Before The Bell: UBS Cuts The Credit Cards; Coal Prices Surge
UBS cuts the credit cards on recession concerns. Coal prices are surging because of China. Futures are lower.
Bloomberg reports the ratings of credit card issuers American Express (AXP), Capital One (COF), and Discover Financial (DFS) were each downgraded from "buy" to "sell" by analysts at UBS. In a note published today, analysts led by Eric Wasserstrom cited recession concerns with higher levels of unemployment in '08 and '09 as the "primary driver of credit losses." The analysts reduced the price targets of AXP from $67 to $45 and DFS from $18 to $14 but left COF unchanged. Professor Mike Mish Shedlock recently mentioned this story in Credit Card Time Bomb Is Ticking Away.
From the Bull Pen: Bulls believe MasterCard (MA) is best-in-breed and better positioned to weather a U.S. recession due to its international exposure; sell-stops may be placed below $200.
From the Bear Cave: Bears may play the downside in the credit card issuers, buy-stops above $60 for COF, above $18.50 for DFS, and above $51 for AXP.
Coal Prices Surge
Coal prices are surging, according to Bloomberg. Prices jumped 25% to a record in Australia as torrent weather continues to plague production in China, the world's largest producer and consumer of coal. More than three weeks of snow have halted the transportation networks in the country, killing at least 60 people and causing approximately $7.5 bln in economic losses, marking the country's worst snow storm in 50 years. China, which relies on coal for 78% of its power, announced a halt in exports until April in an effort to boost domestic supplies. Professor Guy Adami mentioned a tertiary play on coal last week in Burlington Northern Chugging Along.
From the Bull Pen: Professor Adami mentioned Burlington Northern (BNI) as an interesting way to play coal. Sell-stops may be set below $85 or below $80 for those with a higher risk profile.
From the Bear Cave: Coal-burning utilities may see their margins pressured should coal prices remain elevated. Downside-plays include The Southern Company (SO); buy-stops above $38; and American Electric Power (AEP); buy-stops above $46.
For more ideas, see Minyanville's Spotlight Stocks.
Quick Check Around the World
Giants fans rejoice after last night's remarkable Super Bowl upset as foreign markets are looking equally giddy.
Asian trading closed with the Hang Seng +3.77%, Nikkei +2.69%, Sensex +2.29%, Taiwan +2.03% and Shanghai +8.13%.
A quick check across the pond finds the CAC +0.49%, DAX +1.25%, FTSE +0.49%, ATX +1.28%, Swiss Mkt. +0.18% and Stockholm +1.27%.
A Look At Commodities
Commodities are weak this morning. Crude oil is trading down -0.30 to 88.66. Gold is off -5.50 to 903.20. Silver is down -0.115 to 16.755 and copper is lower -2.90 to 326.05.
The dollar index is lower -0.031 to 75.414.
As of 8:30 AM EST, S&P futures are down -3.0 points to 1393, and Nasdaq futures are lower -2.25 to 1861.
On the Radar
10:00 Factory Orders: 2.4% cons
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Happy Monday! Good luck!
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