Before The Bell: Investors Go Hungry; Coals To Chemicals
Bear Stearns is downgrading the restaurant sector. Westerners are finding another booming business in China. Futures are slightly higher.
Morning Perspective: Investors Go Hungry
Briefing.com reports the restaurant sector was downgraded this morning to "Market Underweight" at Bear Stearns. The firm cited consumer macroeconomic issues and downgraded Starbucks (SBUX) to "Peer Perform" from "Outperform." Further, the analyst said it favored quick service restaurants and expressed concerns regarding PF Chang's China Bistro (PFCB), Ruby Tuesday's (RT), and Cheesecake Factory (CAKE). Get Professor Bennet Sedacca's economic view in What Possibilities Lie Ahead?
From the Bull Pen: Bulls looking for a play in the restaurant sector may find a play in McDonald's (MCD). Professor Jeff Macke recently called it "a great American Franchise on a world-class roll." Near-term sell-stops may be set below $57.
From the Bear Cave: Bears may see a downside opportunity in CAKE; buy-stops can be set above the 200 DMA ($25).
Coals To Chemicals!
WSJ reports Western firms such as Celanese (CE) and Praxair (PX) are moving in on China's coal-to-chemical business. With technology from General Electric (GE) and Royal Dutch Shell (RDS), China has built over 20 plants in the last two years that convert coal into gas used for making plastics, paints, food sweeteners, and even pharmaceuticals. The business is "literally exploding," said one industry executive, as the Chinese government continues to focus on a more reliable source of raw materials to feed its main economic growth engine, the manufacturing sector. Read Professor Guy Adami's recently mentioned coal play in Peabody Energy An Alternative To Crude.
From the Bull Pen: Those bullish on CE may place sell-stops below $40 (50 DMA). Professor Adami is bullish on BTU, but investors may choose to wait for a pullback to $57, sell-stops set below.
From the Bear Cave: Bears may be more skeptical of PX which has significant exposure to emerging markets. Should global growth falter, bears may play the downside; buy-stops above $92.
Click on Minyanville's Stocks To Watch for more company-specific ideas.
Quick Check Around the World
Traders return for the first session of 2008 as foreign markets are all mixed up.
Asian trading closed with the Hang Seng -0.91%, Sensex +0.81%, Taiwan -2.15% and Shanghai +0.21%.
A quick check towards Europe finds the CAC +0.65%, DAX +0.01%, FTSE +0.71%, ATX +0.62%, Swiss Mkt. -0.40% and Stockholm +0.02%.
A Look At Commodities
Crude oil is higher this morning, up 1.94 to 97.91. Gold is moving higher as well, up 10.20 to 848.20. Silver is up 0.027 to 14.797 and copper is lower by -2.70 to 303.05.
The dollar index is down -0.407 to 76.241.
As of 8:40 AM ET, S&P and Nasdaq futures were up 0.10 and 3.25, respectively, to 1477.30 and 2108.00.
On the Radar
10:00 Construction Spending: -0.4% cons
10:00 ISM Index: 50.5 cons
2:00 FOMC Minutes
Click here for the full trading radar.
Welcome back, Minyans. Let's start the New Year off with a bang! Good luck!
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