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Two Ways To Play: Credit Crunch Time

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Strengthen your portfolio in good times and bad.

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More Bank Losses Ahead

According to Bloomberg, Wachovia (WB) and Fifth Third Bancorp (FITB) are facing more losses tied to hedge funds managed by Citigroup (C). WB and FITB reported more than $600 million of losses in bank-owned life insurance programs (BOLI) tied to the Falcon Funds. These funds used trading strategies that provided an alternative to the typical less risky holdings of Treasury notes and select corporate bonds. These funds plunged more than 50% in the last year as the credit markets deteriorated. Analysts predict there will be more losses with other banks as total BOLI holdings of U.S. banks topped $120 bln at the end of 2007. See related column, Debt, Dilution, Default, and Denial by Bennet Sedacca.

From the Bull Pen: Bulls continue to favor plays like Visa (V) and can fade into this stock in the $75-80 range.

From the Bear Cave: The bears are playing the downside in the financial ETF (XLF). Buy-stops can be set above $26.50.


HD Beats The Street

Home Depot (HD) reported better-than-expected results this morning. The biggest home improvement retailer said first quarter earnings came in at 41 cents a share, excluding one-time items, 4 cents above consensus estimates (37 cents per shares). Revenues fell 3.4% year-over-year to $17.9 billion vs. $17.6 billion consensus. For a related perspective in the retail sector, see Professor Jeff Macke's Lowe's: Victim of Reaction.

From the Bull Pen: Bulls continue to favor Wal-Mart (WMT) in the retail space and see an attractive pull-back towards $55. Near-term sell-stops can be set below that level.

From the Bear Cave: With continued weakness in consumer sentiment and in the housing sector, bears believe there is more pain for HD. Buy-stops on downside tries can be set above the 200 DMA ($29.90).

For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.


Quick Check Around the World

Asian trading closed with the Hang Seng -2.23%, Nikkei -0.77%, Sensex -1.17%, Taiwan -2.43% and Shanghai -4.48%.

Over in Europe we find the CAC -1.11%, DAX -0.94%, FTSE -1.36%

As of 8:45 AM EST, S&P futures are lower -9.3 points to 1420, and Nasdaq Futures are down -13 points to 2012.


A Look At Commodities

Commodities are higher. Crude oil is up +0.13 to 127.18. Gold is higher +1.50 to 907.20. Silver is higher +0.076 to 17.050, and copper is lower -3.55 to 376.00.

The dollar index is lower -0.519 to 72.527.


On the Radar

Economics
PPI (m/m): 0.2% vs. 0.4% cons.
Core PPI (m/m): 0.4% vs. 0.2% cons.
PPI (y/y): 6.5% vs. 6.7% cons.
Core PPI(m/m): 3.0% vs. 2.9% cons.

10:00 IBD/TIPP Economic Optimism: 38.0 cons.

Click here for the full trading radar.

Good luck, Minyans!
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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