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Two Ways: Berkshire Gets the Axe - Again


Strengthen your portfolio in good times and bad.

Berkshire Ratings Cut Again

Warren Buffett's Berkshire Hathaway (BRK) took another hit from the ratings agencies, this time from one of its own. The Wall Street Journal reports Moody's Corp (MCO) cut the long-term rating of Berkshire from its top Aaa rating to Aa2, citing the global recession and "severe decline in equity markets."

Berkshire holds a 20% stake in Moody's making it the company's largest shareholder. (Shares of Moody's itself have dropped 70% since the start of 2007.)

Berkshire has come under fire, with big losses in its financial portfolio. Last month, Fitch Ratings also cut Berkshire's AAA rating due to similar economic concerns, as well as exposure to long-term derivative contracts.

From the Bull Pen: Bulls can look to FedEx (FDX). This stock sits in the Dow Jones Transportation sector, necessary for a broad market rally. A sell stop can be set below the 50 DMA ($46).

From the Bear Cave: Bears can actually look to Moody's for a downside play. The stock could likely get a lift should it break out of this narrowing range. But longer term it could be headed for new lows. One option is to fade (read: sell) the stock if and when it reaches $25-26.

Quick Check Around the World

Asian trading closed with the Hang Seng 2.95%, Nikkei 3.74%, India 0.57%, Shanghai 1.38% and Taiwan 4.12%.

Glancing towards Europe, we see the CAC 0.43%, DAX 0.89%, FTSE 0.15%

As of 8:10 AM EST, S&P Futures are trading +13 to 836.00, and Nasdaq futures are +15 to 1314.00.

A Look at Commodities

Over in commodities, crude oil is trading +1.18 to 50.56 while gold is +0.30 to 886.20 this morning. Silver is -0.350 to 12.300 and copper +4.15 to 204.00.

The dollar index is -0.215 to 85.5000.

On the Radar


08:30 Initial Jobless Claims
08:30 Continuing Claims
08:30 Trade Balance -36.5b
08:30 Import Index (MoM & YoY)

Happy Thursday! Good luck, Minyans!

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No positions in stocks mentioned.

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