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Two Ways: Ratings Cut Puts JPMorgan in Bad Moody's


Strengthen your portfolio in good times and bad.


Moody's Melancholy and Infinite Sadness

Moody's Investor Services may cut the credit ratings of the nation's 3 largest banks. According to Bloomberg, the ratings agency outlook for JPMorgan Chase (JPM), the largest of the 3, went from from stable to negative. The agency also said it will review the long-term debt ratings of Wells Fargo (WFC) and Bank of America (BAC) due to concerns that higher credit costs could hurt capital ratios.

Moody's did issue a positive statement on JPMorgan's credit card portfolio, however, saying the bank could have fewer losses than its peers. It also cited positive Tier 1 and tangible equity ratios, both measures of financial strength.

From the Bull Pen: Bad banks. Old news. Bulls can turn their attention to copper. Look at Freeport McMoRan (FCX) breaking above $30 resistance on the daily chart. One can set a sell stop 2 points from entry.

From the Bear Cave: The real downgrade is with Moody's. As Professor Bill Feingold mentioned recently on the Buzz, "[It's] hardly cheap for a declining business facing more regulation, one whose entire business model is in doubt." On the long-term technical picture, it's got room all the way to $10. One can set a buy stop around $18.

Quick Check Around the World

Asian trading closed with the Hang Seng -0.97%, Nikkei 1.95%, India -2.94%, Taiwan 2.11% and Shanghai 1.04%.

Glancing towards Europe, we see the CAC -2.00%, DAX -2.54%, FTSE -2.25%

As of 8:00 AM EST, S&P Futures are trading -12 to 696, and Nasdaq futures are -11 to 1089.

A Look At Commodities

Crude oil is trading -1.24 to 44.14. Gold is +10.9 to 917.60. Silver is +0.21 to 13.125, and copper -1.70 to 166.85.

The dollar index is +0.550 to 89.2500.

On the Radar


08:30 ICSC Chain Store Sales YoY
08:30 Nonfarm Productivity 1.6%
08:30 Unit Labor Costs 3.4%
08:30 Initial Jobless Claims
08:30 Continuing Claims
08:30 Factory Orders 2.1%

Click here for the full trading radar.

Thirsty Thursday! Meet us at Stag's Head after work. Good luck!

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No positions in stocks mentioned.

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