Tag - AXL

You've probably heard the quote from the great entrepreneur Henry Ford who once commented, "People can have the model-T in any color, so long as it's black".

 

The man's unique ability to combine innovation with simplicity is symbolic of the great entrepreneurial spirit that helped America become the world's leading superpower. Unfortunately, in modern America, the U.S. automobile industry has faltered and once great companies like Ford (NYSE:F) and General Motors have fallen from grace.

 

Ford also once said, "Nothing is particularly hard if you divide it into small jobs." That's the mentality that is needed right now for U.S. auto companies and parts suppliers if they are going to succeed in the 21^st century.

American Axel Holdings (Nasdaq:AXL), Universal Stainless & Alloy (Nasdaq:USAP), Select Comfort Corp (Nasdaq:SCSS) and Rudolph Technologies (Nasdaq:RTEC) are among the biggest percentage Gainers in Monday's trading among companies with market capitalizations under $1 billion.

Also included among the results: Seabridge Gold Inc (Nasdaq:SA), Medifast Inc (Nasdaq:MED), KongZhong Corp (Nasdaq:KONG), Sourcefire (Nasdaq:FIRE) and PetroQuest Energy Inc (Nasdaq:PQ).

American Axle (Nasdaq:AXL), Morgan Stanley (Nasdaq:MS), Energy Conservation Devices Inc. (Nasdaq:ENER) and NetList (Nasdaq:NLST)are among the most actively traded companies in Thursday's trading among companies with market capitalizations under $1 billion.

Also included among the results: Stec Inc. (Nasdaq:STEC), Eagle Bulk Shipping (Nasdaq:EGLE ), New York Times Co. (Nasdaq:IMGN) and Triquint SemiConductor Inc. (Nasdaq:RFMD) and  Take-Two Interactive SOftware (Nasdaq:SEED).

Energy Services of America Corp. (Nasdaq:ESA), Hallwood Group Inc. (Nasdaq:HWG) and American Axle & Manufacturing Holdings Inc. (Nasdaq:AXL) are among the biggest percentage gainers in Wednesday's trading among companies with market capitalizations under $1 billion.

Also included among the results: Perry Ellis International Inc. (Nasdaq:PERY), United Community Bancorp (Nasdaq:UCBA), Builders FirstSource Inc. (Nasdaq:BLDR), Dana Corp. (Nasdaq:DAN), Primeenergy Corp. (Nasdaq:PNRG) and AnnTaylor Stores Corp. (Nasdaq:ANN).

Stocks are rebounding today after Monday's 2% sell-off. As of press-time, 2:00 P.M. eastern, the Dow is trading up 86 points at 9,222; the Nasdaq is up 24 points at 1,955; and the S&P 500 is up 9 points at 989.

Stocks in the Russell 2000 are up 1.56% and with the index trading at 556.

Leading small-cap gains halfway through today's session is American Axle (NYSE:AXL). The beleaguered auto parts manufacturer's stock is up 95% today on news that it will receive up to $210 million in ad from former parent company General Motors. The firm will receive $110 million in payments from GM to recover costs from GM's bankruptcy this spring. Another $100 million will also come from GM in the form of a loan against which American Axle will have the right to make draws. Other parties in the loan terms include JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC).

Other small-cap leaders include Rentech (Amex:RTK) up 74%; Huron Consulting Group (Nasdaq:HURN) up 35%; and Popular (Nasdaq:BPOP) up 28%.

*****Lowe's (NYSE:LOW) reported weak earnings yesterday. Plus, the company's guidance for current quarter earnings was weaker than expected. Needless to say, worrisome headlines about consumer spending sprang up, and stock prices went down.

At SCI Daily, we've been discussing how high unemployment necessarily means that consumer spending will be weak. And that with little chance of any improvement in unemployment in the foreseeable future, there's not likely to be more money spent. This is a major condition of my "Managed America" economic scenario.

Too bad Lowe's CEO Robert A. Niblock isn't a reader. He said "Wavering consumer confidence, unseasonable weather in core markets, and restrained customer spending compared to last year's fiscal stimulus-aided results led to lower than expected sales in the second quarter…"

Yeah. It's the weather. That's it.

And Lowe's COO Larry Stone ran with it, saying that the mild summer has led to declines in air conditioner sales. But Stone said the heat wave in August has air conditioners selling at a "…pretty good clip."

Apparently better air conditioner sales couldn't keep Lowe's from lowering future guidance and scaling back its expansion plans.

*****The Fed is phasing out several economic rescue programs. Treasury bond purchases and a money market lending program will expire, while a program for loans to commercial banks is being scaled back. 

One program that isn't in danger of getting cancelled is the Term Asset-Backed Securities Loan Facility, or TALF. That's because TALF was expanded to allow commercial real estate assets to qualify under the program. And with $165 billion in commercial real estate loans due this year, and values down 35%, TALF could come in handy.

Again, despite the fact that it's essentially taxpayers at risk, this is a good thing for the economy. And we expected the Fed would do something to help commercial real estate. 

*****Jason Cimpl, the technical analyst for TradeMaster Daily Stock Alerts
just nailed down another winner. This time, his readers were treated to a 29% gain on PPG Industries (NYSE:PPG) in just under two months.

Never heard of PPG Industries? Well, me neither, until Jason uncovered an extremely bullish trading pattern on the stock chart and recommended it to his readers. Jason is extremely skilled at finding profitable trading patterns on stocks, both well-known and unknown.

Now, Jason has his readers positioned to profit from a downward move in financials stocks. For more, click HERE.

*****We have a winner! I'm pleased to announce that we have a winner in The Small-Cap Investor t-shirt contest.
 
We received hundreds of submissions from our readers around the world. And 470 of your fellow readers voted for their favorite t-shirt slogan. The winning t-shirt slogan received 41% of the audience's vote. And the slogan is…"Don't sweat the big stuff. Trade the small stuff. The Small-Cap Investor: Secrets to Winning Big with Small-Cap Stocks."
 
The slogan was submitted by Monika Schmidt. Monika will receive a one-year membership to all of my advisory services, a $2,680 value. Plus, she'll get a personalized, autographed copy of my The Small-Cap Investor and three t-shirts with her winning slogan. Congrats Monika, and thanks for contributing a great slogan to our contest! We hope you enjoy your complimentary membership to our investing newsletter services, including SmallCapInvestor.com PRO.
 
Monika's winning idea was one of many great submissions we received from our audience.  The runners up were as follows:
 
#2: "For profits to peak, small-cap stocks are what we seek." Contributed by Keith Timm, received 91 votes or 19%

#3: "Profit Like the Big Dogs by Investing in the Little Dogs. Learn the Secrets to Winning Big with The Small-Cap Investor." Contributed by Bryan Alvarez, received 74 votes or 16%

#4: "Economy = Uncertain; Stock Market = Volatile; The Small-Cap Investor = PRICELESS." Contributed by Dr. Paula Tucker, 62 votes or 13%

#5: "Got Profits? The Small-Cap Investor. It does a portfolio good!" Contributed by Jannica Beam Johnson, 48 votes or 10%

Everyone who submitted their slogan has received a complimentary one-month subscription to SmallCapInvestor.com PRO. If for some reason you haven't already heard from Claire in my office, please call her at 202-420-7800 and she can setup your complimentary one-month membership. I hope you enjoy your trial, and consider purchasing a copy of The Small-Cap Investor: Secrets to Winning Big with Small-Cap Stocks. You can pre-purchase your copies today by clicking here now.

Thanks again for your support and interest. Once the t-shirts are available, I'll share the design with you. 

Best Regards,

Ian Wyatt
Editor
Small Cap Investor Daily

P.S. My book The Small-Cap Investor: Secrets to Winning Big with Small-Cap Stocks is coming out on September 14 - visit www.smallcapbook.com to learn more. You can also follow me on http://twitter.com/ianwyatt 

Ian Wyatt is the Chief Investment Strategist of SmallCapInvestor.com and author of The Small-Cap Investor: Secrets to Winning Big with Small-Cap Stocks. You can learn more about his book and receive small-cap stock picks at www.smallcapbook.com.

Stocks closed lower today as investors took some profits off the table after the market had a long sustained rally. The Dow closed down 39.22 points to 9,280.97; the Nasdaq finished at 1,993.05, down 18.26 points; and the S&P 500 stayed over 1,000 to close at 1,002.72, down 2.93 points.
 

The Russell 2000 was down 4.75 points to close the day at 565.99.

 

Small-cap price gainers were lead by Radian Group (NYSE:RDN) up 83% on news that the firm handily beat Wall Street expectations. Wall Street had called for the firm to report a quarterly per share loss of $1.51 while the Radian actually reported $2.82 to the positive. Radian's revenues were reported at $577.4 million, with analysts calling only for $284 million.

 

Other small-cap gainers include Triad Guaranty (Nasdaq:TGIC) up 65%; American Axle & Manufacturing (NYSE:AXL) up 44%; and UQM Technologies (AMEX:UQM) up 31%.

 

*****Stocks rallied out of the hole yesterday, as expected. It should be clear now that government intervention in the financial markets is supporting asset prices across the board. That includes cars, houses, stocks, bonds - you name it.

Now, I don't mean to suggest that economic fundamentals support current stocks prices. Most likely, earnings expectations and valuations are getting a little out of whack. Barron's has the P...E ratio for the Dow Industrials at 14.76 and the Wall Street Journal says it's 15.03. And forward estimates are about the same. In the current environment, that's fair value at best.

At worst, earnings estimates are too aggressive and valuations should be lower. While the U.S. economy is expected to grow slightly this quarter, I don't see that translating to earnings surprises when third quarter earnings come in. If companies can manage to meet expectations, I'd consider that a victory. Clearly, I don't see much upside for valuations based on fundamentals.

For the bulls, however, the story is about how much downside there is. And again, the government is saying "not much."

*****70% of the U.S. economy is consumer spending. That's a big ratio, and it shows why the U.S. can plunge in to recession easily. It also shows why I expect it to take a while before we return to decent growth rates.

The unemployment rate is pushing 10%. Economists expect it to move into double-digits in early 2010. Personally, I can't believe it will take that long.

The U.S. lost 371,000 jobs in July. Since December 2007, 6.5 million jobs have been lost. There were 5.7% fewer job cuts announced in July than a year ago. That's supposed to sound like the rate of job losses is slowing. And believe it or not, some economists are saying that payrolls could actually rise some in early 2010. Sounds crazy, I know.

But suppose payrolls start rising at the same rate they've been declining? If 371,000 people get jobs every month, it'll take 17 months to get the unemployment rate back where it was when the recession began. That would put the U.S. economy back on track by January 2011 at the absolute earliest.

*****One aspect of government intervention (which I call "Managed America"), is that the U.S. dollar is being systematically devalued. Against the Euro, it's trading lower than when that currency was introduced. (Reference point: today the U.S. dollar fetches just 0.69 Euros while back on January 1, 1999-when the Euro was introduced-you could get 0.86 Euros for your dollar. That's a 25% long-term slide in the value of the dollar.)

This is having a profound effect on commodity prices. Oil, copper, even steel prices are up significantly this year. And given China's continually robust demand and the near certainty that the dollar will remain weak, investing in commodities is rewarding investors handsomely. And if inflation takes hold as the global economy starts to go and central bankers leave stimulative monetary policy in place, commodity prices will hit new all time highs.

My Global Commodity Investing advisory service is benefiting from current commodity prices and will provide one of the only safe havens if inflation picks up. You can find out more about Global Commodity Investing here.

*****The Managed America video conference is coming up next Monday, August 10 at 6:00 P.M. It's free to attend and you can register HERE.

Best Regards,

Ian Wyatt
Editor
SCI Daily

Stocks closed down today in all of the major U.S. indices. The Dow closed down 25.92 points to end at 9,070.80; the Nasdaq ended at 1,967.76, down 7.75 points; and the S&P 500 moved downward 4.48 points to close at 975.44.

The Russell 2000 ended the day at 549.54, down 2.56 points.

Small-cap gainers were lead by American Axle & Manufacturing (NYSE:AXL) up 50% to close at $2.02. Other small-cap share price gainers Elron Electronic Industries (Nasdaq:ELRN) up 45%; McClatchy Company (NYSE:MNI) up 44%; and Conseco (NYSE:CNO) up 36%.

Small-cap decliners were lead by Frontier Financial Corp. (Nasdaq:FTBK) down 21% on announcing Q2 losses of $1.06 per share versus gains of $0.04 a year ago. Joining FTBK in leading decliners today were THQ (Nasdaq:THQI) down 19%; Alvarion (Nasdaq:ALVR) down 17%; and Ariad Pharmaceuticals (Nasdaq:ARIA) down 16%.

*****With the exception of the Nasdaq, the major indices finished yesterday with slight losses. And it looks like an even money bet whether they'll finish in the red today. We've seen an unlikely move over the last two weeks. The S&P 500 has made gains in 9 of the last 11 sessions and moved 11.3% higher. Volume hasn't been especially strong during this move, but it is summer. Volume is always a bit lighter in the summer.

It seems more and more strategist-types are looking for a pullback or correction for stocks. Yesterday, CNBC's Jim Cramer said he was expecting some red. Of course, Cramer makes so many calls it's hard to keep them all straight.

For the record, Cramer says he likes healthcare stocks, technology and financials, believe it or not. He says financials are so universally hated that they will be stronger than average in the event of a pullback. That's the "no one left to sell" theory.

I'm not so sure. The banks have been given time to earn their way back to health. And it could work. But a lot depends on the housing market. Many banks still carry toxic assets. And their reluctance to sell into Geithner's PPIP suggests they remain hopeful these assets will regain value. If they don't, it could be problematic. And then there's the commercial real estate situation we've been discussing.

******Did you know I'm about to publish my first book? The Small Cap Investor: Secrets to Winning Big with Small Cap Stocks will hit the shelves on September 14.

In The Small Cap Investor, I share the proven techniques for uncovering the small cap companies poise for a huge run higher. My biggest success was apparel company True Religion (Nasdaq:TRLG). I recommended that stock to my readers at $1.13 a share. We sold it in 2008 for 2,216% gains. My techniques have also led my SmallCapInvestor PRO advisory service to a 93% win rate this year.

Now, I need your help. As part of the marketing plan for my book, we are holding a T-shirt contest. I want you to be the one who comes with the slogan for The Small Cap Investor: Secrets to Winning Big with Small Cap Stocks T-shirt.

Obviously, "Secrets to Winning Big with Small Cap Stocks" is taken. But slogan's like "I made a 142% on Gulfport Energy and all I got was this lousy T-shirt" or "Ian Wyatt: The Best Small Investor" are open.

We'll be holding the voting on the Small Cap Investor page on Facebook starting today and running through August 9th. You can leave your submissions there, or send them to tshirt@smallcapinvestor.com.

The winner will get their very own shirt plus a full-year subscription to SmallCapInvestor PRO. This should be a lot of fun. I hope you'll participate.

******China is in the news again. Overnight, the Shanghai Composite fell 5%, the biggest drop in eight months. Investors are nervous on reports that the Chinese government may be discussing clamping down on lending due to the potential for imbalances to occur.

Specifically, Bloomberg is reporting that the Chinese government is concerned that asset bubbles may be forming in the stock market and that inflation may be building.

Chinese stocks are reportedly trading at 35 times reported earnings. And that is expensive. But interestingly, the Chinese stocks in the SmallCapInvestor PRO portfolio are trading with Price-to-Earnings ratios between 8 and 11. That's much cheaper than most Chinese stocks, apparently, and one of the reasons we recommended them.

Of course, valuations won't keep our stocks from declining if the Chinese stock market takes a hit. But Chinese stocks are recovering today after last night's sell-off, so that's a good sign.

If you're interested in finding out more about the Chinese stocks in the SmallCapInvestor PRO portfolio click here to get a copy of the report.

*****Finally, Top Stock Insights reader took 35% gains yesterday on Chinese medical device maker called Mindray (NYSE:MR). I love the science fiction name, but couldn't resist taking the gains.

Best Regards,

Ian Wyatt
Editor
SCI Daily

Stocks closed higher today as Meredith Whitney's comments on Goldman Sachs (NYSE:GS) helped to lift financials, including Bank of America (NYSE:BAC), which she indicated as being inexpensive. Previously she'd been down on financials and very accurate with her assessment concerning their exposure to sub-prime mortgages.

The Dow closed up 185 points today to end at 8,332. The Nasdaq and S&P 500 followed suit to close at 1,793 and 901, respectively.

The Russell 2000 closed at 492, up 11 points.

Small-cap stocks showed leadership behind Territorial Bancorp (Nasdaq:TBNK) of Honolulu, Hawaii, which was up 49% to close at $14.94. Shares in TBNK started trading today as part of an initial public offering with the opening price set at $10.

Other small-cap gainers include PMI Group (NYSE:PMI) up 31%; iBasis (Nasdaq:IBAS) up 28% on news that Dutch telecommunications firm Koninklijke KPN issued an offer of $1.55 per share or roughly $48.2 million to acquire 44 percent of the shares outstanding in iBasis; and American International Group (NYSE:AIG) up 24%.

Decliners were lead by China-based baby formula producer American Dairy (NYSE:ADY) down 44% after issuing news that it had reduced guidance by stating that Q2 revenue would be increase only 10% against the year-prior period.

American Dairy had previously grown by nearly 200% after the company was untainted by the scandals surrounding other Chinese dairy producers over contaminated baby formula that left six infants dead and millions of gallons of milk considered suspect and destroyed.

Other decliners include CardioNET (Nasdaq:BEAT) down 34%; Sinclair Broadcast Group (Nasdaq:SBGI) down 21%; and American Axle & Manufacturing (NYSE:AXL) down 15%.

*****A few weeks ago, Treasury Secretary Geithner had to go to China to assure our largest creditor that their investment in the U.S. dollar was safe. Now he's off to Saudi Arabia and United Arab Emirates for another round of "strong dollar" propaganda.  
Of course, it's not an easy task to convince foreign governments that the U.S. wants a strong dollar when interest rates are at zero and we're selling tens of billions in Treasury bills virtually every week. You may recall Geithner's assurances elicited laughter from a group of Chinese college students when he made the strong dollar pledge there.  

If college students know the score, you can bet everyone else does, too.  But Treasury auctions have been met with plenty of demand, and that's a good thing.

*****Fed Chief Bernanke is expected to reveal to Congress just how he plans to reverse his stimulative monetary policy next week. The Fed has expanded the money supply by about $1 trillion, cut rates to zero and doubled the assets on its balance sheet.  

In normal times, this would be highly inflationary. But these aren't normal times. Were it not for the Fed's action, the U.S. economy would be broken even more than it already is.  

Now, normal times will return. And how the Fed plans to reel in liquidity when the economy starts to grow again is critical. The potential for runaway inflation is real, and the Fed will have to be just as diligent at fighting inflation as it was fighting deflation.  

*****Goldman Sachs (NYSE:GS) received an upgrade from the very same banking analyst that predicted collapse of mortgage-backed securities, Meredith Whitney.  
Upgrading Goldman is easy. The bank is practically a subsidiary of the U.S. government. But the timing is interesting, given that Goldman reports earnings before the bell tomorrow.  

And speaking of earnings, this is a big week for some important companies. In addition to Goldman, we get Intel (Nasdaq:INTC) after the bell tomorrow. Thursday, we'll hear from JP Morgan (NYSE:JPM), Google (Nasdaq:GOOG) and IBM (NYSE:IBM). Then Friday, we get General Electric (NYSE:GE), Bank of America (NYSE:BAC).  

Tech and financials - the anchors for the U.S. economy will be reporting this week. Investors will be watching these early earnings reports closely. Much of the rally of the past few months can be attributed to investors' faith in companies meeting Q2 earnings, even if expectations were substantially lowered. Any bad news from these bellwether companies and the market could turn. We'll be watching closely. 

*****As if earnings weren't enough, there's a full slate of economic data coming out this week, too. Tuesday, it's the Producer Price Index (PPI) along with retail sales and business inventories. 

Wednesday, we get the Consumer Price Index (CPI), the Empire Manufacturing Survey from New York state, capacity utilization, industrial production, crude inventories and the minutes from the last FOMC meeting. 

Thursday, it's initial unemployment claims and the Philadelphia Fed. 
And finally, on Friday, we get building permits and housing starts for June.   
Whew! That's going to be a lot of data to review.  

*****On January 15, my Top Stock Insights advisory service released its Predictions 2009 special issue. This issue was our blueprint for profits with mid- and large-cap stocks as we headed into the new year.  

In that issue, I outlined the case for oil, gold, commodities and biotech/healthcare stocks. And we took 51% profits on an oil stock, 25% on a gold stock, another 25% on a commodity stock and we're still holding three biotech/healthcare double-digit winners in the portfolio. 

In other words, our expectations for the year led my readers to some nice gains this year, and there's more to come... 

Now, I'm all set to release an update to that special Predictions issue that will get us through the rest of this year with more solid gains. It comes out on Wednesday, and if you'd like to get my blueprint for profits for the rest of 2009, please click here. Or go to topstockinsights.com. 

*****Also, if you missed TradeMaster Daily Stock Alerts technical analyst Jason Cimpl's weekly video chart analysis, here's that link again. 

For much of today's trading session stocks were weighed down by falling crude oil prices and an update to the IMF's expectations for the world economy.

Oil continued its six day slide dropping to barely over $60 a barrel from an eight month high of $73 just last week. The IMF announced that it expects the world economy to shrink by 1.4% in 2009, as opposed to its earlier estimate of 1.3%. Still, it did counter that by stating that growth in 2010 should be 2.5%, versus its April estimate of 1.9%.

The Dow closed up 15 points in a late move to finish at 8,178. The Nasdaq inched up just 1 point to close at 1,747 and the S&P 500 was down just slightly at 880.

The Russell 2000, an index of 2,000 small-cap companies, closed down 0.94% at 480.

Leading small-cap decliners was ARYx Therapeutics (Nasdaq:ARYX) down 43% after news was released of the failure of it's anticoagulant agent. The company announced that data from its studies of Tecarfarin did not indicate any statistically significant superiority over Warfarin, a commonly used blood-thinning drug.

Other decliners include Southern Community Financial (Nasdaq:SCMFO) down 23%; American Axle & Manufacturing Holding (NYSE:AXL) down 23%; Atlantic Southern Financial Group (Nasdaq:ASFN) down 17%; and YRC Worldwide (Nasdaq:YRCW) down 24%.

YRC was down yesterday on news that management and Teamsters union officials had still not found an agreeable resolution to YRC's continuing financial worries. Today the stock tumbled further as talks appeared to go nowhere on Wednesday. In addition to a slowing economy calling for less trucking, YRC has been hampered with integration costs from its Yellow and Roadway operations as well as picking up the tab on multi-employer pension plans. YRC participates in the Central States multi-employer pension fund and as other trucking companies have disappeared over the years YRC's responsibilities within the fund have grown. As with many other large industries, YRC is facing mounting pension liabilities that are hampering its ability to weather the recession.

Small-cap gainers were lead by Novogen Limited (Nasdaq:NVGN) up 31%. This is on top of Tuesday's 37% gain on news that the Novogen-licensed oncology drug Phenoxodiol showed great promise in treating acute lymphoid leukemia and may have applications treating autoimmune disease as well.

Other small-cap gainers include fellow pharmaceutical Targacept (Nasdaq:TRGT) up 28% on news that development of its ADHD drug will move forward in studies. The company will receive a $10 million payment from development partner AstraZeneca (NYSE:AZN) and remains eligible to receive an additional $100 million. Leaders also include Internet Initiative Japan (Nasdaq:IIJI) up 23% and biotech firm Amgen (Nasdaq:AMGN) up 14%.

*****Yesterday, Reuters reported that the delinquency rate on credit card debt hit 6.6% in the first quarter of 2009. On mortgage loans, delinquencies hit 3.5%.  
I can virtually guarantee both numbers were higher in the second quarter. And I expect them to move still higher in the future.  

Unemployment will continue to rise. And even when it stops rising, it's not going to magically reverse course, not when the U.S. economy is only growing 1% or 2% a year.  
The recession we're possibly on the verge of exiting has been unique. It wasn't a consumer-led recession. Rather, it was a fundamental recession brought on by weakness in the very foundations of the U.S. economy.  

You don't wake up from this with just a hangover. You wake up without your car because you just wrecked it and your driver's license has been suspended and you now have to take a bus wherever you want to go.  

*****That's why the IMF and the G-8 is now calling for more stimulus packages and funds. The G-8 is meeting in Italy. The U.S. appears to be in "wait and see" mode, despite some calls for more stimulus programs. And rightfully so. The U.S. done a lot, maybe more than it should, to throw money into the system. It's time for some others to step up and do what they can do. 

At the same time the G-8 is talking stimulus, it's also talking about how to reign in stimulative monetary policy. This undoubtedly a good thing. We're all well aware that if rates don't rise, and liquidity gets sopped up, then inflation could run rampant.  
Of course, inflation is not much of a threat now. But once the global economy starts growing again, central banks will have to respond with higher rates, even though growth won't be robust. (If you're interested in loading up on the stocks that will outperform once inflation hits click here for my Inflation Busters report.) 

*****This is a very interesting time for investors. It's going to be critical to be in the right stocks, and in the right sectors. Equally important will be avoiding sectors that are facing significant headwinds. Financials still seem to be among the most vulnerable sectors, while technology and healthcare are demonstrating a lot of promise.  
Investing in this new economic paradigm (which I haven't come up with a name for yet) is going to be a common theme for us here in SCI Daily.

Interest rate concerns and inflation worries put pressure on stocks today after the government's sale of $19 billion had a harder than usual time getting buyers. Investors seem concerned about the government's growing debt and that it could spur higher inflation and interest rates.

The Dow lost 24.04 points to close at 8,739.02; the Nasdaq shed 7.05 points to end the trading session at 1,853.08; and the S&P was down 3.28 points for 939.15.

Stocks comprising the Russell 2000, comprised of the 2,000 largest small-cap stocks, brought the index down to 523.41 on a loss of 4.52 points.

Today's small-cap gainers were lead by communications firm Atlantic Tele-Network (Nasdaq:ATNI) up 42.29% at $37.92. ATNI was up on news from yesterday's announcement to acquire wireless assets from Vodaphone (NYSE:VOD) and Verizon Communications (NYSE:VZ). Primarily doing business in the Caribbean, ATNI now picks up nearly a million wireless subscribers in the U.S. southeast and Illinois and Ohio. Because of regulatory requirements on Verizon to sell off some subscribers as part of its deal with Alltell, ATNI is substantially changed from a small operator overseas to a real player in the U.S. market.

Other small-cap leaders include one of yesterday's leaders, Satyam Computer Services (NYSE:SAY) up 35.7% after being rated "overweight" by an analyst from JP Morgan; American Axle & Manufacturing (NYSE:AXL), another of yesterday's leaders, up 25.7%; and Corel Corp. (Nasdaq:CREL) up 34.75%.

Decliners were lead by NCI Building Systems (NYSE:NCS) down 26.1% on worries over its reports of larger than expected Q2 losses. Shares were going for $3.16 at market close, down from an opening price of $3.80.

Other small-cap decliners include one of yesterday's leading gainers, Sequenom (Nasdaq:SQNM). Yesterday SQNM lead small-cap gainers with a 45.97% gain but today lead decliners by shedding 22.83% of its opening price to close at $4.09. And after shedding 20.17% off its price yesterday, Quiksilver (NYSE:ZQK) saw shares drop another 12.71%. So far this week investors holding shares in Quiksilver have endured a total loss of 27% since Friday's close.

*****"The worst is to come…"

That's what MetLife's (NYSE:MET) Chief Investment Officer Stephen Kandarian told Bloomberg this morning.

He was talking about commercial mortgage defaults. He notes that "[t]ypically there's a lag between when the economy softens and when the defaults actually occur."

Bloomberg also cites a study from Real Estate Econometrics LLC that forecasts default rates for commercial real estate may hit 4.1% by the end of the year.

What does commercial real estate have to do with an insurance company? Plenty…

*****Insurance companies take in cash in the form of the premiums we pay. They then invest that money in order to pay off claims down the road. As their investment returns compound, they profit.

But when their investments lose money, trouble starts. And trouble is exacerbated when insurance companies sell guaranteed returns to investors in the form of annuities.

The promise of annuities forces insurance companies to seek riskier investments to boost their returns. And many have turned to mortgage-backed securities to make more money.

Whoops.

*****MetLife has a $300 billion investment portfolio. That portfolio lost 23% in the first quarter of this year. Mr. Kandarian freely admits he's looking for higher returns to make up the losses. And he's looking at adding securities backed by commercial mortgages, in addition to continuing to originate loans to the commercial real estate sector.

It reminds me of the gambler, who after suffering a big loss, decides to start doubling down and taking more risks to win his money back. It usually doesn't end well.

Of course, what he should do is simply step away from the table. But MetLife and other insurers can't -- they have to make money to meet their obligations. It's not a sure thing, but I can imagine it ending poorly for some insurance companies.

As of press time, 4:00 P.M. Eastern, stocks on the broader indices were up. The Dow was down 2.49 points to 8,762, the Nasdaq up 17.73 points to 1,860.13, and the S&P 500 was up 3.22 points to 942.42.

The Russell 2000, the index tracking the 2,000 largest small cap stocks, was up 4.02 points, or 0.77%, to 528.57.

Leading today's small cap gainers was Sequenom (Nasdaq:SQNM) up 45.97%. Sequenom provides genetic analysis products for biomedical research, molecular medicine, and non-invasive prenatal testing. As I've been saying for the past couple weeks, the sector rotation to defensive stocks like biotech and healthcare has started.

Other small caps showing leadership today include Spreadtrum Communications (Nasdaq:SPRD) up 23.76%; Satyam Computer Services (NYSE:SAY) up 34.93% on surprising the market with profits from the December quarter; Movado Group (NYSE:MOV) up 25.8%; and American Axle & Manufacturing (NYSE:AXL) up 22.45% after having broken through it's 200 day moving average for the second time since over a year ago and despite reporting that it will encounter production shutdowns due to the bankruptcy proceedings of General Motors (OTC:GMGMQ.PK) and Chrysler.

Showing the wrong kind of leadership in today's session-that is, the biggest decliner-was youth fashion creator Quiksilver (NYSE:ZQK) shedding 20.17% off it's opening price to be at $2.88 at press time. Shares dropped precipitously after it was announced that Quiksilver's profit was a penny shy of analysts' estimates.

Other stocks with investors seeing red today include LCA-Vision (Nasdaq:LCAV), provider of LasikPlus, down 14.11%; famed golf equipment maker Callaway Golf (NYSE:ELY) down 15.8% on news of it's dividend cut from 7 cents per share to just one cent per share; CBL & Associates Properties (NYSE:CBL) down 12.8% after releasing its full year outlook below consensus expectations and announcing an offering of 50 million shares of common stock.

*****Bravo. The government's handling of the financial crisis and recovery should be recognized as a masterful performance. At least, so long as you don't look too deeply into the numbers…

Bernanke and Co. have managed to restore confidence to the point that economist Paul Krugman has joined the ranks of those who think we are only a couple months away from actual GDP growth.

And they've accomplished this remarkable feat by stringing investors along with one carrot after another…

*****The first carrot was bailouts and stimulus packages. There was a time when stimulus spending was going to save or create 3.5 million jobs. Now, states are wondering where the stimulus money is. And the president is now promising 600,000 jobs will be created by stimulus spending.

But layoffs have slowed considerably according to the most recent non-farm payroll report. And Americans, feeling more secure in their jobs, may not notice that stimulus jobs won't be there, even if they need them.

*****The Public-Private Investment Program (PPIP) was supposed to remove toxic assets from bank balance sheets. Never mind that the banks probably never had any intention of selling at fire-sale prices and investors weren't thrilled with paying unreasonable prices, no matter how much of the transaction would be funded by the Treasury.

Geithner's "stress tests" resulted in banks raising their capital bases. That has helped remove the incentive to dump those toxic assets. 

And as for the $74 billion banks have raised so far, do not misunderstand all the talk of "green shoots". These green shoots were not economic recovery per se. Rather, the green shoots were the banks stock prices shooting higher after accounting rule changes allowed them to show a profit where there was none.

In other words, the economic recovery is something akin to an illusion -- those inflated stock prices have allowed the banks to raise enough capital to appear healthy and last a little while longer…

*****Now that investors have breathed a sigh of relief that the problems with the auto industry are being resolved, the Chrysler sale to Fiat has been put on hold. Funny, I would swear a couple weeks ago, Chrysler would go bankrupt and millions would lose their job if Fiat didn't buy Chrysler right away.

*****And then there's TARP - the $700 billion boondoggle. Some banks have been asking to repay the money for months. But ever-sensitive to the all-important timing element of a good comedy, the Treasury has been unwilling to accept payment.

After all, why spoil the party by letting all the good news out at once? Why not wait until the rally is looking weak to release the news that, hey, maybe we'll accept TARP repayments after all? And maybe those payments will be more than anyone expects?

But let's make sure we string the announcement out as long as possible and let the threat of good news keep the bears at bay…

*****Of course, you can only fool all of the people for a while. Eventually, without a real pickup in economic activity, the millions of Americans who are barely keeping their head above water will sink. And then all the issues the "stress tests" glossed over (higher unemployment, rising foreclosure rate, etc.) will cripple the banks once again.

As economist Joseph Stiglitz of Columbia University recently told Bloomberg: "There's a chance that it might work...If it does, then they'll look like the brilliant general. But all these efforts also bank on the economy recovering and housing prices not falling too much further. Those are not safe assumptions."

P.S. I normally don't like to be the guy who says "I told you so", but for today I will. Back when the PPIP was first floated by the Treasury my diligent research in my Top Stock Insights advisory service spotted three stocks that would profit big time if the PPIP went through and profit modestly even if it did not. We did it. In a matter of weeks - not months or years - we profited on Legg Mason (NYSE:LM) for 8.16%, BlackRock (NYSE:BLK) for 9.1%, and AllianceBernstein (NYSE:AB) for 12.77%. Top Stock Insights readers booked these gains DESPITE the collapse of Geithner's PPIP plan. To find out how you can see steady and consistent gains no matter what happens, check out Top Stock Insights at http://www.topstockinsights.com/.

Small Caps making up the Russell 2000 are up 3.76% as of reporting at 1:30 P.M. Eastern today. This leads the Dow Jones Industrials, up 2.85%, and the Nasdaq, up 2.62%.  

Leading small cap gainers today include U-Store-It Trust (NYSE:YSI), up 19.6%, which owns and operators self storage facilities in the United States on news of its establishment of a self storage network to include the company owned 386 facilities as well as 150 locations run with third-party partners, and plans for 250 more in the works to join the network.  

Other small cap leaders include MarineMax (NYSE:HZO) up 22.64%; American Axle (NYSE:AXL) up 22.06%; Russ Berrie & Co (NYSE:RUS) up 19.6%, Celldex Therapeutics (Nasdaq:CLDX), up 32.1%; Green Plains Renewable Energy (Nasdaq:GPRE), up 32.7%.  

Readers from Friday's edition will recall that GPRE was a market leader before the weekend as well. It closed on Friday at $4.40 after flirting with the $4.50 mark having opened at $3.41 in the morning. In Monday's open GPRE gapped up to start at $5.00 and as of press time is at $5.84, up 32.7% for the day. 

Since the opening bell after Memorial Day, GPRE is up 107%. GPRE produces, distributes, and markets ethanol and related products in the United States. GPRE was founded in Omaha, Nebraska in 2006. GPRE recently purchased two ethanol plants previously owned by VeraSun Energy.  

*****Both the Nasdaq and the S&P 500 are hitting new recovery rally highs today. Part of the reason for today's strength is the better than expected construction numbers released this morning.  

The 0.8% gain in construction spending for April was the biggest gain in nearly a year. And it was far better than economists' expectations of a 1.5% drop.  
This is how it will be during an economic recovery. There will be wild swings in data. Don't be surprised if construction contracts for May, and then picks up in June. Or vice versa. It really could go either way. And that won't necessarily be bad news.  
Of course, it would be great to see the numbers continue to steadily improve. But that's not the way it works when an economy is recovering from the type of shocks the U.S. economy has received.  

*****General Motors (NYSE:GM) ended the suspense. As expected, it filed for bankruptcy protection this morning. It's the 4th largest bankruptcy filing in US history. GM has $82 billion in assets and $172 billion in debt.  

GM stock is up +20% in the early going today. I want to know why. My guess is that shorts are covering their positions. Still, I don't know why. It's expected that GM common stock will be cancelled as part of the bankruptcy proceedings.

That would mean that shorts don't have to cover their position. However, shorts may continue to incur borrowing fees from the shares they have sold. In order to be completely free of the trade, maybe covering is the way to go.  

*****I've read that GM may resume trading as a new public company in 6-12 months. I don't see why it should take that long. A motivated bankruptcy judge ought to be able to deal with GMs debt faster than that.  

But I will say that, depending on the terms of the bankruptcy, GM stock should be a good buy when it comes public again. GM will be stripped of one of its major stumbling blocks - pension benefits.  

It's estimated that pension benefits add $1,500 in expenses for GM on each car it builds. Obviously, in today's competitive environment, that's insurmountable.  
However, once these costs are gone, and GM can operate with leaner margins, the stock could be a good buy.  

*****SmallCapInvestor PRO readers are enjoying their second +100% gain this year. The stock is Genco Shipping (NYSE:GNK) and it was recommended on April 9 at $14.20 a share. Please do not by the stock now. We will be taking our profits on it in the near future.  

We're holding our other triple digit winner. This domestic oil and gas stock is up +130%. But the strength in oil prices means that there should be more gains coming. Look to this sector to continue providing winning small caps in the months to come. 
I'm getting ready to increase our exposure to China in SmallCapInvestor PRO. The two Chinese stocks in the portfolio now are up, and China is the best growth story in the world right now (indeed, some analysts and economists are calling for China, not the U.S., to lead us to recovery). For more on SmallCapInvestor PRO, please please click HERE.
*****Graham Corp (AMEX:GHM) reported earnings on Friday. And they were not very good. The stock has lost nearly $3 over the past few days. That's plenty for me. If you bought Graham on my recommendation in Daily Profit, it is now time to take your profits. I hope you did well.  

Today’s action started out under tremendous stress, with stock futures reeling overnight after Senate leaders rejected the $14 billion auto bailout bill, but the White House made it clear that they would throw a lifeline to drowning automakers, regardless. The news helped push stocks higher and the Russell 2000 (NYSE:IWM) eventually managed to end the day up 3.82%. Some of today’s small-cap gainers are Prologis (NYSE:PLD), Exelixis (Nasdaq:EXEL) and Macerich (NYSE:MAC).

Other Market Watch highlights today included:

• Retail sales this morning came out at minus 1.8%, which was in line with the forecast and perhaps not as bad as some of the “whisper” numbers ahead of the release.
• The PPI report came in at -2.2%, better than the forecast for a dip of 1.8%, which basically shows inflation isn’t an issue right now.
• Bernard Madoff, former Nasdaq chairman, was arrested and charged with running a fraudulent hedge fund that may have racked up $50B in losses. 
• On the auto front, the White House appears ready to throw a lifeline to cash-strapped firms via the TARP funds.
• Tech shares were a clear source of strength today, with large-cap tech firms setting the tone for a strong day in the arena.
• Crude oil was back in the tank, losing 3.5%, or $1.70 a barrel.
• Commodities were the poorest performers today, with coal, metals, agriculture products and oil exploration among the worst

Small Cap Gainers:

• Prologis (NYSE:PLD) jumped 43% as the distribution facilities manager basically recouped a similar loss from Thursday’s session. PLD has seen its stock crumble from the $60 range six months ago to just above $2 at the recent low . . .

Other Market Watch highlights today included:

• Tire and rubber, coal, homebuilding, metal and mining and even hotel stocks were attracting buyers so far today.   Nov 26, 2008 12:58pm
• Office electronics were up, and so were construction-themed companies.   Nov 26, 2008 12:58pm
• Looking at sector activity, automobile manufacturers were on a roll today, with General Motors Corp. up 31%.   Nov 26, 2008 12:57pm
• The market seemed willing to cast aside a batch of mostly awful economic data from this morning as no surprise.

Small Cap Gainers:

• ATP Oil & Gas Corporation jumped 30% as the offshore oil and gas firm tried to mount a lasting rally after setting long-term lows last week. See (Nasdaq:ATPG).
• Orient Express Hotels Ltd. rallied 27% as the luxury hotelier and travel company appeared to attract bargain hunters in the hotel group. See (NYSE:OEH).  
• American Axle & Manufacturing up 24% after declaring a Q4 dividend earlier this week. See (NYSE:AXL).  
• SeaChange International Inc. is up 23% as the video-on-demand software firm benefited from an earnings-related boost. See (Nasdaq:SEAC).

Small Cap Losers:

• Safe Bulkers drops another 15% today on light volume. See (NYSE:SB).  
• Arbor Realty Trust down 15% on lower-than-average volume, hovering above a 52-week low of $1.77. See (NYSE:ABR). 
• Signet Jewelers reports disappointing Q3 09 results; shares dive 11%. See (NYSE:SIG).  
• J. Crew Group shares fall 7% on weak outlook. See (NYSE:JCG).  

American Axle & Manufacturing Holdings Inc (Nasdaq:AXL), Independent Bank Corp (Michigan) (Nasdaq:IBCP) and Bancorp Bank (Nasdaq:TBBK) are among the biggest percentage losers in Monday's trading among companies with market capitalizations under $1 billion.

Also included among the results: Sciele Pharma Inc (Nasdaq:SCRX), Advanta Corp(Nasdaq:ADVNB), SI Financial Group Inc (Nasdaq:SIFI), Consolidated Graphics Inc (Nasdaq:CGX), Chimera Investment Corp (Nasdaq:CIM) and Global Traffic Network Inc (Nasdaq:GNET).

Here are the biggest percentage losers among small caps:

After opening lower, small-cap stocks have continued their steady decent, as concerns surrounding the financial sector, a rebound in crude oil prices and dismal corporate earnings overshadowed the Senate’s passage of the housing bill. 

At 12:22 p.m. ET, the Russell 2000 (NYSE:IWM) was down 7.73, or 1.09%, to 702.61, while the Dow was down 125.46, or 1.1%, to 11,245.23.

Federal regulators seized two small banks over the weekend, which has cast a rain cloud over the financial sector today. The FDIC took over the First National Bank of Nevada and First Heritage Bank NA of California and sold the banks to Mutual Omaha Bank. Small banks dominated the list of largest percentage losers on the Nasdaq Exchange early this morning.

The bank seizures overshadowed the Senate’s passage of a housing bill on Saturday that creates a backstop for Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) should the mortgage lenders fall off a ledge. The legislation calls for an extension of a limitless line of credit for both firms for a year and a half and bestows authority to the Treasury department to purchase shares should the companies find themselves faced with insolvency.

Crude oil prices are pushing higher on the session, up $1.19 to $124 a barrel in midday action. The commodity is gaining ground on account of reports of attacks on oil pipelines in Nigeria and a fire at a Kuwait refinery.

American Axle & Manufacturing Holdings Inc. (NYSE:AXL) is off 17% today after KeyBanc Capital Markets downgraded the auto parts manufacturer to “hold” from “buy.” The research firm also lowered its 2008 earnings per share estimate to a net loss of $1.52 from a net loss of $0.88. The company has felt the pinch of high gas prices driving down auto sales, especially to its largest customer, General Motors (NYSE:GM). Detroit-based American Axle is down 70% since January.

American Axle shares are at $5.35 at 11:07 p.m. ET, down $1.16 from Friday’s close. The stock has ranged from $5.10 to $28.11 during the past 52 weeks.

American Axle & Manufacturing Holdings Inc. (NYSE:AXL) is off 14% today after announcing a second quarter loss ahead of today’s opening. During the second quarter, American Axle posted a net loss of $644.3 million, or $12.49 per share, compared with a profit of $34.6 million, or $0.66 per share, for the same quarter a year earlier. Net sales dropped to $490.5 million from $916.5 million a year ago. The Detroit-based auto parts manufacturer said the decline in auto sales and the 87-day strike of its union workers dragged down the quarterly earnings.

In today’s pre-market trading, shares are at $5.50, off $0.92 from Thursday’s close. During the past year, shares have ranged from $5.10 to $28.14.

American Axle & Manufacturing Holdings Inc. (NYSE:AXL) is plunging 15% today after the company announced just after the opening bell it was offering early-retirement packages to salaried employees. The offer is part of American Axle’s plan to cut 400 white-collar jobs. The Detroit-based automotive part supplier is also cutting about 2,000 factory jobs, which it previously announced. High gas prices have led to a slowdown in auto sales, which have cut into American Axle’s orders for parts. Shares of American Axle are at $7 today, down $1.27 from Tuesday’s close.

Luna Innovations (Nasdaq:LUNA), Standard Motor Products (NYSE:SMP) and Horizon Financial Corp. (Nasdaq:HRZB) are among the biggest percentage losers in Thursday's trading among companies with market capitalizations under $1 billion.

Also included among the results: Nashua Corp. (Nasdaq:NSHA), China Sunergy Co. (Nasdaq:CSUN), American Axle & Manufacturing Holdings (NYSE:AXL), Xyratex Ltd. (Nasdaq:XRTX), and Federal Signal Corp. (NYSE:FSS).

Here are the biggest percentage losers among small caps:

American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) shares continued to drop Thursday on no fresh news although the car-part maker confirmed earlier in the week it is contemplating salaried job cuts. The Detroit-based company already has plans to close one plant due to declining demand from the auto industry. Shares of the American Axle hit a 52-week low of $8.77, down about 13% from Wednesday’s close.