Archive for July 17th, 2008

KentuckyFC writes “Liquid mirror telescopes begin life as a puddle of mercury in a bowl. Set the bowl spinning and the mercury spreads out in a thin film giving the surface an almost perfect mirror finish. But these telescopes have two important limitations. First, they have the ability to only point straight up since tilting the mirror spills the mercury. And second, they cannot be made adaptive to correct for any blurring introduced by the Earth’s atmosphere. But liquid mirror telescopes look set for an upgrade thanks to the work of a group of Canadian researchers. Their technique is to change the shape of the liquid mirror using powerful electromagnets. They use a ferromagnetic fluid of iron nanoparticles in oil instead of mercury which is too dense to be easily manipulated in this way. The work is just proof of principle at this stage but the idea is to use magnets to correct for the usual range of optical aberrations that telescopes have to deal with (abstract). And also to allow a liquid telescope to be tilted by using oil that is much more viscous than mercury and correcting any periodic deformation in the fluid that tilting might cause.”

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Iron Condor writes with a reminder that that the first race of the Rocket Racing League (last mentioned here in April, after its 2005 founding) is set to take place later this month at Oshkosh AirVenture 08. This race, says Iron Condor, “is exactly what it sounds like: NASCAR 1000m above ground in rocket-propelled airplanes. Created by X-prize founder/CEO Peter Diamandis, this is ‘the next evolution of racing’ (at least according to the promo video, which is definitely worth watching)…”

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ausoleil noted that NASA’s replacement for the shuttle, the Orion, is slipping behind schedule “‘We’re probably going to have to move our target date,’ NASA exploration chief Doug Cooke told The Associated Press on Wednesday after Nasawatch.com posted the 117-page internal status report (PDF) on the moon program. The cost problems include an $80 million overrun on a motor system. The Orion spacecraft’s design remains too heavy for the proposed Ares 1 rocket. Software development, heat shield testing and other complex work remain behind schedule or over budget. There are dozens of such serious challenges, many of which are ‘worsening.’”

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US copper futures open higher on housing data, oil - Reuters

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Diversified industrial manufacturer Eaton Corporation (NYSE: ETN) posted some great numbers for 2Q 2008. Investors responded by pushing the stock down 8% as a result. Go figure. With the exception of its automotive segment, which saw a modest 2% decline in sales, all other divisions posted double digit sales increases with demand remaining strong going forward. 2Q sales increased 32%, net income increased 35%, while net income on a per share basis increased 24% The company posted these results despite the fact that oil prices increased 40% during the quarter.

The FAA recently awarded a $40 million contract for power quality equipment. The company’s Hydraulic Launch Assist technology performed very well in tests on trash trucks. It reduced fuel costs by 25% and significantly reduced brake service costs. With diesel prices showing no signs of decline, demand for this technology will be very strong when it becomes commercially available in late 2008. CEO Alexander Cutter forecasts FY sales growth to be 3% in the U.S. and 5% internationally. FY operating EPS are forecast to grow 12-16%, resulting in EPS of $7.70-$8.00. At this rate of return, the stock is currently bargain-priced around $73.00

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TheStreet.com’s Jim Cramer states if we get fed support for a housing bottom, we have the ability to really turn things around.

If I were at Wells Fargo (NYSE: WFC) (Cramer’s Take), this day would be a day where I issued several billion in preferred stock or I issued a multibillion equity offering. Why? Because the deed is done; the shorts panicked and covered and took the stock up where it could now be worth doing a deal.

If things are so great at WFC, why do they’ve to do a deal? Simple: They’ve a massive increase in nonperformers, and when you’ve a massive increase in nonperformers ,you raise capital. Period.

Yesterday’s relief rally wasn’t about housing prices bottoming — I think that will happen next year, not this year — it was about getting the shorts. The shorts had had their way all over everything. Suddenly you get this surprise smackdown by Chris Cox of the so-called naked shorts — it’s really not at all about that if these stocks aren’t hard to borrow — and you get a dividend boost, something that shorts don’t like to pay.

I think today’s “upside surprise” from JP Morgan (NYSE: JPM) (Cramer’s Take) will generate more short-covering. So will Bank of America (NYSE: BAC) (Cramer’s Take) when it declares its dividend.

Which it will.

Both quarters are good enough to attract more capital. If I were in a shaky California bank like Downey (NYSE: DSL) (Cramer’s Take), I would pull my money out and put it in Wells. I might do the same with a shaky bank in the East, and select JPMorgan. I am glad I keep my money there, for heaven’s sake.

But none of this cures what was a problem for both banks: house price depreciation. Without something that makes it so there are fewer foreclosures and without a mortgage trust to take the bad mortgages off people’s hands, all the good banks can do in this environment is beat the shorts up enough to have their stocks rally so they can raise money for the next wave of nonperforming loans to hit their books. They will have to raise capital until those bad loans crest, and they can’t crest as long as home prices keeps coming down.

So enjoy the squeeze, but remember it is only not a squeeze when we get a relief bill from Washington and a way to crest nonperformers and neither JPM nor WFC has produced it.

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RELATED LINKS:
Merrill to Sell Bloomberg Stake: Report
Don’t Bank on More Dividend Boosts
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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com’s sites and serves as an adviser to the company’s CEO. At the time of publication, Cramer had no positions in the stocks mentioned.

 

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U.S. stock futures edged higher Thursday morning, a day after market staged a big rally. Investors this morning are bracing for some housing data, but more importantly, a wave of earnings. Already better-than-expected earnings from J.P. Morgan Chase boosted stock index futures from earlier declines this morning.

On Wednesday, bulls finally came back in drove to but equity as oil price continued its decline and airlines and Wells Fargo (NYSE: WFC) reported results that Wall Street found encouraging, sending airline and financials stocks through the roof. The Dow Jones Industrial Average ended a three-day losing streak, jumping 276.74 points, or 2.5%. The S&P 500 climbed 30.45 points, or 2.5%, and the Nasdaq Composite gained 69.14 points, or 3.1%.

Still, all this sentiment might yet evaporate, or be seriously damped after housing data is released at 8:30 a.m. EDT. Building permits and housing starts for June are due out at that time. Also, weekly jobless claims will continue to paint the picture of the goings on in the labor market. At 10:00 a.m., the Philadelphia Fed index for July will be reported.

It would be interesting to see how the data and earnings play out. Already, J.P. Morgan Chase (NYSE: JPM) reported it profit sank 53% in the second quarter to $2.00 billion, or 54 cents per share. That beat estimates of 44 cents share. JPM shares are up over 5.5% in premarket trading.

Meanwhile Coca-Cola (NYSE: KO) shares are also rising 2.2% in premarket trading despite reporting a 23% decline in second-quarter profit to $1.42 billion, or 61 cents per share. Excluding one-time items, per-share earnings were $1.01, beating estimates of 96 cents per share. Revenue rose 17%.

Still due to report today are: From financials, Merrill Lynch (NYSE: MER) is due to post earnings after the market close. Then we also have a wave of heavyweight tech companies reporting this day like Google (NASDAQ: GOOG), Microsoft (NASDAQ: MSFT) and IBM (NYSE: IBM), all reporting after the close as well.

On Wednesday, online auctioneer giant eBay (NASDAQ: EBAY) reported a 22% jump in quarterly profit, but gave a soft outlook for the current third quarter. EBAY shares are declining over 9% in premarket trading.

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An anonymous reader writes “California is burning, but according to this article advanced sensors on NASA’s Ikhana unmanned aerial automobile (UAV) can detect exact temperatures (within half a degree) through the smoke, enabling the drone to spot for the firefighters battling the more than 300 wildfires. NASA’s Ikhana is the same aircraft as the Predator, except it’s being used here to save lives.”

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BoogieChile writes “The dissection of a 245 kilo giant squid caught off the coast of Portland, Victoria in Might will take place tomorrow at the Museum of Victoria. In a first for the museum, the event is open to the public and will also be streamed live to the internet from the University’s website, starting at 0130GMT on the 17th of July.”

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A housing finance correction is now due - Financial Times


StarPhoenix

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