bdk

Today was the day that the stress test results leaked out, showing many banks needed to raise capital. That had no negative impact as the numbers could have been much worse, and this notion may have dealt a final blow to the bears betting that the financials (and market) were going to tank lower on bad news.

Stronger than expected ADP jobs data came out ahead of this week's unemployment report and helped. Here were the unofficial closing bell levels:

Dow 8,513.95 +103.30 (1.23%)
S&P 500 919.42 +15.62 (1.73%)
Nasdaq 1,759.10 +4.98 (0.28%)

Top Analyst Upgrades
Top Analyst Downgrades

TheStreet.com's Jim Cramer says it's hard not to capitulate when your clients demand irrationality.

When I was weighted short and we would have these seemingly endless days of rallying, it was the mornings that would get me. The mark-ups of the futures, the refusal of Asia or Europe to go down, the "tone." It was relentless.

Then I would get to the office and, after a long period in which all I heard were downgrades, I would be greeted by upgrades, where I would always scream, "Now? Now they upgrade Intel (NASDAQ: INTC) (Cramer's Take)?" Or, "He's putting Research In Motion (NASDAQ: RIMM) (Cramer's Take) on the list now, after this run?" Or, "Wells Fargo (NYSE: WFC) (Cramer's Take) goes from hold to buy? After it ran up 4 points? What is he thinking?"

It goes without saying that this market remains a market for the bold only. There are some 'greens shoots' sprouting in the economy, to cite a phrase popularized by Fed Chairman Ben Bernanke, but there still are formidable problems.

That said, no one ever made a dime by establishing stock positions when things were 99% safe: by that time, almost every stock has been bid-up. You have to prudently-bottom fish, and with this in mind, Black & Decker (NYSE: BDK) is worth a review.

• Citigroup upgraded Abbott Lab (NYSE: ABT) to Hold from Sell on valuation following the stock's recent underperformance. The firm maintains a $48 price target.
  
• Deutsche Bank upgraded shares of Pepsi Bottling (NYSE: PBG) and Dr. Pepper Snapple (NYSE: DPS) to Buy from Hold as they believe carbonated soft drinks market is showing signs of stabilization. The firm raised its price target on Pepsi Bottling to $28 from $25 and on Dr. Pepper Snapple to $22 from $20.
  
• Baird upgraded CommScope (NYSE: CTV) to Outperform from Neutral and raised their target to $19 from $10 as they expect fundamentals to bottom in Q1 and ramp strongly in Q2 as wireless capex outlook improves.
• Sinopec Shanghai (NYSE: SHI) was raised to Buy from Sell at Goldman.
  
• TRW Automotive (NYSE: TRW) was upgraded at JP Morgan to Neutral from Underweight.

TheStreet.com's Jim Cramer says stocks are headed lower, perhaps much lower, even if the banks receive the help they need.

You can see it dawn on people one by one. We aren't coming out of this morass, we are just going into it. The president and Congress aren't serious about it. But more importantly, somehow, the companies are stunned by it.

If you want to read about what it is like to recognize that things are falling apart, go read the Textron (NYSE: TXT) (Cramer's Take) quarter. They actually thought there would be some improvement at year-end. That's not going to happen to a Cessna manufacturer with a commercial finance division of dubious worth. Perhaps there was some hyperbole, but Textron said it was the worst manufacturing time ever!

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Altria Group Inc. (NYSE: MO) Q4 profit rose on higher prices, and its forecast matched expectations.
• Amgen Inc. (NASDAQ: AMGN) Q4 earnings grew on cost cutting but revenue remained flat.
• Black & Decker Corp. (NYSE: BDK) shares tanked after the dismal Q4 report, and it announced job cuts.
• Carpenter Technology Corp. (NYSE: CRS) Q2 numbers resulted in a downgrade from one analyst.
• ConocoPhillips (NYSE: COP) reported a Q4 loss due to writedowns from recent acquisitions.
• DuPont (NYSE: DD) swung to a bigger-than-expected Q4 loss and its revenue fell as well.
• Eli Lilly & Co. (NYSE: LLY) swung to a Q4 loss on acquisition costs but reaffirmed its guidance.

Yesterday was nightmarish for investors in Black & Decker (NYSE: BDK) as the stock price plunged 21%. In fact, it was the worst one-day performance since 1987.

Like most other companies, Black & Decker got buzz-sawed in the fourth quarter. Revenues fell by 16% to $1.38 billion, with earnings coming to $44 million, or $0.73 per share. This compares to earnings of $184 million, or $2.94 per share in the same period a year ago.

To deal with the situation, Black & Decker plans to slash its payroll by 1,200 employees, which account for 5% of the workforce.

TheStreet.com's Jim Cramer says the next six components include one that may vanish from the index, as well as a top pick.

This is the third part of Jim Cramer's series of predictions for the Dow components in 2009. Be sure to read the first and second parts.

General Motors (NYSE: GM) (Cramer's Take): I believe GM will disappear from the Dow in 2009, a historic change. GM could, like AIG (NYSE: AIG) (Cramer's Take), become a zombie stock, if the common stock isn't crushed in 2009 by bankruptcy. The GMAC deal is a windfall for the company, though, and a "soldier on" situation could be in the works.

The best hope here is a Citigroup-like (NYSE: C) (Cramer's Take) investment where the common stock is bolstered, but the union situation makes it highly unlikely that the company's fortunes can turn. This one's problematic for my whole Dow Jones projections because I believe its near or total obliteration will allow the Dow keepers to replace it with something that can rally in 2009. Cost-cutting just won't make it; there is way too much overcapacity in this industry.

Fortunately, given its reduced size, GM's disappearance won't hurt the averages much. If you really like this one, please play the GM Senior Convertible Debentures C (GPM), which is a convertible preferred with a high yield.

TheStreet.com's Jim Cramer says we have the right people in charge, so 2009 looks a lot brighter.

Send out the clowns. That's how I am looking at 2008.

The people who got us in this mess, whether it be Chris Cox -- last-minute stifling of any accounting hopes ... thanks, Chris! -- or the incredibly overrated and somehow revered Hank Paulson, and, most important, President Bush. Not for a minute did that man do anything to get us out of this jam. It is telling that when people speak of the outgoing administration on Wall Street, they never speak of Bush. It's all Paulson and some Bernanke, a Bush appointee. But in the biggest economic collapse statistically since the Great Depression, the president has played no role and clearly doesn't understand most if not all that is happening around him.

When we speak of the next administration and domestic policy, it is clear that we are going to speak about President Obama. He won't fob it off or deny what's happening. And remember, this crisis got very deep because the man at the top said the fundamentals were sound, and repeated that over and over and over, right up until the beginning of 2008, which is why things are as horrible as they are. And they are horrible. The president's advisers, no doubt cowed by a clueless chief, never wanted to differ, and Bernanke reminds me of one of those academics around presidents Kennedy and Johnson, a brilliant man who has gotten us into the equivalent of a domestic Vietnam. He's finally bombing the heck out of the economy, but it was too late, and now a new administration has to clean up his and Paulson's and Bush's mess for him.

Analyst upgrades:

• Baird upgraded Regal-Beloit (NYSE: RBC) to Outperform from Neutral based on valuation and growth expectations.
• Black & Decker (NYSE: BDK) and Lennar (NYSE: LEN) were upgraded to Buy from Neutral at UBS based on valuation.
• Kroger (NYSE: KR) and Public Storage (NYSE: PSA) were added to Goldman's Conviction Buy List.
• CIBC upgraded Biovail (NYSE: BVF) to Sector Performer from Sector Underperformer.
• Abercrombie & Fitch (NYSE: ANF) was raised to Neutral from Underperform at Cowen.

Analyst downgrades:

• Merrill downgraded Campbell Soup (NYSE: CPB) to Neutral from Buy and expects marketing and promotional spending to limit earnings growth in 2009 and 2010. The firm lowered their target to $35 from $42.
• Mechel Steel (NYSE: MTL) was cut to Underweight from Equal Weight at Morgan Stanley to reflect declining coal demand.
  
• Friedman Billings downgraded shares of Legg Mason (NYSE: LM) to Underperform from Market Perform on liquidity concerns given the Legg Mason's leveraged balance sheet and falling EBITDA. The firm lowered their target to $7 from $11.

How will we know when things have thawed? Everyone's looking at LIBOR and I can't blame them as that indicator of lending from one bank to another bank is crucial for the way the system is supposed to work. It's a good thermometer for certain, but I don't want it to overstay its welcome, because there are other "true" indicators out there besides just LIBOR.

I am looking at something else: takeovers. On Monday, we saw Waste Management (NYSE:WMI) pull its bid for Republic Services (NYSE:RSG) , a smart idea as WMI had dropped so precipitously despite reporting better-than-expected earnings that one had to question if it was worth doing it. More important, though, getting the money was proving to be possible, but difficult. This situation also prevailed in Altria's (NYSE: MO) buy of UST (NYSE: UST) where Goldman Sachs said, "Don't bother, wait," even though the integration of the two is crucial for Altria's growth.

Now I expect deals to be done if the banks are for real about lending.

Further, the endless margin selling has created tremendous bargains for well-capitalized companies to buy other companies that have brimming order books but are being kept down because of hedge fund redemptions. How can some company not want to buy a Trinity (NYSE:TRN), for example, which has been virtually cut in half even though both presidential candidates are pro-wind? Or how about a Foster Wheeler (NASDAQ: FWLT) or a Joy Global (NASDAQ:JOYG) or a Terex (NYSE: TEX) betting that if there is credit there will eventually be a revival?

U.S. stock futures were lower Friday morning, a day after a selloff triggered by housing data. Today investors are bracing for more housing data at 10:00 a.m. EDT after already hearing that foreclosures soared 121% during the second quarter. Other point of interest will be durable goods data reported an hour before the opening bell. Meanwhile, oil continued the steady climb that started Thursday as the dollar weakens, trading above $126 a barrel. It's Friday, and no many earnings reports are due.

While there aren't many earnings reports today, there are a few including Fortune Brands (NYSE: FO), Netflix (NASDAQ: NFLX) and Black & Decker (NYSE: BDK) among others.

Crocs (NASDAQ: CROX) shares are tanking over 44% to $5 after after it cut its earnings outlook significantly on softer demand for its plastic shoes. With all those knockoffs around, is it any wonder? Robert W. Baird downgraded Crocs from Outperform to Neutral, slashing the target price from $21 to $5.

Meanwhile, Juniper Networks (NASDAQ: JNPR) surged 12% in premarket trading after the company not only beat estimates when reporting quarterly results Thursday, but also increased its sales forecast for the third-quarter much higher than analyst estimates. Friedman Billings and Citigroup both upgraded Juniper to Outperform and Buy respectively.

In deal news, Clear Channel Communications (NYSE: CCU) shareholders on Thursday approved a $17.9 billion takeover by private equity funds Thomas H. Lee Partners and Bain Capital. This ends the 20-month long effort.

TheStreet.com's Jim Cramer says when the dust settles, we'll notice the reduced equity here, and stocks will rise to reflect it.

Do corporate balance sheets matter? One of the things that you will see in the next few weeks is everyday industrial companies brimming with cash. You are going to see buybacks of huge proportions. Companies like Deere (NYSE: DE) (Cramer's Take) and Parker-Hannifin (NYSE: PH) (Cramer's Take) and Caterpillar (NYSE: CAT) (Cramer's Take) are swimming in cash. United Technologies (NYSE: UTX) (Cramer's Take), Emerson (NYSE: EMR) (Cramer's Take), huge. Every drug company, big. Almost every major tech company from Intel (NASDAQ: INTC) (Cramer's Take) and Microsoft (NASDAQ: MSFT) (Cramer's Take) to Cisco (NASDAQ: CSCO) (Cramer's Take) and Texas Instruments (NYSE: TXN) (Cramer's Take). Johnson & Johnson (NYSE: JNJ) (Cramer's Take), which just reported, has a monster amount of cash. (Eaton (NYSE: ETN) (Cramer's Take) will soon, after the smoke clears.)

I know it doesn't matter at all. Right now we are so stuck on the banking problems and on the companies bleeding from higher energy prices that nobody cares about all of this cash, which will be used to shrink equity. They won't care because the banks, brokers and homebuilders, and the hobbled companies that use oil, have to issue so much equity that you can't see the effect of the equity shrinkage. But it will eventually matter. It has to matter that Deere has taken out 10% of its stock in the last four years. It does matter that Black & Decker (NYSE: BDK) (Cramer's Take) has eliminated almost 20% of its equity. Emerson's taken out 5%, same with Boeing (NYSE: BA) (Cramer's Take). There's just a huge amount of equity being shrunk.

For the first time Monday I heard John McCain comparing Barack Obama to Jimmy Carter. I had heard this before in other arenas, but not from McCain. I guess that despite these two presidential candidates pledging to the American people to bring change and resist politics as usual, they are both, as usual as one could get.

Obama is being shaped by the pressures of running for office and to believe otherwise is delusional. I suppose one has to have hope but the effects of the campaign are becoming clear. Obama has been painting McCain as an extension of Bush, which is nonsense, and now in a typical tit-for-tat response, McCain is filling the air with Carter references.

Both McCain and Obama are wrong in their assessments of their opponents and they are becoming commoners to resort to the bottom of the barrel campaign techniques used in every campaign for most of our nation's proud history. Obama gave up the high ground too easily and McCain has decided he can sling mud with the best of them.

Laurence Tosi is certainly well educated, with an MBA and JD (from Georgetown University). Only 40 years old, he has served as Merrill Lynch & Co., Inc. (NYSE: MER)'s chief operator officer of global markets and investment banking.

Well, now he has a new gig: the chief financial officer of The Blackstone Group LLP (NYSE: BX).

With the turmoil on Wall Street, there has been a lot of defections lately. For example, Lazard Ltd. (NYSE: LAZ) investment banker, George Bilicic, moved over to KKR. There was also Lehman Brother Holdings, Inc. (NYSE: LEH)'s investment banker, Gary Weinstein, who took a spot at Providence Equity Partners.