• Electronic Arts (NASDAQ:ERTS) said it plans to cut 1500 additional jobs. The firm reported second quarter adjusted earnings of 6 cents, a one penny miss, on revenues of $1.15 billion, which slightly topped Street projections of $1.12 billion. The firm forecast 2010 earnings of $0.70-$1.00, topping estimates of 89 cents on revenues of $4.2-$4.4 billion versus estimates of $4.26 billion

• Cadbury (NYSE:CBY) rejected the latest Kraft (NYSE:KFT) bid calling it "derisory"

• Moody's (NYSE:MCO) commented that AIG (NYSE:AIG) will be able to repay its Federal loans

• Wells Fargo (NYSE:WFC) lifted its growth expectations for the semiconductor group following release of third quarter numbers. Intel (NASDAQ:INTC) remained its first pick within the group, with "outperform" ratings also on Micron Tech (NYSE:MU) and Xilinx (NASDAQ:XLNX). Analysts increased 2010 growth expectations of 25% for the industry from 10-20% prior

• Goldman Sachs (NYSE:GS) added Polo Ralph Lauren (NYSE:RL) to its Conviction Buy List, with a price target of $94

• Goldman Sachs (NYSE:GS) also added Kroger (NYSE:KR) to its Conviction Buy List, with a price target of $27

• Goldman Sachs (NYSE:GS) removed Coca-Cola Enterprises (NYSE:CCE) from its Conviction Buy List, but maintained a "buy" rating on the shares

• Tyco International (NYSE:TYC) released better-than-expected third quarter earnings of 61 cents a share, 7 cents above estimates, on revenues of $4.42 billion, slightly higher than estimates of $4.32 billion

• Burlington Northern (NYSE:BNI) CEO advised Berkshire Hathaway (NYSE:BRK.A) is liquidating shares of rival railroads Norfolk Southern Corp. (NYSE:NSC) and Union Pacific (NYSE:UNP) as it readies its purchase of Burlington

• Google (NASDAQ:GOOG) moved further into the market for digital advertising on cell phones with the acquisition of AdMob for $750 million

• OfficeMax (NYSE:OMX) posted third quarter earnings of 8 cents, 6 cents below Zacks estimates on inline revenues of $1.83 billion, down 12.6%. The firm issued cautious guidance, anticipating macro employment trends will not turn positive well into 2010

• Nintendo (NASDAQ:NTDOY) posted first half profits off 52% to $768 million, while sales dropped 34.5%. The company slashed its dividend for the first half by 37%

• Newmont Mining (NYSE:NEM) reported third quarter earnings of 79 cents a share, 24 cents above Zacks estimates, as revenues of $2.05 billion, up 49.5%, bested Zacks estimates of $1.78 billion

• Royal Dutch Shell (NYSE:RDS.A) reported a 73% drop in net profit, with earnings ex-items of $2.62 billion slightly ahead of estimates of $2.55 billion. The company noted, "We see some indications that energy demand and pricing are improving, but the outlook remains very uncertain and we are not expecting a quick recovery"

• Motorola (NYSE:MOT) reported third quarter results of one penny on better-than-expected revenues of $5.45 billion. The company expects fourth quarter earnings from continuing operations of 7-9 cents

• Colgate-Palmolive (NYSE:CL) reported third quarter results of $1.12, one penny above Zacks estimates, of inline revenues of $4 billion, up 0.3%

• Moody's (NYSE:MCO) reported third quarter earnings of 43 cents a share, a nickel above Zacks expectations, on better-than-expected revenues of $452 million, up 4.2%

• Procter & Gamble (NYSE:PG) posted fiscal first quarter earnings of $1.06, 9 cents above Zacks estimates, on inline revenues of $19.8 billion, down 6%

We maintain our market Neutral recommendation on the shares.

Chicago, IL – October 7, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Moody’s Investor Services (MCO), American Tower Corp (AMT), Crown Castle International (CCI), SBA Communications Corp (SBAC) and US Airways (LCC).

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Here are highlights from Tuesday’s Analyst Blog:

Moody's Upgrades American Tower

Moody’s Investor Services (MCO) has upgraded the rating of American Tower Corp (AMT) senior unsecured debt. So far, this paper has been given a “Ba1" rating by Moody’s which implies a junk corporate rating and probability of default rating.

Now Moody’s has raised its rating to “Baa3," implying its lowest investment-grade rating. Major reasons for this debt rating upgrade were the company’s strong operating performance, increased cash flow and reduced debt over the past two years.

American Tower accounts for most of its revenue from long-term (typically 5-10 year) tower leases with major wireless carriers. In addition, the company provides on-site maintenance and servicing of antennas, amplifiers and base-station equipment as it relates to leasing. This generates a strong long-term lease up-cycle.

The revenue generated from leasing and management of such networks is impressive, and over 95% is recurring in nature. Yearly revenue increased 9.4% in fiscal 2008 compared to the previous year. In the first half of 2009, total revenue was $832 million, up 7.2% compared to the prior-year period.

Mobile subscriber growth has significantly expanded the wireless tower industry. We believe, future financials are likely to be propelled by strong demand for wireless voice, broadband wireless data and video networks which require more tower space. Deployments of 3G and emerging 4G networks will also create impressive demand for tower leasing.

American Tower maintains one of the strongest EBITDA margins in the industry. EBITDA margin for the most recent quarter was 68%, well above its peers Crown Castle International (CCI) and SBA Communications Corp (SBAC).

US Airways Traffic Falls

US Airways (LCC) announced preliminary mainline traffic results for Sept. 2009. The company reported a drop in mainline passenger load factor to 79.3% from 80.1% last year. Total scheduled mainline revenue passenger miles (RPMs) decreased 1.6% to $4.6 billion on a capacity decrease of 0.6% in scheduled mainline available seat miles (ASMs), compared with the same period in 2008.

Consolidated (mainline and express) passenger revenue per available seat mile (PRASM) decreased approximately 15%, versus the same period last year, while total revenue per available seat mile decreased approximately 14% on a year-over-year basis.

The airline has been struggling with volatile oil prices, increased competition and decline in travel. The company has taken aggressive action to address the weakening demand by reducing capacity, introducing additional revenue streams, and prudently cost control. However, consolidated PRASM was also down 1.2% during September.

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Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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In 2009, both S&P and Moody's lowered their outlooks on the company to negative and downgraded the ratings based on concerns related to its real estate lending concentration. Though loan growth has been impressive relative to many of its peers in the past, the pace of growth has started to moderate in the last few quarters.

We expect the pace to slow down further in the near to medium-term, based on the ongoing weakness in the economy. Thus, we are maintaining our Underperform recommendation.Zacks Investment Research

The net proceeds from the offer came to $159,788,000. All of the 2010 notes that were tendered have been guaranteed for payment by Willis. The holders of the 2010 notes will be entitled to receive tender offer consideration of $1,027.50 per $1,000 principal amount of the 2010 notes, plus any accrued and unpaid interest.

The notes, which are guaranteed by Willis Group Holdings, carry ratings of Baa3 by Moody's and BBB- by S&P.

Bank of America (BAC) and JPMorgan Chase (JPM) were the joint book running managers for the sale.

Willis intends to use the net proceeds from this offering to purchase any and all of Willis North America's outstanding 5.125% senior notes due 2010 that are tendered and accepted in a separate offering. Any remaining proceeds will then be used for general corporate purposes.

Willis Group Holdings' second-quarter profit of 52 cents per share was just a penny ahead of the Zacks Consensus Estimate. Results reflected growth in Global operations (7% organic growth) and International (5%), partly offset by a fall in organic commissions and fees in North America (down 8%). Weak insurance markets coupled with the deepening U.S. economic crisis led to a decline in the North American segment's commissions and fees.

However, the company is experiencing strong organic growth in revenues from its International business and Global segments, with steady client retention levels and momentum from the "Shaping Our Future" growth initiatives contributing to the organic growth.

While we expect Willis to benefit from the rate stabilization in the reinsurance segment, we anticipate top-line growth to be curtailed as a result of the overall less-than-robust economic environment. Nevertheless, the company's cost-saving initiatives and capital-bolstering moves bode well. Hence we have a Neutral recommendation on the shares of Willis.

However, credit quality deteriorated drastically during the reported quarter. In 2009, both S&P and Moody's lowered their outlooks on the company to negative and downgraded the ratings based on concerns related to its real estate lending concentration. Though loan growth has been impressive relative to many of its peers in the past, the pace of growth has started to moderate in the last few quarters.

We expect the pace to slow down further in the near to medium-term, based on the ongoing weakness in the economy. Thus, we are maintaining our Underperform recommendation.Zacks Investment Research

Chicago, IL – September 14, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: FedEx Corp. (FDX), United Parcel Service Inc. (SNDA), UBS AG (UBS), Moody’s Corp. (MCO) and McGraw-Hill (MHP).

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Here are highlights from Friday’s Analyst Blog:

FedEx Preannouncement Beats

Shares of FedEx Corp. (FDX) have jumped more than 5% so far today after the company preannounced fiscal first-quarter earnings, which topped Wall Street expectations.

The package-delivery major said that it expects to post earnings of 58 cents per share, which is well above its guidance of 30 cents to 45 cents as well as the Zacks Consensus Estimate of 43 cents per share. The company reported earnings of $1.23 per share in the year-ago quarter.

The Memphis, TN-based company also stated that fiscal second-quarter earnings is expected to range between 65 cents and 95 cents per share, which is in line with the Zacks Consensus Estimate of 71 cents per share derived from 15 covering analysts. The guidance is still well below the year-ago earnings of $1.58 per share.

FedEx attributed the better-than-expected first quarter earnings to improved International Priority (IP) shipping volumes and management’s cost cutting efforts. The IP service generated revenues of nearly $7 billion and contributed about 19.6% towards total revenue during fiscal 2009.

However, the company added that revenue per shipment dipped year over year in each of the transportation segments amid a competitive pricing environment coupled with significant overcapacity in less-than-truckload (LTL) freight market. The company, which competes with United Parcel Service Inc. (SNDA), also said that the second quarter guidance incorporates the current outlook on fuel prices and a modest recovery in global economic conditions.

Moody's Under SEC Axe

Swiss banking giant UBS AG (UBS) was recently ordered to pledge its assets or provide bonds worth $35 million by Judge John Blawie at Connecticut Superior Court. The unfavorable order came as a blow after reports claimed that top credit ratings agencies had committed a securities fraud by providing insider trading information to the bank.

Stanford-based hedge fund Pursuit Partners claimed that UBS had entered a deal to sell its investment-grade collateralized debt obligation (CDO) notes in 2007 with the prior knowledge that the securities were about to be downgraded.

The proceedings revealed that the rating agencies Moody’s Corp. (MCO) and Standard & Poor's provided insider information to UBS regarding their impending decision to downgrade some of the CDOs the bank was selling. The credit crunch led the securities to default only months after they were sold and UBS used the situation to its advantage.

The Court order came at the end of a one-week hearing, where various UBS employees testified and related documents, including internal UBS e-mails, were reviewed. However, UBS pledged innocence saying that the Court’s decision was a routine procedure, requiring defendants to provide security during the case proceedings.

The UBS litigation reflects a negative sentiment that has built up against large credit rating agencies for sharing furtive connections with big investment banks. This would certainly hurt Moody’s goodwill and highlight the fact that rating agencies can be bought. The integrity of the company and its ratings are in question.

Moody’s allegedly hastened the credit crisis earlier in the decade by assigning top ratings to mortgage-backed securities that deteriorated later. Moreover, it is being probed by regulators worldwide, with several ongoing reviews in Europe for rating a European debt product, constant proportion debt obligations (CPDOs), at a higher-than-merited AAA.

The SEC has designed various measures to stop the practice of corporations seeking to buy favorable ratings by negotiating fees with raters. Although Moody’s is not ultimately compensated on the accuracy of its ratings, we believe it will face large penalties similar to investment banks in the wake of the technology bubble earlier in the decade.

The SEC is expected to hold a meeting on Sept. 17 to vote on proposed rules for credit rating agencies and pose restrictions on controversial flash orders. Regulators will also vote on the subject on adopting previously proposed rules to improve credit rating practices. The major credit rating agencies under the scrutiny would be Moody's, McGraw-Hill (MHP), Standard & Poor's and Fitch Ratings.

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About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

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Visit: www.zacks.com

The unit will also incur about $800 million in statutory loss and loss expenses in the period. The statutory loss and loss expenses relate primarily to deterioration in Ambac Assurance’s second-lien and Alt-A mortgage-backed securities financial guarantee portfolios. The impairment loss is expected to reduce Ambac's statutory capital and surplus.

At the end of March, Ambac Assurance had $372.8 million in statutory capital and surplus. With $1.6 billion in extra impairments from the second quarter, the unit would have negative statutory capital and surplus of more than $1 billion.

Ambac Assurance has appealed to the Wisconsin State Insurance Commissioner to discharge a substantial part of its contingency reserves, which totaled $1.95 billion at the end of March. That would replenish the unit's statutory capital and surplus. However, there is uncertainty about the release of funds.

To conserve cash, Ambac intends to stop paying interest on its directly issued subordinated capital securities on Aug, 1. Ambac Assurance will stop paying monthly dividends on the unit's auction market preferred shares on Aug. 1.

Following Ambac’s potential loss announcement, S&P downgraded Ambac and its insurance unit to deeply speculative grade. The rating agency is concerned about the company’s deteriorating capital levels. The losses are expected to eat into Ambac’s capital, causing it to fall below the minimum requisite levels.

S&P cut Ambac Assurance multiple notches to CC from BBB. It also lowered the counterparty Ambac Financial’s credit rating to CC from BB. CC is the most speculative non-investment grade rating. Ratings of BB or lower are junk. The ratings were removed from review for a further downgrade and the outlook is negative.

Moody’s also made a similar move by downgrading Ambac Assurance Corp by five notches to Caa2, eight steps below investment grade and a deeply speculative rating. Moody's also cut Ambac Financial's ratings by three notches to Ca, ten steps below investment grade.

Last month, Ambac deferred the launch of Everspan Financial Guarantee Corp., a new bond insurance unit, as it was unable to garner sufficient capital.

Peer MBIA Inc. (MBI) has also seen several rating downgrades losing its “triple A" rating, since the onset of sub-prime mortgage crisis.

• Time Warner (NYSE:TWX) reported second quarter adjusted earnings 45 cents a share, ahead of consensus estimates of 37 cents a share, on revenues of $6.81 billion, versus estimates of $6.97 billion. The firm maintained its 2009 earnings guidance of flat adjusted results from continuing operations versus $1.98 a year ago

• Moody's (NYSE:MCO) second quarter earnings exceeded estimates by 3 cents at 43 cents as revenues fell 7.6% to $451 million

• Medco Health Solutions (NYSE:MHS) reported second quarter earnings of 69 cents, 4 cents ahead of estimates

• Qwest Communications (NYSE:Q) reported earnings of 13 cents, 3 pennies above estimates, on in-line revenues of $3.1 billion, that was off 9% from a year ago

• Textron (NYSE:TXT) reported second earnings of 8 cents ex-items, 11 cents above Street estimates of a loss as revenues fell 29.1% to $2.61 billion. The firm said it now sees full-year earnings of 33 cents to 63 cents a share, compared with its prior view of 45 cents to 75 cents a share and ahead of consensus estimates of 22 cents

• General Dynamics (NYSE:GD) reported earnings of $1.60, topping estimates of $1.57 and upped its guidance for the full year by a nickel to $6.05-$6.15

• Sprint Nextel (NYSE:S) reported a second-quarter loss of 13 cents a share, an 11-cent miss, on in-line revenues, down 10%, to $8.1 billion

• ArcelorMittal (NYSE:MT) reported a 57 cent per share, or $792 million, second quarter loss versus $4.19 a year ago and estimates of a $336 million profit, as revenues fell 60% to $15.18 billion from $37.84 billion

The Dow Jones industrial average rose 44.13 points, or 0.5%, to 8,324.87, and the broader Standard & Poor's 500 index edged up 2.30 points, or 0.3%, to 898.72. The technology-laden Nasdaq declined 9.12 points, or 0.5%, to 1,787.40.  Among DJIA components, 19 closed higher while six of the ten S&P 500 industry groups advanced.  On the New York Stock Exchange, declining issues beat advancing ones by a three-to-two margin.

Among DJIA components, American Express (NYSE:AXP), up 5.6% and Merck (NYSE:MRK), up 3.3% led on the upside.  American Express gained after Stifel Nicolaus upgraded its rating on the firm (NYSE:AXP), noting the company the best positioned of credit-card issuers to endure the regulatory changes, advising as well that worries of bad debt are easing.  Dupont (NYSE:DD) shares added 2.2% and Proctor & Gamble (NYSE:PG) gained 2.1% on their safety play appeal.  However, as commodities declined, Alcoa (NYSE:AA) slid 6.1% ahead of its quarterly post after the markets closed Wednesday.

Bank of America (NYSE:BAC) shares declined 3.9% following a Credit Suisse (NYSE:CS) report that warned of worse-than-expected loan losses likely impacting the company's second-quarter results. Nevertheless, financials rose 1% with Bank of NY Mellon (NYSE:BK) adding 2.9%, Goldman Sachs (NYSE:GS) gaining 2.1% and JP Morgan (NYSE:JPM) rising 1% on news that Moody's (NYSE:MCO) may lift its rating on Brazil debt, lowering banks' exposure risk.  FedEx (NYSE:FDX) gained 3.2% to $56.04 after head of the company's international business said he saw signs of an economic rebound in the second half of the year.

Amid lingering worries about the pace of an economic recovery, commodity and material issues proved to be a drag as crude prices plunged to a five-week low of $64.05 after hitting an eight-month high of above $73 per barrel last week.  Among the ten S&P500 industry groupings, basic material shares fell 1.9% and oil and gas declined 1.3%. Technology shares eased 0.5%, as Apple (NASDAQ:AAPL) fell 1.0% and Microsoft (NASDAQ:MSFT) edged 0.7% lower, even as chipmaker Samsung projected a fivefold profit increase for the quarter.  A bullish report on semiconductors was also issued this morning, as Bank of America/Merrill (NYSE:BAC) upped its ratings on the sector, estimating 21% 2010 revenue gains versus 14%, and upgrading Intel (NASDAQ:INTC), Marvell (NASDAQ:MRVL) and LSI (NYSE:LSI) to "buy" and Maxim Integrated Products (NASDAQ:MXIM) and National Semiconductor (NYSE:NSM) to "neutral."  Sprint Nextel (NYSE:S) jumped 3.5% after receiving a ratings upgrade on strength of its Boost prepaid mobile telephone contracts.

Remarks from Obama advisor Tyson who noted a second stimulus package should be planned "on a contingency basis," and aimed at infrastructure investment may underscore remarks from Vice President Joe Biden Sunday complaining of a worse-than-anticipated economic legacy from ex-President Bush as well as the possibility of a second stimulus.

Standard & Poor's Upgrades McClatchy's Corporate Rating

On Tuesday June 30, 2009, Standard & Poor's raised its corporate credit rating for newspaper publisher McClatchy (MNI) to "CC" (highly vulnerable) from "SD," (selective default). The rating agency still holds a negative view on the company on account of its possible restructuring.

Last Friday, June 26, both Standard & Poor's and Moody's Investor Services had lowered their corporate ratings on the company following the debt exchange offer announced by McClatchy. Moody's lowered its corporate rating to "Caa2" from "Caa1", whereas Standard & Poor's lowered its credit rating to "SD" from "CC." McClatchy offered to pay $60 million in cash and issue $175 million in new notes, with a 15.75% coupon rate due 2014, to replace $1.15 billion in debt owed to its bondholders.

The reason behind downgrading was the company's dubious ability to repay debt and high default risk. On the announcement of the completion of the debt exchange offer on June 26, only $102.9 million in debt had been tendered, (approximately 9% of $1.15 billion).

The recent marginal amendment to "CC" from "SD," by Standard & Poor's was based on McClatchy's announcement that it exchanged $24.2 million in new senior notes and $3.4 million in cash, for a total of $102.9 million of senior notes.

McClatchy like other newspaper companies - The New York Times Company (NYT), Washington Post Co (WPO), Gannett Co (GCI) and Journal Communications (JRN) is in the midst of a secular and cyclical slowdown in print advertising. McClatchy, in a race for survival, is building its Internet operations, cutting costs, reducing its debt burden and has recently suspended its dividend.

However, postponement of $190 million land sale erodes visibility to any relief. We maintain a Sell rating on the stock with a six-month target price of $0.50.

On June 26, PMI Group Inc. (PMI), a California-based mortgage insurer, announced that Moody's Investors Service (MCO) confirmed its rating on PMI's senior unsecured debt to "B3" and junior subordinated debt to "Caa1". The outlook on the ratings was revised to developing.

While the past downgrades by rating agencies have had a negative effect on PMI's eligibility to insure mortgage loans from GSEs and other private mortgage lenders, the recent action by Moody's will definitely give some relief to PMI.

Moody's took this action as PMI successfully executed its Amended and Restated Credit Agreement. The Amended Agreement reduces the size of the facility to $125 million and eliminates certain financial covenants and events of default contained in the previous revolving credit facility. According to Moody's, amended terms of the credit facility would reduce PMI's near-term default risk. We think the Moody's action should offset the downside potential of the stock somewhat.

Though the company may benefit from recent U.S. regulatory moves, we expect the losses to remain elevated in the coming quarters. At the current levels, shares of PMI trade at 0.15x the company's 1Q09 book value of $14.16 per share. This is significantly below its historical 2.2x high and 22% below the median of its peers like MGIC Investment Corp. (MTG), Radian Group Inc. (RDN) and Genworth Financial Inc. (GNW)

Though the rise in delinquencies and defaults on loan payments may continue for longer than expected and lead to increased losses for mortgage insurers, we think that the downside risk is rather limited and hence have a Hold recommendation on the shares.

Dayton, Ohio-based diversified energy utility DPL Inc. (DPL) and its subsidiary Dayton Power and Light Company were upgraded by Moody's Investors Service. On last Friday, June 26, Moody's upgraded the parent's senior unsecured debt rating to Baa1 from Baa2 and the subsidiary's senior secured debt rating to A1 from A2.

The upside came from an approval for ESP settlement establishing rates till 2012 from the Public Utilities Commission of Ohio (PUCO). The ESP was originally filed in October 2008 as required by Ohio Amended Substitute Senate Bill No.221 (SB 221).

Under the terms of the settlement, DP&L will freeze base distribution and generation rates through 2012, with limited exceptions including changes in regulatory and tax laws, storm damage costs, costs associated with any new climate change laws or regulations, and certain regional transmission organization related costs.

The settlement lent stability to the fortunes of DPL, which was rocked on the troubled shores of the Midwest economy. DPL's issuer rating rose to A2 from A3 while the rating of its preferred stock improved to Baa1 from Baa2. Moody's also upgraded the trust preferred securities of DPL Capital Trust II to Baa2 from Baa3. The rating outlooks of DPL and DP&L are still positive, subsequent to the July 2008 upgrade from stable.

Michael G. Haggarty, a Moody's senior credit officer observed, "The upgrade reflects the credit supportive cost recovery provisions included in the company's rate plan, which will provide rate stability and potentially improve the utility's already strong cash flow coverage ratios at least through 2012."

With a high dividend yield of 4.9 and ROE of 23.5%, DPL was nominated as one of Forbes' "100 Most Trustworthy Companies" in 2009. The defensive stock (Beta: 0.58) rose more than 8% over the past month. All this gives us enough confidence to continue our Buy rating of the stock.

The fund invests in a broad, diversified portfolio of common stocks of small and medium capitalization companies traded in the U.S. or in foreign countries, including emerging market countries.

The fund's top holdings include Carter's Inc. (CRI), Dun & Bradstreet Corp. (DNB) and Global Payments Inc. (GPN).

Janus Triton (JATTX) seeks long-term growth of capital. The fund is designed for investors looking to diversify their portfolio and add the upside potential of small to mid-sized growth companies.

Small-and medium-sized companies have a market capitalization of less than $10 billion. The fund may invest in foreign equity and debt securities, which may include investments in emerging markets.

Unit holders have to make a minimum initial investment of $2,500 to enter this Zacks#1 Rank ("Strong Buy") fund. It has an expense ratio of 1.20%.

Meridian Growth (MERDX) seeks long-term growth of capital. The fund invests primarily in growth stocks, including those with small and medium sized market values.

The fund may also invest in debt and equity-related securities, bonds rated A or better by Moody's, and securities of foreign companies, including emerging-market firms. It may invest up to 25% of total assets in securities of foreign companies.

Richard F. Aster has managed the fund since its inception in August 1984. The fund has topped the total returns of its benchmark index in the last 1-.3-and 5-year periods.

Discover Many More Funds

Learn more about the new Zacks Mutual Fund Rank and discover some of the best market-beating mutual funds by browsing our new mutual funds section. This part of Zacks.com offers a variety of tools, including mutual fund research, a new mutual fund screener, helpful answers to frequently asked questions and quick access to prospectuses and other information.

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward.

On June 17, 2009, S&P's Ratings Services (S&P) lowered ratings and revised its outlook on Wilmington Trust Corporation (WL) along with 22 rated U.S. banks. S&P lowered its outlook to "negative" from "negative watch" on Wilmington and HAD downgraded its long-term counterparty credit rating to "BBB" from "BBB+" earlier. S&P believes that operating conditions for the industry will become less favorable, compared to the past, characterized by greater volatility in financial markets during credit cycles and tighter regulatory supervision.

However, Wilmington's 1Q09 results exceeded expectations mainly due to lower-than-expected provision expense, which more than offset the decline in net interest income and non-interest income. Credit metrics were mixed during the quarter, with non-performing assets increasing to 2.67% of related assets (up 48 bps sequentially) and year-to-date net charge-offs at 0.22% of average loans (down 35 bps sequentially). During the reported quarter, net charge-offs improved somewhat sequentially but non-performing asset levels continued to increase. Moody's downgraded the rating of the company in April 2009 based on concerns related to its real estate lending concentration and investments in bank trust preferred securities.

Wilmington Trust Corporation is a mid-cap financial holding company whose primary subsidiary, Wilmington Trust Company, is a Delaware-chartered bank and trust company. As of March 31, 2009, Wilmington had $11.5 billion in total assets, $9.4 billion in loans and leases, and $8.3 billion in deposits. Including its three advisory affiliates, Wilmington had $42.9 billion in assets under management, as of this date.

We remain most concerned about Wilmington's exposure to construction loans (21% of the average loan portfolio). Within the construction loan portfolio, 71% loans are for residential construction/land development. Though Wilmington lends only to smaller homebuilders in the Delaware Valley (60% of the construction loan portfolio) and not to national homebuilders, we expect further deterioration in the credit quality on account of the ongoing weakness in sales.

Further, as the Housing and Commercial Real Estate pricing continues to worsen and unemployment continues to rise, we expect further losses in other loan categories as well, especially Commercial Mortgage (21% of loan portfolio), Residential Mortgage (6%) and Consumer (17%) loan portfolios.

Ahead of its 2Q09 results, scheduled to release on July 24, 2009, we are maintaining our Sell recommendation on the shares mainly due to our concerns related to its large construction portfolio.

Among the number of economic posts that are due today, investors are likely to take a cue from Federal Reserve's interest-rate policy announcement that is due at 2.15 ET.  Expectations are that the central bank will hold the interest rates steady.  Also, May new home sales report is due out after the start of trading.  Monday saw increased risk-aversion in the market after the World Bank's report and the Vix volatility measure jumped 11.4%. 

But as governments across the world have geared up to prevent a collapse of the financial system, and a full-blown depression has been avoided, investors will now look toward the Fed for guidance on its exit strategy, on any expansion of its $300 billion Treasury purchase plan, as well as its views on rising yields. A bullish view form the Fed would likely put equities back on track to resume its three-month rally.

Among S&P sector groupings, six recorded moderate declines yesterday, with utilities down 1.0%, consumer services off 0.7%, consumer goods off 0.3%, industrials and tech down 0.2%, and health care off 0.1%.  Basic material sector shares jumped 1.9% and oil and gas edged up 0.7%  Financials, taking a cue from FBR Capital's raised earnings projections and price target on Goldman Sachs (NYSE:GS), advanced 1.4%.

According to the National Association of Realtors, existing home sales gave further evidence that housing may be stabilizing as falling prices, increased foreclosure activity and government tax breaks attracted buyers, sending sales 2.4% higher in May, though slightly lower than an expected 2.6% increase.

The company said that proceeds from the placement will be utilized for reducing debt and for general corporate purposes.

The specialty retailer's performance has been affected by the continuing slowdown in discretionary spending by consumers, which caused May same-store sales to contract 7% year over year.

Limited Brands' corporate rating was cut further into junk territory by Moody's last month on weak sales and earnings results. The agency, however, did highlight the company's sound liquidity position in its report.

Shares of the Zacks #3 Rank ("Hold") company have slipped more than 2% on volume of almost 2 million, which is lower than the average daily volume of about 4.8 million.

The fund operates as a fund of funds and invests principally in underlying funds. It may invest up to 40% of assets in any single fixed-income fund as well as cash equivalents, no more than 30% of its net assets in equity funds, and may invest up to 30% of the assets in any single equity fund.

The fund offers dividends quarterly and capital gains annually. It has an expense ratio of 0.67%.

LargeCap Growth I A (OMSOX) seeks long-term growth of capital. The fund mainly invests in equity securities of companies with market capitalizations within the range of Russell 1000 Growth index.

The fund normally focuses on companies with an above-average rate of earnings and cash flow growth and a lucrative niche in the economy that gives them the ability to sustain earnings momentum even during times of slow economic growth. As of January 2009, its portfolio turnover was 64.50%.

Apple Inc. (AAPL), Juniper Networks Inc. (JNPR) and Amazon.com Inc. (AMZN) are among the fund's key holdings.

High Yield A (CPHYX) invests primarily in high-yield, high-risk, junk bonds in search of a relatively high level of current income.

The fund invests normally at least 80% of net assets in a diversified portfolio of fixed-income securities rated lower than BBB by S&P or Fitch or rated lower than Baa by Moody's or of equivalent quality. Gary Pokrzywinski has managed the fund since its inception in April 1998.

Unit holders have to make a minimum initial investment of $1,000 to enter this Zacks#1 Rank ("Strong Buy") fund. The fund has outperformed the total returns of its benchmark index in the last 1-, 3-and 5-year periods.

The National Association of Realtors' index for pending home sales continued its advance for the third month in a row, rising 6.7% in April.  At day's end, the Dow Jones industrial average managed a gain of 19 points or 0.2%, after briefly turning positive for the year.  The S&P 500 edged up 0.2% and Nasdaq gained 0.4%.  Volume on the NYSE remained light with 1.4 billion shares exchanging hands with advancing issues outpacing declining stocks by a three-to-two margin.   Yesterday, better-than-expected reports on personal income, manufacturing and construction spending had propelled S&P 500 to a seven-month high.

Treasury Secretary Geithner, travelling to China amid growing worries in that country over the prospects of American economy, sought to calm nerves, noting, "What I sense is a fair amount of confidence in the underlying strength of the American economy."  There is a growing worry in China, the largest holder of American debt, that bulging deficit in the US could hurt the dollar and obliterate the value of US Treasuries held by China.  Treasury prices edged slightly higher on optimism following the friendly talks in China.  However, US dollar dropped to its lowest since late September, declining 0.9% against a basket of currencies, after crude prices, continued to hover near the year's high set on Monday.

Among DJIA components, American Express (NYSE:AXP) and Citigroup (NYSE:C) led the list of declining components, off 4.9%, respectively.  JP Morgan (NYSE:JPM) dropped 4.5%. Bank of America (NYSE:BAC) shares, however, gained 1.8% after the company said it has raised almost $33 billion, and said it would easily achieve the $33.9 billion capital requirement.  During the last four weeks, banks have raised more than $85 billion, with American Express (NYSE:AXP), JP Morgan (NYSE:JPM) and Morgan Stanley (NYSE:MS) raising $7.7 billion meet heightened cash payback requirements. Nevertheless, Moody's (NYSE:MCO) also maintained a negative outlook on banks and their credit outlook, noting US companies are expected to face $470 billion in pretax loan losses and write downs this year and next.

Allergan Inc. (NYSE:AGN) added 4.6% to $46.23 and Intuitive Surgical Inc. jumped 6.5% to $159.05 after the stocks were upgraded by analysts.

Following the positive housing data, D.R. Horton (NYSE:DHI) added 4.1% to $9.63; Pulte Homes (NYSE:PHM) increased 3.5% to $8.97; KB Homes (NYSE:KBH) shares rose 2.7% and Toll Brothers (NYSE:TOL) was up 3.9%.  This morning, Toll Brothers (NYSE:TOL) reported a second quarter loss of 52 cents a share, before items, versus the expectations of a 50 cents a share loss.  Revenues during the quarter plunged 51.3% year-over-year to $398.3 million. The company said it expects deliveries of 2200-2800 homes this year, versus its March guidance of 2000-3000 homes, but at lower delivery prices.

According to Autodata, Aggressive April discounting resulted in a total auto market annualized selling rate of 9.91 million, up from April's 9.32 million, and the highest so far this year.  Ford (NYSE:F) shares rose 4.6% on the news, while General Motors (OTC:GMGMQ), now trading in the pink sheets, plunged 18.7%.

Stock futures suggest a higher opening on the Wall Street.  Dow Jones industrial average futures rose 0.4% to 8,327. Standard & Poor's 500 index futures rose 0.3% to 895.30 and Nasdaq 100 index futures were up 0.4% to 1,409.00.

On Wednesday, U.S. stocks sank amid growing worries over the fate of General Motors (NYSE:GM) and rising yields on longer-term US government debt.  An encouraging housing report did little to contain the selloff as yields on the benchmark 10-year jumped to a 6-month high. Energy shares declined but financials were the leading laggards.  Shaking investor confidence yesterday were yields on 10-year Treasuries which climbed 0.18 percentage point, or 18 basis points, to 3.732%.  According to Goldman Sachs (NYSE:GS) the US will sell $3.25 trillion in Treasuries by the end of the September fiscal year, as the US funds bank bailouts, stimulus spending and a record budget deficit.

General Motors' (NYSE:GM) bondholders turned down a $27 billion bond swap offer and many analysts said bankruptcy is imminent for the beleaguered automaker. The decline was broad based as all S&P sectors ended in the red.  The S&P 500 stock average declined 1.9% for its highest decline in two weeks.  The DJIA shed 173 points, or 2.1%, to close at 8300. Technology focused NASDAQ managed a 1.1% drop.  Volume on the NYSE remained low as only 1.3 billion shares exchanged hands.  The CBOE Vix, the measure of market volatility, however, surged 5.7% to 32.36.  On the NYSE, declining stocks outpaced advancing issues by a four-to-one margin.  SanDisk (NASDAQ:SNDK), which renewed a licensing agreement with Samsung Electronics, led the gainers on the S&P 500, with a 14.3% jump to $15.52.

This morning Moody's (NYSE:MCO) asserted the US AAA sovereign rating is "stable," despite a heavy debt burden.  Moody's cited a diverse and resilient US economy, strong government institutions, high per capita income and a fundamental position in the global economy for its stable outlook.  Wednesday's Treasury auction of 5-year notes met with successful demand, with a 2.3 bid-to-cover ratio; today $26 billion 7-year notes will be auctioned. The government plans to turn out $101 billion in debt this week.

On the DJIA, all but two components slid.  Among the declining issues, General Motors (NYSE:GM) led on the downside with a 20.1% fall.  Many fear bankruptcy of the automaker would add to already swollen unemployment numbers and wreak havoc on the economy.  JP Morgan (NYSE:JPM) shares plunged 5.2% after CEO Dimon's said credit card losses at its Washington Mutual unit could rise to 24% by year-end. Nevertheless, Dimon remained optimistic on company's earnings prospects, noting that reduced leverage would be more than offset by increased interest rate spreads, providing 18 to 20 per cent return on equity. Bank of America (NYSE:BAC) announced that it has raised almost $26 billion in capital since results of the government stress test found the bank needed $33.9 billion in additional capital.  The bank also noted the possible issuance of 564 million additional common shares through an exchange of perpetual preferred shares for common stcok. Wells Fargo (NYSE:WFC) declined 6.1% to $24.08. U.S. Bancorp slid 5.7% to $17.96.  PNC Financial Services, which said it has raised $600 million in a common stock offering, declined 5% to $41.11.

Financials were once again the leading gainers, with a 3.5% advance. JP Morgan (NYSE:JPM) shares jumped 4.4%, Bank of America (NYSE:BAC) added 2.7%, and Citigroup (NYSE:C) was up 4.1%. Wells Fargo (NYSE:WFC), fresh from its $8.6 billion stock sale, jumped 6.2% after Moody's (NYSE:MCO) raised its ratings on the company's preferred shares, saying there is an improved likelihood of maintaining the dividend payout. The rating agency put Bank of America (NYSE:BAC) on review for an upgrade on consideration of its financial strength. Fortress Investment Group (NYSE:FIG), however, lost 5.3% after the company said an offering of its 40 million shares was priced at $5 each.  The 3-month LIBOR witnessed its biggest drop in three months, declining to a record low of 0.85%.

On Thursday, basic material shares jumped 2.2% and technology stocks were up 1.5%.  Among material stocks, Dow Chemical (NYSE:DOW) surged 6.0%, AK Steel (NYSE:AKS) was up 2.9% and Newmont Mining (NYSE:NEM) added 1.7%.  CA's (NYSE:CA) better-than-expected results helped technology firms register a 1.5% advance.  Reflecting improved Chinese demand for commodities, such as iron ore, coal and grains, the Baltic Dry Index jumped to its highest level this year.

Consumer spending nevertheless remained a core area of interest as several better-than-expected returns boosted sentiment yesterday, after Wednesday's 0.4% drop in April retail sales disappointed investors.  Although Wal-Mart (NYSE:WMT) reported inline earnings, its revenues came in below expectations.  Whole Foods (NASDAQ:WFMI) shares, however, added 2.8% after the company's cost controls measures helped it post better-than-expected earnings. Nike (NYSE:NKE) announced plans to lay off 1,750 jobs.  Nordstrom (NYSE:JWN), up 3.4% Thursday, posted better-than-expected first quarter earnings on inline revenues, and raised its full-year guidance.

Today's consumer price report is expected to have shown no change in April, with a 0.1% increase in core prices. NY Empire Manufacturing data is expected to come in at a negative 15.00.  Industrial production is expected to show a 0.6% m/m drop, with capacity utilization coming in at 68.9% from 69.3% prior.

Moody's Investors Service upgraded Wells Fargo & Co.'s (WFC) preferred stock rating by two notches on Thursday, saying that the bank's financial flexibility had improved after an $8.6 billion stock sale.

The San Francisco, California-based firm had to raise capital by selling shares after the government's stress tests indicated that it required $13.7 billion to buffer itself against potential near-term losses. Federal regulators determined that Wells Fargo's requirement was second only to Bank of America (BAC) among the 10 large banks that had been asked to plug their capital holes.

The credit ratings agency boosted Wells Fargo's preferred stock to Ba3 from B2 and said the bank's current capital position reduces the threat of a dividend cut. Moody's had slashed this rating by nine notches last March on concerns regarding Wells Fargo's short-term capital ratio.

Shares of Wells Fargo jumped 5.74% to an intraday high of $25.59 at noon on the New York Stock Exchange.

The Commerce Department reported yesterday that U.S. retail sales declined 0.4% in April.  Economists had expected the number to remain unchanged.  Purchases at U.S. stores had tumbled 1.3% in March.

On Wednesday, U.S. stocks declined with the New York Stock Exchange witnessing the broadest sell-off in three weeks.  The Dow Jones Industrial Average shed 184.22 points, or 2.2%, to 8,284.89. The S&P 500 Index declined for the third straight session, wiping off most of the gains it made last week.  The benchmark declined 2.7% to 883.92, and has lost 4.9% since the beginning of this week.  The tech-heavy Nasdaq declined 3%, or 51.73 points, at 1,664.19. Shares of industrial producers and consumer-related businesses bore the brunt. On the NYSE, volume was heavy as 1.76 billion shares exchanged hands and losing stocks outpaced advancing issues by a sixteen-to-one margin.

Treasury prices rallied as the unexpected decline in U.S. retail sales pushed investors towards risk aversion.  Dollar rose 0.7% against a basket of currencies.  Copper prices fell 3.2%; The DJ-UBS commodity index was off 1.2%.

Premarket futures are almost flat as inline earnings from Wal-Mart (NYSE:WMT) provided little boost to sentiments. According to a Financial Times article by a former US comptroller general, David Walker, the US' AAA debt rating is imperiled by the government's current excessive spending levels.

Optimism on the Street related to yesterday's retail sales was short lived as analysts failed to adequately assess the one-time, positive impact of January and February rebates from Social Security, which had helped revive consumer spending early this year.  Excluding autos, sales declined 0.5%.  As investors turned to cut positions, retail shares suffered, with Saks (NYSE:SKS) dropping 11.9%, Macy's (NYSE:M) plunging 6.7%, Target (NYSE:TGT) declining 4.8%, Costco (NASDAQ:COST) losing 2.3%, and Wal-Mart (NYSE:WMT) declining 1.2%. Office Depot (NYSE:ODP) shares plunged 15% after Moody's (NYSE:MCO) lowered the firm's debt rating.  Citigroup (NYSE:C) raised Home Depot (NYSE:HD) to "buy" from "hold," saying it expects the company to exceed this year's estimates; although fellow retailers declined, the shares bucked the trend with a 0.8% gain.

Basic materials led the declining sectors, off 5.8%, after weak demand assumptions from any economic recovery in the near-term hurt prospects. Alcoa (NYSE:AA) shares declined 8.8% on reports China may have restarted up to 1.4 million metric tons of capacity in April. Industrial shares fell 4.2%.  Caterpillar (NYSE:CAT) shares declined 5.2%, General Electric (NYSE:GE) lost 5.6%, 3M (NYSE:MMM) fell 4.4%, and United Technologies (NYSE:UTX) lost 4.2%.

Financial shares were once again under renewed pressure, falling 5.0%, as investors pondered over the banks' ability to raise fresh capital from private sources. Among DJIA components, Bank of America (NYSE:BAC) plunged 9.5%, Citigroup (NYSE:C) lost 6.8%, and American Express (NYSE:AXP) declined 5.3%. BB&T (NYSE:BBT) joined the growing list of banks tapping the market to raise funds, selling 75 million shares at $20 apiece, a discount to Tuesday's close of $22.50.  SunTrust (NYSE:STI) declined 6.9%, even as Goldman Sachs (NYSE:GS) upgraded the stock to "neutral" from "sell," citing better-than-expected stress test capital-raising needs.

Technology stocks showed signs of strength.  IBM (NYSE:IBM) said it expects 2009 earnings to be at least $9.20, versus consensus projections of $9.11, and noted it is "ahead of pace" to meet 2010 earnings projections of $10 to $12 per share.

Treasury Secretary Geithner's positive comments of "welcome signs" in the housing markets failed to convince investors as RealtyTrac reported increased foreclosures in April, with one in every 374 US homes receiving notices. Beazer Homes (NYSE:BZH) shares plunged 21.8%, and Hovnanian (NYSE:HOV) declined 12.2%.

Today's economic news covers wholesale prices for April, expected to show prices increased 0.1%. Besides the Wal-Mart (NYSE:WMT) inline post, weekly initial jobless claims are also expected to rate high on sentiment's Richter scale, with traders hoping for a continued diminished pace of claims.

Commercial Real Estate Values Go South

The Moodys/Real National All Property Index dropped 0.6% in February compared to January of this year. In addition, the index is about 21% lower than a year ago, and about 18% lower than two years ago.

This index tracks the change in sale prices for different property types based on sales of the same assets over time. The index is a good measure of where commercial property prices are going. The largest year over year price drop (February 2009 vs. February 2008) was reported in industrial, 13.9% decrease; followed by apartments, 13.6% decrease; office, 13.5% decrease; and retail, 8.5% decrease.  Also, according to the report, sales volumes in February were down 67% from the year ago period and most of the sales(90%) were for assets under $15 million.

Some conclusions that can be inferred from this data:

• Commercial property prices continue to fall, which could put many owners who bought at the height of the boom underwater on their mortgages.  
  
• There will be a continued rise in loan defaults -- owners who have lostequity are more likely to walk away from their properties or sell at heavily discounted prices.
• Lower dollar deals are getting done vs. large transactions; financingfor smaller properties is easier, which should make price drops in this class >$15 million, less severe.
• With financing still scarce and fundamentals going south, expect pricesto continue falling. Expect fewer transactions as owners are reluctant to take losses.
• Wait for more price drops before buying commercial real estate; whenbuying, focus on the larger, higher growth markets. According to the Moody's report, y/y price drops were significantly lower in the top 10 MSAs for all major property types (apartments, industrial, office, and retail).
• We still favor REITs with assets in supply constrained, urban markets,where values and rents will continue to hold up better. A couple of companies we have buys on are Avalon Bay (AVB) for apartments and Regency Centers (REG), a strip mall owner. Despite declining property values across these sectors, both companies are still trading below the value of their assets.

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Here are highlights from Wednesday's Analyst Blog:

Centennial Reports, Kept a Hold

We maintain our Hold rating for Centennial Communications Corp. (CYCL), a regional provider of wireless and integrated communications. The company's recent operational performance has been driven by solid growth in net income coupled with respectable subscriber additions across its wireless and broadband operations.

CYCL recently received shareholders approval for the acquisition by AT&T Inc. (T), the second largest wireless carrier in the U.S., for approximately $2.8 billion in cash and net debt, which includes cash to stockholders $8.50 per share. New initiatives in fiscal 2009, including network infrastructure upgrades in the U.S. and unlimited tariff plans in Puerto Rico, are expected to accelerate overall business performance.

Irish Banks Over a Cliff

Share prices at Allied Irish Banks, plc (AIB) and The Governor and Company of the Bank of Ireland (IRE) have plummeted, dropping almost 16% in morning trading, following release of the Irish government's bank plan and ratings downgrades by Moody's.

The Irish government announced the establishment of a "bad bank," under which the government will purchase EUR80-90 billion ($107- $120 billion) of impaired property loans from Irish banks in exchange for government bonds. Critics pointed out that this amount is equivalent to 50% of Ireland's GDP, with Prime Minister Lenihan admitting that it could be 10 years before the debt might be repaid.

Denbury Resources a Buy to $24

Denbury Resources, Inc. (DNR) is a leading tertiary oil player, with a solid asset base and an impressive track record of production and reserve growth. We expect this growth momentum to continue over the next five years.

Our continued favorable view of Denbury shares reflects the company's low risk profile and niche business model. In response to the commodity-price pullback and credit market issues, the company has reduced its capital budget to bring its projected outlays within operating cash flows.

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1. We, the Leaders of the Group of Twenty, met in London on 2 April 2009.

2. We face the greatest challenge to the world economy in modern times; a crisis which has deepened since we last met, which affects the lives of women, men, and children in every country, and which all countries must join together to resolve. A global crisis requires a global solution.

Things stink all over due to this mess, and it has gotten worse lately.

3. We start from the belief that prosperity is indivisible; that growth, to be sustained, has to be shared; and that our global plan for recovery must have at its heart the needs and jobs of hard-working families, not just in developed countries but in emerging markets and the poorest countries of the world too; and must reflect the interests, not just of today's population, but of future generations too. We believe that the only sure foundation for sustainable globalization and rising prosperity for all is an open world economy based on market principles, effective regulation, and strong global institutions.

It would be nice if everybody could grow and get richer.  Lets not forget about the poor countries that have been hurt even more than the rich countries by this crisis, even though it was not their fault.  However, we will not fundamentally alter the overall global economic system.

4. We have today therefore pledged to do whatever is necessary to:

• restore confidence, growth, and jobs;
• repair the financial system to restore lending;
• strengthen financial regulation to rebuild trust;
• fund and reform our international financial institutions to overcome this crisis and prevent future ones; promote global trade and investment and reject protectionism, to underpin prosperity; and
• build an inclusive, green, and sustainable recovery.

By acting together to fulfill these pledges we will bring the world economy out of recession and prevent a crisis like this from recurring in the future.

Nice set of goals.  However, what is meant by do "what ever is necessary" to repair the financial system.  Calls for stronger regulation of markets are good and very much needed.  The international financial institutions they are referring to here are the World Bank, the IMF and their regional counterparts.

5. The agreements we have reached today, to treble resources available to the IMF to $750 billion, to support a new SDR allocation of $250 billion, to support at least $100 billion of additional lending by the MDBs, to ensure $250 billion of support for trade finance, and to use the additional resources from agreed IMF gold sales for concessional finance for the poorest countries, constitute an additional $1.1 trillion programme of support to restore credit, growth and jobs in the world economy. Together with the measures we have each taken nationally, this constitutes a global plan for recovery on an unprecedented scale.

This is a major increase in support for the IMF and is a very useful step.  It actually means that the calls to help out the poor countries that are suffering from this are not just platitudes, but that the major countries of the world are actually prepared to help.

Restoring growth and jobs

6. We are undertaking an unprecedented and concerted fiscal expansion, which will save or create millions of jobs which would otherwise have been destroyed, and that will, by the end of next year, amount to $5 trillion, raise output by 4 per cent, and accelerate the transition to a green economy. We are committed to deliver the scale of sustained fiscal effort necessary to restore growth.

I will note that the vast bulk of that $5 trillion is coming from a handful of countries, most notably the U.S. and China, with honorable mentions to Japan and the U.K. Continental Europe is effectively trying to free ride off the increased aggregate demand from the countries that are actively stimulating their economies. I would however read this clause as an endorsement of the Obama Strategy.

7. Our central banks have also taken exceptional action. Interest rates have been cut aggressively in most countries, and our central banks have pledged to maintain expansionary policies for as long as needed and to use the full range of monetary policy instruments, including unconventional instruments, consistent with price stability.

A pat on the back for the central bankers.  This is an explicit endorsement of the use of Quantitative Easing (central banks buying long term government bonds and effectively printing money) which is being implemented by the Fed and the Bank of England.  I would also see this as a call for the European Central Bank (ECB) help out a bit more.

8. Our actions to restore growth cannot be effective until we restore domestic lending and international capital flows. We have provided significant and comprehensive support to our banking systems to provide liquidity, recapitalize financial institutions, and address decisively the problem of impaired assets. We are committed to take all necessary actions to restore the normal flow of credit through the financial system and ensure the soundness of systemically important institutions, implementing our policies in line with the agreed G20 framework for restoring lending and repairing the financial sector.

We have thrown lots of money at the banks to keep the system afloat and are prepared to continue throwing money at the banks.

9. Taken together, these actions will constitute the largest fiscal and monetary stimulus and the most comprehensive support programme for the financial sector in modern times. Acting together strengthens the impact and the exceptional policy actions announced so far must be implemented without delay. Today, we have further agreed over $1 trillion of additional resources for the world economy through our international financial institutions and trade finance.

Yes, it has been a lot of money we have thrown at the banks.  So far we have been helping out private commercial banks.  However given the scale of this problem we also need to significantly increase the resources of the IMF and World Bank (mostly IMF).

10. Last month the IMF estimated that world growth in real terms would resume and rise to over 2 percent by the end of 2010. We are confident that the actions we have agreed today, and our unshakeable commitment to work together to restore growth and jobs, while preserving long-term fiscal sustainability, will accelerate the return to trend growth. We commit today to taking whatever action is necessary to secure that outcome, and we call on the IMF to assess regularly the actions taken and the global actions required.

The sun will come out tomorrow.  We think this plan will work, but perhaps the IMF can give some progress reports from time to time.

11. We are resolved to ensure long-term fiscal sustainability and price stability and will put in place credible exit strategies from the measures that need to be taken now to support the financial sector and restore global demand. We are convinced that by implementing our agreed policies we will limit the longer-term costs to our economies, thereby reducing the scale of the fiscal consolidation necessary over the longer term.

We are sure we can pull back from the fiscal stimulus before it bankrupts us and from the monetary stimulus before hyperinflation breaks out.  You don't get to be a head of state by lacking in confidence, and this was a meeting of 20 heads of state or government.

12. We will conduct all our economic policies cooperatively and responsibly with regard to the impact on other countries and will refrain from competitive devaluation of our currencies and promote a stable and well-functioning international monetary system. We will support, now and in the future, to candid, even-handed, and independent IMF surveillance of our economies and financial sectors, of the impact of our policies on others, and of risks facing the global economy.

If the independent surveillance of the economy by the IMF applies to the U.S. then this is big news.  More likely there are no teeth to this.  If the U.S were any other country, the IMF would have long ago pressed us to nationalize the banks, clean them up and sell them off.

Strengthening financial supervision and regulation

13. Major failures in the financial sector and in financial regulation and supervision were fundamental causes of the crisis. Confidence will not be restored until we rebuild trust in our financial system. We will take action to build a stronger, more globally consistent, supervisory and regulatory framework for the future financial sector, which will support sustainable global growth and serve the needs of business and citizens.

Deregulation was a VERY bad idea when it comes to financial institutions.  With the world now interconnected more than ever before, regulations need to be strengthened and made more consistent across boarders.

14. We each agree to ensure our domestic regulatory systems are strong. But we also agree to establish the much greater consistency and systematic cooperation between countries, and the framework of internationally agreed high standards, that a global financial system requires. Strengthened regulation and supervision must promote propriety, integrity and transparency; guard against risk across the financial system; dampen rather than amplify the financial and economic cycle; reduce reliance on inappropriately risky sources of financing; and discourage excessive risk-taking. Regulators and supervisors must protect consumers and investors, support market discipline, avoid adverse impacts on other countries, reduce the scope for regulatory arbitrage, support competition and dynamism, and keep pace with innovation in the marketplace.

Everyone has to regulate, no trying to lure financial activity to your country by promising to look the other way when institutions take on excessive risk in the hunt for short term profits.

15. To this end we are implementing the Action Plan agreed at our last meeting, as set out in the attached progress report. We have today also issued a Declaration, Strengthening the Financial System.

In particular we agree:

• to establish a new Financial Stability Board (FSB) with a strengthened mandate, as a successor to the Financial Stability Forum (FSF), including all G20 countries, FSF members, Spain, and the European Commission;
  that the FSB should collaborate with the IMF to provide early warning of macroeconomic and financial risks and the actions needed to address them;
  to reshape our regulatory systems so that our authorities are able to identify and take account of macro-prudential risks;
• to extend regulation and oversight to all systemically important financial institutions, instruments and markets. This will include, for the first time, systemically important hedge funds;
• to endorse and implement the FSF's tough new principles on pay and compensation and to support sustainable compensation schemes and the corporate social responsibility of all firms;
• to take action, once recovery is assured, to improve the quality, quantity, and international consistency of capital in the banking system. In future, regulation must prevent excessive leverage and require buffers of resources to be built up in good times;
• to take action against non-cooperative jurisdictions, including tax havens. We stand ready to deploy sanctions to protect our public finances and financial systems. The era of banking secrecy is over. We note that the OECD has today published a list of countries assessed by the Global Forum against the international standard for exchange of tax information;
• to call on the accounting standard setters to work urgently with supervisors and regulators to improve standards on valuation and provisioning and achieve a single set of high-quality global accounting standards; and
  to extend regulatory oversight and registration to Credit Rating Agencies to ensure they meet the international code of good practice, particularly to prevent unacceptable conflicts of interest.

That is a long list of reforms and areas for tighter supervision.  Mostly it amounts to more international cooperation on regulation, in a more formal and institutionalized way.  The call for regulation and oversight of the Credit Rating agencies (i.e. Moody's and S&P) is long overdue, as their lack of action and incompetence was a major factor in this whole mess occurring.  All big financial institutions, including hedge funds need to be regulated.

16. We instruct our Finance Ministers to complete the implementation of these decisions in line with the timetable set out in the Action Plan. We have asked the FSB and the IMF to monitor progress, working with the Financial Action Taskforce and other relevant bodies, and to provide a report to the next meeting of our Finance Ministers in Scotland in November.

We hope we can get our act together by November.

That is about half of the statement, I will have a follow up post on the rest of it.  In general the basic thrust of the statement is that it endorses aggressive government actions, both on the fiscal and monetary front to address the crisis.  It calls for much stronger regulation.  Perhaps the most significant news is a very large commitment to strengthening the resources of the IMF to help some of the emerging economy's deal with the fallout of this mess that they did not create.

While high-yield bond exchange-traded funds have proved to be popular with investors in recent years, similar options for muni investors haven't been so plentiful. The only available high-yield muni funds have been either in the closed-end marketplace or through traditional open-end mutual funds. 

But that has changed. The Market Vectors High-Yield Municipal Index ETF (NYSE Arca: HYD) was launched on Feb. 5, becoming the first of its kind in the ETF marketplace. It's expected to wind up with an annual expense ratio of 0.35%.The average high-yield muni mutual fund charges 0.63%, according to Morningstar. 

"The muni high-yield segment is very interesting and has real potential in the format of an ETF," said Harvey Hirsch, a senior vice president at Van Eck Global. "About 10% of the muni market is now represented by high-yield issues."

HYD is the fifth muni ETF now out by Van Eck Global. Its index was created by Barclays and had about 4,204 different bonds entering 2009 with a market value of $101 billion. The average coupon in the index was about 5.82% and the average duration was 8.63 years.

Perhaps more important for investors is the fact that the portfolio's yield is starting out at a quite-attractive 9.35%. By comparison, the Market Vectors Long-Term Municipal Bond ETF (NYSE Arca: MLN) has a yield of 5.71%.

"There's a significant spread now between long-term investment-grade munis and high-yield munis," said Jim Colby, senior municipal strategist and portfolio manager at Van Eck Global.

In fact, yield spreads on muni high-yield bonds are now at historically high levels compared to investment-grade munis, he added. The average spread between the two, based on long-term performances of two Barclays bond indexes, has been about 242 basis points. At the end of 2008, that differential was 636 basis points.

"There would appear to be significant opportunity for those willing to assume the added risks of investing in high-yield munis now," said Colby.

In the rolling 10-year period ending June 30, 2008, the taxable equivalent return on high-yield munis topped all other categories of munis, he added. "And high-yield led by a very wide margin," Colby noted.

High-yield munis had a difficult second half of 2008. "The auto industry, airlines and paper industries that are fairly recognizable in the corporate equities indexes are also components of high-yield indexes," said Colby.

While corporate high-yield bonds have held higher correlations to stocks in the past, that hasn't been true with muni high-yield issues, contends Van Eck.

"Investment-grade municipal bonds have far less correlation to the equity market than municipal high-yield. The corporate component of HYD is in the order of 25% to 30%," said Colby. "That should be much less than a high-yield bond fund, which likely will hold a majority of its portfolio in corporate issues."

And the commonly used term for the category, junk bonds, doesn't necessarily apply to munis, points out Colby. He notes a Moody's study showing that historical default rates on high-yield munis run about 4.3% on an annualized basis. By comparison, high-yield corporate default rates come out about 32.7%.

"Muni high-yield bonds have different characteristics than they do in the corporate world," said Colby.

-- This article was submitted by IndexUniverse.com's Murray Coleman.

During October 2008, Primus Financial, the issuing subsidiary was downgraded by both S&P and Moody's to AA+ and AA1 (from AAA and Aaa ) respectively, with negative implications. Additionally, S&P and Moody's downgraded the 7% notes issued by Primus Guaranty to "BB" and "BA1," respectively.

In view of the challenging conditions, the company has decided to manage its business in the amortization mode versus the growth mode earlier. After reviewing the results, we are maintaining our Sell recommendation on the shares.
"PRS5" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

ETFs As The World's Playground

Kirk Shinkle, one of the most experienced and artful markets reporters on the national scene, takes an interesting look at ETFs as they've "evolved into a playground for index designers, offering easy access to esoteric corners of the market and far-flung reaches of the globe."

Shinkle, who now writes for U.S. News & World Report, takes an entertaining jaunt around the globe to see all of the sectors and countries ETFs provide access to these days. Along the way, he bumps into our own Matt Hougan for a quick observation.

You can read the story here.

Corporate Bonds Set To Rocket?

Now that the largest bond fund manager in the world is making plans to enter the exchange-traded funds marketplace, it's worth noting that its top corporate fixed-income manager is predicting banner times in 2009 for the asset class.

Mark Kiesel tells Bloomberg News that despite the fact corporate bonds are heading for a terrible 2008, he expects funds focusing on that segment of the market to rebound strongly next year. In fact, he's forecasting they'll do better than equities.

You can read the story here.

Rising Junk Bond Rates Point To More Problems?

Meanwhile, another report from Bloomberg News says that with yields on junk bonds now topping 20%, the broad U.S. credit market could face a massive rise in defaults.

John Lonski, chief economist at Moody's Investment Service, in a note forecasted U.S. default rates for the overall bond market to rise to levels not seen since the Great Depression.

Pick your poison ... here's the story. 

State Street To Cut 6% Of Workforce

Another big fund manager, State Street Corp., also is in the headlines. The parent of ETF player State Street Global Advisors says it plans to lay off up to 1,800 workers, mainly in North America. 

No word on how many of those job cuts will come in its SSgA unit. But this Reuters story notes that State Street's moves come after similar slashes at asset managers Fidelity, Janus and Legg Mason. You can read the story here.