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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (33423)2/5/2009 8:24:08 PM
From: E_K_S  Read Replies (1) of 78708
 
Futures Show Dividends to Fall the Most Since 2001 in Europe
Feb. 6 (Bloomberg) -- Traders in the futures market are betting that European companies will cut their dividends by the most since at least 2001 this year as the global recession batters earnings.
bloomberg.com

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Gross Says U.S. Must Spend to Avoid Mini Depression (Update1)
Feb. 5 (Bloomberg) -- Bill Gross, co-chief investment officer of Pacific Investment Management Co., said the U.S. may slump into a “mini depression” unless policy makers spend trillions of dollars to spur growth.
bloomberg.com

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Not too many positive headlines recently. I am watching for the next shoe to drop as it's possible that our current economic slowdown could spiral into several quarters of deflation. If this is the case, equities may be cheaper tomorrow than today.

I am looking to future dividend cuts as one signal that we may have touched bottom. So far, there are few companies that have "slashed" their dividend. In fact GE stated today that they are willing to have their AAA rating downgraded to AA before they would cut their dividend. I think it is time to be cautious.

I missed SPECTRA ENERGY (NYQ: SE) below $14 this morning. I suspect if they cut their dividend, I should be able to buy in below $12.50. Their fourth-quarter profit dropped 41 percent as sales fell across all of their business units. I was a little gun shy to buy this AM with their sales down so much and was surprised to see that the slow down even hit their distribution business segment.

EKS
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