Dear Subscribers,

The main story on Monday was that Standard & Poors kept US government bond ratings at AAA, but cut its outlook from stable to negative. This sent stocks tumbling out of the gate to as low as Dow 12,093 before bouncing over a hundred points. Yet even that finish was still well into the red.

Personally I am shocked and dismayed by this reaction. Why? How could anyone think that our debt situation was actually in good shape?. In fact, how is it still AAA and not lower?. I assumed, falsely I now see, that everyone with an IQ above room temperature was working off the same premise that our deficit was raging out of control. And that, my friends, provides a valuable investing lesson. Don't assume anything. Because as they say, when you "assume" you end up making an "ass" out of "u" and "me" ;-)

My strong hope and desire is that this truly lights a fire under our politicians to take make aggressive deficit cuts soon. If not, then our debt ratings will drop while interest rates go higher. This will make financing the debt all the more difficult and wreak havoc on the economy. If we can show resolve to reign in our bad ways now, then this economic recovery can stay on track with stocks moving higher.

Read the rest of this article at: What Deficit Are They Looking At?

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Best,

Steve Reitmeister
Executive VP, Zacks Investment Research

Today's Top Stories: Tuesday- April 19, 2011

ZACKS RANK BUY STOCKS

• Aggressive Growth - BTU International (BTUI) reported $27.4 million in sales for the fourth quarter, up 127% year over year. Earnings worked out to $0.24 per share, which was twice as much as analysts were expecting. Read More...
   
• Growth & Income - The Scotts Miracle-Gro Company (SMG) analysts are projecting 7% EPS growth in 2011 and 14% growth in 2012. Scotts has also been buying back stock, and it doubled its quarterly dividend in 2010. Read More...
   
• Momentum - Bed Bath & Beyond Inc. (BBBY) earnings came in strong at $1.12, 15.5% ahead of the Zacks Consensus Estimate, where the company now has an average earnings surprise of 12% over the last four quarters. Read More...
   
• Value - The Toronto-Dominion Bank (TD) reported its fiscal first quarter results and surprised on the Zacks Consensus by 28 cents. Earnings per share were $1.79 compared to the consensus of just $1.51. Read More...
   

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EDUCATION: Value

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Best,

Steve Reitmeister
Executive VP, Zacks Investment Research

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