by Jeff Bailey, Y-Charts

Sometimes it pays for equity investors to think like lenders – if we put our money into this company, can it afford to pay us back? And thus today we hear from a hard-bitten debt analyst, James Goldstein at CreditSights, about the deteriorating condition of Sears (SHLD).

If you are bargain shopping, and still believe the 2004  BusinessWeek cover that asked rhetorically whether fund manager Eddie Lampert was “the next Warren Buffett,” by some measure Sears could look attractive. It takes retail sales to make a retailer’s profit, of course, and on a price-to-sale basis, for instance, Sears screams cheap.

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Money Morning Article of the Week

By David Zeiler, Associate Editor, Money Morning

Despite the recent downturn in China's stock market, investors need to remain focused on the profit-generating long-term growth potential of the Asian powerhouse.

The Shanghai Composite Index is down about 10% on the year, compared to a drop of less than 1% year-to-date for the Standard & Poor's 500 Index.

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by Jeff Miller

Sometimes stock market moves defy a sensible interpretation.

The news directly related to US equities was pretty good last week, but the market reaction was negative. If you were watching daily trading, you could focus on one indicator: The yield on the Italian ten-year bonds. With 7% perceived as the danger zone that presaged problems in Greece and Ireland, there is special concern when this level is approached.

As rates move higher, current holders are increasing their selling. The New York Times highlights the risk of a downward spiral. When the euro moves lower, the dollar moves higher and stocks decline. Correlations among all stocks and sectors remain high, so the story is all about Europe.

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by Guest Author Russ Winter, Winter Watch at the Wall Street Examiner

Original title: “MF Global, Another Symptom of Grand Theft Nation”

Monday marked two weeks since the news broke that MF Global “removed” unencumbered segregated funds from customers’ accounts. Segregation simply means that customer deposits can’t be mixed with the firm’s own money or used to cover firm expenses. They must always be available for customers to trade with or withdraw at a moment’s notice. During that time MF Global customers have found themselves locked out of reduced equity in their accounts. Worst of all, even MF Global customers who held no open futures positions and only cash and unencumbered assets, have found those assets under the control of the bankruptcy trustee.

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by Guest Author Art Patten, from Symmetry Capital Management

The eurozone meltdown that we anticipated and followed up on recently continues. Sovereign yields and spreads over German government bonds (also referred to as Bunds) are still on a frighteningly steep upward trajectory. While interbank funding in euros has eased and appears stable for the time being, interbank demand for U.S. dollars continues to intensify (often a sign of looming financial risk, as we noted yesterday).

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