Blog Posts by Matt Nesto

The two largest U.S. rating agencies and the nation's top economists are all sounding the alarm over our out-of-control national debt and the possibility of losing the coveted AAA credit rating -- something that was unthinkable prior to this year.

Standard & Poor's warned us in April, Moody's warned us this week, and more than 150 economists warned us in a letter sent to the Speaker of the House John Boehner. If we don't see some meaningful deficit reduction, the market will react, according to new Friend of Breakout Nariman Behravesh, chief economist at IHS.

"If you just raise the debt ceiling and do nothing else, that really lacks credibility," he says. We're nearing a breaking point and must "use this opportunity to make some meaningful deficit reduction."

As it stands, the nation's $14.3 trillion debt is growing by about $1 trillion due to the fact that annual expenditures exceed income by about 30%. If lawmakers don't make significant progress by mid July -- just weeks ahead of a threatened Aug. 2 default date -- then the two ratings agencies have said they will be forced to act.

"Things have to change," Nariman adds. "Markets aren't going to be patient."

For the record, the U.S. is one of only 19 countries in the world that has the top-rated AAA rating alongside the likes of Germany, France, the U.K. and Canada. Even though it is still intact, never in our long national history has it even come under review before. But economists say this time it's different, and they're right.

"I want money... lots and lots of money ... ." So goes the catchy old Cab Calloway tune "I Wanna Be Rich." And truth be told, who doesn't want to be rich?

Of course, to actually be "rich" means vastly different things to different people. But in the case of George Evans and the 4-star rated Oppenheimer International Growth Fund (OIGAX), the definition of rich is very low by Western standards.

"One of the first things people do when they get a little bit more money in their pocket is to buy better alcohol," he says. It's all part of his "mass affluence" theme that he says is based on a huge amount people, particularly in emerging markets, gaining spending power and essentially becoming "middle class." It's also why he likes global spirits players like Diageo (DEO) and France's Pernod Ricard (RI.PA).

Fresh ideas may be hard to come by in this tape but Breakout found someone willing to stick their neck out on names both obscure and hiding in plain sight. Hilary Kramer, editor of GameChangerStocks.com, has picks galore. With no further ado:

* Goldman Sachs (GS): With a regulatory overhang that's second to none, including a subpoena today and a stock that's fallen 20 percent in less than four months, you'd instinctively think to avoid buying. But Kramer says that's all wrong and "Goldman is good for a short-term bounce and a long-term home run." She says GS will successfully fight off any charges, adding that their ace in the hole is that their client base is very sophisticated and signed agreements saying that they understood the risks. She owns the July call options because she thinks a buyback announcement could be coming.

* Evercore Partners (EVR): Kramer says this boutique investment bank is the antithesis of Goldman in that it has no regulatory issues and they're building their

Well, that was special. The worst one-day sell-off in a year, coming just two days before the big May jobs number and extending a retreat of stocks, and confidence, that began to unravel a month ago.

So far, the retreat remains modest at about down 4%, but dig in a bit deeper and that "consolidation" starts to move a lot more toward becoming a full blown correction (loss of 10%) -- something we haven't seen in a year.

Specifically, I am referring to the outsized slide of several key industries: Banks, diversified financials and insurers, autos and parts, capital goods, energy and materials, all of which are at least halfway there already. This giveback may be a tempting opportunity for bottom-fishers and value funds, but it still looks and feels a bit too early for that.

Whether you're sipping free drinks in a casino or nibbling free advice on Wall Street, how many times have you heard it said, "Let your winners run?"

I'll go out on a limb here and guess that you've probably heard it a lot. Well, you won't hear any of that today, at least as it pertains to catching a bounce in commodities and the stocks related to them.

That's right, if you were thinking about maybe -- just maybe -- reloading the boat for a second run in commodity XYZ (take your pick really), at least one pro says, don't do it. "The popular trade (in commodities) is really over," says Hilary Kramer. "It's been a really crowded trade, and it's over."

Remember the old TV show MASH? When the choppers and buses would bring in scores of wounded soldiers all at once, completely overwhelming the medical staff, who were scrambling to provide care? The first thing they would do would be to assess the scope of the damage, then stabilize the injured and prioritize which patients got tended to first. To borrow the words of Jim Grant, it was "fast and ugly" in action.

The other side of that type of urgent triage would be "slow and ugly," a euphemism often used to describe the current course of action the Federal Reserve and Treasury have embarked upon to restore the economy. But now that we're more than three years into it, critics such as Jim Bianco of Bianco research say it's high time we started moving forward.

"Quantitative easing is all about trying to prevent pain in the marketplace," he says. " But in doing so, it prevents adjustments, and that's why markets like housing can't move forward."

Given the latest housing statistics, few

First, the good news. European unity is alive and well across the pond and, while strained, the world's youngest major currency, the euro, will survive.

And the bad news? We still have another month of negotiating to listen to as European central banks and member states try to reach another solution to the Greek debt crisis. Or, if you will, avert a Greek tragedy that engulfs the entire union.

It's a situation that Jim Bianco of Bianco Research ultimately sees benefiting the dollar.

"At least we're not Europe," he says. "They have a financial system that doesn't work properly. They borrowed too much, you have 16 countries using the same currency and screaming at each other in seven different languages. You don't have political union or the will to deal with problems."

Few things in life drive me crazier than the velvet rope. You may have experienced it yourself, but for those who haven't, it works like this: A muscle-bound doorman prevents you from entering a particular establishment and instead has you wait, often shivering or wet, in a long line of people behind a velvet rope. At the same time, a steady stream of people is inexplicably allowed to go inside, their laughter, glee and smooches serving as a proverbial thumb in the eye to those stuck behind the rope.

It is much the same for stocks trying to gain entry into the 5-star rated Rising Dividend Growth Trust (ICRIX). The main difference here is that they tell everyone what it takes to get by their velvet rope: You have to pass the 10-10 test.
That's short-hand for a dividend increase of at least 10 percent a year for 10 consecutive years, or as fund manager Tom Cameron likes to say, "a minimum of 10 percent." He points out that half of their current portfolio would be able to pass a 20-10