Goldman Sachs (NYSE: GS) decided to it needs to correct the market a little more and issued a slew of downgrades.

Already yesterday it downgraded aerospace stocks, and today it went after financials and autos.

No sooner than we got used to the huge writeoffs and thought most of the fallout is behind us, that Goldman came today and whacked us on the head. "Over?" it laughed, "you wish!" It then proceeded to downgrade investment banks from Attractive to Neutral. Specifically, it downgraded Citigroup (NYSE: C) to Sell, urging investors to short sell it!

Citigroup will have another $8.9 billion in writedowns, William Tanona, the Goldman analyst said, and added Citigroup to Goldman's "Americas conviction sell" list, cutting his price target on the stock to $16 from $20. Citi shares are down 5.5%.

Merrill Lynch (NYSE: MER) has already been subject to rumors last week it would have to write down more assets. Today, the same Goldman analyst said it will likely incur $4.2 billion of write-downs in the second quarter. MER stock is down 4.5%.

At least Goldman shares have not been immune and are declining nearly 2.7% along with the rest of the investment banks and the market.

The Dow Jones industrial average gave up more than 280 points by midday Friday. That's a decline of over 2.2% to 12,324. Weren't we over 13,000 just a few days ago -- May 19, to be exact?

But today there seems to be good cause for the selloff -- the jobs report was extremely weak with unemployment rate jumping to 5.5%. With that, the dollar weakened -- how can the Federal Reserve raise rates when the economy is slowing? Not to mention, fundamental reasons for the dollar's decline and ECB's president Thursday saying he's considering a rate hike. Already his comments Thursday caused the biggest rally (in dollar terms) in oil prices, a feat that has already repeated itself today.

Of course, with higher oil price comes higher inflation and the consumers real income declines, leaving much less disposable income for purchases. Yes, more than two thirds of the U.S. economy is consumer driven, so that scares the heck out of many, especially with one of the worst housing slumps and credit crunches in decades.

Can the U.S. economy recover? How fast? Views on that matter differ, with some saying the U.S. economy is more resilient than given credit for and that there is a lot of unnecessary fear out there as the weak dollar could boost exports, which in turn could have its own trickling down effect. Others say that until the housing market starts showing signs of recovery -- with estimates of that happening anywhere from the Q4, 2008 to Q4, 2009 -- the economy will remain sluggish. I'm with the more pessimist crowd, but the question is how will the stock markets react tomorrow?

Just as I finished reading a great article about turning trash to power, I went to check General Electric's(NYSE: GE)'stock. Seems that while I've learned how GE plans to convert garbage into electricity, its shares have been plunging, dropping to multi-year lows. Not since May 2004 has GE shares hit $30.39. This dubious feat was accomplished today. Too bad, too.

I became all giddy reading the aforementioned article, thinking of Dr. Emmett Brown at the end of Back to the Future asking Marty for garbage to put in his modified gas tank. Of course, such simplicity is still a long way away, but GE has plans to adapt its gasification technology, used to burn coal more cleanly, to turn waste into a relatively clean-burning gas. While GE may be five to ten years away from making this a paying business, the company is planning to make $25 billion in annual sales from green businesses by 2010. It's something to consider.

Meanwhile, another "general" has been plunging. General Motors (NYSE: GM) shares fell to their lowest levels in 25 years! Not since 1982 has GM share been at $17.46. Seems that despite American Axle and Manufacturing (NYSE: AXL) finally reaching a deal with the union and ending a three-month strike, the realization that the strike will cost GM $1.8 billion has been more than many could stomach.

It's no wonder, then, that the Dow Jones Industrial Average is off nearly 150 points to below 12,500. Stock markets have already experienced two days of heavy losses this week on Tuesday and Wednesday. Has the rally to 13,000, which never seemed supported by fundamentals as Peter Cohan wrote at the beginning of the month, indeed been a sucker rally and the bears are back in control? It's not so hard to answer that question in the affirmative today, at the end of this week.

The New York Times reports -- with relief (since the Times' Andrew Ross Sorkin's name had been floated for the job) -- that News Corp's (NYSE: NWS) Wall Street Journal has appointed Robert Thomson, a Murdoch loyalist who formerly edited the Times of London as its managing editor. Murdoch also appointed another loyalist, Leslie Hinton, as its publisher. Thomson and Hinton will also be editor-in-chief and CEO, respectively, of Dow Jones.

I remember back when Murdoch was courting the Bancroft family and people were worried that he would replace the senior people at the Wall Street Journal with his own people. Back then, I posted that he had a track record of doing that when he took over newspapers. I did not expect a different outcome with the Journal.

I was just thinking today that since I skip over most of what the Wall Street Journal publishes in its print edition, it would not be too much of a hardship to cancel my subscription when it comes up for renewal. If Thomson's appointment means less business insight and more propaganda, that decision will be an easier one.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Who is the boss of Bloomberg News?

During my career there, there was no question that Matthew Winkler was in charge. My colleagues laughed hysterically when I told them I asked Winkler about his bow ties during my interview with him before I was hired. Bloomberg's editor-in-chief is not known for his sense of humor. Good thing I didn't bring up bow ties -- which he wears every day -- again.

That's why I found the appointment of former Wall Street Journal top editor Norman Pearlstine as Bloomberg's chief content officer so curious. Does this mean that Pearlstine, who was Winkler's boss at the Journal, will supervise him again? What exactly does a chief content officer do that's different than an editor-in-chief? I am not sure of the answers to those questions and neither is the New York Times.

As the Times opines, "the move suggests that Bloomberg, whose fortunes have been buoyed by the selling of its hugely profitable data terminals to brokerage firms and investment banks, plans to expand the journalism side of its business."

The Reuters/University of Michigan Surveys of Consumers shows consumer sentiment at a 26-year low: "The April result is the lowest since March 1982's level of 62.0., when the "stagflationary" period of low growth and high inflation was still an issue for many Americans."

But is that a bad thing? A quick look at history shows that it probably isn't. The last time consumer sentiment was this low was right before the beginning of the longest bull-run in history. The best book on that era is called Bull: A History of the Boom and Bust: 1982-2004. The chart below of the Dow Jones Industrial Average performance during 1980-2000 pretty much tells the story. See the little divot on the far left side? Yeah, that was 1982.

So don't get too depressed about consumer weakness. The last time things looked this bad, they ended up working out better than ever. And anyone who sold on the scary headlines regretted it very quickly.

MAJOR PAPERS:

• If the financial crisis hasn't crippled banks enough, the cost to build bank loan reserves may be just as painful, according to the Wall Street Journal's "Heard on the Street". The need for larger reserves is eating away at earnings and is showing up in first quarter reports for banks such as Bank of America Corporation (NYSE: BAC), whose results took an additional hit because of a $6B addition to its loan loss reserve.
• Just four months after Journal parent Dow Jones & Co. was bought by Rupert Murdoch's News Corporation (NYSE: NWS), Wall Street Journal managing editor Marcus Brauchli is expected to resign, according to the Wall Street Journal. Journal publisher Robert Thomson may temporarily take over until a new managing editor is hired.
• The Financial Times reported that Citigroup Incorporated (NYSE: C) is seeking advice from IT group Hewlett-Packard Company (NYSE: HPQ) on how to overcome a crisis without breaking up the company.

WEB SITES:

• According to Reuters, activist shareholders in ASM International (NASDAQ: ASMI) believe, by giving more equity to top managers, that they can boost its value by $1.6B.

The Bespoke Investment Group always produces interesting charts, graphs, and data to give investors different ways to look at current trends. Clearly, given the recent volatility in the market, I was surprised to see a post entitled, "Dow 15,000". So, I clicked.

The article, brief but illustrative took an interesting methodology. Bespoke looked at current prices of all 30 component of the Dow Jones Industrial Average.

Next, the post looked at the average of all analyst price targets on the 30 firms.

The outcome?

"If analyst price targets are in the ballpark though, the Dow should rise by 19% from current levels, putting Dow 15,000 within reach by the end of the year".

Analyst opinions are frequently wrong but it's useful for investors to put things in perspective. It may not matter what analysts think of individual stocks if the entire market suffers this year. Good stocks frequently get sold off in market downturns.

Zack Miller the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.

News Corp (NYSE: NWS) said it will sell Salt Lake City-based KSTU Channel 13 and seven other Fox-affiliated televisions stations to Oak Hill Capital Partners for $1.1 billion, the Associated Press reported Wednesday. In May 2007, Oak Hill purchased nine television stations from The New York Times Co. (NYSE: NYT) for $575 million.

News Corp's shares gained 5 cents to $21.47 on the news in Wednesday morning trading.

Alan Daniak of Anderson & Associates told BloggingStocks Wednesday that the deal should help rebuild News Corp.'s cash component, following the purchase of Dow Jones.

"It's a significant cash infusion for News Corp. KSTU was a strong revenue holding but News Corp. could benefit from the added cash after the Dow Jones deal, so it makes considerable sense," Daniak said. "And the deal also speaks to the fact the News Corp. is committed to selling lower-profile, smaller affiliate stations to concentrate on core markets."

Earlier this year News Corp. agreed to buy Dow Jones, including The Wall Street Journal, for $5.2 billion.

There's definitely some symbolism here: Now that Dow Jones, the most respected name in financial news, has been sold to Rupert Murdoch, it's being replaced in the S&P 500 by a store that sells video games.

A lagging stock price and stagnant growth have forced the parent company of The Wall Street Journal into the hands of one of the most controversial media barons in history, and all that the S&P 500 has to show for it is a chain that operates stores in the mall selling titles like Halo 3 and Hello Kitty Roller Rescue to kids and kids who never grew up.

Ladies and gentlemen, GameStop (NYSE: GME), the world's largest video game retailer, is joining the S&P 500. The New York Times reports on the company's remarkable turnaround. A little more than 10 years ago, GameStop was in bankruptcy. What's interesting is that GameStop has prospered as a niche store, in world where niche stores are getting beaten into the ground by big boxes like Wal-Mart (NYSE: WMT).

How did they do it? By hiring people who -- gasp -- are enthusiastic about the products they're selling.

Shares of GameStop should get a boost as index funds scramble to add the shares to their portfolios. But oftentimes, the addition the index can be the peak of a company's fortunes and investors may want to consider taking profits -- GameStop isn't the underdog anymore.

MAJOR PAPERS:

• The Wall Street Journal's "Deal Journal" reported that Sam Zell's planned buyout of Tribune Company (NYSE: TRB) is contingent on the receipt of a solvency opinion, and that this is the first time they have ever seen a deal dependant on this.
• The WSJ's "Heard on the Street" reported that Countrywide Financial Corporation (NYSE: CFC) may not be out of the woods yet. Despite executives promising a return to profitability, there is still a risk the company may eventually seek bankruptcy protection or "resort to huge sales" of new stock.
• U.S. private equity group JC Flowers "is understood" to have walked away from the auction for troubled bank Northern Rock, the Financial Times reported.
• Rupert Murdoch is shaking up the management of News Corp (NYSE: NWS.A), the Financial Times reported, giving his son, James Murdoch, control over the company's European and Asian operations, and appointing two trusted executives to lead Dow Jones & Company Inc (NYSE: DJ) and the Wall Street Journal.

WEB SITES:

• Barron's Online's "Weekly Trader" said AutoNation Inc (NYSE: AN) looks attractive now, despite hovering near a multi-year low. The company has also been on a slow but steady quest to diversify away from unpopular domestic brands by snapping up luxury and import dealerships.

Newsweek is running an article that Dow Jones & Company, Inc. (NYSE: DJ) current CEO, Richard Zannino, is set to relinquish his CEO position of the Wall Street Journal. This comes one week before Rupert Murdoch's News Corporation (NYSE: NWS) is set to assume control over Dow Jones.

This move comes after a contentious battle waged by Murdoch to lobby the Bancroft family to vote their controlling shares in favor of a merger.

The Newsweek article provides some color on this whole process saying, "Fearful that Murdoch might use the Journal as a platform to forward his own business and political views, numerous Dow Jones employees and executives tried to lobby the Bancrofts not to sell. But after Murdoch promised to preserve the Journal's editorial independence, the family decided to take the money and run."

As for Zannino, the ex-fashion industry and retailing executive, Murdoch doesn't seem to have found a place for him in the "new" Dow Jones. But that's OK, don't shed a tear for Zannino. His parting package weighs in at about $19 million, according to the Newsweek

Zack Miller is the Managing Editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund. He does not own any stocks mentioned.

Tribune (NYSE: TRB) is recently down 55 cents to $29.95. TRB expects its $34-per-share sale to Sam Zell, private equity, debt holders and employees to be closed by end of 2007. The FCC granted temporary waivers to complete the deal on Dec. 30. TRB call option volume of 2,688 contracts compares to put volume of 15,775 contracts. TRB December option implied volatility of 80 is above its 26-week average of 36 according to Track Data, suggesting larger price risks.

LDK Solar (NYSE: LDK) is a manufacturer of multicrystalline solar wafers. Dow Jones reported LDK will tap $700 million in long-term debt and credit lines, as well as about $100 million in customer prepayments. LDK auditing report on the investigation of allegations of inaccurate inventory is expected in early December. LDK has said the company has correctly reported its inventories. LDK is expected to report Q3 EPS in mid-December. LDK December option implied volatility is at 165 and March is at 133; above its 21-week average of 98, according to Track Data, suggesting larger risk.

Daily Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

In what could could be a sign of things to come, Rupert Murdoch and executives at the Dow Jones Company's (NYSE: DJ) Wall Street Journal are trading arguments in the press about the future of the newspaper's online edition.

A few days ago, Murdoch said that he planned to make the Wall Street Journal Online free, and make up for the lost subscription revenue by selling advertising on the site. Given the Journal's status as the premier financial news source, he estimated that he could increase traffic 10- to 15-fold from its current base of about 1 million subscribers.

Well some executives at the paper responded that the "The exclusivity of Journal content provides value beyond the Web site" and that making the Journal free would reduce print subscriptions and cannibalize traffic to other Dow Jones-owned sites.

My hunch is that Murdoch is right -- online advertising is exploding and the idea of a property as valuable as this newspaper getting so little traffic makes me think there's a better way. But regardless of who is right, this is a fight Murdoch will probably win. It's been said before and it's worth saying again: Rupert gets what Rupert wants.

The storied merger proceedings between Sirius Satellite Radio (NASDAQ: SIRI) and its hoped-for partner, XM Satellite Radio (NASDAQ: XMSR), took another step on Tuesday, albeit one that was widely expected. Shareholders of both companies gave the merger their collective blessing by a healthy majority.

The sizable hurdles of regulatory approval on the part of the Justice Department and the Federal Communications Commission (FCC) remain. Those opposed to the collaboration say the deal would create a monopoly in the satellite radio industry and point to the failed merger attempt between EchoStar Communications (NASDAQ: DISH), parent of the DISH Network, and DirecTV.