TheStreet.com's Jim Cramer says stocks connected to the sector will take it on the chin if the housing index falls further.

A perusal of the charts this weekend shows something surprising: The weakest group out there has been the homebuilders for several weeks now. KB Home (NYSE: KBH) (Cramer's Take), D.R. Horton (NYSE: DHI) (Cramer's Take), Lennar (NYSE: LEN) (Cramer's Take), and Toll Brothers (NYSE: TOL) (Cramer's Take) have simply been a horror show. What's going on here? How can these stocks be so dangerous when mortgage rates have crashed through 5%, the level that every banker I talk to says mortgages jump off the table and refinancings rush to be done.

What's going on? This group's tracking more than just mortgage rates. It's tracking employment and news flow and both are terrible.

Here are some highlights from last week's earnings coverage from BloggingStocks:

• Adobe Systems Inc. (NASDAQ: ADBE) just beat low Q3 earnings estimates but revenue also declined.
• Best Buy Co. Inc. (NYSE: BBY) earnings fell short of estimates but revenue was better than expected.
• Cracker Barrel Old Country Store Inc. (NASDAQ: CBRL) posted better-than-expected Q4 earnings.
• Discover Financial Services (NYSE: DFS) posted a surprise Q3 profit but shares rose slightly on the news.
• Dress Barn Inc. (NASDAQ: DBRN) reported modest growth in both net income and revenue in Q4.
• FedEx Corp. (NYSE: FDX) said that its Q1 earnings and revenue dropped but its cash flow has improved.

TheStreet.com's Jim Cramer says these companies believed they could ride out the storm, but that wasn't the reality.

Have I been had? That's how I feel recently about two interviews I conducted on "Mad Money," one with Bruce Carbonari of Fortune Brands (NYSE: FO) (Cramer's Take) and the other with Rick Goings from Tupperware (NYSE: TUP) (Cramer's Take).

Let me say from the outset that these two companies and these two CEOs have been gracious enough to come on my show to talk about their businesses and their prospects and how they would survive in tough times.

Both have what I call accidentally high yields. Both are upbeat people and like to see the good in their businesses. They are not "downbeat" -- perhaps even when they should be.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Andersons Inc. (NASDAQ: ANDE) lifted its outlook on improved performance of its Plant Nutrient Group.
• BP Plc (NYSE: BP) was upgraded by Societe Generale due in part to its earnings prospects.
• Citigroup Inc. (NYSE: C) has developed an earnings improvement plan based on collective bonuses.
• Corel Corp. (NASDAQ: CREL) solid Q2 results did not address a buyout offer from Vector Capital.
• Discover Financial Services (NYSE: DFS) Q2 earnings were boosted by dumping its Goldfish card division.
• Fortune Brands Inc. (NYSE: FO) lowered its earnings outlook on challenging consumer environment.
• Isle of Capri Casinos Inc. (NASDAQ: ISLE) blamed dismal results on floods and smoking bans.
• MSCI Inc. (NYSE: MXB) strong Q2 results didn't save it from being dumped by Morgan Stanley (NYSE: MS).
• PAREXEL International Corp. (NASDAQ: PRXL) lifted its Q4 and full-year guidance, leading to an upgrade.
• Texas Industries Inc. (NYSE: TXI) was downgraded due to fears about its earnings prospects.
• Taleo Corp. (NASDAQ: TLEO) reaffirmed its outlook as an acquisition would boost results.
• WD-40 Co. (NASDAQ: WDFC) posted solid Q3 results and offered conservative guidance.

More highlights from this past week: Apollo Group, Family Dollar, Kroger, Deutsche Bank and others

Also, while Jim Cramer ponders what will signal the bottom, many investors will be looking at next week's earnings results for General Electric (NYSE: GE), the world's largest conglomerate, as a sign of the direction of the global market. And BusinessWeek reminds us that cheap stocks -- even with big names such as Ford Motor Co. (NYSE: F), Sprint Nextel Corp. (NYSE: S), and Northwest Airlines (NYSE: NWA) -- are no bargain if they have no earnings.

Upcoming results to watch for include Alcoa (NYSE: AA), Pepsi Bottling Group (NYSE: PBG), Marriott International (NYSE: MAR), and General Electric (NYSE: GE).

Visit AOL Money & Finance for more earnings coverage.

The bulls got to lead the first day of the quarter, although we would note that if today was the norm that trading volatility isn't slowing down regardless of the direction. Oil rose again toward session highs on tensions and the usual myriad of reasons we cite for oil rising (yes, it's that routine). Here are today's unofficial closing levels:

• DJIA 11,381.77 (+31.51)
• S&P500 1284.89 (+4.89)
• NASDAQ 2304.97 (+11.99)
• 10YR T-Note 3.992% (+0.013%)
• 52-WEEK LOWS

We actually saw many financial sector upgrades from research firms today, which sent many of the corresponding shares higher in what feels like a "for once" statement. We would caution that later in the day an analyst report did note other banks would need more capital (again).

When the Swedish government put Vin & Spirit, parent company of Absolut Vodka, up for sale more than a year ago, industry experts estimated it would fetch over $4 billion.

Now, Pernod Ricard, a French liquor company, is buying the brand for $8.89 billion. Absolut is the third largest spirit brand in the world, and the sale attracted the interest of many of the industry's top players: Fortune Brands (NYSE: FO), Diageo and Bacardi.

What makes the high valuation afforded to Absolut so interesting is that Pernod Ricard is paying nearly $9 billion for a brand that only really came to prominence in its current form in the 1980s.

With its racy and provocative ads (like the one on this post), Absolut was one of the first mainstream brands to aggressively target the gay community. Back when the sale effort was first announced, I opined that targeting gay media outlets was a decision that paid off, as this large, and often affluent population group, now counts Absolut as its vodka of choice. Perhaps a company like Budweiser, which has been widely criticized for spending money on ads (such as the Super Bowl) that have done little for the brand, could learn something from Absolut's edgy marketing.

The M&A field is in a rough patch right now, struggling from a tough debt market and general economic malaise. But apparently, strategic buyers are still able to pay up for strong brands.

TheStreet.com's Jim Cramer says the bad news is relentless, and people are discouraged.

Each day seems to be filled with so much disappointment. The American Axle (NYSE: AXL) (Cramer's Take) strike, for example, has now pretty much shut down General Motors (NYSE: GM) (Cramer's Take), and I see no signs that AXL can defeat the union. Given how heavily dependent the Midwest region is on GM for steady income, this one can only exacerbate the terrible real estate market and hence the terrible mortgage delinquencies that pockmark Indiana, Michigan and Ohio.

Or the loss of the Absolut brand for Fortune Brands (NYSE: FO) (Cramer's Take). Fortune needed to win this one because its home improvement business is falling off a cliff. This was a vain attempt to diversify a division that has always helped the company in tough times.

Or the Vytorin studies, nothing new, as we knew that parts of the medical community doesn't approve of the drug, but the analysts had held out hope and we have and are going to see repeated downgrades of the stock. I am telling subscribers of Action Alerts PLUS that Schering (NYSE: SGP) (Cramer's Take) stock, at $16 -- where it is surely headed -- has now lost more than half its value, which reflects the pulling of the drug. As 50% of the company's earnings are reportedly from the drug, perhaps that's a fitting decline. I think SGP is worth a lot more because of the purchase of Oraganon. I have been very wrong. My solace: So many others have been, too.

Other companies reporting quarterly results on Tuesday included the following:

Constellation Brands Inc. (NYSE: STZ): Third-quarter profit rose 11 percent, lifted by strong liquor sales, a growth in North American wine business, and acquisition of Svedka vodka. Profit for the quarter ended November 30 rose to $119.6 million, or 55 cents a share, from $107.8 million, or 45 cents a share, a year earlier. Analysts polled by Thomson Financial had expected 55 cents per share on revenue of $1.04 billion. However, Constellation lowered its full-year profit outlook, in part due to costs from its recent acquisition of Fortune Brands Inc.

Acuity Brands Inc. (NYSE: AYI): Fiscal 2008 first-quarter earnings fell 7 percent, as a restructuring charge offset higher pricing and increased sales. The company earned $31.1 million, or 72 cents per share, compared with $33.6 million, or 77 cents per share, in the same quarter a year ago. Analysts had expected profit of 82 cents per share on revenue of $500.6 million, according to analysts polled by Thomson Financial. Revenue increased 7% to $508.9 million, from $477.6 million a year ago. The special charge was related to planned actions to streamline operations as a result of the spin-off of Zep Inc.

MOST NOTEWORTHY: Sun Microsystems (JAVA), FMC Technologies (FTI), TorreyPines (TPTX), and Exelixis (EXEL) were today's noteworthy initiations:

• Sun Microsystems Inc (NASDAQ: JAVA) was initiated with a Market Perform at BMO Capital, which views the shares' risk/reward as favorable around $5.
• FMC Technologies Inc (NYSE: FTI) was initiated with a Buy by Jefferies, which believes strong subsea fundamentals will drive strong earnings by the company.
• TorreyPines Therapeutics Inc (NASDAQ: TPTX) was initiated with a Strong Buy at JMP Securities, which said PhIIb data in Q4 on the company's tezampanel drug could increase investor conviction on the first in-class drug.
• Exelixis Inc (NASDAQ: EXEL) was initiated with a Buy by Lazard, which believes Exelixis has a promising pipeline.

OTHER INITIATIONS:

• Fortune Brands Inc (NYSE: FO) was assumed with a Neutral rating by JMP Securities.
• Evergreen Solar Inc (NASDAQ: ESLR) was assumed with a Hold rating by Jefferies.
• Research in Motion Limited (NASDAQ: RIMM) and Kodiak Oil & Gas Corp (AMEX: KOG) were initiated with Outperform ratings at BMO Capital.

MOST NOTEWORTHY: HouseValues, Inc (SOLD), Fortune Brands (FO), D.R. Horton (DHI), Dicks Sporting Goods (DKS) and USG Corp (USG) were some of today's noteworthy initiations:

• Cantor believes HouseValues (NASDAQ: SOLD) may be a lagging indicator of the broader real estate market. As such, it may see its customer and revenue bases contract further in the face of still-sluggish housing data and started shares with a Hold rating.

• Pali Research initiated Fortune Brands (NYSE: FO) with a Neutral rating based on valuation.

• The firm also believes D.R. Horton's (NYSE: DHI) risk to book value and profitability is higher than some of the competition since the company has taken significantly less land charges. Shares were initiated with a Hold rating.

• Dick's Sporting Goods (NYSE: DKS) was initiated with an Outperform at Baird and is positive on Dick's store expansion, market leadership, margin opportunities and fundamentals.

• USG (NYSE: USG) was initiated with a Sell rating at Banc of America, believing wallboard price and profit declines will be worse than expected due to lower housing starts and less spending on remodeling. Their analysis suggests another leg down for housing...

OTHER INITIATIONS:

• Morgan Joseph started Jamba, Inc (NASDAQ: JMBA) with a Buy rating.

• Wachovia started Johnson & Johnson (NYSE: JNJ) with a Market Perform rating.

• Baird started Golfsmith International Holdings (NASDAQ: GOLF) with a Neutral rating.

• Merrill Lynch initiated Bayer AG (NYSE: BAY) with a Buy rating and UBS initiated QLogic (NASDAQ: QLGC) with a Neutral rating.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MAJOR PAPERS:

• William Ackman's Pershing Square Capital Management, whose firms holds about 15% of Ceridian Corporation (NYSE: CEN), doesn't like the proposed $5.3B sale of the company to Thomas H. Lee Partners and Fidelity National Financial Inc (NYSE: FNF), and says he's going to find higher bidders, according to the Wall Street Journal.
• The Financial Times reported that British bank Barclays PLC (NYSE: BCS) has drawn up plans to sweeten its $86B all-share offer for Dutch bank ABN Amro Holdings (NYSE: ABN), by substituting cash for some of the shares it is currently offering for ABN.
• Beginning today, Apple Inc (NASDAQ: AAPL) is embedding its iTunes internet music download service in the British and Irish social networking site Bebo, reported the Financial Times.

OTHER PAPERS:

• The New York Post has learned that a private-equity firm owned by the Dubai government is close to buying Barneys New York from the Jones Apparel Group (NYSE: JNY).
• The New York Times reported that the Wall Street Journal is set to "shake up its newsroom" by reassigning and replacing several top editors.
• Golf equipment maker Callaway Golf Company (NYSE: ELY) is suing Fortune Brands Inc.'s (NYSE: FO) Acushnet Co, for allegedly violating five Callaway patents for golf clubs, reported the Los Angeles Times.

MOST NOTEWORTHY: Fortune Brands (FO) and Altria Group (MO) were today's more notable downgrades:

• JP Morgan downgraded Fortune Brands (NYSE: FO) to Neutral from Overweight on valuation and the weak outlook for home and hardware sales.

• Altria Group (NYSE: MO) was downgraded by Deutsche Bank to Hold from Buy with a $95 target, citing its valuation, ex-Kraft, is more in line with its tobacco peers.

OTHER DOWNGRADES:

• CheckPoint Software Tech (NASDAQ: CHKP) was downgraded to Underperform from Market Perform with a $19 target at Freedman Billings, with expectations that 2007 will be a difficult transition year.

• Matrix USA downgraded shares of Boyd Gaming (NYSE: BYD) to Hold from Buy on valuation.

• Goldman Sachs downgraded TRW Automotive Hldg (NYSE: TRW) to Sell from Neutral and was added to the America's Sell List; they believe rising costs, a less favorable product mix and commercial steering business headwinds will weigh on revenue growth and margins in 2007.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Fortune Brands (FO) and Advanced Micro Devices (AMD) top today's small list of initiations.

• Fortune Brands, Inc. (NYSE:FO) was initiated with a Neutral rating and $86 target. The firm expects the weak housing market to put pressure on the shares.
• Morgan Stanley resumed coverage on Advanced Micro Devices, Inc. (NYSE:AMD) with a Equal Weight, citing risk to the ATI Technologies (ATYT) acquisition.

OTHER INITIATIONS:

• Morgan Stanley initiated Toll Brothers, Inc. (NYSE:TOL) with an Overweight rating and $23 target. The firm expects the high-end single-family market to outperform the group.
• Benihana, Inc. (NASDAQ:BNHNA) was initiated with an Outperform at Ryan Beck. The firm is positive on Benihana's accelerated remodeling program and potential growth from the company's RA Sushi concept.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).