Standard & Poor’s announced a downgrade to Japan citing a lack of “coherent strategy” in reducing their $11 trillion deficit. This weakened the yen against 16 currency counterparts and over 1 percent against the dollar and euro. This is the first downgrade of Japan by S&P in over nine years.

The S&P 500 fell 0.01 behind this announcement.

Japanese officials are citing political gridlock and persistent deflation for the inability to control their deficit according to S&P. Japan is now rated as an AA-. This is equivalent to the rating of China which recently surpassed Japan as being the second-largest economy in the world. This rating is considered to be the fourth highest of the S&P ratings.

Other markets were affected by the downgrade among concerns borrowing rates to Japan would increase. Currently, their deficit is about twice that of their gross domestic product. Bond futures fell amid warnings the deficit must be addressed before onset of a “global depression.” The Japanese Vice Finance Minister, Fumihiko Igarashi, warned the government must address the financial woes of the country to avoid a debt crisis.

With the downgrade comes revelations for certain companies based in Japan. S&P rates at least thirteen Japanese companies with a higher rating than their local economy. Though S&P states this is not uncommon, contenders to follow this model have to exhibit a robust export base, little reliance on the public sector, and sell products that have a relatively inelastic demand. An example of this type of company would be Toyota Motor Company. Though executives decline comment, Toyota exists above the parameters of staying within a more global mindset to continue their profitability. This keeps their S&P rating high. They are able to pass the “stress test” which consists of evaluating their dependency on imports, sales in local currency, and evaluation of industry regulation. The country itself is not meeting these same standards.

According to the S&P index, Qualcomm and Netflix are continuing to gain steam as of late-day trading on Wednesday.

Fourth-quarter reports were released by both companies showing an increase in overall profit greater than previously expected. Netflix posted an 87 cent per share profit increase which was a stellar 22 percent above the 71 cent per share expectation. Qualcomm showed an adjusted profit of 82 cents per share toppling the expected 72 cents per share projection. The exceptional return boosted both companies to have a strong finish in yesterday’s S&P trading.

Netflix is considered the top of the S&P chain posting a 250% gain in 2010. The 9.6% increase in stock pricing to $200.55 is based on a 2.9 million volume as posted on Nasdaq.com. Qualcomm has also posted a roughly 10% increase in that same time period reaching $53.10 last week. The increase has been an additional 6.8% to $55.01 on a 6.6 million volume.

Qualcomm is anticipating the growth trend to continue with the assistance of continued demand for smart phones. Netflix is continuing to see the subscriber base grow with the increased capability of streaming more movies over the internet. The continued expansion of the demand for their services should help to keep them securely set in the upper echelon of the S&P elite.

On the flip side, Starbucks suffered a decline of 2.5%, falling to $32.23 on a volume of 2.5 million. The decline seems to have generated from a decent posting of profit for the end of fiscal 2010, but the projected outlooks for 2011s fiscal year were not as bright.

Starbucks estimates that profit will range from $1.44 to $1.47 for the fiscal year ending in September. This is below the projected $1.49. The company is citing increased commodities costs as the culprit for the decrease in profits. With the increase, there is an anticipated reduction in profit of approximately 20 cents year-on-year as the costs of coffee continue to rise.

Proctor & Gamble suffered a $1.28 share drop to $64.25 after the releasing that the company fell short of its third-quarter profit forecast. This is the largest drop in P&G stock since August 3, 2010.

P&G analysts are now anticipating closer to a 99 cent to 1 dollar overall profit for the quarter. P&G executives are citing cost of production materials have jumped as high as 20-21 percent over the last year alone. This includes such products as resin, wood pulp, and commodities used to create everything from packaging to Pampers diapers. This rise in cost has been the major contributing factor in the fall of P&G’s profit margin.

Rival companies are already showing profits with their fourth-quarter earnings. Kimberly-Clark Corporation and Colgate-Palmolive Company have both maintained or exceeded profit projections with the same rise in commodities pricing in place. It is reported that Kimberly-Clark Corporation managed to offset these costs by raising consumer pricing.

Even with the third-quarter short fall, P&G still anticipates an overall annual increase in profit for the fiscal year 2010. The estimates show projected profit ranging from $3.94 to $4.01 excluding costs for legal matters and taxes. P&G goes on to report that second-quarter profits rose 5.8 percent to over $3.33 billion, equating to about $1.11 per share. This is reportedly because of the reduction in the overall income-tax liability. P&G asserts this number could be as high as $1.13 per share subtracting certain items. Even so, this would be a decline from the same period one year previously where per share profit equated $1.49 or $4.66 billion.

P&G continues to develop plans to increase its profitability. Plans are in place to spur sales by introducing a lower-cost product line to address the high unemployment rate. This is considered to help these families continue to purchase quality products during the harsh economic times. Meanwhile, P&G is also looking to expansion into developing markets globally for product distribution. Only roughly 40 percent of P&G’s $78.9 billion in sales was generated in North America. The remainder was fueled by developing markets. Executives believe by maintaining this continued growth and development P&G will remain the global power in consumer products for many years to come.

Brazilian Government Bonds are overtaking the yield rates once held strictly by the United States. According to the Artio Total Return Bond Fund, Brazilian bonds are becoming the most attractive in the world. With returns of over 6.2%, the yields are better than over 60% of their constituents.

The Brazilian model contains a fund of roughly $1.4 billion dollars consisting of private sector corporations and mortgages. The yield year-over-year for the previous five years has averaged 6%. This is outperforming roughly 75% of the Morningstar rivals.

On this basis, it is considered that the Brazilian yields are consistently high enough that they are worth the potential risk.

The Brazilian currency is maintaining a consistent level which is an indicator against any hike in interest rates. Investors are being encouraged to look at this as a sort of discount. With a small likelihood of interest fluctuation, there is less likely to be any long-term affect on the overall yield. Any interest increase would be short-term at worst, and therefore, making this a very low-risk investment.

Warnings do exist about which ends of the Brazilian market to enter. As with general private securities, there are warnings against entering into the private mortgage securities as they are subject to collapse as the US mortgage market did. There are also warnings against investing in direct corporations. The Brazilian Industrial Market is subject to companies restructuring their balance sheet to restructure for corporate takeover. Though it is good for company equity investors, it is not good in the bond sector. There are warnings to stick with companies that are less likely to be acquired and have a stable structure over a three to five year period. These companies are better investment possibilities.

Yield for US treasuries are on the rise. Artio reports that interest rates are also poised for an increase. Long-term investment in US treasuries will not see the kind of yield that the Brazilian bonds are obtaining currently because of interest rate increases. If one is looking at US treasuries, the recommendation is strictly for short-term investment. These shorter-term investments are less likely to be negatively affected by the interest rate increase.

With the exclusive rights to the iPhone hanging over their heads, AT&T stocks are taking a dive.

AT&T announced their full-year earnings will most likely miss projections. The expected increase will only equate to about “mid-single digits,” as the yearly $2.22 per share is only expected to hit $2.33 per share. Projections stated increases to be approximately $2.50. Because of this, stocks fell 82 cents, or 2.9 percent, to $27.91. Previous gains were upward of 4.8 percent over last year.

AT&T is determining its strategy to address sales without the exclusive iPhone relationship. Next month, Verizon Wireless will begin carrying the iPhone. AT&T is projects subscriber gains for the year, but anticipation is the new relationship between Apple and Verizon will decrease that subscriber base in the coming year. This would require AT&T to compensate with increased handset costs which will lower overall earnings potential.

Coinciding with the fall of AT&T stock, Verizon is projecting growth because of the new agreement to carry the iPhone. Analysts expect up to 8 percent year-on-year growth courtesy of the new line. Projections range from 5 percent to 8 percent depending on the iPhone sales.

AT&T had just surpassed Verizon as the largest carrier before the new iPhone agreement. AT&T increased from 92.8 million subscribers to 95.5 million customers by year end. Verizon finished year end with 94.1 million subscribers up from the 93.2 million in the third-quarter reporting. The iPhone agreement will make a major impact on these numbers.

AT&T’s mobile empire may be threatened by the Verizon-Apple partnership, but there are additional AT&T services to help compensate for some of the subscriber decline. AT&T has seen increases in the subscriber base to their Uverse television service and overall internet service. This subscriber base has grown to 3 million which was up from the 248,000 registered at the end of the previous year.