Tuesday, August 10, 2004

Tuesday Watch

Earnings of Note
Company/Estimate
ANF/.43
AGI/.26
CSCO/.20
CSC/.57
DISH/.22
ECLG/.09
FOSL/.17
MAY/.35
OSIP/-1.18
DIS/.26

Splits
None of note.

Economic Data
Preliminary 2Q Non-farm Productivity estimated +2.0% versus +3.8% in 1Q.
Preliminary 2Q Unit Labor Costs estimated +2.0% versus +.8% in 1Q.
The Fed is expected to raise rates 25 basis points.

Recommendations
Goldman Sachs reiterated Outperform on BAC, BSX, UNH and SYMC. Goldman reiterated Underperform on DAL.

Late-Night News
Asian indices are quietly mixed ahead of the U.S. Fed rate announcement. California's power-grid operator predicted record demand for electricity Wednesday and extended its power use warning for another two days, Dow Jones News reported. Sony will use its game console chips in flat-panel tv for fall release, the Nihon Keizai said. Former Enron Chairman Lay asked a federal judge to separate his case from two other ex-Enron officers and schedule his trial on fraud charges to start Sept. 14, his lawyer said. China's industrial production rose in July at its slowest pace in a year, adding to evidence that the government's lending curbs are cooling growth in the world's seventh-largest economy.

Late-Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 indicated +.08%.
NASDAQ 100 indicated +.11%

BOTTOM LINE: I expect U.S. stocks to open modestly lower ahead of the Fed rate announcement. However, stocks should rise later in the day after the hike and Fed comments. I expect the Fed will raise rates 25 basis points tomorrow and make comments that they are monitoring the recent weakness in some parts of the economy and will slow the pace of increase if necessary. Moreover, they will likely say they are seeing positive signs with respect to slowing inflation. The Portfolio is 25% net long heading into tomorrow.

No comments: