Weekly Outlook

There are a number of important economic reports and many significant corporate earnings reports scheduled for release this week. Economic reports include (Mon.)-Personal Income/Spending, PCE Deflator, New Home Sales, Chicago Purchasing Manager (Tues.)-Construction Spending, ISM Manufacturing/Prices Paid, Total Vehicle Sales (Wed.)-FOMC Rate Decision (Thur.)-Preliminary 4Q Non-farm Productivity/Unit Labor Costs, Initial Jobless Claims, Factory Orders, ISM Non-Manufacturing (Fri.)-Unemployment Rate, Change in Non-farm Payrolls, Univ. of Mich. Consumer Confidence. Personal Spending, New Home Sales, Chicago Purchasing Manager, ISM Manufacturing, FOMC Rate Decision, ISM Non-Manufacturing, Change in Non-farm Payrolls and Consumer Confidence all have market-moving potential.

Mon. - AFLAC Inc.(AFL), Exxon Mobil(XOM), Hilton Hotels(HLT), Kellogg(K), Nortel Networks(NT), Walt Disney(DIS), Zimmer Holdings(ZMH) Tues. - Avon Products(AVP), Boston Scientific(BSX), Chicago Mercantile Exchange(CME), Chubb Corp.(CB), Emerson Electric(EMR), Google(GOOG), HCA Inc.(HCA), Ingersoll-Rand(IR), Tyco Intl.(TYC) Wed. - Amazon.com(AMZN), Boeing(BA), Harrah's Entertainment(HET), Northrop Grumman(NOC), Pulte Homes(PHM) Thur. - Comcast (CMCSA), International Paper(IP), Sprint Corp.(FON), Starwood Hotels(HOT) Fri. - Cardinal Health(CAH), Newmont Mining(NEM), Time Warner(TWX) are some of the more important companies that release quarterly earnings this week. There are also a few other events that have market-moving potential. The CSFB Energy Summit(Mon.-Fri.), Lehman Brothers Industrial Conference(Tues.) and the Fed's Greenspan speaking(Fri.) could also impact trading this week.

Bottom Line: I expect US stocks to finish the week higher on a very positive outcome with the Iraqi elections, increased optimism over meaningful US reforms, declining energy prices, better fund inflows, strong earnings reports and more dovish Fed comments. Economic reports for January will likely show modest deceleration, thus keeping long-term interest rates low. The Fed will likely raise rates by 25 basis points and maintain their language of "continuing hikes at a measured pace." However, I am not ruling out the possibility of comments suggesting a slowing of the pace of their hikes and do expect this at some point in the near future. The markets would view this positively as I believe investors are worried the Fed is now raising rates unnecessarily, given slowing global growth, decelerating inflation and a stabilizing US dollar. My short-term trading indicators are still giving Sell signals and the Portfolio is 100% net long heading into the week.