Economic reports for the week include:
Mon. - None of note
Tues. - Consumer Confidence
Wed. - Final 4Q GDP, Final 4Q Personal Consumption, Final 4Q GDP Price Deflator
Thur. - Personal Income, Personal Spending, PCE Deflator, Initial Jobless Claims, Help Wanted Index, Chicago Purchasing Manager, Factory Orders
Fri. - Unemployment Rate, Average Hourly Earnings, Change in Non-farm Payrolls, Average Weekly Hours, Univ. of Mich. Consumer Confidence, Construction Spending, ISM Manufacturing, Total Vehicle Sales
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - Micron Technology(MU), Walgreen Co.(WAG)
Tues. - Apollo Group(APOL)
Wed. - Accenture Ltd(ACN), Best Buy(BBY), Carmax Inc.(KMX), Circuit City Stores(CC), Ruby Tuesday(RI)
Thur. - American Tower(AMT), Bed Bath & Beyond(BBBY), Freddie Mac(FRE), Red Hat Inc.(RHAT), Toys R Us(TOY)
Fri. - Pier 1 Imports(PIR)
Other events that have market-moving potential this week include:
Mon. - None of note
Tue. - Smith Barney Healthcare Conference, Banc of America Media/Telecom/Entertainment Conference, Prudential Metals & Mining Conference
Wed. - Lehman Brothers' Global Healthcare Conference, Banc of America Media/Telecom/Entertainment Conference, MSFT Analyst Meeting
Thur. - Lehman Brothers' Global Healthcare Conference
Fri. - Lehman Brothers' Global Healthcare Conference
BOTTOM LINE: I expect US stocks to begin the week modestly lower and then rally on an oversold technical bounce, bargain hunting, short covering, stabilizing long-term interest rates and quarter-end window-dressing. Consumer Confidence readings will likely come in below expectations due to the recent extreme negativity perpetuated in the media, high-profile acts of violence around the country, Terri Schiavo's Case, the Social Security debate, higher gas prices and lower stock prices. As well, other economic data may fail to meet elevated expectations. This, combined with a stronger US dollar, should lead to a stabilizing of long-term interest rates this week. I continue to expect the second half of the year to be much better for US stocks than the first half as inflation decelerates, commodities prices fall, long-term interest rates decline, low valuations tempt investors, growth remains healthy, the US dollar stabilizes, employment continues to improve, merger activity continues and corporate spending accelerates. My trading indicators are still bearish and the Portfolio is market neutral heading into the week.
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