Sunday, April 10, 2005

Weekly Outlook

There are a few important economic reports and some significant corporate earnings reports scheduled for release this week.

Economic reports for the week include:

Mon. - None of note
Tues. - Trade Balance, Minutes of March 22 FOMC Meeting, Monthly Budget Statement
Wed. - Advance Retail Sales
Thur. - Initial Jobless Claims, Business Inventories
Fri. - Empire Manufacturing, Import Price Index, Net Foreign Security Purchases, Industrial Production, Preliminary April Univ. of Mich. Consumer Confidence

Some of the more noteworthy companies that release quarterly earnings this week are:

Mon. - Circuit City(CC), Genentech(DNA), Abbott Labs(ABT)
Tues. - Ameritrade Holdings(AMTD)
Wed. - Advanced Micro Devices(AMD), Apple Computer(AAPL), Harley-Davidson(HDI), Lam Research(LRCX), Linear Techonogy(LLTC), Commerce Bancorp(CBH)
Thur. - JB Hunt Transportation(JBHT), PepsiCo(PEP), UnitedHealth Group(UNH), Sun Microsystems(SUNW), Southwest Airlines(LUV)
Fri. - Citigroup(C), General Electric(GE), Wachovia(WB), Mattel Inc.(MAT)

Other events that have market-moving potential this week include:

Mon. - Fed's Guynn speaks on Business Ethics
Tue. - Fed's Santomero speaks on Economy
Wed. - None of note
Thur. - Fed's Bernanke speaks on Current Account Gap
Fri. - None of note

BOTTOM LINE: I expect US stocks to finish the week modestly lower on continuing worries over slower economic growth and inflation. While I think US growth is slowing and may even temporarily fall below 3%, growth should accelerate to healthy levels later in the year. As well, the coming weeks will likely result in peak inflation fears for the year. I continue to expect the second half to be much better for US stocks than the first half as inflation decelerates, commodities prices fall, long-term interest rates remain low, 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 25% net long heading into the week.

No comments: