Economic reports for the week include:
Mon. - NAHB Housing Market Index
Tues. - Producer Price Index, Housing Starts, Building Permits
Wed. - Consumer Price Index, Fed's Beige Book
Thur. - Initial Jobless Claims, Leading Indicators, Philadelphia Fed.
Fri. - None of note
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - 3M Co.(MMM), Bank of America(BAC), Eli Lilly(LLY), Hasbro(HAS), Novellus Systems(NVLS), Texas Instruments(TXN)
Tues. - Boston Scientific(BSX), CDW Corp.(CDWC), Cendant(CD), Coca-Cola(KO), General Motors(GM), Intel Corp.(INTC), Johnson & Johnson(JNJ), Juniper Networks(JNPR), Merrill Lynch(MER), MGM Mirage(MGG), Pfizer Inc.(PFE), RadioShack(RSH), Seagate Technology(STX), Washington Mutual(WM), Yahoo! Inc.(YHOO)
Wed. - Altria Group(MO), Caterpillar Inc.(CAT), eBay Inc.(EBAY), General Dynamics(GD), Harrah's Entertainment(HET), JPMorgan Chase(JPM), Motorola(MOT), Qualcomm(QCOM)
Thur. - Amgen(AMGN), Broadcom(BRCM), Google Inc.(GOOG), HCA Inc.(HCA), McDonald's(MCD), Office Depot(ODP), Starbucks(SBUX), Valero Energy(VLO)
Fri. - Barrick Gold(ABX), Eastman Kodak(EK)
Other events that have market-moving potential this week include:
Mon. - AG Edwards Media & Entertainment Conference
Tue. - AG Edwards Media & Entertainment Conference, Goldman Sachs Small-Cap Consumer/Retail Conference, Semi Book-to-Bill, Fed's Fianalto speaks
Wed. - Goldman Sachs Small-Cap Consumer/Retail Conference
Thur. - Merrill Lynch Deathcare Conference, Fed's Pianalto speaks
Fri. - Fed's Kohn and Fed's Hoenig speaks
BOTTOM LINE: I expect US stocks to finish the week modestly higher on bargain hunting, short-covering and lower energy prices. I continue to believe US growth is slowing and may even temporarily fall to around 2% before accelerating to more healthy levels later in the year. However, in my opinion, investors are overreacting to this slowdown and pricing in an imminent recession. Sentiment has finally reached levels normally associated with meaningful market bottoms. I also 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 accelerates, the US dollar remains firm, employment continues to improve and merger activity continues. As I stated last week, it is my belief that longer-term investors should use any further weakness over the coming weeks to begin building positions in favorite longs. Homebuilder, Retail, Biotech, Airline, Financial, Internet and Gaming shares should outperform in the second half, given my outlook. My trading indicators are still bearish and the Portfolio is 25% net long heading into the week.
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