Weekly Outlook

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There are some economic reports of note and a number of significant corporate earnings reports scheduled for release this week.

Economic reports for the week include:

Mon. - Monthly Budget Statement

Tues. - Producer Price Index, Advance Retail Sales, Business Inventories

Wed. - Empire Manufacturing, Oct.24 FOMC Minutes

Thur. - Consumer Price Index, Initial Jobless Claims, Net Foreign Security Purchases, Industrial Production, Capacity Utilization, Philly Fed, NAHB Housing Market Index

Fri. - Housing Starts, Building Permits

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

Mon. - Bob Evans Farms(BOBE), Dick’s Sporting Goods(DKS), Qiagen NV(QGEN), Tyson Foods(TSN)

Tues. - Abercrombie & Fitch(ANF), Agilent Technology(A), American Eagle Outfitters(AEOS), Analog Devices(ADI), BJ’s Wholesale(BJ), DR Horton(DHI), Fossil Inc.(FOSL), Home Depot(HD), Pep Boys(PBY), Pilgrim’s Pride(PPC), Ross Stores(ROSS), Saks Inc.(SKS), Staples(SPLS), Target Corp.(TGT), TJX Cos(TJX), Wal-Mart Stores(WMT)

Wed. - Applied Materials(AMAT), Aramark Corp.(RMK), BEA Systems(BEAS), Charming Shoppes(CHRS), Gymboree Corp.(GYMB), HOT Topic(HOTT), Ltd Brands(LTD), Men’s Warehouse(MW), Network Appliance(NTAP), PetSmart Inc.(PETM), Salesforce.com(CRM), Talbots(TLB), Tyco Intl.(TYC)

Thur. - Barnes & Noble(BKS), Children’s Place(PLCE), Claire’s Stores(CLE), Dell Inc.(DELL), Footlocker(FL), Hewlett-Packard(HPQ), Hibbett Sporting Goods(HIBB), Intuit(INTU), JLG Industries(JLG), Kulicke & Soffa(KLIC), Longs Drug Store(LDG), Marvell Tech(MRVL), Stages Stores(SSI), Starbucks(SBUX), William-Sonoma(WSM), Zale Corp.(ZLC)

Fri. - AnnTaylor Stores(ANN), JM Smucker(SJM), Vimpel Communications(VIP), Zoll Medical(ZOLL)

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

Mon. - Deutsche Bank/Goldman Sachs Gaming Forum

Tue. - Bear Stearns SMid-cap Conference, Merrill Lynch Banking and Financial Services Conference, Citigroup Transports Conference, Morgan Stanley Global Consumer & Retail Conference, Deutsche Bank/Goldman Gaming Forum, UBS Global Communications and Tech Conference, (GE) Analyst Meeting, Fed’s Poole speaking, Fed’s Minehan speaking, Fed’s Yellen speaking

Wed. - Merrill Lynch Banking and Financial Services Conference, CSFB Healthcare Conference, Think Equity Media Convergence Summit, Citigroup Transports Conference, Morgan Stanley Global Consumer & Retail Conference, Lehman Small-cap Conference, Bank of America Energy Conference, Bear Stearns SMid-cap Conference, UBS Global Communications and Tech Conference

Thur. - Oppenheimer Restaurant Conference, CIBC Optical Tech Conference, Morgan Stanley Global Consumer & Retail Conference, CSFB Alternative Energy Conference, Bank of America Energy Conference, Lehman Small-cap Conference, CSFB Healthcare Conference, Merrill Lynch Banking & Financial Services Conference, Fed’s Pinalto speaking, Fed’s Kroszner speaking, Fed’s Bies speaking, Fed’s Moskow speaking

Fri. - Lehman Small-cap Conference, Bank of America Energy Conference, CSFB Insurance Conference, CSFB Healthcare Conference, Fed’s Fisher speaking, Fed’s Pinalto speaking

BOTTOM LINE: I expect US stocks to finish the week modestly higher on less political uncertainty, falling inflation worries, rising consumer spending optimism, lower energy prices, seasonal strength, strong corporate profits, investment manager performance anxiety and short-covering. My trading indicators are still giving bullish signals and the Portfolio is 100% net long heading into the week.

Weekly Scoreboard*

Indices
S&P 500 1,380.90 +1.22%
DJIA 12,108.43 +1.02%
NASDAQ 2,389.72 +2.53%
Russell 2000 769.15 +2.18%
Wilshire 5000 13,835.02 +1.36%
S&P Barra Growth 639.69 +.96%
S&P Barra Value 739.21 +1.47%
Morgan Stanley Consumer 669.56 +.59%
Morgan Stanley Cyclical 863.90 +2.26%
Morgan Stanley Technology 562.16 +2.94%
Transports 4,733.41 +2.62%
Utilities 449.83 +.91%
MSCI Emerging Markets 105.98 +2.69%
S&P 500 Cum A/D Line 8,535 +3.0%
Bloomberg Crude Oil 49.0% Bulls +29.5%
CFTC Oil Large Speculative Longs 162,794 +2.0%
Put/Call .98 +8.89%
NYSE Arms 1.45 +36.79%
Volatility(VIX) 10.79 -3.31%
ISE Sentiment 135.0 +15.4%
AAII % Bulls 50.60 +15.6%
AAII % Bears 26.51 -28.12%
US Dollar 85.07 -.78%
CRB 310.74 +.27%
ECRI Weekly Leading Index 137.50 +1.03%

Futures Spot Prices
Crude Oil 59.59 +.64%
Unleaded Gasoline 156.0 +3.45%
Natural Gas 7.77 -.92%
Heating Oil 169.86 +1.06%
Gold 629.50 +.33%
Base Metals 241.74 -1.51%
Copper 309.50 -7.55%
10-year US Treasury Yield 4.59% -2.75%
Average 30-year Mortgage Rate 6.33% +.32%

Leading Sectors
Gaming +5.87%
Networking +5.46%
Tobacco +4.46%
Internet +4.33%
Airlines +4.06%

Lagging Sectors
Gold and Silver -.29%
Telecom -1.21%
HMOs -2.23%
Drugs -2.62%
Coal -3.10%

One-Week High-Volume Gainers
One-Week High-Volume Losers

*5-Day % Change

Stocks Mostly Higher into Final Hour on Falling Commodity Prices, Lower Long-term Rates and Short-covering

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Semi longs, Retail longs and Commodity shorts. I have not traded today, thus leaving the Portfolio 75% net long. The tone of the market is positive as the advance/decline line is modestly higher, most sectors are rising and volume is below average. The Import Price Index for October fell 2.0% yesterday vs. estimates of a 1.0% decline and a 2.0% decline in September. Moreover, import prices fell 0.2% year-over-year. This is the first year-over-year decline since 2002 and it is down from a 9.9% increase in September 2005. Almost every widely followed measure of inflation is decelerating substantially. As the many U.S. stock market bears continue to pick and chose measures of inflation that suit their arguments, the 10-year yield, the best long-term predictor of inflation, moves ever lower. I remain long (TLT). I expect US stocks to trade modestly higher into the close from current levels on short-covering, performance anxiety, declining interest rates, lower energy prices and less irrational pessimism.

Today's Headlines

Bloomberg:
- Crude oil is falling for the first time in three days after the International Energy Agency cut its demand forecast for the third consecutive month.
- Russian and the US will sign terms for the former Soviet state to join the World Trade Organization next week, clearing one of the last hurdles for an agreement that may add $10 billion a year to the Russian economy.
- Copper is plunging to a four-month low, capping the biggest weekly decline since September. The Beijing-based customs office said recently that warehouse inventories monitored by the Shanghai Futures Exchange rose 15% this week and that Chinese imports plunged 22% so far this year. Merrill Lynch, today, is telling clients its sees copper collapsing 47% by 2008.
- Jeff Shankman, the former chief operating officer of global markets at Enron Corp., plans to raise as much as $250 million in the next six months for an energy hedge fund.
- SEC Chairman Cox said the agency will propose rules next month that raise hedge fund investing requirements.
- US Treasuries are headed for their biggest weekly advance since September on decelerating inflation readings and optimism about demand for new securities.
- Economists at Citigroup(C), JPMorgan Chase(JPM), Royal Bank of Scotland Group and Commerzbank AG cut their forecasts for the European economy after French growth unexpectedly stalled in the third quarter.
- Gold in NY is falling on skepticism China will buy the precious metal to diversify its foreign-currency reserves.

Wall Street Journal:
- Sweden’s new right-leaning government, led by Prime Minister Fredrik Reinfeldt, is on track with its program of promoting economic growth by shrinking the country’s welfare system.
- Starbucks Corp.(SBUX) is trying to offer new choices in its interior designs to help it defuse opposition as it expands worldwide.
- Businesses gained a victory in coping with US accounting standards after regulators agreed to relax the requirements for verifying and assessing internal financial controls.
- Citigroup(C) so far has little to show for its efforts to expand in China’s $2 trillion banking market as the Chinese government has resisted expansion by foreign banks.
- GM(GM) plans to sell a new Buick model, which carries seven passengers, at a lower price than rival vehicles from Toyota Motor’s(TM) Lexus and Honda Motor’s Acura.
- Dell Inc.(DELL) has sacrificed its leading position in the global computer market in favor of higher profit and investors are signaling approval.
- US Large-cap Growth mutual funds seem poised for a rally, after several years of underperformance.

NY Times:
- Burger King Holdings(BKC), OfficeMax(OMX) and Anheuser-Busch(BUD) are among companies augmenting advertising by creating entire television shows featuring their products.
- Cummins(CMI) and Caterpillar(CAT) are among companies either building or using diesel engines to meet US EPA requirements.
- Allergan(AGN) is offering free injections of its wrinkle-filler Juvederm to users of Restylane, which is sold in the US by Medicis Pharmaceutical(MRX).
- The five principals of Fortress Investment Group LLC stand to make $6.8 billion from the hedge fund’s initial public offering.
- NBC has ordered nine more episodes of “Studio 60 on the Sunset Strip,” even as the number of viewers has plunged 41%.
- President Bush began efforts to remove Defense Secretary Rumsfeld almost three months ago and put off the ouster because of fear it would be interpreted as political opportunism.

Philadelphia Inquirer:
- Robert Johnson, the founder of Black Entertainment Television, will be a partner in Pinnacle Entertainment’s(PNK) bid to build a $350 million waterfront casino in Philadelphia.

Boston Globe:
- Fidelity Investments will eliminate the $20 annual fee on all college-savings plans and lower the minimum investment required to start an account.

Economic Releases

- None of note

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