Long-Term CRB Index Graph

(click on image to enlarge)

BOTTOM LINE: The CRB Index is up 122.3% from the October 2001 low, but is 37.7% higher in just the last six months even as global growth decelerates. In my opinion, this type of parabolic move in commodities is unsustainable and has many of the characteristics seen during other blow-off tops.

Long-Term Unit Labor Costs Graph(Quarter-Over-Quarter % Change)

(click on image to enlarge)

BOTTOM LINE: Unit Labor Costs, which account for about two-thirds of the cost of goods and services, rose 2.1% quarter-over-quarter in the fourth quarter. This is below the long-term average of 3.1%. Moreover, over the last three quarters unit labor costs have been falling at a .3% rate on average. In my opinion, if it were not for the current bubble in commodity prices, investors would be much more concerned about the potential for deflation rather than problematic inflation.

Long-Term Consumer Price Index Graph(Year-Over-Year % Change)

(click on image to enlarge)

BOTTOM LINE: The CPI rose 4.3% year-over-year in January. While this is modestly above the long-term average of 3.0%, it is nowhere near problematic levels seen in the past.

Weekly Outlook

Click here for a weekly economic preview by MarketWatch.

Click here for Monday’s US Equity Preview by Bloomberg.

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

Economic reports for the week include:

Mon. – ISM Manufacturing, ISM Prices Paid, Construction Spending, Total Vehicle Sales

Tues. – Weekly retail sales reports

Wed. – Weekly EIA energy inventory data, weekly MBA Mortgage Applications report, Challenger Job Cuts, ADP Employment Change, 4Q Non-farm Productivity, 4Q Unit Labor Costs, Factory Orders, ISM Non-Manufacturing, Fed’s Beige Book

Thur. – Initial Jobless Claims, Pending Home Sales, Mortgage Delinquencies, ICSC Chain Store Sales

Fri. – Change in Non-farm Payrolls, Unemployment Rate, Average Hourly Earnings, Consumer Credit

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

Mon. – None of note

Tues. – Tech Data(TECD), Kenneth Cole(KCP), Chico’s FAS(CHS), Take-Two(TTWO), WellCare Health(WCG), Copart(CPRT), Staples(SPLS), AES Corp.(AES)

Wed. – Brown Shoe(BWS), BJ’s Wholesale(BJ), Saks Inc.(SKS), Martek Biosciences(MATK), ADC Telecom(ADCT), PetSmart(PETM), H&R Block(HRB), Coldwater Creek(CWTR), Big Lots(BIG), Costco Wholesale(COST), Longs Drug Stores(LDG)

Thur. – Joy Global(JOYG), Urban Outfitters(URBN), Blockbuster Inc.(BBI), Orbitz Worldwide(OWW), National Semi(NSM), Cooper Cos(COO), Quiksilver Inc.(ZQK), Marvel Tech(MRVL), Dillard’s(DDS), Korn/Ferry(KFI), VeriFone(PAY), Blackstone Group(BX)

Fri. – None of note

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

Mon. – Fed’s Plosser speaking, (KEG) analyst meeting, Morgan Stanley Tech Conference, Merriman Curhan Ford IP Video Conference, Citi Global Property Conference, Raymond James Institutional Conference, CSFB Under Followed Opportunities Conference

Tue. – Fed’s Bernanke speaking, (EAC) analyst meeting, (JAH) analyst meeting, (ARRS) analyst meeting, (RTIX) analyst dinner, (OMTR) analyst meeting, CSFB Under Followed Opportunities Conference, Bear Stearns Retail/Restaurants/Consumer Conference, Citi Global Property Conference, Morgan Stanley Tech Conference, Merrill Global Automotive Conference, Raymond James Institutional Investor Conference, Citi Industrial Manufacturing Conference

Wed. – OPEC Meeting, (PFE) analyst meeting, (XOM) analyst meeting, (KWK) analyst meeting, (TAP) analyst meeting, CSFB Under Followed Opportunities Conference, Morgan Stanley Tech Conference, CSFB Global Biotech Conference, Citi Global Real Estate Conference, Bear Stearns Retail/Restaurant/Consumer Conference, Citi Industrial Manufacturing Conference, CSFB Global Biotech Conference, CIBC Retail Conference, Raymond James Institutional Investor Conference, Citi Global Industrial Manufacturing Conference

Thur. – (SD) analyst meeting, (BNI) analyst meeting, (IBM) investor briefing, (IT) investor day, (JNPR) analyst meeting, (LMNX) investor day, (HRS) analyst meeting, Bear Stearns Retail/Restaurants/Consumer Conference, UBS Energy Conference, UBS Engineering/Construction Conference

Fri. – UBS Energy Conference

BOTTOM LINE: I expect US stocks to finish the week mixed as mostly positive earnings reports, increasing odds for a 75 basis pint rate cut, bargain hunting and diminishing bond insurer uncertainty offsets more shorting and economic pessimism. My trading indicators are giving mixed signals and the Portfolio is 75% net long heading into the week.

Market Week in Review

S&P 500 1,330.63 -1.66%*

Click here for the Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices
S&P 500 1,330.63 -1.66%
DJIA 12,266.39 -.93%
NASDAQ 2,271.48 -1.38%
Russell 2000 686.18 -1.33%
Wilshire 5000 13,398.02 -1.55%
Russell 1000 Growth 551.92 -1.18%
Russell 1000 Value 728.55 -2.10%
Morgan Stanley Consumer 681.10 -1.47%
Morgan Stanley Cyclical 929.04 -1.92%
Morgan Stanley Technology 529.68 -1.69%
Transports 4,550.58 -2.79%
Utilities 477.50 -4.03%
MSCI Emerging Markets 141.70 +.80%

Sentiment/Internals
NYSE Cumulative A/D Line 59,824 +2.95%
Bloomberg New Highs-Lows Index -184
Bloomberg Crude Oil % Bulls 18.0 -37.9%
CFTC Oil Large Speculative Longs 257,989 +11.0%
Total Put/Call 1.23 +7.89%
ISE Sentiment 75.0 -7.54%
NYSE Arms 2.75 +394.44%
Volatility(VIX) 26.54 +10.31%
G7 Currency Volatility (VXY) 10.94 +11.52%
AAII % Bulls 34.3 +3.4%
AAII % Bears 45.3 +1.25%

Futures Spot Prices
Crude Oil 101.74 +2.56%
Reformulated Gasoline 266.26 -.86%
Natural Gas 9.36 +1.14%
Heating Oil 280.50 +1.98%
Gold 975.20 +2.94%
Base Metals 270.22 +5.74%
Copper 383.0 +1.18%

Economy
10-year US Treasury Yield 3.51% -29 basis points
10-year TIPS Spread 2.44% +8 basis points
TED Spread 1.22 +34 basis points
Investment Grade Credit Default Swap Index 151.26 -1.30%
Fed Fund Futures 70.0% chance of 75 cut, 30.0% chance of 50 cut on 3/18
Iraqi 2028 Govt Bonds 73.45 +.34%
4-Wk MA of Jobless Claims 360,500 -.4%
Average 30-year Mortgage Rate 6.24% +20 basis points
Weekly Mortgage Applications 665,100 -19.2%
Weekly Retail Sales +.6%
Nationwide Gas $3.16/gallon +.03/gallon.
US Heating Demand Next 7 Days right at normal
ECRI Weekly Leading Economic Index 132.40 +.15%
US Dollar Index 73.75 -2.39%
CRB Index 412.76 +3.52%

Best Performing Style
Small-cap Growth -.87%

Worst Performing Style
Mid-cap Value -2.11%

Leading Sectors
Computer Services +2.82%
Energy +1.73%
Oil Service +1.37%
Biotech +1.01%
Medical Equipment unch.

Lagging Sectors
Utilities -4.03%
Gaming -5.48%
I-Banks -5.52%
Banks -6.39%
Airlines -10.66%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change