Weekly Outlook

Click here for Wall St. Week Ahead by Reuters.

Click here for stocks in focus for Monday by MarketWatch.

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

Economic reports for the week include:

Mon. – None of note

Tues. – S&P/CaseShiller Home Price Index, Consumer Confidence, Richmond Fed Manufacturing Index, House Price Index, weekly retail sales

Wed. – Durable Goods Orders, New Home Sales, FOMC rate decision, weekly MBA Mortgage Applications report, weekly EIA energy inventory data report

Thur. – Final 1Q GDP, Final 1Q, Personal Consumption, Final 1Q GDP Price Index, Final 1Q Core PCE, Initial Jobless Claims, Existing Home Sales, weekly EIA natural gas inventory report

Fri. – Personal Income, Personal Spending, PCE Core, Univ. of Mich. Consumer Confidence

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

Mon. – Walgreen Co.(WAG)

Tues. – Jabil Circuit(JBL), Darden Restaurant(DRI), Sonic Corp.(SONC), Kroger Co.(KR)

Wed. – Monsanto(MON), General Mills(GIS), Nike Inc.(NKE), Oracle Corp.(ORCL), CKE Restaurants(CKE), Herman Miller(MLHR), Red Hat Inc.(RHT), Bed Bath & Beyond(BBBY), American Greeting(AM)

Thur. – Discover Financial(DFS), Lennar Corp.(LEN), ConAgra Foods(CAG), Palm Inc.(PALM), Christopher & Banks(CBK), Paychex(PAYX), Accenture(ACN), Rite Aid(RAD), McCormick & Co.(MKC), Micron Tech(MU)

Fri. – KB Home(KBH), Steelcase Inc.(SCS), Finish Line(FINL)

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

Mon. – (ECA) analyst meeting, (FEIC) investor meeting, Wachovia Nantucket Equity Conference

Tue. – (ALD) investor day, (POR) analyst day, (RDC) conference call, Wachovia Nantucket Equity Conference, Jeffries Healthcare Conference, Bank of America Utilities Conference, Deutsche Bank Alternative Energy Conference, UBS Global Financial Markets & Technology Conference

Wed. – (PRXL) investor meeting, (WMB) analyst day, (MORN) investment conference, Jeffries Healthcare Conference, Wachovia Nantucket Conference, UBS Global Financial Markets & Technology Conference

Thur. – (MORN) investment conference, (GT) investor meeting, (XLNX) analyst meeting, (AUXL) conference call, (BRCD) technology day, Wachovia Nantucket Conference, Jeffries Healthcare Conference, UBS Insurance Conference

Fri. – (MORN) investment conference, JPMorgan Tobacco Conference, UBS Insurance Conference

BOTTOM LINE: I expect US stocks to finish the week modestly higher on a firmer US dollar, lower energy prices, less economic pessimism, a bounce in emerging market shares, a bounce in financial stocks, bargain-hunting and short-covering. My trading indicators are giving mostly bearish signals and the Portfolio is 75% net long heading into the week.

Market Week in Review

S&P 500 1,317.93 -3.10%*

Click here for the Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices
S&P 500 1,317.93 -3.10%
DJIA 11,842.69 -3.77%
NASDAQ 2,406.09 -1.97%
Russell 2000 725.73 -1.07%
Wilshire 5000 13,440.00 -2.70%
Russell 1000 Growth 571.14 -2.37%
Russell 1000 Value 698.67 -3.53%
Morgan Stanley Consumer 668.21 -3.32%
Morgan Stanley Cyclical 909.27 -3.72%
Morgan Stanley Technology 582.78 -2.23%
Transports 5,194.02 +.88%
Utilities 518.85 -.99%
MSCI Emerging Markets 138.91 -1.33%

Sentiment/Internals
NYSE Cumulative A/D Line 53,362 +.10%
Bloomberg New Highs-Lows Index -423
Bloomberg Crude Oil % Bulls 29.0 +38.1%
CFTC Oil Large Speculative Longs 203,806 -6.72%
Total Put/Call 1.29 +41.8%
OEX Put/Call 1.43 +22.2%
ISE Sentiment 76.0 -40.3%
NYSE Arms 1.36 +98.53%
Volatility(VIX) 22.87 +7.78%
G7 Currency Volatility (VXY) 9.91 -7.04%
Smart Money Flow Index 8,378.52 -.18%
AAII % Bulls 32.98 +5.54%
AAII % Bears 45.74 -14.62%

Futures Spot Prices
Crude Oil 134.95 +.02%
Reformulated Gasoline 343.0 -.93%
Natural Gas 13.03 +3.11%
Heating Oil 376.07 -1.90%
Gold 904.0 +3.58%
Base Metals 247.87 +4.93%
Copper 382.0 +6.74%
Agriculture 469.38 -.19%

Economy
10-year US Treasury Yield 4.17% -9 basis points
10-year TIPS Spread 2.50% -2 basis points
TED Spread .95 +10 basis points
N. Amer. Investment Grade Credit Default Swap Index 116.20 +4.19%
Emerging Markets Credit Default Swap Index 239.06 +3.77%
Citi US Economic Surprise Index +12.30 +83.6%
Fed Fund Futures 10.0% chance of 25 hike, 90.0% chance of no move on 6/25
Iraqi 2028 Govt Bonds 73.0 -1.93%
4-Wk MA of Jobless Claims 375,300 +.9%
Average 30-year Mortgage Rate 6.42% +10 basis points
Weekly Mortgage Applications 507,900 -8.83%
Weekly Retail Sales +2.2%
Nationwide Gas $4.08/gallon +.01/gallon.
US Cooling Demand Next 7 Days 2.0% above normal
ECRI Weekly Leading Economic Index 132.60 -.23%
US Dollar Index 73.03 -1.50%
Baltic Dry Index 9,474 -6.59%
CRB Index 455.38 +2.13%

Best Performing Style
Small-cap Growth -.57%

Worst Performing Style
Large-cap Value -3.53%

Leading Sectors
Airlines +2.21%
Steel +2.07%
Oil Service +1.64%
Alternative Energy +1.59%
Biotech +.35%

Lagging Sectors
Insurance -4.33%
Telecom -5.14%
Gaming -5.31%
Banks -5.86%
HMOs -11.24%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change

Stocks Finish Sharply Lower, Weighed Down by Airline, Gaming, Technology, Steel, Financial Shares

Evening Review
Market Summary
Top 20 Biz Stories
Today’s Movers
Market Performance Summary
WSJ Data Center
Sector Performance
ETF Performance
Style Performance
Commodity Movers
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Commentary
After-hours Movers
After-hours Real-Time Stock Bid/Ask
After-hours Stock Quote
After-hours Stock Chart
In Play

Stocks Lower into Final Hour on Rising Oil, Global Growth Concerns, Financial Sector Worries

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Gaming longs, Alternative Energy longs and Software longs. I added (IWM/QQQQ) hedges and added to my (EEM) short today, thus leaving the Portfolio 75% net long. The tone of the market is very negative as the advance/decline line is substantially lower, every sector is declining and volume is heavy. Investor anxiety is high. Today’s overall market action is very bearish. The VIX is rising 8.1% and remains above average at 23.32. The ISE Sentiment Index is depressed at 78.0 and the total put/call is very high at 1.22. Finally, the NYSE Arms has been running very high most of the day and is currently 1.74. The Euro Financial Sector Credit Default Swap Index is rising 7.8% today to 85.9 basis points. This is up from a low of 52.66 on May 5^th, but still down from 129.46 basis points on March 20^th. The North American Investment Grade Credit Default Swap Index is rising 5.5% today to 120.4. The TED spread is rising 6.9% today to .96 basis points. On the positive side, the Regional Bank Index(KRX) is trading like it is washed out. (STI) just affirmed its first quarter credit and capital outlook and said it didn’t plan on cutting the dividend or issuing additional shares. The stock is surging 10% from session lows. Despite the rise in oil today, the 10-year TIPS spread, a good gauge of inflation expectations, is down 3 basis points to 2.47%. This is also down 12 basis points in 9 days. Investor angst is reaching very elevated levels again, which is always a necessary component to a tradable bottom, which could materialize at any moment. The parabolic rise in short interest, combined with recent stock declines, should give the many bears itchy trigger fingers to take some profits, as well. However, I still think it will take a meaningful reversal lower in commodities before the broad US market can mount a sustainable rally. One of my longs, (ILMN) continues to trade very well and is seeing a 663% spike in call option activity today. Nikkei futures indicate a -140 open in Japan and DAX futures indicate an +44 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on bargain-hunting and short-covering.

Today's Headlines

Bloomberg:
- Freddie Mac to treat MGIC, PMI, Radian as Type I insurers, says plan will help insurers regain AA ratings.
- The IMF said the US economic slump has been shallower than estimated and warned the Federal Reserve may have to raise interest rates “quickly” to contain inflation. IMF economists raised their forecast for US growth next year to 2% from 1.6%.
- Energy-Book Frenzy Is Sign of Speculation in Oil, Birinyi Says. New books on oil and energy investing are being published at the fastest rate in almost 40 years, a sign speculators are contributing to the rally in crude prices, according to Birinyi Associates. ``The conversation at dinner parties now is about oil prices,'' Rubin said in a phone interview from the research and money-management firm's office in Westport, Connecticut. ``When you find the interest is getting overly robust, it tends to be a cautionary note, as you saw with real estate.'' The last time a similar pattern arose was in books on real- estate investing three years ago, just before U.S. housing starts began a 57 percent tumble to the lowest level in 17 years, Birinyi's data show. Crude rose 676 percent since trading at $17.45 a barrel in November 2001 as demand from China and India increased, violence in Nigeria and Iraq reduced supplies and the U.S. dollar declined. Investors added about $250 billion to commodity index trading strategies from the end of 2003 through March.
- India, China Face Faster Inflation, Higher Rates. India’s inflation accelerated to a 13-year high and economists forecast higher consumer prices in China after record crude oil forced both nations to increase the regulated cost of fuel. India’s wholesale prices jumped 11.05% in the week to June 7, more than the median 9.79% increase in a Bloomberg News survey.
- Crude oil is rising more than $3/bbl. on a weaker US dollar and Iranian nuclear facility attack worries.
- Mexico’s central bank unexpectedly raised its benchmark interest rate, ignoring suggestions by President Felipe Calderon that borrowing costs were too high.
- Google Inc.(GOOG) may have some unlikely allies in defending its proposed partnership with Yahoo!(YHOO): the very advertisers that critics say may be hurt by the deal.
- General Motors(GM), Ford(F) and Chrysler credit ratings may be lowered by S&P on concern that higher gas prices are inflicting “financial damage” on the auto industry.
- Toronto-Dominion Bank would consider further US acquisitions or infusing other lenders with capital if the opportunity was right, CEO Edmund Clark said.

Wall Street Journal:
- Overseas Offerings Cut Into US Returns.
- Obama Turns FDR Upside Down. A high-income entrepreneur would see his or her federal marginal tax rate rise to 53% from 37.7% under Sen. Obama's tax plan. He proposes a 4.6 percentage point hike in the personal income tax rate, a loss of some itemized deductions, and a 12.4 percentage point hike in the Social Security payroll tax. This would take a successful entrepreneur's effective marginal tax rate higher than what it was under Jimmy Carter or Richard Nixon, when the maximum tax on an entrepreneur was 50%.
- The ‘Idle’ Oil Field Fallacy. A bill introduced in Congress this week would “compel” oil and natural gas companies to produce from federal lands they are leasing. These lawmakers ask why oil and gas companies want more access to federal lands to drill if they aren’t using all of the 68 million acres they already have? Anyone with even the most basic understanding of how oil and natural gas are produced – and this should include many members of Congress – knows that claims of “idle” leases are a diversionary feint.

CNBC:
- JPMorgan(JPM) May Be Interested In Wachovia(WB) Bid.

NY Times:
- China Presses Injured Athletes in Quest for Gold.
- The demand for fuel-efficient small cars and hybrids is so fierce that automakers cannot produce them fast enough.

USA Today:
- Millions more could get a rebate – if they file a return. Even as the IRS has sent out nearly 77 million tax rebates, more than 5 million retirees and disabled veterans who may qualify for a rebate haven’t received one because they haven’t filed a tax return, IRS Commissioner Douglas Shulman said.

NY Post:
- Fortress Investment Group is considering adding another $1 billion to the war chest it’s amassed to take advantage of the pain being felt on Wall Street. Fortress’ fund likely will look to purchase debt including securities such as mortgage-tainted collateralized debt obligations and leveraged loans that have been stuck on bank balance sheets.

Philadelphia Inquirer:
- Philadelphia Councilman Darrell Clarke yesterday proposed a zoning change to allow construction of the American Commerce Center, a tower that would be the nation’s tallest building.

Advertising Age:
- It looks like 2008 will not go down as the year marketers relied less on TV after all. After the broadcast upfront wrapped last week with a surprisingly strong $9.2 billion haul, the cable and syndication upfront markets – both expected to be about 80% wrapped this week and completely finished by July 4 – have posted even more significant increases. Cable is likely to have increased between 10% and 15% to $7.5 billion up from last year’s take of $6.9 billion, according to several key buyers, sellers and analysts.

Kommersant:
- Cement prices in the Moscow area fell about 10% in June to an average of $183 a metric ton as construction slowed and lower tariffs increased supplies of imports, citing statistics by industry groups. Construction during the first quarter this year in Russia’s Central Federal District fell 9% in comparison to the same period last year.