Weekly Outlook

Click here for Wall St. Week Ahead by Reuters.

Click here for stocks in focus for Monday by MarketWatch.

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

Economic reports for the week include:

Mon. – Challenger Job Cuts, Personal Income, Personal Spending, PCE Core, Factory Orders

Tues. – ISM Non-Manufacturing, FOMC Rate Decision, weekly retail sales

Wed. – Weekly MBA mortgage applications, weekly EIA energy inventory data

Thur. – Initial Jobless Claims, Pending Home Sales, ICSC Chain Store Sales, Consumer Credit

Fri. – Non-farm Productivity, Unit Labor Costs, Wholesale Inventories

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

Mon. – Disk Network(DISH), IntercontinentalExchange(ICE), Humana(HUM), Pitney Bowes(PBI), Post Properties(PPS), Anadarko Petroleum(APC)

Tues. – Marvel Entertainment(MVL), Emerson Electric(EMR), MGM Mirage(MGM), DR Horton(DHI), Weyerhaeuser(WY), Grubb & Ellis(GBE), Covidien Ltd(COV), Brinker Intl.(EAT), St. Joe(JOE), Archer-Daniels-Midland(ADM), Duke Energy(DUK), News Corp.(NWS/A), Computer Sciences(CSC), Georgia Gulf(GGC), Papa John’s(PZZA), Forest Oil(FST), Whole Foods(WFMI), Vulcan Materials(VMC), Jack in the Box(JBX), Cisco Systems(CSCO), Rowan Cos(RDC), Sotheby’s(BID), Wendy’s(WEN), Priceline.com(PCLN), Vornado Realty(VNO), Procter & Gamble(PG)

Wed. – Transocean(RIG), Freddie Mac(FRE), Marsh & McLennan(MMC), Time Warner(TWX), Sprint Nextel(S), Qwest Communications(Q), Polo Ralph Lauren(RL), Advance Auto Parts(AAP), El Paso Corp.(EP), Devon Energy(DVN), Foster Wheeler(FWLT), Blackstone Group(BX)

Thur. – Warnaco Group(WRC), Blockbuster(BBI), Williams Cos(WMB), Dynegy(DYN), Sara Lee(SLE), California Pizza Kitchen(CPKI), Hansen Natural(HANS), DirectTV(DTV), Dollar Tree(DLTR), Barr Pharma(BRL), Progressive Corp.(PGR), Deckers Outdoor(DECK), Titanium Metals(TIE), Cardinal Health(CAH)

Fri. – Beazer Homes(BZH), MBIA(MBI), MicroStrategy(MSTR)

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

Mon. – Pacific Crest Tech Forum

Tue. – BMO Healthcare Conference, RBC Tech/Media/Communications Conference, Pacific Crest Tech Forum

Wed. – (AXP) analyst meeting, (TXT) analyst call, RBC Tech/Media/Communications Conference, BMO Healthcare Conference

Thur. – Bank of America Specialty Pharma Conference, RBC Tech/Media/Communications Conference

Fri. – Bank of America Specialty Pharma Conference

BOTTOM LINE: I expect US stocks to finish the week modestly higher on less economic pessimism, bargain-hunting, diminishing credit market fear, mostly positive earnings reports, lower energy prices, a firmer US dollar and short-covering. My trading indicators are giving neutral signals and the Portfolio is 100% net long heading into the week.

Market Week in Review

S&P 500 1,260.31 +.20%*

Click here for the Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices
S&P 500 1,260.31 +.20%
DJIA 11,326.32 -.39%
NASDAQ 2,310.96 +.02%
Russell 2000 716.14 +.82%
Wilshire 5000 12,827.05 +.37%
Russell 1000 Growth 537.99 -.31%
Russell 1000 Value 672.47 +.93%
Morgan Stanley Consumer 670.01 +.72%
Morgan Stanley Cyclical 856.51 +1.63%
Morgan Stanley Technology 554.33 +.66%
Transports 4,949.22 -.20%
Utilities 469.53 -2.04%
MSCI Emerging Markets 42.57 +.29%

Sentiment/Internals
NYSE Cumulative A/D Line 43,404 +2.39%
Bloomberg New Highs-Lows Index -372 +4.37%
Bloomberg Crude Oil % Bulls 24.0 +33.3%
CFTC Oil Large Speculative Longs 201,622 +1.82%
Total Put/Call .99 +20.73%
OEX Put/Call .92 +37.31%
ISE Sentiment 82.0 -25.45%
NYSE Arms 1.23 +6.03%
Volatility(VIX) 22.57 -1.48%
G7 Currency Volatility (VXY) 9.44 -3.58%
Smart Money Flow Index 8,007.81 -1.61%
AAII % Bulls 40.0 +11.7%
AAII % Bears 41.2 -6.5%

Futures Spot Prices
Crude Oil 125.15 +1.38%
Reformulated Gasoline 308.52 +1.40%
Natural Gas 9.40 +3.27%
Heating Oil 344.03 -3.29%
Gold 918.80 -2.10%
Base Metals 232.35 -.76%
Copper 359.20 -.69%
Agriculture 410.44 -.49%

Economy
10-year US Treasury Yield 3.93% -16 basis points
10-year TIPS Spread 2.30% -2 basis points
TED Spread 1.14 +7 basis points
N. Amer. Investment Grade Credit Default Swap Index 132.98 -1.56%
Emerging Markets Credit Default Swap Index 247.96 +1.51%
Citi US Economic Surprise Index +26.80 -23.65%
Fed Fund Futures 9.2% chance of 25 hike, 90.8% chance of no move on 8/5
Iraqi 2028 Govt Bonds 74.82 +.17%
4-Wk MA of Jobless Claims 393,000 +2.9%
Average 30-year Mortgage Rate 6.52% -11 basis points
Weekly Mortgage Applications 420,800 -14.05%
Weekly Retail Sales +2.7%
Nationwide Gas $3.90/gallon -.10/gallon
US Cooling Demand Next 7 Days 20.0% above normal
ECRI Weekly Leading Economic Index 128.10 -1.08%
US Dollar Index 73.42 +77%
Baltic Dry Index 8,341 -4.90%
CRB Index 416.02 +.92%

Best Performing Style
Mid-cap Value +1.13%

Worst Performing Style
Large-cap Growth -.31%

Leading Sectors
Papers +8.78%
Banks +6.36%
I-Banks +4.93%
Biotech +3.30%
Gaming +2.84%

Lagging Sectors
Utilities -2.04%
Networking -2.68%
Oil Tankers -3.82%
Gold -6.66%
Coal -8.12%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change

Stocks Finish Mostly Lower, Weighed Down by Commodity and Utility 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 Mostly Lower into Final Hour on Iran Tensions, Global Growth Worries

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Medical longs, Software longs and Computer longs. I covered all my (IWM)/(QQQQ) hedges and some of my (EEM) short today, thus leaving the Portfolio 100% net long. The tone of the market is modestly negative as the advance/decline line is about even, sector performance is mostly negative and volume is about average. Investor anxiety is above average. Today’s overall market action is mildly bearish. The VIX is falling 1.44% and is still above-average at 22.61. The ISE Sentiment Index is depressed at 70.0 and the total put/call is above average at 1.02. Finally, the NYSE Arms has been running high most of the day and is currently 1.33. The Euro Financial Sector Credit Default Swap Index is rising 2.0% today to 83.46 basis points. This index is up from a low of 52.66 on May 5^th, but down from 129.46 basis points on March 20^th. The North American Investment Grade Credit Default Swap Index is -.3% today to 132.98 basis points. The TED spread is rising .3% to 1.14. The 10-year TIPS spread, a good gauge of inflation expectations, is stable at 2.29%, which is the lowest since May 2nd and down 34 basis points in less than 3 weeks. Given Iran and Israel’s saber-rattling comments today, oil’s small rise is a large positive. Oil tanker rates have plunged 33.9% this week, which could indicate less hoarding. As well, the US dollar continues to trade very well, rising another .2%, despite today’s perceived disappointing economic data, which bodes well for another decline in commodities next week. According to Intrade.com, notwithstanding Israel’s comments today, the percent chance of a US/Israeli air strike on Iran before October is only 11%, down from 30% at the beginning of April. Financial shares continue to consolidate recent gains even better than I would have expected, which has to worry the many bears. The (XLF) is at session highs, rising .42%. The (XLF) is 26% higher from its July 15^th lows. The BankRate.com average 30-year fixed mortgage rate is now 6.26%, which is down 25 basis points in a week. I expect mortgage rates to continue to trend lower over the intermediate-term. Nikkei futures indicate an +16 open in Japan and DAX futures indicate an +35 open in Germany on Monday. I expect US stocks to trade modestly higher into the close from current levels on short-covering, less financial sector pessimism and bargain-hunting.

Today's Headlines

Bloomberg:
- The cost of protecting US corporate bonds from default fell after a government report showed the economy lost fewer jobs in July than economists had projected. Credit-default swaps on the Markit CDX North America Investment Grade Index fell .75 basis point to 133.75 basis points as of 8:35 am in NY.
- Copper and aluminum fell in London on indications that demand growth in China, the world's largest consumer of all industrial metals, may slow after manufacturing contracted for the first time since a survey began in 2005. ``For years the Chinese have tried to slow down the economic growth to avoid a bubble and that's probably taking effect now,'' said Andrew Silver, a trader at Natixis Commodity Markets in London. ``Once the slowdown takes hold, we will see impacts on consumption,'' he said today by phone from London. Copper inventories expanded 2,250 tons, or 1.6 percent, to 144,650 tons, the highest since Feb. 28, according to the exchange's daily data.
- The US dollar rose to a one-month high against the euro as a government report showed employers in the U.S. eliminated fewer jobs last month than analysts forecast. The euro weakened as German retail sales dropped in June more than twice as much as forecast, undermining the case for the European Central Bank to boost interest rates again this year. The pound headed for its biggest weekly drop since mid- June as U.K. manufacturing shrank by the most in a decade.
- Corn and soybeans fell for a second straight day on speculation that rainfall next week will ease the stress of hot weather and improve crop conditions in the U.S., the world's largest producer and exporters. Corn futures for December delivery fell 14.5 cents, or 2.4 percent, to $5.93 a bushel at 10:53 a.m. on the Chicago Board of Trade, the second straight drop. A close at that price would leave corn down 0.5 percent for the week, the fifth straight decline. Most-active futures fell 20 percent in July, the most in 22 years, and are down 25 percent from a record $7.9925 on June 27.
- Crude oil was little changed after falling more than $2 a barrel, capping the biggest one-month decline since December 2004, as a slowing U.S. economy caused fuel consumption to weaken to the lowest in three years. ``With demand so poor, we have to re-examine price expectations. The market will be guided by the economic outlook here, in Europe and in the emerging markets.'' Pump prices are following changes in futures. Regular gasoline, averaged nationwide, fell 1.7 cents to $3.909 a gallon, AAA, the nation's largest motorist organization, said on its Web site yesterday. Pump prices reached a record $4.114 a gallon on July 17. ``We found a slowdown in same-store diesel of 4 to 4.5 percent across the board,'' Marathon Oil Corp. refining chief Gary Heminger said on a conference call yesterday with analysts. One reason is that truckers are driving at lower speeds, ``which has really taken an improvement of about 4 percent in their miles per gallon, which has dropped demand.'' Marathon is the U.S. Midwest's largest refiner.
- Iran is driving toward a ``major breakthrough'' in its nuclear development effort that poses an ``unacceptable'' danger, Israeli Deputy Prime Minister Shaul Mofaz told a Washington audience today.
- Ford Motor Co.(F) and Toyota Motor Corp.'s July U.S. sales declined as record gasoline prices damped demand for trucks and a slowing economy kept consumers away from dealer lots.
- Ambac Financial Group Inc.(ABK), the bond insurer that lost its AAA credit rating this year, will pay Citigroup Inc.(C) $850 million to extricate itself from a guarantee of a $1.4 billion collateralized debt obligation. Ambac rose as much as 60 percent in New York trading after the company said it will record a gain of $150 million on the contract because it had previously written down its value by $1 billion.

NY Times:
- Deutsche Bank AG Chairman Josef Ackermann believes the turmoil in the world financial system will be over “within a few months.”

Washington Post:
- Bank officials named in an unfolding Senate investigation have directed more than $2 million into this year's congressional and presidential campaigns, some of it arriving just as investigators finished a report accusing the bank of helping clients hide billions of taxable dollars from the Internal Revenue Service. At the heart of the probe is UBS of Switzerland, one of the world's largest banks, which in June alone distributed $98,000 to members of Congress through its political action committee.

Newsday.com:
- Sen. Hillary Rodham Clinton (D-N.Y.) will not be Barack Obama's running mate, but she will be the keynote speaker at the Democratic National Convention - at least that is what some of her boosters are saying. "Because of your work, Senator Obama asked Hillary to be his keynote speaker at the Democratic National Convention!" said Vote Both founders Adam Parkhomenko and Sam Arora on their Web site. "Regretfully, this means that Senator Hillary Clinton is no longer under consideration as Senator Obama's running mate." Asked how he knows, Arora told The Associated Press, "All indications we have from people close to Senator Clinton and Senator Obama are that Hillary is not on the short list."

New York Post:
- In a move similar to what Merrill Lynch(MER) has done, Lehman Brothers'(LEH) CEO Dick Fuld is trying to shop tens of billions of dollars in mortgage securities on its balance sheet in order to reduce leverage at the embattled investment bank, The Post has learned. Lehman is engaged in talks with prospective buyers about offloading some $30 billion in commercial mortgage assets and other hard-to-value securities that have dogged its balance sheet for months and ultimately resulted in the demotion of Chief Financial Officer Erin Callan and President Joseph Gregory.

greentechmedia:
- New Energy Finance says the number of specialist hedge funds focused on clean energy and the environment is growing, as is the number of funds that invest in other cleantech funds.

USA Today:
- AT&T Inc.’s(T) exclusive distribution of Apple Inc.’s(AAPL) iPhone 3G was extended a year to 2010 in exchange for the wireless company helping subsidize the cost of phone. AT&T pays Apple $300 per phone to keep the iPhone’s retail cost at $199 so consumers can afford it.

International Herald Tribune:
- As the first anniversary of the August 2007 subprime mortgage meltdown approaches, and world markets still reel, you would think that the people who have received much of the blame - the math wizards, computer geeks and other quantitative analysts collectively known as financial engineers - would be in disgrace. Yet by all evidence, the field of financial engineering is thriving - and, in fact, growing. Far from disowning financial engineers, or quants as they are also known, financial institutions - and their regulators - are embracing them as partners in an increasingly complicated game that, it seems, only the very brainy can understand well enough to play safely.

Business Timesonline:
- Investors almost halved the money they put into Asia-focused hedge funds in the second quarter compared to the first three months of the year as a selloff in stocks hurt appetite for risky assets, data showed. Asia-focused hedge funds received a net US$530 million from investors in the April-June quarter, down from US$1 billion in the first quarter, Chicago-based Hedge Fund Research said in a statement released late on Thursday.