The Week Ahead

January 31, 2011

We ended the week on a volatile note as the Middle East, namely Egypt, rattled the markets. Taking Friday’s action into consideration, the markets are still mostly positive year-to-date with the DJIA, the Nasdaq, and the S&P 500 up 2.1%, 1.3% and 1.5% respectively. The Russell 2000 is down 1.1%.  The U.S. appears to be in a more self sustaining expansion as we saw GDP growth accelerate in the fourth quarter to 3.2%.

 Earning season continues this week however most major companies have already reported. Friday’s employment situation is in focus as the jobless claims continue to improve, albeit with a lot of noise in the weekly claims.

The Week Ahead

January 24, 2011

Markets last week were mixed, with the DJIA advancing 0.7%, while the Nasdaq, the S&P 500 and the Russell 2000 all declined by –2.4%, -0.8% and –4.3% respectively.  Earnings reports were mixed, with GE’s positive surprise only partially offsetting disappointments registered by BAC and FFIV [reining in the cloud computing euphoria].
The week ahead includes earnings and non-earning events of note.  The earnings calendar includes MCD MMM AXP EMC JNJ VZ BA T CL MSFT CVX and Ford.  The State of the Union and the Federal Reserve meeting on Wednesday will also be important.
Finally, manufacturing activity in the US is quietly expanding.  Capacity utilization rose by 0.6% in December to 76%.

This is producing manufacturing employment increases, and has plenty of runway ahead of it [the average since 1972 is 80.6%].

The Week Ahead

January 18, 2011


Last week the DJIA rose 0.96%, for the seventh consecutive weekly gain, to close at a 2½ year high.
Look for a blizzard of earnings reports this week starting with Apple on Tuesday, although Apple’s earnings maybe overshadowed by the announcement that Steve Jobs is taking a second medical leave, and finishing with GE’s earnings on Friday. 4th quarter earnings reports should provide further support for the stock market this week.
The chart below illustrates the current quarterly year over year estimated earnings growth rate of 30.7% for the S&P 500.

The Week Ahead

January 10, 2011

We read with interest today a survey of 140 institutional money managers that was conducted by Morgan Stanley Smith Barney.  While it is unsettling to be part of a consensus, many of their conclusions dovetail with our findings.
Earnings are expected to be up in 2011 by 11% versus bottoms-up forecasts of 13.4%. S&P 500 go ahead is projected at 9%, with more participants expecting 20%+ up versus down.
Large-cap stocks are projected to outperform small and mid-size companies, and growth stocks to outperform value(this by a very wide margin).  Finally US stocks are projected to outperform international.  It’s not a bad way to approach the market as we enter 2011!

The Week Ahead

January 4, 2011

Last week marked the end of 2010 with all the major US equity indices posting double digit returns for a second year in a row:

The week ahead gathers steam as the world returns to work following the holiday season. In focus will be updates on the following: US Manufacturing, US Non-Manufacturing (Service sector), the state of the consumer (Consumer Credit outstanding) and minutes from the recent FOMC meeting.
Also Friday’s US employment situation will certainly be headline news given that weekly unemployment claims appear to have broken out to the downside:

The Week Ahead

December 28, 2010

Last week the Standard & Poor’s 500 finished at 1256.77 … reclaiming the level it held before the collapse of Lehman Brothers.  Perhaps the markets have moved a bit too far too fast, but we see the markets moving higher after a brief respite that is long overdue.

The week ahead should be fairly quiet due to a lot of traders and investors on vacation and the New England blizzard.  The S&P/Case Shiller report on Tuesday will likely disappoint due to cash-strapped consumers pulling back major purchases.

Initial jobless claims and pending home sales on Thursday may create some buzz, but we expect a fairly quiet and low-volume week of trading.  Remember, the markets are open on Friday (12/31).

Best wishes for a Happy, Healthy and Peaceful New Year!

The Week Ahead

December 20, 2010

Last week equity markets continued their rally with the DJIA advancing 0.72%. This week look for final revisions to 3rd quarter GDP and a final reading on consumer confidence for December from the University of Michigan. Both should continue to show modest improvement.  Looking forward to next year most economic forecasters have been raising their estimates for GDP growth due to passage of legislation extending the Bush tax cuts.

The Week Ahead

December 13, 2010

Glass is half full for U.S. stocks – our markets continue to rally as investors respond to the prospect of a tax deal approval. The deal will be positive for all income brackets and is being reflected in improving consumer confidence. Lurking in the background, however, are whiffs of inflation in our energy and food prices and concerns about inflation in China. Interest rates have been edging back up as well. For now we’ll enjoy the historical pattern of rising stock prices in December and January.

The Week Ahead

December 6, 2010

Equity markets are still digesting last week’s major news out of Europe, conflicts with North/South Korea and our weaker than anticipated jobs number. This week we should get some clarity on the Bush tax cuts. We are in the camp that the tax cuts will be extended (most likely for all income levels or letting the tax cuts expire for income levels above $500k or $1million) with a compromise in extending jobless benefits.  Otherwise we will keep our eyes open for updates regarding the following:

The state of the consumer
Consumer Credit, Tuesday @ 3pm
Jobless Claims, Thursday @830am
Consumer Sentiment, Friday @ 955am

Economic Activity
Oil Inventories, Wednesday @ 1030am
Natural Gas Inventories, Thursday @1030am
International Trade, Friday @ 830am

Money Supply, Thursday @ 430pm
Import and Export Prices, Friday @ 830am