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"Resource Investor" - Physicals
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10 October 2009
Weekly Eco-Data Preview
The latest quarterly reporting period is off to a strong start, but next week will be crucial to hopes that revenue growth has returned triumphant, as opposed to earnings surprises resulting mostly from cost-cutting.
Six Dow components and some of the biggest banks are in line for scorecard reporting. This time last quarter, during the first full week after Alcoa's results, the S&P500 rose 7 percent. It has not had a better week since, but if earnings continue the trend established by early results, the buying could continue. There is however, concern over the fact analysts have been aggressively raising estimates lately. Perhaps too aggressively in an effort to get out in front of the rally. IMHO this is tantamount to driving thru the rear-view mirror but it DOES happen for reasons of internal politics in apparent bull environments.
Despite the revisions in various sectors, earnings are expected to fall more than 25 percent year-over-year, according to Thomson Reuters. Arguably, the bar is still set low, even if people have already factored this into projections.
BLUES in the BLACK?
Some of the big (Blue-Chip) corporate names scheduled to report next week are Intel and J&J on Tuesday, JPMorgan on Wednesday, Goldman Sachs and IBM on Thursday, BofA and GE on Friday.
Interest will center on whether IBM/Intel benefit from the weak dollar via overseas ops/sales or both. IBM expected to post earnings of $2.38/share on revenue of $23.38 byn, while Intel is forecast to earn .27/share on $9.015 byn adds Thomson Reuters.
WEAK DOLLAR and TAME CPI
Another key will be the U.S. dollar. Greenback weakness boosted the prices of materials, leading in turn to a jump in commodities and related stocks. Both CPIs anticipated to essentially cancel each other out by YoY accounting.
(KEY) ECO-DATA also ON TAP
WEDNESDAY:
September retail sales expected -2.1%. Last Thursday data showed same-store sales for September rose for the first time in more than a year, perhaps this will portend further positivity (new word I just made up).
THURSDAY:
Full CPI expected +0.2% MoM & -1.4% YoY.
Core CPI (ex-food/energy) expected +0.1% MoM & +1.4% YoY.
Real earnings expected -0.1%.
Initial (dole) claims expected at 525,000, roughly in line w/ last week.
Continuing (dole) claims 6.02 million, just a smidge lower.
T. W. Merryman
Managing Director
Interconti, Limited
(Market Research Analysts)
Chicago, IL 60604
e: intercon@intercontilimited.com
w: www.intercontilimited.com
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Weekly Market Preview part deux


