Monday, February 15, 2010

BAGAKOAAFeb 16 2010 The week ahead.


Feb 16 2010 The week ahead.

Ok this usually gets put up on Sunday night, but I was enjoying one of the best Valentines ever with my lovely wife Devin. It was a great day and I did not for one minute think about stocks, economics, or the Salve Lucrum Portfolio. But now it is back in the saddle.

The Empire State manufacturers index reports tomorrow and should follow the lead of the indicators and should be strong. January’s number jumped huge from 4 to almost 16 and the consensus figures are all over the place and some are saying look for 28. My guess will be a number closer to 25 still showing good growth. That should have little impact on the market tomorrow since eyes are still on The European drama playing out. The Greece issue may end up being greasier than thought and there is banter about some countries leaving the Euro. I don’t think that will happen but talk like that should get the VIX up a few more points.

The bigger play in the market should be some of the earnings report this week. Tuesday KFT reports. You know they just bought Cadbury but that should have no bearing on this earnings report. I looked for estimates and whisper numbers and they are scarce. The ranges are 42-55 cents a share. Since we are talking about staple brands like Oscar Mayer, Oreo, Maxwell House, and Nabisco and if you follow Kraft’s game plan to slowly leave the low margin area of sports drinks and juices, we could see a nice earning near the high end of the spectrum. Anything over the 50 cent range could get attention. There is no KFT in any of the portfolios.

Another one to watch will be WM. Waste Management might have problems with the lower level of revenue because of the drop in construction rubbish. Higher prices and the fact that they own a lot of their landfills give them a slight advantage. They have a lot of debt but it is manageable. Look for the estimates of 48 to get nailed and a possible 50 cents a share might give the stock some legs.

On Wednesday look for a couple of reports. Housing starts are coming out and NEED to be in the 580 thousand range or you can expect more of a drop in the market. That would cause a weakening in the dollar, more of a bump in the VIX, and an increase in Gold. If the number is north of 580, the market should continue sideways. A little later on Wednesday watch the industrial production report and the industrial capacity reports. All indications are they should go north, if not look for a drop in the market.

We have several tech stocks reporting Wednesday and all should be strong. We have NetApp, NVDIA, HP, and Analog Devices. Look for NetApp to blow by the estimate of 28 cents a share. HP should have no problem hitting the 1.05 a share expected. It would be bad news for the whole tech sector if they don’t come in strong.

Thursday we have the Producers Price index reporting and it should be relative flat taking more pressure off inflation. The jobless claims number should continue to be positive. Dell reports on Thursday and it should be strong and handle the estimate numbers with no problem. I’d be surprised if Dell did not come in above 30 cents a share. The down surprise will be Walmart. I am guessing the predatory pricing they engaged in over the holidays is going to bite their margin in the butt. They will blame any shortfall on weather and on line sales (Partially true), but they were giving away the farm over the holidays. Analysts are looking for 1.12 a share I am guessing 1.01.

Friday you have consumer price index reporting but again that should demonstrate little inflation threat. No one exciting is reporting on Friday so it should be quiet and my guess low volume.

In a nutshell, keep an eye on your stops. It could be a wild ride.

Salve Lucrum


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