EXCERPTS FROM PRIOR WEEKS BELOW:     
April 30—May 04, 2012  REPEAT AFTER ME: The Fed has tools at its disposable to continue to aid the economy, if needed; The Fed stands ready to act, if needed.  So said Ben Bernanke, more than a half a dozen times, during his press conference that followed the FOMC 2-day meeting, on Wednesday. SO, although the Fed stood pat, and a single member continues to object to the Fed’s statement, for pinning low rates on a date—late 2014, instead of the outcome in the economy, based on incoming data. And with that, it was off to the races for the major US stock indices, the press attempt to deflect attention from a Fed on hold to selected earnings reports, which didn’t fool most.

It will be another incredibly busy week for Earnings, tops of that list probably Visa & MasterCard, the week’s earnings wrapping with Berkshire Hathaway and The Washington Post, later Friday. The Economic Calendar is flush with significant data, most notably, April Motor Vehicle Sales, Retail Monthly, and for many, Chains, Quarterly and comparable Store Sales, plus the April Unemployment Report, which the weekend press has been doing much to talk down. Do you know what you’ll hear most about, this week? Woodstock for Capitalists, aka the Berkshire Hathaway Annual Meeting, which culminates next Saturday, 05/05, with the full day Q&A session lead by Warren Buffett & Charlie Munger. Sure hope it pushes Rupert Murdoch’s many UK embarrassments off Bloomberg TV and CNBC’s. Ahhh! You noticed CNBC didn’t devote quite as much time to Rupert as BBG? Perhaps because CNBC has long had a collaboration with the Wall Street Journal and its writers. What’s different at BRK;A’s annual meeting, this year, is an agreement to allow some analysts to pose questions to Warren & Charlie. The anointed few include Jay Gelb of Barclays, Cliff Gallant of KBW, and Gary Ransom of Dowling & Partners. This is Buffett’s attempt to circumvent the many analysts and fund managers, like those from Fidelity, who managed to game the system for shareholder questioning, who dominated the Q&A sessions in the recent past. For the record, WYNN doesn’t usually confirm its coming earnings report until, at most, 38 hours prior to the release. As of Sunday, 4/29, its report this week wasn’t confirmed. (Other reports likely to be influential are emboldened on the Earnings Calendar.)

Analysts and the press, likewise, have been talking down April vehicle sales, foreseeing weaker sales as pay-back for strength earlier in the year. Anyone who shops for a car professionally knows the best deals are in summer, when the current year models are cleared—summer as early as May, for some manufacturers. Likewise, October is a great month for vehicle bargains. The other months, the buyer has less leverage. April came in with doubts about how retail stores would fair, after March’s strength, and the calendar fluke that put Easter on the 8^th of the month, which many feared would mean March borrowed sales from April. And so it seemed, as the 2^nd weekend after Easter looked like the slowest weekend of the year but, then, the final weekend of April was gang-busters. Retailers, nearly across the board, offered at least 40% off, with some, like Talbot’s, touting up to 65% with an extra 30% off already reduced merchandise. Though I can’t say there was much I could find that represented that big of a discount, a Talbot’s, the mall didn’t lack for large discounts almost everywhere I looked. And the stores that restrained their promotional activity, like PacSun and American Eagle Outfitters paid the price for their more modest mark-downs. And then there was Saks 5^th Avenue, running Friends & Family, a 20% discount on most purchases except jewelry, only 15%. There were no discounts on cosmetics or fragrances, this year, as there were for the past three years. And the only shoes on which the F&F discount prevailed were those from Tory Burch, Stuart Weitzman, and Vera Wang’s Lavendar line, delivered specifically for F&F. But the discounts were simply the excuse for women to be shopping like there was no tomorrow. The mall was so packed, navigating was a challenge. The ground floor of Macy*s looked forbidding, as baby carriages and women carrying bulky bags loaded with shoes and comforters squeezed between the shoe department and Justin Beiber’s stand up cardboard display for his latest fragrance. The last week of April did a bang up job making up for the single slow week after Easter, and there went the savings rate again, for April. The Street will be pleased with many of the Comp Store and Quarterly Sales reported Thursday, unless activity in the rest of the country was significantly softer than it appeared, here, in Southern Florida. .

But, then, do the bulls really need more encouragement? Not when Bernanke spends a press conference post meeting emphasizing he stands ready to take more action if the economy proves to need more. Paul Krugman, in Sunday’s New York Times argues that FOMC Chairman Bernanke is a lot more timid and restrained about boosting the economy than he was in writing about what Japan should do to pull out of its decline. Krugman blames it on the Federal Reserve Borg and political pressure, especially from Republicans. Then, gain, the Street will spend this week adjusting its guesstimate for Friday’s Unemployment Report, and pave the way to miss with all the excuses they can muster—including the warm winter than stole labor gains from April. Spain about to crash & burn? No problem: The ECB will step up with another Long Term Refinancing Operation—LTRO. You can almost hear the printing presses running in the background. At least until the April 9/10 low is broken to the downside

ECONOMIC: ( More here)
    
© Sandi Lynne 2012 Nothing contained in this commentary should be mistaken as a recommendation to buy or sell any security. The opinions expressed are the author’s, alone, and should be just one factor in more complete due diligence.
    
April.23—27, 2012  COULD BE THE WILD WEST, MARKET STYLE, THIS WEEK  Let’s not kid ourselves, with a 2-day FOMC meeting, that will conclude with a statement, then updated individual member forecasts, culminating in a press conference with Ben Bernanke, the heaviest week of earnings could defer to Wednesday’s moment of truth. For what it’s worth, I not only don’t think the statement changes much from last time but, in fact, think the members will go out of their way to assure they don’t change much of the prior wording, in which a couple of members felt more stimulus was needed, down from a "few" in the January statement. It’s almost ironic that the ECB should schedule its own announcement of its refunding intentions the same day. Fast forward to Friday’s first glimpse of 2Q12 GDP, and Monday, which should include an up opening that immediately turns down, as so frequently happens on post-Expiration Mondays, and the week is nearly set. But not quite. Because with rates as low as they are, in the U.S., it’s fair to worry, also, about how both the 5-year & 7-year auctions will go, Wednesday and Thursday, respectively.

IF you want to narrow the week’s Earnings Calendar into a more distilled list than the highlighted names I’ve offered up, we could select Brinker Monday, because it’s one of the largest casual dining chains, and United Stationers, because of its large percentage of European business. Texas Instruments could still be clearing inventory but its inclusion in the NAZ 100, as of Monday, will lend some support to it.

Tuesday, the nod should go to 3M, AT&T, US Steel and United Technologies, AT&T included only because its comments on iPhone sales and activations will provide Apple analysts with one last change to tweak their numbers before Amgen, Apple, Baidu, and Robert Half report later that day. It would help to remember how many more countries Apple added to its distribution network, in recent months, even if the new iPad wasn’t introduced until March 16^th, leaving only 2 weeks in the quarter to sell out of the latest electronic toy. For what it’s worth, though little mentioned by analysts, some employees at AAPL stores have told me that they’ve been stunned by the boost to iPad 2 sales, at $399, especially once there were a slug of articles about how fast consumers ran through their data limits with their 3G new iPad, triggering some to opt for the older one.

While many traders and funds will be reacting to Apple’s report, Wednesday, the reports that might count, that day, include AutoNation, Boeing, Caterpillar, Delta, General Dynamics, Northrop Grumman, and Penske Auto Group, in the morning, and, in the afternoon, Avalon Bay Apartments, Cliff’s Natural Resources, Harley-Davidson, Jarden Corp, Las Vegas Sands, and O’Reilly Automotive—assuming the FOMC hasn’t wrenched the markets again, like it did in March. JAH might seem an odd name to throw into that group but with a rare breadth of consumer products sold worldwide, from playing cards to Crock pots, it can be as informative on consumers as United Stationers will be on European businesses.

Thursday offers up some notable reports, on the day when the largest number of companies will report, over the week. Some of the most notable ones include Aetna, AmerisourceBrunswick, the CME, Colgate Palmolive, Dow Chemical, ExxonMobil, Group 1 Automotive, Interpublic Group (with fresh news of the Digital NewFronts), ITT Education, Lockheed Martin, Mead Johnson, Monster Worldwide, PepsiCo, Pulte Group Raytheon, Reliance Steel, Royal Dutch Shell, Safeway, Starwood Hotels & Resorts, UPS, Waste Management, Whirlpool, and Zimmer Holdings.

On Friday, to end what is likely to be a hectic week, look for Chevron, Ford, Goodyear, Honda Motors, Newmont Mining, Procter & Gamble, Simon Property Group, Total S.A. and VF Corp. Of course, though, I mentioned Friday’s first look at 1Q12 GDP, which may well drown out most of the sting of any earnings miss from the day’s reporters, if there will be any.

Headline meetings, this week, are not as abundant as during some weeks, specifically because Trade Show organizers and Investment firms know, in advance, what a big week this is for earnings. Still, my vote for top events would include Monday’s Life Insurance Conference, as well as the press days in advance of the opening of the Beijing Auto Show. Tuesday, for distraction, while the FOMC is holding its first day of meetings, SAE World Automotive Congress, in Detroit, and Barclays Capital Retail & Restaurants, in New York, with an honorable mention to BioIT World, in Boston. GIGse Global iGaming Conference is more about pipe dreams than business, at least until any of the United States legalizes internet gambling. One state went online for its lottery—a mega, multi-state Powerball Lottery (either OH or IL, we forget which), at that, but it’s quite a distance until online poker or blackjack is legalized. Opal Group’s Real Estate Investor’s Summit is really more about the investors than real estate. Cruise3Sixty in Ft Lauderdale, stands little chance of rescuing the major cruise lines, which were trounced last Friday, and probably take a back seat to the fight between Bilgari Holdings & Cracker Barrel Old Country Store, whose shareholders might just prefer giving the Steak 'n Shake company Chairman a shot at running the Old Country Store.

The week ahead could wind up looking like one side of a zipper, with many peaks and valleys. No question, Apple is probably held by more institutions than any other stock, some of whom might still be trying to squeeze through the exits with the vigor seen for a few days last week, when double digit declines were the norm. But in the end, it will be the FOMC Statement & Bernanke’s Press Conference that will set the tone—not just for the week but, perhaps, for several weeks to come. It is not unusual for the latter part of April to see selling, after the last minute retirement funders’ monies arrive and get invested, even as checks sent to the IRS from brokerage accounts suck some funds from institutional managers-—Tuesday the day Federal Taxes are due, this year.

But forget earnings, for a moment: There’s the FOMC statement, the members’ forecasts, and Bernanke’s press conference. The ECB’s refunding plans won’t be the only word from that central bank, since it is sure to try and tamp down rates in Spain & Italy, even as the French alliance with Germany’s Merkel is at risk, as candidates Hollande & Sarkozy are headed towards a run off election on May 6^th, the same day Greece could vote in a new government. Throw in the Dutch coalition collapsing, and there are numerous fires to be put out around the world, and neither the ECB or the US Federal Reserve, alone, able to put them all out, even with the help of the IMF, touting its just enlarged funding. And, just when it looked like things can’t get any worse, Lamborghini introduced an SUV at the Beijing Auto Show. That’s as bad an idea as a Bentley SUV, both attributed to Chinese demand, and proving there’s not accounting for taste—the taste for stocks, possibly, an equally bad idea this week, for those who don’t wear a seat belt and neck brace when they trade. Months of low volatility have already given way to heightened vols, the worst of it yet to come. Protect yourself, especially if the April 10th lows are broken.

ECONOMIC: (More here, including a look ahead)                                
EARNINGS: (For subscribers, only)
EVENTS: (For subscribers, only)

© Sandi Lynne 2012 Nothing contained in this commentary should be mistaken as a recommendation to buy or sell any security. The opinions expressed are the author’s, alone, and should be just one factor in more complete due diligence.

April 16—20, 2012 UNTIL THEY BREAK TUESDAY’S LOW, THE BULLS STAND A (Slim) CHANCE So, how troubling is the rise in weekly US jobless claims up 13K to 380K and the highest since Jan 28^th? I don’t think we’ll really have the answer to that for a couple of weeks, though I’d point out that ski resorts had to close early, this year, because of a lack of snow or, even, cold weather conducive to snow making. That contrasts with the last 2 years of unusually late closings because of a more severe winter and snowfalls that lasted well into spring. So that 13K number is one-off for now. .

China GDP +8.1% disappointed the majority who looked for +8.3% but the Street seems to forget the number was higher than +7.5% Chinese target announced at the most recent 5-year planning session Offsetting GDP was March loans above 1B yuan, at least 250 yuan higher than expected, and evidence that China might have been easing more broadly than the minor reserve requirement pullbacks belie This weekend, China widened the yuan trading band to 1% from the prior 0.5%. which sounds like well-timed currency maneuvers in advance of the joint meetings of the IMF & World Bank, this week, and the not too distant G20 meetings, as well. The move certainly meshed well with the U.S. Treasury’s postponement of its semi-annual report to Congress on currencies. And mean time, China saw its January-March electricity consumption rise 6.8% and, for March, 7%, And a good thing because capacity, in Q1, grew by 9.24 gigawatts While the weekend’s financial press is filled with confident talk that the change in the yuan’s trading band proves the country isn’t worried about a slowdown or hard landing, the futures aren’t buying it, yet.

Why devote a whole paragraph to China? Because the financial press keeps looking for excuses every time stocks rise or fall, and blame last week on rates rising in Spain & Italy, even though we all know the ECB will do whatever it takes to hold the EU together—3 months LTRO on the 25th not equal to the two rounds of 3-yr 1% LTRO it already did, in December and February, it’s something, nonetheless. And IF the media is going to continue to look for excuses for stocks to suddenly trade in 70 or 100 point daily increments, it will find all it could want in this week’s Earnings Calendar, though not necessarily Monday, when the schedule remains light and lacking in power punches other than Citigroup and, perhaps, Gannett, Monday morning. But from then on, through Friday, the deluge of reports and outlooks could be scary enough, on their own, without any help or hindrance from Europe. Qualcomm could deliver the most dangerous report, especially with Apple breaking below the 20-day moving average for the first time in months. Should QCOM caution on the current quarter, it could trigger a full on assault on Apple’s shares, which have done so much to support, not just the $NDX and COMP but the S&P, as well. Even with Q2’s Father’s Day and graduation, it’s not unreasonable to suggest that the channel might be working off inventory builds, in the quarter, the release of the new iPad at the end of March, perhaps, providing an exceptional first quarter that can’t, possibly, be repeated.

The big event of the week is the NABSHOW, for Broadcasters, just in time for them to talk about Q1 ad rates. No doubt, the collapse of the campaigns of Republican challengers to Mitt Romney’s candidacy will add some pressure to Q2 Earnings but, then, so would have running ads the candidates couldn’t pay for. And, clearly, Santorum, Paul, and Gingrich possessed more gumption than funds, unless Newt’s current wife was going to pay the tab for him. Speaking of media companies, the Digital NewFronts are spread out over a couuple of weeks but the big names start Thursday. NewFronts are the Digital equivalent to the Broadcasters UpFronts, media already starting to book Fall 2012 commitments even as the rest of us are prepared to be buried in Q1 reports and Q2 outlooks.

Federal Taxes due Tuesday are probably a godsend for Mutual Funds, since it’s the last day to fund 2011 retirement accounts, and Bernanke et al has made sure there’s no reason to leave the money in cash. The other good thing about the Federal Tax deadline is the amount of funds flowing into the U.S. Treasury, which lowers the amount it needs to borrow, at least, temporarily.

Wednesday is the big day for Healthcare Companies, even despite Healthtech’s multi-conference Drug Discovery series starting Tuesday, along with the Boston Biotech Conference. Liver, Cariology, and Transplants with a side of Roche’s attempted board coup at Illumina, give the nod to Wednesday. If you’re in Healthcare plans or providers, Monday’s your day, and Tuesday for Independent Oil & Gas Companies, because that’s who belongs to IPAA, which is hosting one massive analyst meeting for its members. If it all makes you want to escape, then PowWow is for you, next Saturday, courtesy of the Travel Industry Association.

For a good read on consumers and homes, you could do worse than High Point, which starts next Saturday, also, or March Retail Sales, Monday, March Housing Starts & Building Permits, Tuesday, or March Existing Home Sales Thursday. It’s worth mentioning that hoteliers, builders, retailers, and apparel manufacturers outperformed, last week. In fact, the only recent starring sector that lost its way, last week, was financials, which dragged down the markets.

As for the Joint IMF/World Bank meetings this week, Tuesday’s IMF releases on Global Financial Stability and the Economic Outlook might take second stage to Thursday’s briefings from both Robert Zoelick and Christine Lagarde, Zoelick, perhaps, more free to speak than usual, since his term is coming to an end, the U.S. nominee almost sure to win confirmation.

The 750 stock charts I click through nightly were quite the revelation, this weekend. It didn’t feel like most stocks made higher lows, from Tuesday’s close through Friday’s close but, indeed, that’s exactly what happened. And until last Tuesday’s low is broken to the downside, on close, the bulls still have a chance. It’s hard to imagine the bulls pulling a save out of the hat but the charts don’t lie. If Tuesday’s low hold—as unlikely as that seems—then the bulls will be targeting last Monday’s highs, with the most frustrating possibility for bull and bear alike, a range for the week that holds Tuesday’s low. As I said, hard to imagine but not impossible, in a week during which we expect most world leaders to seek to soothe markets on both sides of the Atlantic. And ya know, while the printing presses are running flat out, what’s another Trillion, or so, of fresh fiat currency, hot off the presses? That leaves the Expiration to contend with, a near guarantee of whiplash, this week. The only question is whether world leaders gathered for the IMF/World Bank joint meeting can pull a rabbit out of a hat on the even of expiration. It’s happened before. Should they, the only question remaining would be the durability, since the ECB’s big LTRO in February lasted barely eight weeks, which may be a record fast evaporation of financial support.

© Sandi Lynne 2012 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions are the author’s, alone, and should just one factor in more complete due diligence.

April 09--13, 2012  READY FOR A WICKED RIDE?   Thursday, after the close, Egan Jones downgraded the US’ credit rating to AA with negative "watch," from AA+. Between Jones & the Unemployment Report that showed the number of jobs added, in March, were half the over 200K (approx. 220K) expected by the Street, sets up for an ugly opening Monday. March, unseasonably warm and a month in which consumers shopped with gusto, was the first month since November that didn’t post at least 200K jobs gains, and that may very well be weather related: If companies hired in earlier months because of the unseasonably warm weather, jobs normally created in March had been launched in the earlier months. Conspiracists will claim the BLS held the March data for a day on which equity markets were closed (Good Friday) but that’s hog wash: The BLS announced its full year schedule months ago. But in light of the soft Employment Report, expect Wall Street’s guesstimators to reflect back on all Bernanke’s recent comments about a fragile economy not ready for higher rates that they’ll build assumptions about pre-knowledge. Hogwash to that, also: Bernanke was rightly cautious after the strong early months of 2010 & 2011 bled to disappointment by April, also. And with Bernanke Speaking as soon as Monday, after hours, expect more of the same talking down the economy. The only really good news ahead, is the fact that Congress remains on recess until April 16^th, and the Street has often found cause to rally when Congress is away.

The Earnings Calendar is short but significant. Tuesday, Supervalu & Alcoa report. While I find the attention CNBC’s Pisani puts on AA because it is the ‘firsts Dow stock to report," the truth is analysts almost never get AA right, not to the up-or downside. Vehicle sales were blazing in Q1, while Boeing has stepped up its manufacture of planes, so one might assume Alcoa saw strong sales. But logic has rarely been a successful strategy with Alcoa, whose most advantageous cost, in Q1, might have been nat gas prices collapsing, which should help contain its costs to smelt. But, again, logic has usually been a lousy guide to guesstimating Alcoa’s report. Progressive Insurance earnings, Wed, are of particular interest, only in light of the unusual number and severity of tornadoes which, it seems, are continuing in the this Qtr. Cars are particularly vulnerable to tornadoes, because they is no way to tie them down, if they’re parked in driveways or the street. But beyond the reports mentioned here, Google on Thursday, plus JPMorgan & Wells Fargo, Friday, hold the keys to any recovery from the early in the week sell off that Unemployment & Egan Jones’ downgrade of US debt has, surely, inspired. Then, again, it’s impossible to predict which companies will warn about their Q1 report, as the coming week unfolds.

The Event & Trade Show Calendar is also rather slim. But with Jim Chanos speaking Tuesday, Grant’s Interest Rate Observer’s Conference, Wednesday, should only add to the negative sentiment before Google weighs in. Jim Grant’s Conference will be filled, exclusively, with bears touting their negativity. As for Friday, the 13^th, ironically, that’s more often positive than negative, historically, though not in an especially significant way. Rather, there’s no reason to fear big losses on Friday, simply because it’s the 13^th on the calendar.

Walmart’s International Meeting for the Investment Community takes place in Toronto, which may not be where most think when they hear "international." Then, again, the meeting will start prior to the market open, which will add another source of contemporary comment on retail sales, in particularly, Easter sales, about which others won’t say much until April comps are released in early may. For what it’s worth, Good Friday in the mall was all about teens shopping, their spending fairly democratically spread amongst the top teen stores, Aeropostale at 50% off everything in the store, Abercrombie & Fitch not far behind, in the big discount department, American Eagle Outfitters at a mere 30%--including off already reduced-- though, PacSun tried to hold the line with BOGO 50% off. And for the second week in a row, when adults were shopping, they were more likely to be in a kids’ store or the kids’ section of shoe or department stores, leaving the missy stores, ex-Chico’s, fairly lonely places. CHS had a good weekend here but chains like Talbot’s were quiet, despite signs promising discounts up to 65%, supplemented by post cards mailed to customers. So teen retailers are off to a decent start to April, albeit, at discounted prices.

It’s a long way from 1400 to 1340 on the S&P, the latter not an unreasonable target, if selling really picks up. And brisk selling is exactly what I expect to start the week—any comments Bernanke makes not actionable until Tuesday, since his speech won’t be delivered until after market hours. With the Beige Book out, Wednesday, Bernanke could surprise, Tuesday, by saying little beyond what he’s already said in recent weeks, even as the Beige is likely to paint a more perky picture of the economy, than Friday’s lousy Employment stats belie. Interestingly enough, the BLS shamelessly revises the numbers it reports, each month, when it delivers the next month’s new report. In fact, if you read the fine print, the BLS calls what it released, last Friday, its "preliminary" March Report. But the coming months will be larded with danger, anyway, as college graduates look for jobs, and college and high school kids look for summer work, swelling the labor force whose shrinkage was responsible for Friday’s announcement of the Unemployment Rate falling to 8.2%. And, then, as the Street economists who guessed Friday’s number wrong will, certainly, point out, the number of people filing new claims for unemployment are at multi-year lows. Never mind, those laid off from jobs they held for less than 40 weeks are ineligible for new unemployment benefits, if they previously were unemployed. And more significantly, even if the Street got what it had been looking for, even 340K new apps for benefits against the street’s low-side hoped for 200K new jobs still leave approximately 60K more filing for benefits than added to the working labor force. By anyone’s math, the number of people applying for new benefits has remained larger than those finding jobs--even over the months since November in which 200K+ jobs were added.

Former FOMC chair Alan Greenspan’s mostly inscrutable comments were crystal clear on one point, when he spoke, often, of the U.S.’ miracle of increased productivity. But, in the end, with machines doing more of the jobs workers used to do, unemployment looks increasingly like a structural problem all the QE in the world can’t change. Without expansion of job growth, builders will remain in a lingering shrunken market, which is a big problem for GDP---no matter how many housing recoveries the Street wrongly anticipates. On the other hand, there can’t be any doubt that talk of QE3 has been revived by Friday’s report from the BLS. That might just provide a reprieve to gold bulls, who hadn’t noticed the metal’s chart started up high, and slid down to the right side—a sure sign of a downtrend that, at least temporarily, could be arrested by Friday’s ugly employment report. QE3 off the table? Not for long, if the April report, and March revisions, look anything near as ugly as Friday’s report did. For stock investors, meanwhile, this year is looking like a repeat of 2010 & 2011, and that’s sure to be such a big disappointment, that the sell off that starts Monday will be deeper than the ones we’ve seen since the November launch of the stock rally that has probably, already, ended.

April 02—06, 2012  SHORT WEEK COMPLICATED BY MARCH UNEMPLOYMENT REPORT FRIDAY  I found myself writing about the Chinese official March PMI, at 53.1, up from 51 in February, vs the HSBC/Market March flash of 48.3, down from February’s 49.6, the LGF’s growing fortune from "The Hunger Games," that trounced not only "Wrath of the Titans" and Julia Roberts’ "Mirror Mirror," and realized I was procrastinating—pulling together extraneous thoughts because the coming week is a conundrum. First, there’s the Friday holiday for equity traders, who’ll miss the opportunity to overreact to the March Unemployment Report, even as Treasury markets will remain open until noon, because the Bureau of Labor Statistics couldn’t see fit to schedule the jobs report on a day other than Good Friday, when Passover starts at sundown, as well.

On the flip side of those inconveniences, there’s the fact that strong inflows usually attend the early days of a new month, though when the month prior ends on a weekend, those flows often don’t make their way into the market until the 3^rd or 4^th, money that may not be put to work immediately, because of Friday’s holiday.

If you recall the dip in stocks and gold when the FOMC meeting statement failed to mention, let alone hint at QE3 in the tool chest, Tuesday’s release of the FOMC meeting minutes could revive another wave of hesitation, if not outright selling, especially if what have become the poster children or risk appetite—Apple and Google—continue unraveling, as they did late last week. Fed speakers punctuate the week though it’s March Vehicle and Chain Store Sales, Tuesday & Thursday, respectively, that could sway markets more, along with the aforementioned Unemployment Report that’s hard to position for Thursday, when the reaction won’t come until Monday—a day some traders might, in fact, remain away.

Speaking of retailers, home builders’ stocks have had a terrific, albeit somewhat volatile six months. The bulls snapping up shares, evidently, forgot about the higher mortgage insurance rates, as of Sunday, April 1^st, even as mortgage rates have been nibbling at higher levels. The best of the sector aren’t builders, at all, but the home improvement chains, Lowe’s & Home Depot, with two of the prettiest charts around. Spring planting’s official start has, traditionally, been around Easter, when all those lillies on rolling metal shelves beckon from outside their front doors. For other retailers, the problem hasn’t been March so much as the business March might have stolen from April, thanks to extraordinarily warm weather—record highs in Chicago, just off the record hi in New York. Traffic and activity a the mall remained elevated all this year, until this past weekend, when most shoppers sought kids’ clothes, Gymboree’s up to 60% off sale and, even, Sears’ Land’s End kids’ department, at 30% off, was busy, and that’s not something anyone gets to say about any part of Sears, at least around here.

The Earnings Calendar is very thin, Monsanto & Bed Bath & Beyond Tuesday, CarMax and Constellation Brands Thursday, the reports likely to attract the most press.

Speaking of press, AACR, the American Association of Cancer Research Annual Meeting is, unquestionably, the even of the week, in progress through Wednesday. Other notable events include ARDA (Sun.), the Annual conference for resort development, O’Reilly’s Where 2.0, Storage Networking World, the National Association of Newspapers mediaXchange Conference (all starting Monday), BAC/Merrill Lynch’s New York Auto Summit, Wells Fargo Securities’ Annual Technology Transformation Summit, and Aircraft Electronics (the latter 3 starting Tuesday). I am less enthralled with both BMO’s and Needham’s Healthcare Conferences, not just because of AACR, already cited, but because most of the other investment banks have already hosted healthcare conferences, while the really big news is released in association with medical society meetings, like AACR. I suspect, even Global Hunter Securities’ Land Driller Day (Wed.) will offer fresher news than what comes ou tof either BMO or Needham.

Which brings us back to the fraught week ahead, cash withdrawals for final tax payments and last minute deposits into retirement accounts are often a cash drain into tax day, which happens to be the 17^th, this year, because the 15^th falls on a weekend, and the 16^th, the next day after the 15^th, is a Massachusetts and D.C. holiday—founders day—reason for IRS offices to be closed on Monday. While last year was flat for the indices, there were plenty of gains and losses to be harvested by the time 2011 ended, and reason to suspect there are still final tax payments to be made with personal tax filings. Some of that selling could smack right into those worried that April 2012 could wind up a repeat of 2011, when a significant high was made in April, as the count down to the June 30^th end of QE2 was similar to this year’s count down to the stated end of "Operation Twist.".

Just suppose you’re a portfolio manager who has hung on for the ride, since the November bottom, perhaps matched or exceeded the gains in Nasdaq, the S&P or the Dow Industrials. It’s a new quarter, a clean slate, and perhaps a good time to take profits and see how the markets develop. Perhaps it seems prudent to put more money to work in corporate bonds, to wait out the Earnings Warning season, which is upon us. Perhaps you’re that P.M. who, also, has an eye on Spain, or even, the new Greek bond yields well into double digits, which could trigger a repeat of April 2011. Or, maybe you’re the P.M. who noticed Colgate just broke to a new all time high, and think staples, especially those with healthy yields, are the place to go. Or perhaps, you simply remember that no was ever fired for booking profits and pigs get slaughtered, even as you can’t ignore the number of shareholders cashing out continues to exceed those depositing money into the equity fund you run. While Presidential cycles suggest this should be a strong year, one can argue that the gains already booked, this year, are a years worth, and then some. .

ECONOMIC: (More here, including the week ahead)

© Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author’s, alone, and should be just one factor in more complete due diligence.     

March 26—30, 2012  WINDOW DRESSING? Maybe not that, alone. Perhaps, only through the 27^th What are the odds that IDGA’s Air power Middle East Conference would meet in Oman, starting Monday, the same day AIAA’s Missile Defense Conference & Exhibit is held in D.C., even as there are grumblings of Israel preparing to attack Iran—the global allegations that there’s still time for sanctions & diplomacy to work directed at Israel?

Lots of Fed speakers, this week, on both sides of the QE3 debate but the only comments that might count are Dudley’s on financial market regulation, and Bernanke’s, the latter less certain of the economy that equities seem to be. Plus, several Treasury Auctions even as Greece is about to force the last non-Greek law bond holders to swap their debt. Half an eye should remain on both Spain & Italy’s yields, since they’ve both been at dangerous levels, even as Spain is about to deliver its budget, at the end of the week, which shouldn’t be a big problem for anyone but its debt holders; Spain has already warned that it can’t meet the 3% deficit limit the ECB would impose. Conveniently, the Eurogroup & FinMins are also meeting Friday. Bernanke, in combination with Dudley’s testimony, on how the Eurozone is impacting the dollar & US, Thursday, could fan the flames of QE3 again, since he’s been such an ardent advocate for more QE.

The Earnings Calendar will be punctuated with a few significant reports, from Apollo, on Monday, to Lennar, McCormick’s, and Walgreens Tuesday morning, to Oxford Industries and PVH Corp, formerly, the latter two largish apparel manufacturers. Wednesday, keep an eye out for Family Dollar, Mosaic, Paychex, and Redhat. Thursday, recently high-flying Best Buy reports, along with Movado, Worthington Steel, and Research in Motion. I hope the analyst who claimed Fossil is practically a watch monopoly will be tuning into Movado’s report: since dumping its retail stores and restricting itself to manufacturing and wholesale distribution, its business has improved, considerably. Friday, Finish Line reports. While it doesn’t, quite, get the attention FootLocker does, it’s still a formidable competitor whose fortunes have, also, improved in the last few years.

The continuing American College of Cardiology Congress(ACC) has been making news all weekend. There’s plenty more to come before it wraps Tuesday evening. Starting Sunday, Howard Weil’s 39^th Annual Energy Conference is just one of the week’s highlight conferences. Others include the Ad Industry’s Annual & Research Foundation Re:THINK, in NY, which runs into the Ad Agencies’ Transformation Conference, in L.A., starting Monday. Along with Mad men’s big Sunday return to AMC after a 17 month hiatus, that makes for a lot more about advertising than normal. ACS (Chemical Society), and boffo box office for LionsGate Film’s Hunger Games, which is said to have pulled in $155m over the weekend. If it can sustain the momentum, which doesn’t always happens, Easter Weekend should stupendously enrich LGF.

Channel Partners, in Vegas, Monday, is the former Phones+ and all about getting phones from manufacturers to retailers—Channel Partners—even as the public has shown a distinct preference for buying phones at Apple stores, rather than the stores run by carriers. When have you ever seen shoppers lined up at midnight to get into an AT&T or Verizon Wireless stores on the even of a tablet or cellphone launch? Tuesday, TAG’s Annual Spring Consumer Conference needs a break down—it’s former Bear Stearns retail analyst Dana Telsey’s research firm and despite the fact that she rarely covered more than 5 stocks at a time, while at Bear Stearns, and had a buy on Abercrombie & Fitch while it swooned 34 points, she remains a well-followed if not respected analyst, who’s rustled up a large crowd of apparel manufacturers, retailers, and a restaurant or two. Also Tuesday, JPMorgan’s Protein Conference, and Business Aviation Asia, in Shanghai, which might still be a bright spot for the likes of Textron, General Dynamics, Bombardier, Embraer, and the private and corporate plane sector. Morgan Stanley’s European Financial Conference, in London, is unlikely to make a big difference for the stocks of companies presenting, unless one of them announces a capital raise. Banks over there aren’t bound by Reg FD.

Wednesday Conferences worth checking out include Bank of America/Merrill Lynch’s Annual Megawatt Roundup, for Utilities, Barclays Capital’s Emerging Payments Conference, and RBC’s Nashville Healthcare Tour. Also a cut above, ERExpo, in light of Monster Worldwide putting itself in play, Carriers World Asia, now that the Journal reports gray market imported new iPad prices have been slashed only a week into sales in China, where it isn’t officially on sale. As companion to RBC’s Healthcare Tour of providers, OPM/AHIP Carrier Institute is the companion, Thursday, when it happens that JPMorgan hosts Insurance, concentrated, more, on property & reinsurance, than healthcare.

Of course, if truth be known, this week neatly packages the end of Q1, and that might very well influence trading most, early in the week, especially. For those Portfolio Managers bound by T-3 settlement, Tuesday is the day by which they must acquire the shares they want to show to shareholders on their books at quarter’s end, and likewise the day by which they must dump shares they’re not all that proud of. So, it’s easy to envision Apple, IBM, Qualcomm, Ross Stores, and TJMaxx, for instance, enjoying inflows to start the week, while poor performers, in the quarter, like Deckers Outdoors, could see worse levels, still. Likewise, the financials will be in play, after their first strong quarter since the 2009 lows. All of which makes stocks, like Best Buy dangerous to own, unless one has reliable insight into how its quarter went. Another earnings disappointment won’t be tolerated, just as the stock has spent the last few weeks playing the phoenix. And truthfully, I don’t feel particularly optimistic about BBY’s chances, despite LED TV prices slashed by manufacturers, which should have spurred sales for both Super Bowl and the still, ongoing, NCAA championship, which finishes up next weekend.

Spend more than a few minutes thinking about asset allocators who might be thinking seriously about how stocks did in Q2 last year, and considering taking their chips out of equities. I don’t mean to sound slightly bearish on such a regular basis but if Operation "Twist" is going to draw to a close on June 30^th, and the ECB is done offering LTRO’s, then there are an awful lot of similarities between this year and last year, the main difference, so far, retail not falling, apart this year. And the prospects for some of the big department stores, Kohl’s & JCPenney, especially, aided by Sears closing so many stores—its ad for 30—70% at 3 Palm Beach County locations that are closing staring out of Sunday’s papers. Mind you, I’m not a bull on JCP, nor am I a believer in Ron Johnson’s revamp of Penney’s new selling structure, as long as Macy*s advertises a one-day sale every day of the week, week in and week out. But with Sears out of the picture, in over 100 locations, there is room for other retailers to pick up more appliance and electronics sales—perhaps BBY, Home Depot & Lowe’s, even as KSS, M, and JCP could see incrementally better sales of apparel and shoes—an unexpected benefit none of them could have planned that might just save them from the disaster that could be April sales, with Easter so early in the month (8^th).

My least favorite happens to be BBY, selling Microsoft Office ‘10 for $149 and $249 for 1 & 3PC licenses, except with the purchase of a PC or laptop, respectively, when the office supply stores and CompUSA are selling them for $99 and $149, no PC or laptop purchase required. An H-P laptop BBY advertised for the week of March 18th was poorly distributed throughout the chain, so Boca got only 3, while W. Palm Beach got 14, and instead of offering to have it sent from an online order, BBY personnel, while I was at the Boca store, told customers to rush up to W. Palm Beach to pick it up, because it was in-store only. And practically speaking, if Win8 is based on the Metro user interface, which responds to touch, one imagines the copies of Office BBY is holding onto at high prices, while others are clearing them out, will require replacement as soon as Win8 reaches some level of saturation. In other words, I’m totally unimpressed with BBY’s awareness of its competitors, consumer choice, or how to draw and keep customers.

For the week, I’m looking for early strength that peters out, and the week after could be worse: Not only are asset allocators going to make significant changes to their holdings, come April but the first week of April will be on count down to the holiday weekend, markets closed Good Friday, April 6th. Therefore, we’re probably looking at two weeks of strong volume early, that evaporates, though I’ll grant this Friday’s volume should be strong, a reflection of mark to market players finishing up their month, if not quarter. But strong volume late in the week might be bad for the markets which have levitated on light volume for months. That, alone, wouldn’t be a very good signal for stocks.

 March 19—23, 2012  WATCH BOND YIELDS AND MIND END OF QUARTER  The low volume rally was easier to distrust as long as the Transports were not just lagging but steadily falling. Thursday’s SURGE in Transports complicates the picture for stocks, though that doesn’t change our outlook for Monday, after Expiration. Monday’s after expiration always see some whiplash maneuvers but that’s to be expected, especially, after the most recent, a quadruple option expiry—the expiration that ends with S&P rebalancing its indices. Even if stocks open up, Monday, expect a sell off which will drag stocks down to their nearest strike under Friday’s close. With the quarter ending shortly, it’s not hard to imagine performance chasers buying the slightest dip in stocks, While the jump on the merest retreat may happen sooner, our target for the S&P is 1393.61, which should be good enough to attract buyers.

Some online media has gotten VERY excited about Bernanke’s appearance at George Washington University Monday & Thursday but he’s addressing business school students at George Washington University, and extremely unlikely to make a policy statement, there. If you’re looking for policy-related comments, the annual "Federal Reserve in the 21^st Century" Conference, at Fed headquarters, starting Monday, is a much more relevant forum for policy comments, and far enough from prying press, since it’s open to academics, only—white tower economists, like Bernanke, himself, before he was drafted from Princeton to run the Fed, since the price of entry is qualification as an "educator." Friday, also, the Fed hosts a conference: "Before During and After the Crisis."

I cannot get excited about Monday’s NAHB Housing Market Index, Tuesday’s Housing Starts & Permits, or Wednesday’s Existing Home Sales. With rates at rock bottom, housing prices low, and the Fed and GSE’s encouraging investors to buy homes in bulk, even as they’re paying banks to execute short sales, it would be shocking if homes weren’t selling at a brisker pace—especially given the mild weather the northern half of the country experienced this winter. A better indicator of home sales will come if the recent uptick in rates, triggering the first rise in mortgage rates in three years, spurs fence sitters to jump in. Home Depot & Lowe’s could be features, with BuildFax releasing its Remodeling Index, Monday. Both have been on monstrous runs. Into quarter’s end, it’s hard to assess if that’s good enough to attract more buyers. For a change, there are an enormous number of stocks that have been on strong runs, making indices as good a choice as most any stock—Apple, of course the exception. If you’re curious, even at 4pm on Saturday, there were people still waiting on the lines for either pick up order, and purchase but nothing like the snaking crowds at the mall for the iPhone 4. And besides the big bounce in Transports Thursday, by Friday commodities, ex-silver & gold, flared. Fertilizer and coal companies suddenly reversed their slides but the durability is yet to be determined.

While the quarter doesn’t end for almost two weeks, the Earnings Calendar has some significant reports scheduled. From Adobe Monday, to Tiffany, Jabil and Oracle Tuesday, through Cargill, Dollar General, Fedex, Lululemon, Accenture & Nike, Thursday, the Earnings Calendar makes up in heft what it lacks in quantity. Discover Financial reports Wednesday, then holds it annual analyst meeting Thursday. I’ve highlighted Herman Miller Wednesday, and Steelcase Thursday, because their on diametrically opposed positions on the employment scale. When executive offices are updated, MLHR benefits. When the rank & file are hired, SCS is often the beneficiary. General Mills has rarely been able to raise prices sufficiently to offset higher input costs. In fact, GIS’ price hikes are usually met with predatory price cuts from competitors like Kellogg, even as consumers often try generic store brand cereals, when money is tight and the price differential is sufficient for them to make the switch.

The Conference likely to attrack the most attention is not NAMB or NAREIM Sunday but JPMorgan’s Gaming, Lodging, Restaurant & Leisure Management Access, in Vegas, starting Monday. All four sectors have been included in recent conferences like RayJame’s Institutional Investor Conference and some will, also, appear at Sidoti’s Growth Conference, also Monday, but neither have the clout JPM does. As recently as Friday, companies like Las Vegas Sands and ShuffleMaster were first confirming. If the contest were about which firm promises the most presenters, Sidoti would win hands down but, alas, that’s not what moves stocks.

Also notable, JPMorgan’s annual Capital Goods Blue chip Forum. Also in Vegas, which is most convenient for that firm. It’s ironic that Bank of America/Merrill Lynch is hosting the European counterpart starting Tuesday, with Capital Goods, Autos, Aerospace & Defence. But Tuesday’s TV Summit, from Variety, in Los Angeles, could make noise of its own, MPA Digital Swipe not to be overlooked either: It’s from Magazine Publishers, concerning delivering content to tablets, eReaders & smartphones. NYSSA hosts Insurance on Monday, Macquarie West Coast European Insurance Corporate Thursday but my vote stays with JPM.

Healthcare offers its share of events, including Dermatology & Geriatric Psychiatry, continuing Sunday, Antibodies & Immunity starting Sunday, BIO Europe Monday, Thyroid & Parathyroid Disease, also Monday, HIV Viral Immunity & Vaccines, as well as Advancing Oral Health, both on our shores Wednesday, ECCEO European Congress for Aspects of Osteoporosis & Osteoarthritis the same day in France. Thursday, Houston’s Aortic Symposium: Frontiers in Cardiovascular Diseases starts, along with Hinman Dental & the Int’l Vision Expo, for Optomistrists, more than opthalmalogists. Next Saturday, ARON Congress is for nurses, SGO for the Society of Gynecologic Oncologists yet, it might turn out, the FDA meetings rise above a number of conferences, Boston Scientific’s Gateway delivery system for the Wingspan Stent being re-examined at the request of the Citizens for better Healthcare, because they believe the approval should be pulled. From the rally above $6 in BSX late last week, when the FDA questions and papers were released, it appears the market believes BSX’ neurological stents are unlikely to be pulled but could see their use more heavily restricted.

Now forget all the conferences and concentrate on the Earnings, and Bond Yields, the latter especially. Last year, a rip roaring rally came to a halt in April, the news appearing bullish for the first few months, just as it is this year. But as it was a year ago, a Fed program—"Twist"—is scheduled to end June 30^th, and the ECB is unlikely to revive LTRO again. The reason for offering 1% loans for 3 years is to carry banks through more than a few months. Admittedly, some of the reports I singled out will reveal much about the economy but it’s rarely market leaders that one has to watch for—it’s the rank and file, and that’s why I’m not sure the Street will gain sufficient information from a handful of market leaders. On the other hand, if Bond yields keep rising, there’ll be an incentive for some retirement fund portfolio managers to take profits on stocks and jump ship to bonds. As the quarter ends, that’s more likely to happen, especially if they believe Sell in May and Go Away, which was the correct tactic a year ago.

Honestly, as the V.P. of a Homeowner’s Association, I have a ringside seat to foreclosures, some of which the Ass’n has brought, successfully, against delinquent homeowners. We are now, for the firs time in three years, are being awarded more sale dates than we have freshly delinquent owners. That signals a significant improvement in this 703 home community but we still have owners asking for payment plans, barely getting by. Based on my experience, I can’t really say that I believe the economy has "escape velocity," especially not when schools are still laying off teachers, state, county, and city offices still laying off workers. Has the economy improved? It appears so. Is the improvement sustainable? That’s the $64B question, and we won’t really have the answer until the Fed stops toying with rates, and the ECB stops working so hard to expand its balance sheet faster than the Fed’s. And, truthfully, despite the Transports joining the party, I remain disturbed by low volume, and the near universal bullishness of analysts and talking head portfolio managers. Friday, another commentator asked me for equity recommendations for a client who couldn’t find anything worth buying. Exactly, I responded: He/she can’t find anything because there’s practically nothing still cheap. If one absolutely must enter new positions, here, it might be better to sell naked puts below current levels, and use a portion of the premium to buy protection at slightly lower levels, still. If stocks continue to rally, the premium differential is all profit. If stocks fall, you’ve set a lower price at which you’re willing to buy a stock, yet protected yourself from unlimited downside. Obviously, it’s not a great time to use that strategy, either, since premiums are ridiculously low, thanks to a teenage VIX but it sure beats tying up a lot of capital in new positions, when I’m more tempted to trim some big winners and remain on the sidelines for awhile, especially since the bargains I do see won’t be timely, on a seasonal basis, until June, at the earliest.. Before too long, Earnings Warnings will be all the rage—a predictable function of how late it is in the quarter, and who knows? At least a couple of this week’s earnings reports may have others questioning the strength of the global economy and, hence, Q1 reports to come, soon. 

© Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author’s, alone, and should be just one factor in more complete due diligence.      

March 12—16, 2012   WHAT’S THE CATALYST FOR HIGHER PRICES?  There are dozens of items on this week’s schedule that would, ordinarily, be headliners but not this week. Any other week I’d be talking about Roth’s OC Growth Stock Conference (started Sunday), Credit Suisse’s Global Services Conference, Bank of America/Merrill Lynch’s Taiwan, Technology & Beyond (Monday), JP Morgan’s Aviation, Transportation & Defense Conference (Tuesday), perhaps Chevron’s Security Analyst Meeting, Barclays Capital’s Healthcare Conference (both also Tues), the 29^th Annual Miami Breast Cancer Conference and the ABA’s Collections & Credit Risks Conference, as well as AFIA Purchasing/Ingredient Suppliers meeting (Wednesday), or Gabelli’s Move & Broadcast Conference (Thursday), plus Friday’s delivery of the first new iPads, already sold out, and pant over the tear downs iSupply and others will do to identify suppliers. But not this week. PPI and CPI? Forgheddaboudit! We all know higher energy prices will have made them both rise, CPI conveniently reported both with and without food and energy, as if anyone with a job could get to work without putting gas in their car.

This week, three items stand out: First, Master Trust Data from credit card companies that have enjoyed such tremendous improvements in their consumer loans that there isn’t much room to go anywhere but up. Second, The FOMC Meeting, Tuesday, could also roil markets, the danger of the tone of the statement being more upbeat than it’s been in a while hammering the final nail in QE3’s coffin, even if the statement acknowledges the continuing risk from Europe, despite Greece’s financial woes "solved with the debt exchange." Never mind Greece not being able to pay back even its lower debt, with the country devolving into depression. And, then, Thursday afternoon, just in time to cause tummelt for Expiration—a Quadruple Expiration, I’d add—the Fed will release results of their "Stress Tests" of the nation’s biggest banks, based on which, the Fed will bless dividends and buybacks, or won’t. Anything else on the calendar should be nothing more than temporary distraction between the week’s highlights, even the Expiration, normally a big deal, subsumed to the other three items.

I have one question that overrides all else. Is the recent hi the celebration before like the one from Nov 9^th 2011? There was a dip completely retraced, before a steep decline that lasted into Dec? Of is it Last year, when both data and stocks were strong early in the year, before they topped in April & May, depending on the index and sector, launching into a steep pull back from there? Of is it fall 2009, with persistently higher prices to defy every skeptic? It’s a question worth asking: the level of investor bullishness is troubling, not to mention weak volume. Check out recent volume compared to the volume from October and November for comparisons. Despite last Tuesday’s deep decline, and the S&P’s recent failures at 1374, most traders are keeping an eye on 1407. It may be hard to dismiss the possibility that stocks stocks could make it there, if they don’t first get swept to the downside but similarities to a year ago are undeniable, warm weather helping economic activity more than anyone is admitting. And, like last year, a Fed program, this year "Twist" and last year QE2, ends in June, after which growth is supposed to be self sustaining. And how about 1340, if there is a pullback? It’s likely stocks will hold there, again, on the next swipe. Bulls rarely give up quickly. But with half of Europe in recession, the other hald strapped from bailing out the have nots, and China paving the way for slower growth, either India & Brazil post strong enough growth to save the day, or the current rally is on borrowed time, its end only a matter of when, not if. And make not mistake, when 1340 fails to find buyers, at some future date, the flood gates to selling will open wide for a serious and sustainable down draft.

The problem in hoping India can save the US is some restrictive corporate rules for a democratic state, and rulings getting reversed in fairly swift and flaky fashion. One day it announces it will allow foreign companies in to do business, without Indian partners, a week or two later it says no it won’t. Recently, it banned cotton exports and, days later, reversed itself again. If that’s one of the two big pillars U.S. equity markets are counting on for enough growth to act as a pillar of support for expansion, it’s a weak link for such vaulted aspirations. Brazil? So worried about inflation, it taxes foreign inflows 2%. With it hosting both a future Olympics and FIFA’s World Cup, there’s plenty of reason to build infrastructure to accommodate all the players who’ll descend on the country for both sets of games. But will Brazil be able to create enough growth, through imports, to support the U.S., Germany and France? A stretch, me thinks.

A few companies are worth mentioning. They’re S&P 500 constituents headed into the S&P 100: Eli Lilly and Co., Anadarko Petroleum Corp., eBay Inc., Simon Property Group, Inc., Accenture plc, and Starbucks Corp. (SBUX). Who’s out? Entergy Corp., Xerox Corp., Weyerhaeuser Co., Alcoa, Inc., Avon Products, Inc., and Sprint Nextel Corp., after the close of trading on Friday, March 16. The companies being removed from the S&P 100 index will remain in the S&P 500 index. You can bet some analysts have already been circulating lists of the potential replacements, though they’ll all see heavy activity both Friday afternoon and Monday morning.

Otherwise, it might be wise to start accumulating cheap puts for out months. This rally, at 36 months old, may not yet be feeble but by the time it obviously is, the cost of having remained long will be very high.

ECONOMIC: (More here)
EARNINGS & EVENTS: (Excerpts only here)

© Sandi Lynne 2012 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions are the author’s, alone, and should be just one factor in more complete due diligence.

February 27—March.02, 2012  SELL ON THE NEWS?  The Bureau of Labor Statistics forgot data is compiled by computers, now, and is holding off release of February ’12 Employment Data until March 9^th, which makes the week’s Economic highlights easy to pick. It’s not the release of Chain Store Sales, Thursday, because fewer retailers are releasing Monthly Comps, JCPenney the latest to say it won’t, anymore. Furthermore, with retailers reporting earnings, now, and providing their qtrly and annual outlooks, February is old news and the shortest month of the year, despite an extra day in this leap year. Vehicle sales numbers, that will start arriving Thursday, also, are for a short month prior to WTI’s rise above $100 per barrel, so also older news than usual, especially when weekend media reports (Reuters) claim Saudi Arabia plans on increasing output, and the White House is debating whether to release some oil from the Strategic Petroleum Reserve. Whether either is true, or not, both rumors are sufficient to trigger a pause in oil’s run, for a day or two.

There’s little reason to get too excited about either January Durable Goods, or the second look at 4Q11 GDP. The Chinese New Year fell in January, this year, when February is more typical. Therefore, there’s a possibility that some shipments were pulled into December or delayed until February. GDP is likely to be revised down, slightly, based on downward revisions to any number of data series.

Which brings us to the penultimate event of the week, the second EU Long Term Refinancing Operation (LTRO). When the initial one was offered by the ECB, nearly half a billion euros was passed out as 3 year loans, against questionable collateral, at a mere 1%. Some large European banks, like Deutsche Bank, pointed out, in their post-earnings conference calls, that they didn’t take any money because they feared a stigma. Given how well global markets reacted to the first LTRO, those banks who sat out the first are unlikely to sit out this second one, which will be awarded Thursday. (Are you getting the feeling Thursday is the big day of the week?) The ECB hasn’t said how much it will offer, or whether there’ll be a limit to the amount they’re willing to offer, so there’s less information, going into the week, than one might think. And the only question really is, at one point do traders stop celebrating all the additional liquidity and, instead, worry that so many Euros are needed? At what point does the ECB stop demonstrating its largesse, its balance sheet growing at an astronomical pace? The questions are worth pondering because it’s altogether possible that the LTRO winds up an event the market celebrates in anticipation, before selling off on the news. Yes, I’m biased, because I totally distrust markets that run in one direction, especially when so many diverse asset classes are all pointing in the same direction, even as transports are on the decline, as is VIX, and the number of bears, based on any investor or trader survey one cares to cite. Throw in so many Fed speakers, a few of whom don’t want the Fed to do more, plus the Fed’s coming Beige Book (Thurs), which might well be the most chipper one in a year, and the odds against QE rising, disappointing any number of traders who are counting on the Fed stepping up to the plate—especially since one of the most influential FOMC members, NY Fed’s William Dudley, has been such a big proponent of the need for QE3. The 2^nd LTRO is, most likely, the signature event on the Economic Calendar.

Picking the big events of the week is equally easy. On the trade/industry side, it’s GSMA Global Wireless Congress (started Sunday evening). Wireless is increasingly becoming a tri-opoly of Apple, Google & Samsung, many Android phone manufacturers wondering what change and, perhaps, increased competition, GOOG’s owning Motorola Mobility will deliver, should the deal be blessed by regulators. Samsung’s Galaxy brand of products has the most to lose, since they’re the top Android sellers. (Google’s Eric Schmidt delivers one of several keynotes.) Samsung has been very lucky, facing off against a premium priced competitor, like AAPL, which is why the GOOG/MMI merger should be especially worrisome. Motorola long ago gave up aspirations to premium pricing and, with GOOG’s engineers working on its software, costs should drop, as well, though that’s not good news for Moto’s engineers. While thousands will attend and exhibit, most are also-rans, HTC, until now, the only Samsung competitor with strong products it hasn’t figured out how to profit from, despite their sales success. HTC is expected to release the largest number of products at GSMA. It is GOOG’s expected purchase of MMI that gives Microsoft an opening to reel in more WinMobile products besides Nokia, which made much of its commitment, which came with a fee from MSFT.

Qualcomm and ARM Holdings are the hammers in the wireless supply chain that Intel is determined to make a three-way race. You might have noticed I haven’t, so far, mentioned Microsoft & Nokia: that’s because they’re not, yet, a factor in smartphones—at least not in the US or, even, China, for that matter, which will one day be the largest market in the world, based merely on number of potential smartphone carrying citizens (China Mobile’s {CHL} Pres. Li Yue delivers another keynote). I didn’t mention RIMM, either, its QNX operating system postponed so many times, that they’ve lost share, and mindshare, possibly, forever. Other keynotes will come from Ford, eBay, Facebook, and Electronic Arts. Near-field Communications (NFC) for mobile payments, locating, and communications between devices and people might not be as exciting in 2012, as it was past years. Mobile Providers and backbone players, like Cisco and Juniper, will also be there. In fact, AAPL’s about the only company that won’t be there, continuing, under CEO Cook, to walk to the beat of a different drummer. But just as Comdex disappeared, one has to wonder how much longer CES (January event) and Mobile World Congress will be held separately. As mobility comes to dominate so many things--even cars that are increasingly about communications in a far older, personal mobile device—vehicles. The convergence tech visionaries long ago predicted has arrived. Ford is introducing the B-Max at the show, the first, ever, auto introduction at a communications show. It’s fair to ask how many more communications products will appear in vehicles; Ray LaHood, chief of the Dept of Transportation, wants to outlaw texting and, perhaps, even, updating social websites, like Facebook, on the road. Absent any breakthrough, never before seen devices, rather than just another handheld game device, smartphone, tablet, or lightweight computer, it’s hard to imagine GSMA generating the same excitement of past years, though Microsoft hopes it will. Mr. Softee is expected to unveil something at GSMA-- a prototype or beta version of it’s new Windows built on ARM architecture, perhaps. Whether the introduction will be software, a tablet, or other mobile form factor is unknown but Win8 will be the first release built on anything but Intel architecture (AMD chips are, also built on Intel architecture though it has said it might design to ARM, also. If it doesn’t, its graphics division will be ceding the market to competitors.) With Softee’s stock up so much since CES, a continuation is the riskier bet. There are any number of companies hosting analyst events at GSMA, most notably, ARM Holdings (ARMH) and Cisco Systems (CSCO) both on Tuesday.

The key Investment Bank events of the week include Healthcare Conference hosted, separately, by Citi (Mon) and RBC (Tues.), separately, Morgan Stanley’s TMT (Mon), Deutsche Bank’s Media & Telecom (Mon), BMO Capital’s Metals & Mining (Tues.), KeyBanc’s Consumer (Tues), Bank of America/Merrill Lynch’s Fixed Income Bank & Finance (Tues) will collide with JPMorgan’s High Yield & Leverage Finance (starts Mon), BAC/MER’s Bank & Finance day (Wed). For Commodity traders, before next Saturday’s GEAPs Conference, and in addition to BMO’s conference, can tune into the BAC/MER Global Agriculture Conference, The Commodity Classic (Wed), Simmons & Co Int’l 12^th Annual Energy Conference (Wed.), and Mitsubishi UFJ Securities’ High Yield Oil & Gas Conference (Wed), as well as JPMorgan’s Emerging Markets Corporate Conference (Wed.). Then, again, perhaps KBW’s Boston Bank Conference (Thurs) is more your cup of tea, unfortunately, a Thursday conference that will likely take a back seat to the Economic Data already highlighted. Not only did RBC schedule its Healthcare Conference to conflict with Citi’s but it scheduled a South American Energy Conference (Wed), in Toronto, that conflicts with Simmons’ Annual Energy Conference. Other healthcare related events include Lazard’s Annual Snowbird Medical Tech Conference (Wed) and Credit Suisse’s Healthcare 1x1, in a week in which healthcare providers are salted throughout the Earnings Calendar. If past history is any guide, it’s Citi’s Healthcare and Morgan Stanley’s TMT will deliver the most news, along with GSMA, though speakers at R.W. Baird’s Business Solutions Conference (Wed) could pull out a surprise because it involves among tech service providers a number of for-profit education companies, that have been under attack by the DoE and short sellers.

I’ve taken the liberty of emboldening the Earnings releases that are likely to move stocks the most. PetSmart should attract outsized attention. The company, reporting Wednesday afternoon, is an analyst favorite, without any pure play public competitors, plus the Pet Expo starts Tuesday. Lowe’s (Mon) and Costco (Wed), along with Genesco (Fri) are retailer likely to attract the most conversation and exert the most influence on the retail sector, unless Collective Brands (PSS, Tues) says more about the bidders it solicited. Rumor has it ten viable bids were submitted, the number to be narrowed before second round bids are submitted. Aside from those reports, the reporting schedule is well populated with health care providers.

A couple of senior indices made new highs, last week. The end of any month and first few days of every new month are, generally, bullish for stocks, the latter because new money invested into retirement accounts tends to make its way to mutual funds early in the month. Then, without an Unemployment Report to worry about, there’s less reason, this week, to capture profits before its release. So there are plenty of theoretical reason to expect stocks to continue their nearly relentless rise that started with the New Year. However, on the charts, there’s plenty of evidence of the rally getting a little tired, the rise boosted particularly, by two stocks: Apple & IBM. The LTRO might serve as an excuse to keep stocks elevated—or at least, keep sellers at bay—but it might very well be reason for traders to have second thoughts—depending on how many euros are demanded of the ECB. Enough money, and fears of inflation could, again, derail stocks, especially if oil keeps running to the upside. The Transports have already derailed, and I wouldn’t bet on additional gains in the Dow & S&P without some cheap downside protection in the form of puts. And we know the level to watch on the downside—1340 which has twice been successfully tested. Granted, after the kind of run stock have been on since this year began, it makes sense that sideline money would seize an opportunity to join the party on pullbacks. But there will come a day when that doesn’t happen—when sideline money will be a little less eager to hit buy buttons at 1340, or hit the buy button with such a tight stop an innocent bout of profit taking turns into something a little more serious. Given March’s history for air pockets, and the Fed’s plans to release the latest round of stress tests, mid month, it makes sense to take some profits—how much or little dependent on your ability to believe the slowdown seen, as recently as December, is completely off the table. That’s not my scenario, with a good portion of Europe already in recession, and China’s economy as big a black box as there ever was. Sure, China’s middle class is looking, so far, as addicted to shopping as any American ever was. But any retailer than can tell you consumers tend to binge and purge. With the celebration of the Year of the Dragon over a month ago, even the Chinese might be allowing their war chest to build up a bit, before they go on their next buying binge. The rally is aged, if not ready to call it quits and is overdue for consolidation if not a healthy pullback. The LTRO might just be the excuse, as Wall Street loves to buy in anticipation, and sell on the news—especially since the ECB announced that it has tightened its collateral terms. But does anyone really believe there’ll be no spillover effects in the US from a European Recession? And let’s be honest, even if Germany isn’t dragged into recession it’s going to find a lot of its own free cash flow devoted to supporting European peripheral countries—that’s exactly what its parliamentary vote is about, Monday. The more Germany devotes to other European countries, the less it has to stimulate its own economy. I simply don’t see how this ends well.

ECONOMIC: (More here, including an extra week ahead)
EARNINGS: (For subscribers, only)
EVENTS: (For subscribers, only)

© Sandi Lynne, 2012 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author’s, alone, and should be just one factor in more complete due diligence.                                                        

February 20—24, 2012  ECB LIQUIDITY, WITH MORE COMING, STILL FUELING THE RALLY Did Greece get the money or didn’t it? Monday comments from Juncker seemed to indicate Greek would get the money it needs but, as of 7pm, US time, nothing definitive was available on the web—except China easing big banks’ reserve requirements, as of this coming Friday. The requirement was cut by half a percent, to 20.5%, starting Friday, March 2nd. Meanwhile, Reuters reports the ECB bought no bonds, last week, for the first time, since August, whether satisfied with the liquidity in sovereign debt markets, or marshalling its own resources for the 2^nd LTRO (Long Term Refinancing Operation), whose bids will be accepted on February 28^th, the results to be announced the 29^th. The coming LTRO may keep markets from a long overdue pullback. The fact that it will come on the eve of a usually bullish first few days of a new month should continue the pain for bears, who’ve regularly anticipated the end of the run that started with the first LTRO, late last year. I count myself among them, having nibbled at puts, on 02/09/12, only. I’ll scale into more, probably, March 2^nd or 5th, depending on the data between now and them. ECB Executive Board member Peter Praet, said on Monday, it can help Greece more, within its mandate to promote and maintain price stability.

Meanwhile, the Republican contest has gotten even more interesting, with Michigan, one of the biggest prizes, leaning towards Santorum. Republican presidential candidates will debate, on CNN, Wednesday. It’s a light week for data, though keep an eye on the 5-year & 7-year Note auctions, Wednesday & Thursday, respectively. Though there’s only been a tiny gain in yield, sometimes it doesn’t take much more than that, if portfolio managers are looking to book the profits they’ve made since the year opened.

The Economic Calendar is light, except for what the Europeans are up to. True, Wednesday brings Realtors’ January Existing Home Sales, and Friday Jan New Home Sales, as well as the FHFA’s much delayed December Home Price Index but for more contemporary comments, tune into Mohawk’s (MHK Thursday a.m.) conference call. As a global floor covering supplier, it’s view is far more telling than the moldy data due out.

Earnings are most interesting for the large retailers scheduled to report, including Walmart, Macy’s, and Home Depot, before Tuesday’s trade even starts. Most have already discounted good news—perhaps, even, more good news than is coming but Decker’s Outdoors, maker of UGG, is perennially underestimated. It had a fabulous season, even though the current one is for clearance, its summer lines like Simple & Teva not nearly the power houses UGG remains. Seasonally, it’s too early to jump in for anything more than a play on earnings. Boston Beer (SAM, Wed. afternoon) and Limited (LTD, the same time) are two that often exceed yet LTD rarely boosts its outlook as much as analyst have. That’s still a danger—no matter the Pink Chiffon & Mist Fragrance dispensers most recently introduced. Then again, earnings from Dell and Intuit (Tues. p.m.), and Hewlett-Packard (Wed. p.m.), and Salesforce.com (CRM Thursday p.m.) could attract as much attention as any earnings this week, Barron’s especially negative on HPQ, this past weekend. Note, also, the number of healthcare providers scheduled to report, this week, ExpressScript (ESRX Wed. p.m.) likely the subject of intense scrutiny, as analysts await word that it and Walgreens have settled their dispute or are, at least, still negotiating. Should ESRX hint at so little as additional discussions, it might be enough to get WAG running. Likewise, Lowe’s is not reporting until 2/27, when it usually reports within 2 days of HD. Should HD surprise to the upside, it’s LOW that could see sharp inflows into an already outstanding chart. Did DISH (reports Thursday) and, for that matter, DTV, benefit from the 7-week long dispute between MSG & Time Warner Cable that kept Knick games off Time Warner cable customers’ TV’s, even as "Lin-sanity"—the celebration of the brilliant play of new team member, Jeremy Lin—became a sensation. New Yorkers are notoriously impatient, yet, waited a long time for the Knicks to find a groove. Lin has abetted a string of wins no one thought possible with 3 starters on the sidelines, despite being unimpressive with 3 other teams.

A couple of big events this week include the Molecular Medicine Tri-Conference which is more like a Quad Conference, this week, Personalized Diagnostics and Medicine the newest additions, even as the 7^th Annual Biomarkers Congress meets across the ocean, in England, starting one day later, and NY Stem Cells on the same day. CAGNY’s Annual Winter Meeting, Monday, is without doubt, a headliner though, I admit, it’s puzzling that the Personal Care Products Council meets, in a separate city clear across Florida, on a different day, Tuesday, while the NY Consumer Analysts are still at the meeting that starts Monday. London hosts the Int’l Petroleum Week, starting Monday, while EnerCom’s Oil & Service Conference takes place in San Francisco, starting Tuesday. The headline investment bank meeting of the week is, arguably, Barclays Industrial Select, starting Wednesday, in Miami, though it’s fair to consider Wednesday I-bank day. Also meeting, then, Jefferies’ Global Clean Tech in NY, Credit Suisse’s Paper & Packaging, and Guggenheim Securities’ Financial Services 1x1 conference, information about which was tough to come by, as all 1x1’s are. Also Wednesday, a handful of analyst meetings from Cerner Corp, Diebold, Mosaic, and Tempur-Pedic Int’l, the latter additional color behind Mohawk’s earnings. For fireworks, Thursday’s USDA 86^th Annual Agricultural Outlook Forum, in Arlington VA could be tops—the sparklers about revisions to data that drive commodity traders up a wall. Also, Thursday, Oppenheimer’s 9^th Annual Semiconductor Conference, in Vail, Colorado.

Oil is quickly becoming the star commodity, set to rise even more as Iran responded to the EU’s decision to observe the embargo, starting July, by cutting off deliveries to the U.K. and France. Oddly, companies like ExxonMobil have been dreary trades but that isn’t likely to remain true, if oil keeps reaching for the stars in a repeat of 2008’s shooting star activity.

Stocks look overdue for a serious bout of profit-taking but the fact that so many are waiting for it, makes it less likely to emerge. With Greece’s woes about to be settled, for now, and the next LTRO nearing, T-3 for February arriving Friday, it’s possible stocks will work off overbought conditions with some rotation, the major averages giving up little in the process. Monday, stocks should open up and, then, sell off later in the morning, in typical post-expiration machinations. But the stiff sell-off some are waiting for before getting into stocks may be postponed until after March 2^nd, setting up the possibility for more short squeezes and covering, which means stocks going higher still. Should they find reason to sell off—like in reaction to oil prices that could crimp the U.S. recovery—rest assured there’ll be buyers waiting to pounce. The ECB hasn’t been calling the LTRO QE-anything but it was no coincidence that stocks took off soon after the ECB announced nearly half a trillion euros injected into the system, by way of those 1% loans. With the possibility of an equal amount, or more, coming late this month, expect stocks to keep partying as if it is 1999.

ECONOMIC: (Here, including NY Fed "Twist" Operations thru end Feb. after which has not yet been announced)
EARNINGS: (For Subscribers, only)
EVENTS:(For subscribers, only)  

© Sandi Lynne, 2012 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author’s, alone, and should be just one factor in more complete due diligence. 

February 13—17, 2012   GREEK DEBT ISSUES SETTLED FOR THE 7^th TIME?  Eurogroup rejected the latest Greek package of cuts, including cuts to pension funds. It is now asking for another euro 325m in cuts, Parliamentary ratification and the political parties agreeing not to renege after April elections. IF these three new demands are met, the Eurogroup will meet next Wednesday, according to our Forex champ, Barbara Rockefeller. But she questions how fast Greece will get money, since Germany’s Merkel has set 2/27 for a vote by Germany’s parliament. Plus, media and traders are questioning whether the Eurogroup’s latest demands are not a back-door way to squeeze Greece so hard, it is forced out of the euro union, even as there’s agreement that Greece’s political parties must be bound by any near term agreement, since one can imagine the campaign promises, otherwise. Over the weekend, the politicos voted in favor, setting up another Monday morning rebound.

Speaking of the Eurogroup, after the close, Friday, S&P downgraded the ratings on 34 Italian banks. This will simply raise the pressure on Europe and the finance ministers and, IMO, puts more pressure on the rest of the EU to boot out Greece who they, otherwise, have to come up with the cash to support. How can countries, other than Greece, especially Italy, afford to provide money to the ESFS, ECB, and IMF to support a Greek bail-out when some of the other peripheral countries are teetering, financially, themselves?

On 02/14, the Census Bureau released January 2012 Retail Sales and, probably, revise Decembers’. With Dec/Jan in hand, analysts and economists will be able to sum the combined Dec./Jan. season for all retailers, including supermarkets, restaurants, gas stations, etc., providing a picture of the consumer in the prior two months. We already know from Consumer Credit, the consumer has ratcheted up the amount of debt he/she carries but little of that increase went onto credit cards compared to the percentage that went to non-revolving loans, like car loans, home equity loans, or education loans. Then, again, the release last week was filled with "N/A" which suggests not as much was learned as one might have hoped.

Obama’s budget should be the highlight of the week but it rarely is, despite the number of agency heads that testify in Congress in support of the proposed spending. Geithner will run from one chamber to another, joined by OMC Acting Director & Sec’y of HHS. Despite the number of FOMC speakers and Geithner’s testimonies, the FOMC minutes, Wednesday, will be more closely followed, after Bernanke, last week, stuck to his conclusion that the recovery remains too weak to bring down unemployment, even as he reaffirmed his desire to see housing receive more help, especially allowing renters into the millions of foreclosed homes, to return hard hit communities to life. China’s second in command and presumed successor to its current leader, Xi Jinping will start his US visit at the White House, speak to business & political leaders, before pushing off on the third day of his trip, Wednesday, heading off to Iowa, then California, where his trip will wrap. Beyond the level of the yuan, the US’ desire to pressure both Iran’s nuclear program to stop proceeding to weapons grade, and Assad to give up leading Syria, none of that wish list is likely to be accomplished after talks with Xi.

Earnings reports will be voluminous though not, necessarily, as influential as in some other weeks. The names likely to attract the most attention are emboldened. Comcast slips in a week after many of its competitors (Wednesday), on the same day as Deere, Penske Auto, Teva Pharmaceuticals, CBS, Marriott, MEMC Wafer, Netapp, nVidia, and Cliff’s Natural Resources, as well. But that’s not to say there’s nothing going on the rest of the week, because that would overlook so many of the major reports, even on Wednesday, like Wellcare Group, Equinix, and Jardan, which will meet with analysts and customers, to introduce its 2012 Collection. Then Thursday, Advance Auto, Apache, American Barrick Gold, General Motors, Humana, Hyatt, TRW, Waste Management, and VF Corp whose North Face could have seen reorders slammed by the lack of snow early in what’s normally a ski season, not to mention the unusually warm winter, until recent days. Then, Thursday afternoon, Applied Materials, DaVita, Nordstrom, and SunPower weigh in. Big names all, and yet, I haven’t come close to exhausting the highlighted names.

Notable Events include the Grammy Awards, Sunday, which probably saw the number of viewers spike, after Whitney Houston died the night earlier, her presence in Los Angeles closely to tied to the Awards show. MAGIC, which started as a mens & boys wear show but, years ago, embraced womens’, teen and children’s apparel, is one of the major events of both the week, and Las Vegas’ convention season. While Lazard and RBC have it on their analysts’ schedules, every investment bank will send analysts who’ll gather meet & greets with manufacturers, and major buyers. There are apparel shows all around the country, the most notable, outside MAGIC, the Fall 2012 runway collections being shown in New York City, this week, as well. After years of being held in tents behind the main New York City Public Library, the designer shows moved to Lincoln Center, a couple of years ago, and this year will be, somewhat, spread around the city. Some designers have chosen to host less formal showings at their studio cum retail flagship, others at the Piers, still others at art galleries. Fashion will nearly paralyze both Vegas & New York, this week. Smaller events, include a surfeit of analyst meetings, the end of so many companies’ fiscal year, the trigger. BIO CEO & BIO Investor, also in NY, along with the New York International Toy Fair are two more reasons for taxi’s to be in short supply. Tulare California hosts World Ag Expo, while San Francisco is another popular city for events, this week, with Barclays Capital’s Big Data conference, Goldman Sachs’ Technology & Internet, and Pacific Crest’s Emerging Technology Summit all planned there, early this week, while Stifel Nicolaus scheduled Transportation & Logistics in Florida, where Deutsche Bank’s Small & Mid Cap Conference chose that state, too, but a different city. Scotts Miracle-Gro’s Analyst Meeting, Tuesday, should give some insight into Lowe’s & Home Depot’s business, since they’re its two biggest customers, with Walmart & Target not far behind.

China’s CIAACE Int’l Expo is for Auto Electronics, Accessories, Tuning, and Car Care Products. Given the country is the great hope for automakers from all over the world, it’s one attended by US analysts, also.

Besides Deere’s earnings, and the Tulare Ag Expo, Louisville, Kentucky (Wednesday) hosts a Nat’l Farm Machinery Expo, and if not for a lack of time, I could list another half dozen farm equip expos in other states, as well, all this week. Bank of America/Merrill Lynch’s Insurance Conference (Wednesday) will attract considerable attention, not just because Australia suffered new floods after 2011 ended but because analysts want to hear about premiums rising, given the extraordinary number of disasters in 2011, that made Japan’s triple disaster only a preview to one of the most or most expensive catastrophe years in history. Leerink Swann, a respected biotech specialist, hosts its Global Healthcare Conference, starting Wednesday, the same day, while Nat’l Pavement Expo involves many of the same heavy equipment that star at the farm shows. Thursday, Keefe Bruyette & Woods hosts Cards, Payments & Financial Technology, topics that were well covered last week.

We’d be remiss if we didn’t point out the Options Expiration Friday, which might be very active, given how strongly stocks have rallied since the year began, even as March has often been unkind to investors—in like a lamb, out like a lion. Despite the large number of companies reporting, this week, the switch to March Options get traders ruminating on Q1 earnings warnings that could, well, start cropping up in March. In fact, it isn’t March individual stock put options that have enriched buyers but, rather, individual stock put options with an April expiry that have, often, been lucrative in the past. That’s because a heavy spate of Q1 warnings arrive in late March and early April, shortly after March options expire. But some of March’s stock option activity is related to the quarterly index futures that expire in March.

With VIX still low, though granted, off the recent bottom, it’s time to start nibbling on March & April puts, once this week’s Expiry is put to bed. At last Friday’s open, it clearly looked like the bulls were going to be tested but, by the end of the day, stocks recovered one third of the day’s worst levels, which encouraged the bulls, allowing for Monday'’ upside opening which faded. Given that February Options are dirt cheap, and there's likely to be at least one whipsaw day down, this week, there’s reason to sample some puts that expire Friday or NEXT week. The Greek "deal" consented to by its fractious parties are about the 7^th deal on Greece, yet it’s still pulling markets around on a string. With the Troika’s various task masters still to vote on Greece’s latest package of reforms and budget cuts, before releasing the next tranche of aid, and Greece’s creditors still working on a debt swap agreement, it remains way too early to believe stocks and bonds have nothing to fear from the EU’s problems. If anything, Greece is similar to the major, multi-state mortgage foreclosure irregularities settlement with the 5 major banks. That deal hasn’t done much to put the credit crisis behind banks. They still face lawsuits from individuals, some of the investors who bought the packages of loans they distributed based on faulty mortgage papers, and even other lawsuits by the same states that signed onto the settlement announced last week. Within hours of the foreclosure settlement, the NY State Attorney General had filed a lawsuit against MERS, the electronic registry that’s owned by many of the same settlement banks, which had filed many of the foreclosures the banks processed improperly. In fact, the NY AG plans on reversing foreclosures in which MERS was the plaintiff, his ultimately goal is the destruction of MERS, altogether.

In sum, it’s way too soon to sound the all clear horn. In fact, Friday’s minor stumble did too little to work off the magnitude of the rally that started as soon as the New Year opened. Stocks need either a few weeks of consolidation, or a number of days of healthy profit-taking, and it isn’t clear which route will, ultimately, be taken. The March puts I started accumulating, last Thursday, 02/09, are proof that I think some give back is more likely than mere consolidation, in place. Part of the reason I reached for puts is the likelihood that earnings warnings are dead ahead. With cost cutting having run its course, during the latest recession, if not since as far back as the 2001 bursting of the dot,com bubble, it’s going to be hard for companies to continue boosting margins with much of Europe either in, or heading into recession. Then, again, last week, for the first time this year, I saw underlying demand for more defensive stocks, even before Friday’s dip, a sign some others are worried about the rally needing a rest, if not correction. But, then, again, I felt the same way last week and the rally ignored me, at least, until Friday.

ECONOMIC: (More here, including look ahead)
EARNINGS Highlights:
EVENTS:

© Sandi Lynne 2012 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions are the author’s, alone, and should be just one factor in more complete due diligence.  

February 06—10, 2012  CONSOLIDATION, IF NOT PROFIT-TAKING, LONG OVERDUE The hardest thing to do, last week, was to ward off the temptation to sell stocks. Stocks that looked like they suffered agoraphobia at particular price levels suddenly blasted through them, last week, making mince meat of resistance levels. The poster child may have been Microsoft, which took out $30, last week, for the first time in a decade. Others had more recent resistance they blasted through with ease. Financials remain the missing link, with few breaking out but credit card names unencumbered by mortgages—non-bank financials—were the except. Visa made a new all time high, Amex shut above $51, and DFS finally took out $28. Retail stocks were rewarded for good news, like TJMaxx, which made a new high while those that reported bad results were punished accordingly, like Abercrombie and Fitch. And still, there wasn’t hardly an analyst or financial TV talking head inclined to recommend profit-taking, despite both the percentage of bulls and VIX compressing to the teens, have, previously, been the perfect set for a near term top. Not a one, last week, said stocks are seriously overdue for a pullback, except, perhaps, options expert, Larry McMillan, in his written missive.

The market’s become a real head scratcher. Contrast the talking heads’ enthusiasm for the rally, in stark contrast to the week prior’s FOMC statement or, even, the Fed chief’s testimony, last week, at the House, in which he said he stands ready to do more to stimulate the economy, if necessary. So which is real and which is Memorex? Is there anyone else worried about how similar this year, so far, looks to last year’s early days of the 2011? Wasn’t it only a few months ago that traders worried the US would slip back into recession? That Greece and other European peripheral countries could default and cause paralysis in the credit markets?

And then, there was that January Unemployment Report, released Friday, relying on "seasonal adjustments" for the "gains" in employment reported, when the raw data show’s over 2.5m jobs actually lost, a warm winter preserving many of the construction jobs that are usually lost to snow and freezing temperatures, even as new retail locations are sopping up a good portion of the seasonal help laid off in January. Read Gene Epstein, usually Barron’s economic cheerleader to Alan Abelson’s doubting Thomas. He details, this week, how the government turned over 2.5m job losses into gains—on a seasonally adjusted basis but he’s not the only one. I found 6 articles within minutes of the release, Zero Hedge and Mish Shedlock always good sources for analysis of the federal government’s fictions. .

Last week, both Mattel & Hasbro raised their dividends, something for their investors to take to the bank as this week marches towards the opening of the International Toy Fair. The pre-earnings boost leads me to ask whether Hasbro could surprise to the upside, after it warned & lowered guidance? Isn’t raising your dividend by 20%, (to 36c per share from 30c p/share) something companies save to announce with an earnings miss, to assuage disappointed investors? For the record, the Toy Fair is preceded by a media product preview. Mattel will meet with analysts to unveil of new products and updates investors, just before Toy Fair opens. Toy Fair has been eclipsed by Licensing, in June, for the past few years. I expect nothing different this year though Hasbro might, just, have some new toys to introduce for this summer’s debut of G.I.Joe: Retaliation, the 2^nd movie which opens on June 29^th.

I was wondering if anyone caught the Deutsche Bank post-earnings analyst call. Did it really say, on that call, 02/02, that ex-litigation charges and the Greek write down, 2011 net income would have been EU 8B "just short" of the EU 10B target? Since when is a an EU 2B miss, ($2.6B) or, even, a $2B miss, "just short?" Are banks so perverse, still, that they can’t see $2.6B as significant, or has CEO Ackermann been negotiating in the hundreds of billions with Greece, for so long, that $2B simply doesn’t seem as important anymore. More Major European banks are on the Earnings Calendar, this week, including Itau, ING, Barclays, UBS.

According to Dow Jones, states have until Monday, 02/06, to opt into the global mortgage foreclosure irregularities settlement. That settlement is expected to cost banks approximately $25B, most of which, after costs for negotiators and payments to those wrongly foreclosed, to be used to reduced principal for homeowners who are underwater on their mortgage. Because settlements to homeowners wrongly foreclosed is reported by the media to total about $1,800, each, I can’t imagine this is anything but a good deal for the banks, especially since some initiated or executed foreclosures on homes for which they didn’t have any paperwork backing up their claim to own the mortgage note—an issue the NY AG is litigating in a lawsuit filed, last week, against MERS, the database that tracks who owns what and is owned by the major banks.. As a V.P. of a homeowners’ association in Florida, a judicial foreclosure state, I can cite dozens of foreclosure actions, within my own 703 home community, that banks withdrew because, in the end, they couldn’t prove they owned the mortgage notes In other cases, they were dropped because the notes prove they owned the home after some of the years for which they claimed an owner defaulted. In one case, a bank didn’t own the note until AFTER the foreclosure sale and eviction. $1,800 for those former owners? That’s the crime, if the reported settlement matches fairly represent the final settlement.

Besides a number of Fed speakers, including Bernanke at the Nation Association of Homebuilders’ Builders Show, the highlight of the week may be the Senate asking him to explain why he’s so ready to offer more support to the economy after last week’s Employment Report. U.S. Treasury Auctions, on the back of rates ticking up a bit last week, should also be closely watched for the bid to cover, especially for Wednesday’s 10-year Notes and Thursday’s 30-year Bonds, the latter a small offering when many would argue the government could keep its cost of financing the debt very low if it bulked up the long-term debt offerings while rates remain so low.

Healthcare providers are among the notable Earnings Reporters, this week, HCA, Humana, and Lincare, Monday, right off the bat, healthcare will be the morning wake-up call. We’ll hear from a few high profile tech companies, Cisco, in particular, Wednesday. But with YUM reporting Monday, both Coke & Pepsi, Tuesday and Thursday mornings, respectively, along with Walt Disney, OpenTable, Panera and Rahlcorp, Tuesday, Furniture Brands, Jones NY, Ralph Lauren, Time Warner, and Wyndham Wednesday, News Corp, Visa, and Whole Foods, Wednesday, it’s not as if the last word on consumers arrived with last week’s January Comparable Store Sales, though one did get the impression retailers on either end of the barbell are significantly outperforming the middle of the road, TJMaxx posting comps up 7%, Costco up 8%, ex- fuel, and Saks up 10.5%—Macy*s the biggest disappointment in terms of comps, though it did manage to raise earnings guidance. Macy*s has benefited, the last two years, from former May Department store customers finally succumbing to its never ending "One-Day Sales." But with a revamped JCPenney nipping at its heels, it remains to be seen how long M can keep up the momentum it had displayed until January, when it was lapping the 2 prior years of strong comps from thanks to former Robinson’s and other May divisions..At the very least, its lawsuit against Martha Stewart OmniLiving, over MSO’s deal with JCP bears watching, given how great a contribution home and furniture have been to M’s bottom line, MSO a large percentage of home and table top revenues. I, also, expect heightened interest in WFM, with its stock in the stratosphere though, realistically, holidays have often been strong for the retailer. For more on retailers than anyone can possibly fathom, there’s 7^th on Sixth, the ready to wear buying week, in New York, as well as the Mercedes-Benz Fashion Week, for American designers, complete with runway shows, starting Thursday.

Notable Events, this week, include AAOS, the Orthopaedic Research Society meeting starting the 4^th, Ortho Surgeons joining on the 7^th, with RBC and Lazard amongst the I-banks hosting clients and companies there. Regulated Utilities (NARUC) and Multifamily Housing (CREF) start Sunday, the Medicare Congress and World Shoe Expo both starting Monday, when Credit Suisse, also, launches its Energy Summit in Vail Colorado. UBS’ 22^nd Annual Healthcare Services Conference is timed perfectly to coincide with so many of the presenters reporting their earnings. Credit Suisse hosts its 13^th Annual Financial Services Forum, Tuesday, Visa, as mentioned, reporting Wednesday afternoon, even as foreign banks report in numbers this week. Of course, with investors newly optimistic about housing—both new build and renovations—NAHB’s Int’l Builders’ Show, starting Wednesday, would have been a highlight of the week, even if Ben Bernanke was not speaking there, Friday.

The Unmanned Systems Program Review 2012 could be one of the bright spots for defense companies, since the Federal government only recently decided to allow drones to be sold to friendly foreign governments-—the first sale of 13 to a single foreign buyer announced only last week. ModEx, which started Sunday, in Atlanta, is a Materials Handing equipment expo, which should provide added insight to earnings reports expected from Arcelor Mittal (Tuesday), BHP Billiton and Ingersoll-Rand (Wednesday), and Rio Tinto (Thursday), a group with both a global view and deep insight into China that’s tough to match.

Then, there are a few other company specific events, besides both Mattel & Hasbro showing off their wares to analysts. Wednesday’s semi-annual American Express Financial Community Meeting (Wednesday), State Street Corp’s Investor & Analyst Forum, Southern Company’s (both Thursday) hearing at NRC headquarters, where its proposal to build 2 nuclear power plants in Eastern Georgia will be discussed, are ones that stand out, perhaps, with AEP’s Analyst & Investor Meeting (Friday), for good measure, the latter especially in light of natural gas prices falling so far that Chesapeake is slashing production.

And yet, I can’t resist the suspicion that attention may turn back to Europe, even as portfolio managers start anticipating not just the Options Expiration in two weeks but the fact that it arrives at a time when many PM’s will be either gone or have one foot out the door for the President’s Birthday celebrated on the 20^th. One of the most striking observations I made in the mall, this weekend, was the number of shoppers lined up at both Zale’s and Kay Jewelers (SIG), for the first time since 2001. These were two of the loneliest stores, in recent years, yet activity seen two weeks ago really cranked up this weekend—albeit both offering anywhere from 20—60% off, often with an extra 10% off, plus interest free financing to those who qualify. A local Walgreens was sold out of a spinning rack of handmade Valentine’s Day cards that go for $8 to $14 each. They were set out, in most of its stores, here, only last week. For all the criticism of last week’s lately. And I’m not referring to just one weekend. Mall traffic never really crashed, after the holidays. Prices did, because most retailers have forgotten how to sell at retail but shoppers haven’t, yet, put their credit cards away. With spring deliveries already looking brighter this year than they were last year, that bodes well not just for retailers but for consumers and jobs, too. Some of the newbies brought on for the holidays remain on the floor, for now.

Yet, having made so many positive observations, I still can’t help feeling stocks are utterly overbought and due for consolidation, if not profit taking—especially as the Presidents’ holiday approaches. The question is whether stocks broke out from a bull flag, Friday, or is the 1346/50 area a target above which many sell programs are set? A pop a little higher followed by a drop wouldn’t surprise at all. On the contrary, it makes a lot of sense, here. If tops often come on good news, then Friday’s seasonal adjusted good employment report, on top of the Fitch upgrade of AIG, and the joyous response to Facebook’s filing for an IPO may just be signs of froth that shouldn’t be ignored, especially since the longer it takes for a Greek deal to materialize, the less likely it is that a "voluntary" one will come at all. JPMorgan’s Jamie Dimon may have said a Greek default won’t impact US banks but I tend to doubt it the fall out would be as smooth as he’s reportedly suggested.

ECONOMIC: (More here, including a week out)
EARNINGS HIGHLIGHTS (For subscribers, only)
EVENTS: (For subscribers, only)

© Sandi Lynne 2012 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are author’s, alone, and should be just one factor in more complete due diligence.            

January 30—February 3, 2012  SHOULD SEE STEADY PROFIT-TAKING    Spoiler Alert: Not on the calendar but sure to arrive, previews of the coming Super Bowl ads. If you enjoy seeing your Super Bowl ads in their entirety, when run, then you probably should avoid watching ANY financial TV this week. On the other hand, if you’re not going to DVR the game, and want to be able to sneak out to the bathroom or kitchen, a few times during the game, you’ll want to watch the "previews" of the coming Super Bowl ads, so you’re sure not to miss anything while building in breaks. This is no idle conversation since, except for 2008, winners of the Super Bowl have had a hi 80% correlation, when an original NFC teams wins.

Relative strength rose to 70, last Thursday, when readings above 58 have been the inflection point for turn downs. VIX is ridiculously low. But before the bears get too frisky, one must ask whether a deal with Greek creditors will be a sell the news situation, or whether the markets have one more global fling to the upside when a Greek deal is finalized. I think that’s the crux of the question because, last Friday, heading into this week’s EU Summit, Olli Rehn, the European Union’s economic and monetary affairs commissioner, said a deal could be reached soon, possibly by the weekend. He made the remarks at the World Economic Forum in Davos, Switzerland and that, alone, may have been sufficient to keep stops from correcting.

It feels like it’s high time stocks did correct—the first bout of serious profit taking this year, imminent. But again, sellers may be holding off, hoping for one last run-up to celebrate a formal announcement of a Greek deal. Honestly, the coming Greek deal has been as well telegraphed as the possibility of a Greek, outright, default, which should seriously limit how much enthusiasm traders will be able to summon when the details are, ultimately, announced.

Ironically, the formal Greek deal announcement could, easily, wind up clashing with Friday’s January Employment Report and the Annual Revisions to not just the monthly but the annual report offered in February 2011. Last year’s Annual revised the prior Unemployment numbers to a much worse situation than even the ugly 2009 & 2010 reports implied—demonstrating that the economy had been in even worse shape than the reports belied. There’s a possibility the same is true with Friday’s revisions. It wasn’t until last Thursday’s weekly claims data that unemployment applications took a jump up. I suspect there’s more of that to come. Not only are financial firms still laying off people but retailers, also, in January, start cutting the excess employees hired for the holiday season, and will finish, if not by the end of January, then early in February. Friday’s report could demonstrate concrete evidence of that going on.

Other highlights from the Economic Calendar include Wednesday’s Jan. Motor Vehicle Sales but, even with recovering sales, Ford’s earnings report, last week, proved, better sales don’t always translate into better profits. Here, I found the end of year and New Year promotions not only bigger than usual but true, even, for the Japanese companies that used to be able to shun promotions. GM is lucky the Volt isn’t its top selling car because that model spent a good part out the month under a cloud, after the battery in a Volt caught fire after an accident.

FOMC Chief will testify, Thursday, before the House, discussing his semi-annual "State of the US Economy" report, formerly the Humphrey-Hawkins report. If you bother to read the actual minutes of the FOMC meetings, released 3 weeks after each meeting, or even just processed the recent lengthening of the time before the FOMC expects to have to raise rates, it’s clear that Bernanke’s assessment of the economy is weaker than the stock market, so far in the New Year, makes it seem, given the enthusiastic rally, until late last week. Furthermore, Bernanke will discuss, in the House, budgetary issues, and is sure to point out the unsustainable path the US Budget Deficit remains on—the troops pulled out of Iraq about the only basis upon which relative savings can be projected with any certainty—at least until the automatic budget cuts are enacted, in the 2013 budget year, cuts many believe will never happen, anyway. And though Bernanke & his FOMC Committee members mentioned additional actions they could take to spur the economy, if it worsened, Bernanke is likely to say, as he has in the past, that the Central Bank has done most of what it can do, effectively, and Congress must do the rest.

Retail Chain Store Sales for January, and in many cases, for the quarter which ends January 31^st, may show growth in units sold without much growth in revenues. Additionally, margins are likely to be soft. Evidently, 40% off is the new 20% off of the past, and 70% off has replaced what used to be half price sales. Often, to get to 70% off, retailers will cut prices by 40 or 50%, then offer an additional 40 or 50% off the lowest marked price. Don’t ask if I think Ron Johnson will succeed at JC Penney, relying on 3, standing tiers of discounts, because that would be too silly a question. Macy*s Terry Lundgren is destroying retail for all other chains, and the time for JCP to have seized the day was back when Lundgren was integrating his May Department Store purchase, and changing the names of its chains, like Robinson’s, to the Macy*s name, which caused May’s customers to go anywhere but to Macy*s. Only last year, M began winning back those customers from May & Robinson’s worn down by Macy*s near daily "One Day Sale," "WOW Pass," and "Every Day Low Price," which isn’t and wasn’t, ever, an everyday low price, since it had long built in the first 15% discount Macy*s customers get when using their Red Card, or M’s Bloomingdale’s customers get, on nearly every item purchased, when they use the house credit card at either M division. Were those customers to run side by side price checks with identical merchandise carried by Nordstrom, they’d realize M builds in the first discount into the original retail price on the hang tag. Likewise, Ann Taylor has done the same since the original price of its merchandise but, with all its merchandise made for its stores, it’s impossible to run side by side comparisons as one can do with 3^rd party branded merchandise at both JWN and M.

The chains that ran the most successful clearance in sales in January, that saw the greatest traffic, are perennial winners Express and Limited’s (LMT) Victoria’s Secret, which includes Body & Bath Works as well as Pink and Henri Bendel. Problem is, both had strong year ago comps, as well, LTD’s +24%, and EXPR +12%. EXPR, which went public for 2008, obviously has the easier of the comps to top, the number of stores added to the comp base likely to decide whether either can top year ago comps. Despite its easier comps, EXPR’s problem is opening many new men’s stores, and they lack the outstanding traction of its ladies stores, which will drag on comps, a bit. And while Macy*s has won back the customers alienated by the name change of its acquired stores, M makes little on its apparel, relying, to a large extent, on home, table top, & furniture profits to carry the rest of the store, since those are categories where it has much less competition. Saks 5^th Avenue, and Neiman Marcus largely avoid furniture, and lightly stock their home departments with, mainly, hostess and gift items in departments that rarely occupy must more than a few hundred square feet. Nordstrom doesn’t bother, at all.

As for Earnings, this week promises a flood of S&P companies reporting but many have already moved on as large cap tech earnings wind down—Amazon Tuesday and Qualcomm Wednesday, glaring exceptions. The Earnings Calendar and Events share healthcare in common, where there’s room for dashed expectations. On the consumer side beyond Amazon, few stocks are likely to move more than Chipotle Mexican Grill, like Qualcomm, Wednesday afternoon. Coincidently, Electronic Arts (Wednesday p.m.), Take Two (Thursday p.m.) and THQ Interactive (ditto TTWO’s timing), all report this week, NPD data not, particularly, encouraging. Because major pharma companies like Biogen Idec (Tues. am.), look for Pfizer, that morning, also, as well as Aetna and Thermo Fisher (Wed. a.m.), Allstate (Wed. p.m.), Allergan, Boston Scientific, Cigna, and Merck Thursday Morning, that day’s stars, likely, CME and MasterCard, and a big day Friday, whose reports will make up in punch for what they lack in quantity, with American Axle, AON, Clorox, Estee Lauder, Healthnet, Panasonic, Simon Property, Tyson Foods, Volvo, and Weyerhauser. I should mention that both ExxonMobil & Royal Dutch Shell report this week, Tuesday and Thursday, respectively, so soon after Chevron sorely disappointed. And so do Manpower & Kelly Services, Wednesday & Thursday, respectively, both with significant exposure to Europe, who could confirm a significant slowdown in the Eurozone. There are any number of minefields embedded in this week’s busy Earnings Calendar.

Two events to watch, this week, JPMorgan hosts Global Commodities, Wednesday, the same day Cattlemen meet, and both AMD and Navistar will host Analyst Meetings. Thursday include Raymond James Global Airline Conference, "Growth" dropped from the conference name, yet Stem Cells World is likely to attract the most press. NADA’s (Nat’l American Auto Dealers Ass’n) involves autos and trucks concurrently, with J. D. Power’s Roundtable, the kick off, Friday. Still even a cursory glance down the schedule makes the concentration of health-related events obvious.

Throughout, the dollar could rise and fall on the latest rumor of a Greek settlement with creditors and, it appears, for now, Gold and Silver have already priced in most of the inflation traders anticipate the FOMC’s decision to hold rates at zero into 2014 is likely to trigger—inflation the bugaboo that’s been anticipated enthusiastically, even as global deleveraging limits where inflation will go.

This week should be one of profit-taking and slow distribution of stocks, at least until the January Unemployment Report is released, Friday. Retailers are unlikely to be too enthusiastic about the near future for consumption, even as more companies will have a hard time forecasting a continuation of double digit or, even, high single digit earnings increases. The truth is, peak margins and, possibly, earnings, may already be baked into stock prices. A period of consolidation that lasts right through to Q1 earnings reports is possible. It’s a little late to get too excited about going long stocks.

ECONOMIC: (Here)
EARNINGS: (for subs, only
EVENTS: (for subs, only)

© Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author’s, alone, and should be just one factor in more complete due diligence.                                                              

January 23—27, 2012  CAN THE BULLS KEEP IT UP? If you’re old enough to remember the "Nifty 50," then last week must have felt reminiscent to others. There were IBM, Microsoft and Intel, the 3 horsemen of old tech, being feted to the upside on what were earnings that did nothing but beat lowered expectations, Microsoft & Intel having warned of slow PC sales, Softee only a week earlier. Did anyone else notice outsized volume in P&G, last week? Wasn’t it just a few short weeks ago that traders in the U.S. were anticipating QE3, as soon as, possibly, this week’s FOMC meeting? Curious that stocks have rallied with such spirit, since the New Year began, (and VIX has all but collapsed), since it, certainly, dampens the FOMC’s sense of any urgency for QE3. Part of what saved U.S. markets, it seems, was the conclusion that the ECB’s LTRO was a form of QE3. With another coming, later in February, which many feel will solve the EU’s and its banks’ funding problems, for a year or two, it’s a lot to ask for stocks to continue rallying until then. Especially with Greece’s debt exchange still hanging in the balance, the reason Merkel & the IMF’s Lagarde are sitting down together, to end the weekend, before flying off to Davos, where Merkel has the honor of delivering the opening keynote. (The ECB’s LTRO is a Long Term Refinancing operation, in both cases mentioned, for 3-years, at 1%, with the total expected to reach 800B euros by the time the second offering is completed)

The will be the heaviest week of Earnings reports, yet. Still, it may not be Earnings that defines the week. There are two huge items coming this week, while China and much of Asia will be off to celebrate the Lunar New Year, the year of the Dragon. The first is the government’s first guess of 4Q11 GDP, which will be released Friday. Analysts are expecting 3% but, be aware, revisions in recent years have mostly been down, and there are two more monthly guesses to follow, the last the "final." The real star of the week, will be the FOMC Statement and Press Conference to follow the 2-day FOMC meeting, which starts Tuesday. It’ll be a momentous event because, for the first time, ever, the post meeting detritus will include the interest rate forecasts, for the next several years, from each committee member. The latest enhancement arrives after only 3 quarterly quarterly Press Conferences, Bernanke’s goal of more transparency on full display. That won’t make the FOMC’s outlook any more accurate than the abysmal record its posted, to date, missing how much damage the subprime mortgage fiasco would inflict on the economy but, it you want to know, sooner, how faulty their thinking is, this latest addition is for you. Note results of a recent study from the Federal Reserve, published in a gloss-over by the Wall Street Journal, on 1/5/12, in the "Overheard" column, described bullish action that was more likely prior to, than after, the decision, at least since the FOMC began announcing its decision publicly, in 1994. The WSJ said, "Since then, excess returns on U.S. stocks have been more than 30 times larger on the decision day, then others…. Gains are made in the 24 hours leading up to the decision, not after the FOMC decision." But on Monday, expect some volatile action and a pullback in the morning because that’s typical of post-expiration action, and even the bulls have to be wondering how long stocks will continue celebrating earnings that are, simply, not as bad as the worst fears.

A number of financial writers have mentioned the behind the scenes pressure for a bank foreclosure settlement to be reached by the time Pres. Obama delivers his SOTU, Tuesday evening. The States Attorney Generals from NY and CA are said to be hold-outs, so the question might become, will the other states involved forge ahead without those two, so Obama has something to tout during the SOTU? Does that make sense to anyone, other than a speculating financial writer? Most of the settlement--still rumored to be between $25—40B--is expected not in cash but in principal forgiveness—damn the moral hazard or inequity—since those who responsibly borrowed and continue paying off their mortgage get nothing. Still, housing related stocks would celebrate anything that brings relief to homeowners and the financials could rally hardest, if it happens. Any settlement is likely to take prosecution and puts-backs off the table, which will considerably lower their remaining unquantifiable exposure.

And then of course, can we discuss central planning and settlements without asking the question on many a trader’s mind: Does China ease policy during the Lunar New Year holiday? That’s been its m.o., to date, easing on Friday’s before a long weekend or during some other multi-day holiday. Inquiring minds need to know because on so many other metrics, the rally that started in November is getting a little long in the tooth, the drop in VIX just one sign of how few are set up for bad news. With semi’s and financials rallying hard last week, it was a classic rally that few in this business for more than a few days have been taught to respect. But up here at resistance, with VIX sub-20, and the slug of earnings reports set for release, it would sure help the rampant bulls if China put the icing on the cake and eased, as well.

If you’re looking for stocks that are rallying to break outs or posed to, which few are talking about, you might take a look at Media companies, ex-Viacom, which is currently lagging. News Corp broke out after announcement of the 36 hacking suit settlements, while Comcast is threatening to follow suit, and Time Warner is poised to join in. Worth mentioning since, if these are meaningful break outs, it’s still very early in their run.

I’m sure there were many comforted, last week, to see that Google’s miss didn’t completely derail the rally in stocks. Can that sustain if Apple misses, Tuesday? We might not have to find out, this time. With Apple launching the iPhone 4S in 21 countries plus China, late in 2011 stirring near mobs at its stores in Beijing & Shanghai, apparently, so threatening that the stores shut down and Apple decided not to sell the phones in them, at all, it’s a fair bet that Apple’s iPhone numbers will easily offset any weakness it might have seen in any other product category—if it saw any weakness, at all. In short, the rally should see a pause and pullback, this week, but that’s no more guaranteed than continuation of the rally. Don’t know what they’re smoking, down on Wall Street, but it hasn’t been diffused into more distant states, yet. Evidently, pullbacks are to be bought, until they’re not. All those morning pullbacks that resolved with upside days, have telegraphed that pretty clearly. But a week's worth of digestion doesn't seem out of line.
ECONOMIC: (Here)
EARNINGS HIGHLIGHTS: (Subscribers, only)
EVENTS:(subscribers, only)

©Sandi Lynne 2012 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author’s, alone, and should be just one factor in more complete due diligence.

January16—20, 2012  AFTER SEVERAL 4-DAY WEEKS, WALL STREET GETS BACK TO THE BUSINESS OF EARNINGS    Fridays before a long weekend, in the US, cause traders to flatten their positions, as a rule but the cross currents, last Friday, before the MLK holiday, were heightened. There was the rumored European sovereign debt rating cuts, which proved true, after the bell. Then, there were Taiwanese elections, Iran’s waving a stick over the straight of Hormuz, Europe back pedaling on taking the Iranian sanctions as far as stopping purchases of Iranian oil, turmoil within Japan’s relatively new government, the head of the Swiss nat’l Bank resigning, and the possibility that Greek debt will go to default, triggering CDS and raising the likelihood of contagion—contagion to countries it was, correctly rumored, who saw their own debt ratings trimmed, hurting the rating of the EFSF and coming ESM, this summer. Considering everything that was going on, Friday’s decline was mild. Then, let it be said, it was Friday, the 13^th. A lot to assimilate, yet, in the wake of S&P’s ratings cuts, France floated 8.6B euros of bills at a lower yield, and Juncker said the Euro Group would not cut back the EFS lending facility but may look to raise the ceiling, a decision he hopes to be made by March. Gold benefited, over the weekend, from the European downgrades, and oil bounced while the U.S. was closed but, other than that, the reaction’s been tame, so far.

Coming this week, is resumption of Greek debt holders’ continuing "voluntary" bond haircut talks but that outcome is looking less certain by the day. Even in the presence of the Institute of Int’l Finance (IFF), the EU, ECB, and IMF, the settlement looks less close than it was last year. Many are worried not so much about a Greek default triggering CDS pay-outs, since CDS on Greece cost 70% of the value of the debt being insured; anyway. Instead, most worry about the precedent of a 40 or 50% haircut NOT triggering CDS pay-outs, which CDS holders certainly anticipated would be the case. Why buy CDS if they’re not going to pay out in such an instance? Equally worrisome, those who believe the haircut would need to be 70% or, even 90% to, realistically, solve Greece’s debt problem, especially since tourism all but collapsed thanks to worker strikes in the streets of Athens and elsewhere, that got quite violent, when austerity measures were first announced.

Speaking of tourism, Carnival Cruise Lines is in the cross hairs over the cruise ship that ran aground and started to sink, off the coast of Italy, the death toll still rising. Hannover Re has already announced it has significant exposure to the incident.

Meanwhile, back in the U.S., in advance of the next Repbublican primary, John Huntsman has quit the race and thrown his support to Romney, who’s looking more winsome with each passing day. Pundits had expected Huntsman to stick it out into South Carolina, at least, and perhaps through Super Tuesday—the first Tuesday in march—but that didn’t happen, as it turns out.

While U.S. December PPI & CPI will be announced Wednesday/Thursday, and December Existing Home Sales Friday, many look to close on their new home before year’s end both so their kids can start the New Year in their new school but, also, in states like Florida with homestead real estate tax exemptions, to qualify for whatever savings they can. But as much as the end of the year is an impetus for some, others prefer to spend one last holiday in their "old" home before moving on. There might be nothing cleared up with Existing Home Sales. Forget December Industrial Production/Capacity Utilization since every retailer has already called out unseasonably warm temps which will trim utility output, as well as draws from home heating oil and natural gas tanks.

If anything, the headline event on the "Economic" calendar is this Friday’s Options Expiration, which should provide the background for some typical whipsaw action, mid-week, even as the Earnings Calendar is fraught with big money-center bank reports. Right out of the gate, Tuesday morning will bring both Citi & Wells Fargo. Wednesday morning we should hear from Bank of NY Mellon, Goldman Sachs, Northern Trust, PNC, State Street and US Bancorp. Wednesday afternoon the string of bank reports will be fractured by reports from eBay, F5, Sanmina, and Xilinx. Thursday morning is diverse, despite a number of financials that includes Bank of America, BB&T, BlackRock and Morgan Stanley, to be followed in the afternoon by American Express, and Capital One. But banks aren’t all there is Thursday, because that morning, also, promises Freeport McMoRan Copper & Gold, Johnson Controls, PPG Industries, Southwest Airlines, Union Pacific, and United Health, before the afternoon that will deliver IBM, Intel, Intuitive Surgical, and Microsoft, all with the power to sway markets—IBM especially, since its gains and losses are most influential to the Dow Jones Industrials. Notably, the first prominent, negative comments about IBM arrivedwith this week’s Barron’s, when one of its Roundtable members called it out for too much optimism. It’s rare for IBM and Microsoft to report during the January Expiration cycle, since both usually report the week afterwards. By the end of the week, the naked truth of earnings just completed and the outlook for 12Q1 will already be set. It’s more than likely Europe’s woes will be called out as the basis for the kind of uncertainty that was typical of 2008/09. And we all know the Street hates uncertainty.

Because Earnings get underway in earnest, this week, the Investment bank calendar is a little quieter than usual. Still, there are a few really big "shoos," as Ed Sullivan used to say, including the NRF’s (Nat’l Retail Federation) BIG Show, from Sunday though Wednesday, even though it’s more focused on technology for retailers, than retailing, itself. That’s actually a good thing, since malls were exceptionally quiet, this past weekend, the lure of up to 70% or 75% off no longer the draw it was soon after Christmas. Stifel’s Senior Housing & Healthcare Real Estate Conference, Monday, is more unusual than most and, for that reason, could attract considerable attention. Ditto IEEE’s Power & Energy Society’s Smart Grid Technologies (Washington D.C.), which happens to overlap with The World Future Energy Summit in Abu Dhabi, a location that would sound a lot stranger if it hadn’t been held there previously.

Because BHP Billiton is a humongous exporter to emerging economies, its December Quarter Update on production, exploration, plus development, Tuesday, should be widely followed. Wednesday’s 38^th Annual Securities Regulation Institute, (through Thursday), should touch on topics that might make some banks uncomfortable, if they weren’t already in discomfort, reporting in droves, this week. Also notable, CIBC’s Whistler Institutional Investor Conference, which will include a hodge podge of company presentations that could eclipse news out of Bank of America Merrill Lynch’s Gaming Conference, in Las Vegas, which starts Thursday. Lazard is treating Outdoor Retailer (Thursday, Salt Lake City) more significantly than most other firms, leading clients through a tour of the booths. Of course, with Haute Couture Week about to start, in Paris, Wednesday, one should expect Menswear to star early in the week, womenswear next week, the Hollywood Foreign Press’ Golden Globes, Sunday, the preview of what’s to come.

Still, no matter how you slice it, the Events & Trade Show Calendar is dwarfed in importance by Earnings; the week’s battle between the bulls and bears likely to continue until the last bell rings on Friday--Expiration the background Musak that should see stocks wind up the week with a dip, after a bunge jump Wednesday/Thursday, if not sooner. Unless, that is, the long rumored settlement between the major banks and states attorneys general, regarding robo-signing and other foreclosure infractions is, finally, put to bed. With so much about the banks’ earnings power and newly added regulation still up in the air, there’s little their earnings reports will settle, the long awaited closure to the 2008/09 credit collapse still sometime off in the future, Europe’s latest woes another thorn that keeps pricking open the wound.

© Sandi Lynne 2012 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author’s, alone, and should be just one factor in more complete due diligence.

January 09—13, 2012  REALITY DUE TO RETURN FROM VACATION  One regular week before there’s another short week, the markets closed for Martin Luther King Day the 16^th. And there’s nothing that gets the equity market’s juices surging more than a deal to start the week. We can thank Bristol-Myers’ (BMY) purchase of Inhibitex (INHX) for $26 per share ($2.5B total) for providing the fuel. Overseas, JD Sports is a rumored buyer of Blacks Leisure but that, alone, wouldn’t have been good enough. The Wall Street Journal reports that Regions Financial is close to selling its Morgan Keegan division to Raymond James Financial. If that’s announced Monday, it won’t, necessarily, be additive to the BMY news since it’s been long known that Morgan Keegan was on the block. Ditto Lions Gate Entertainment’s rumored buy of Summit Entertainment, famous for the Twilight films.

The biggest items on the Economic calendar should be Monday’s November’s Consumer Credit, Wednesday’s Beige Book and Thursday’s December Retail Sales but, alas, that isn’t likely to be the case, this week. That’s because Spain and Italy are going to try and get off debt issues and, at best, the European stability fund, which sold bonds of its own, last week, will be there to mop up most of the issues. And, as if the Beige wasn’t enough word from the Federal Reserve, a slug of members will be speaking again, next week, literally, from Monday through Friday, multiple members speaking on a few of the days. Is it a given that the ECB will cut rates, again, Thursday? Consumer Credit should especially interest investors in retail and apparel/footwear manufacturing because the report will reveal how deep into debt consumers went to vacuum all those bargains the weekend of Good Friday. And don’t forget, C.C. includes supermarkets, gas stations, and restaurants, so the dive deeper into deeper revolving debt could have been large. Down here, in Southern Florida, shoppers finally stopped going to the mall, this weekend, after weeks of strong traffic. Maybe it was those few days of true winter weather, including nights in the 30’s, that convinced them it was time to spend some time outside, once the high’s were back in the low 80’s, sunshine, light breezes and relatively little humidity the big draw.

Circling back to the FOMC, this past Saturday, in a speech delivered by the chief of St. Louis Federal Reserve bank, James Bullard, said QE isn’t likely, now. But William Dudley, who as head of the New York Federal Reserve and vice chairman of the interest rate-setting Federal Open Market Committee, feels differently. For months, he’s been pounding the table for greater easing and, last week in a speech, said he would like to see refinancing made broadly available on streamlined terms and with moderate fees to all prime conforming borrowers who are current on their payments." He also called for "earned principal" reduction for borrowers who are underwater but kept on making their mortgage payments. But Dudley, also, quite incredibly, called for banks to accept more risk, to loosen underwriting for banks to see to it that appraisers have less of a "downward bias." (NAR claims many deals are busted because of low-ball valuatuions from appraisers from outside the area, who know nothing about the neighborhood they’re appraising). Dudley pushed for a $15 billion-a-year bridge loan program for those who are laid off so that they can keep paying their mortgage while finding a new job. The latter is something the GSE’s are already behind, announcing last week they’d offer 6 months forbearance for those who lose their jobs, to give them a chance to find new ones.

Earnings season starts this week but not because Alcoa is reporting. That’s one company analysts get wrong to the upside and downside, it’s retention as a DJIA stock a questionable decision made by the editors of Dow Jones. With CME’s recent purchase of a large stake in the Dow indices, perhaps it’ll have some sway, even though the deal leaves decisions about index members to the editors from Dow Jones. About the only one to ever get excited about AA’s earnings is CNBC’s Bob Pisani. Most professionals don’t find AA particular relevant, today, since it struggles to remain profitable even as automakers boosted 2011 annual sales to near 13.5m vehicles, and despite all the made in the U.S. A. planes Boeing delivered. So, for the rest of us, Earnings season doesn’t commence because AA is reporting but it will by Friday, because that’s when JPMorgan reports and will provide a reflection on the just completed 4^th quarter, as well as its outlook for Q1 and beyond. The securities industry has suffered at the hands of Europe’s near financial seizure, so no one expects much good news out of the financial industry. To the contrary, analysts have been falling all over themselves, rushing to trim estimates for members of the financial services sector, even as more are sure to continue doing so, in the days before JPM report. The negativity is the best thing the lagging sector has going for it. It would take only a little upside surprise to create a stampede into the financials,

The schedule is filled with more events than necessary and, unlike the volume seen some weeks, a few this week are headliners with tremendous influence. The stars should be CES, ICR Xchange, the JPMorgan Healthcare Conference, and the Detroit Auto Show, with Wells Fargo’s Food Symposium pulling up the rear. WFC will offer presentations from Pilgrim’s Pride, JBS USA, Michael Foods, Del Monte Foods, Performance Food Group, Supervalu and others, SVU, as it turns, out, reporting Wednesday, too..

The presentations at CES are innumerable, especially given so many co-located shows, and the astronimical number of domestic & international investment banks hosting some sort of meeting, there, with clients and company execs. On the even of the opening of CES, NPD delivered bad news, saying US "holiday" (generally, November/December combined) electronics sales fell 5.9%, lead by camcorder sales, which plunged 43 percent, and sales of digital picture frames, which fell 38 percent. NPD said GPS units slumped 33 percent. PC and TV sales slipped a mere 4 percent, sales of TVs bigger than 50 inches stemming what could have been a worse decline. But with both Tiffany & Signet (owner of Kay Jewelers in almost every mall) reporting their holiday comps Tuesday, perhaps we’ll find out where else besides electronics or apparel consumers spent their money. Both seemed to do well here, Kay slaughtering Zale’s at the middle market game but ZLC possessing its secret weapon—Piercing Pagoda—which would have done twice the sales it managed, both this year and last year, if ZLC only bothered to staff the kiosks with more than one sales person..

The Detroit Auto Show is one place US automakers, generally, dominate the news, only because foreign makers prefer to unveil their new models and prototypes at their home show, or in Geneva, specially the European manufacturers. According to the Wall Street Journal, the new Ford Focus is slated to star, with styling reminiscent of its former luxury division, Maserati.

ICR Xchange is, often, THE event of the first half of the year for consumer names, especially retailers, on and off line, and apparel & shoe manufacturers. After chain stores reported mostly tepid December comparable store sales, there’s room for them to indicate better sales, since New year’s Day, when the NRF month of January, began. Then, again, don’t expect miracles. Not only is 50% off the new 20% off but what used to be half price sales after Christmas are, now, 70—75% off. Sales are being won at the expense of margins, off mall off price retailers TJMaxx & Ross Stores the only ones who need not resort to slashing prices, because they buy right, to begin with.

Don’t looks now but, on 1/14, US Debt Ceiling will automatically rise by another $1.2B, unless both houses of Congress submit a bill and vote to disapprove the resolution that will increase it. Obama announced, late last year, he needs another $1.2 trillion, something he was required, by law, to do when the administration came within $100B of the current limit. Last summer’s deal to that lead to a short term spending bill & extended the Bush tax cuts, passed when the U.S. was on the brink of running out of money made this boost to the debt limit a nearly incontestable event.

It’s likely stocks will open with a hearty bounce on merger Monday but the smart money is likely to pare longs into the rally and, possibly, through the week. With the Beige Book here, and Spanish and Italian debt issues over there, mid- late in the week, some won’t hang around waiting for JPMorgan’s report to arrive Friday, unless tech companies surprise and upside at CES. That’s not impossible for the mobile-related names to do but it seems prudent to count out most tied to consumer electronics. And even if the tech comments are skewed to the upside, it’s not prudent to expect more than minor gains, not just after big gains of the first few days of the New Year but given how much stocks struggled even after one of the best Unemployment Reports in months, Friday. Honestly, even Merkel & Sarkozy could say something to stir worries about the Eurozone, after their Monday tete a tete and before either Spain or Italy step up to the plate. For a week, US equity markets acted as if Europe wasn’t an issue. Count on it becoming an issue this week, even if the European Stability Fund plows all the money it raised, last week, into the Spanish & Italian bonds to be issued. One can only sweep so much under the rug before tripping over the pile.

ECONOMIC: (More here, )
EARNINGS: (For subscribers, only)
EVENTS: (For subscribers, only) EARLIER COMMENTS HERE

© Sandi Lynne 2012 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security, The opinions expressed are the author’s, along, and should be just one factor in more complete due diligence.                                                             

Send comments by hitting the "Contact Us" on the left frame or Sandi.Lynne@wallstreetinadvance.com.