Thread: This Month in Stocks: 9/29 - 11/02/07

The Week Ahead

Last Update: 28-Sep-07 12:22 ET

The week ahead is a bit thin in terms of scheduled happenings, but it certainly isn't devoid of meaningful economic data.

Leading off the week is the September ISM Index. This will be a closely watched report because it will provide some insight on national manufacturing activity following the credit market turmoil.

The most important item of the week, though, will be the September employment report. It will be released Friday and it is sure to be a market-mover as participants are anxious to see if the August decline in payrolls was an aberration. Previews of the data can be found on our Economic Calendar page.

The earnings calendar shows only a handful of companies of note reporting. Walgreen (WAG), Palm (PALM), Pepsi Bottling Group (PBG), Marriot (MAR), Research in Motion (RIMM), and Constellation Brands (STZ) are among the more notable names due to report.
__________________________________________________ ______________
Monday, October 1:

• Earnings: Walgreen (WAG), Palm (PALM)
• Economic Data: ISM Index; Auto & Truck Sales
• Events: None
• Conferences: Independent Petrol Assoc. of America 2007 OGIS Conference; BioProcess International Conference; Equities Transatlantic Conference; Jefferies Technology Conference hosting Sybase Conference
• Fed Speakers: None

Tuesday, October 2:

• Earnings: Pepsi Bottling Group (PBG)
• Economic Data: Pending Home Sales
• Events: None
• Conferences: None
• Fed Speakers: Fed's Dallas President Fisher speaks to Dallas Chamber of Commerce

Wednesday, October 3:

• Earnings: Wolverine (WWW)
• Economic Data: ISM Services Index; Crude Inventories
• Events: None
• Conferences: BOE Policy Meeting
• Fed Speakers: None

Thursday, October 4:

• Earnings: Sealy (ZZ), Marriot (MAR), Research In Motion (RIMM), Family Dollar (FDO), Constellation Brands (STZ), International Speedway (ISCA)
• Economic Data: Initial Claims; Factory Orders
• Events: None
• Conferences: ECB Policy Meeting
• Fed Speakers: Fed Governor Mishkin to speak at Deutsche Bank event; Dallas Fed President Fisher to speak to economists in North Carolina

Friday, October 5:

• Earnings: None
• Economic Data: September Employment Report; Consumer Credit
• Events: Early close for financial futures and options (1:00 EST)
• Conferences: None
• Fed Speakers: Fed Vice Chairman Kohn speaks on economic outlook in Phila.; Fed Governor Warsh speaks on Financial Markets at Siena College

--Jeffrey Ham, Briefing.com

Stocks wait for jobs report for clues on Fed
NEW YORK (MarketWatch) - Stocks will take their cues from economic data next week, with the September jobs report on Friday expected to provide clues on whether the Federal Reserve can step in with more rate cuts to boost the slumping U.S. economy.

Hope has sprung anew on Wall Street since the Fed cut interest rates by an unexpected 50 basis points on Sept. 18. Many now hope that more rate cuts will follow, but concerns remain that the economy might still slump into recession. Data next week, especially the all-important September jobs report on Friday, will be keenly awaited for hints about both the economy and Fed policy. Prior to the Fed's rate cut in September, employment unexpectedly fell by 4,000 jobs in August. Key among other data next week will be the September manufacturing index by the Institute for Supply Management, along with vehicle sales for the month, to be released on Monday. Tuesday will bring pending home sales for August. On Wednesday, the ISM's non-manufacturing index, the ADP employment report and weekly mortgage data will be released. Besides seeking hints about monetary policy, investors are also starting to look toward the upcoming third-quarter earnings season, which will officially kick off after Alcoa reports on Oct. 9.
http://www.marketwatch.com/news/stor...st=SecMostRead

Credit Strike Over on Wall Street
Forget the United Auto Workers' walkout against General Motors Corp. (GM). We're talking about a more important stoppage: the organized resistance by lenders to finance deals - any deal. Buyers and sellers of debt have agreed tentatively to accept tighter conditions for borrowing and higher rates for risk. Under the agreement hammered out during the last couple of weeks, high-risk offerings will be priced accordingly, if they are to be priced and sold at all. That pact is being seen as a victory for both sides, and the two sides celebrated by pushing through that symbol of stuck deals: the first two loans to back Kohlberg Kravis Roberts & Co.'s $24 billion buyout of First Data Corp. (FDC). Investors snapped up a $5 billion loan earlier this week, and a $2 billion follow-up was being considered, according to a Dow Jones report. A $9 billion junk-bond offering was also in the works, the report stated.
http://www.smartmoney.com/bn/smw/ind...20070927101802

So, if one had a crystal ball and knew the jobs data for next Friday, what would one even do w/ that knowledge?

Say, it's very low, even negative again. Would he market tank as recessionary fears grow or would it be a "the fed is certain to cut more" bad news is good news thing?

Or vice versa -- what if it shows healthy, better than expected numbers? Would the market go up or down ("oh no, the fed's gonna stop cutting")?

Maybe the market doesn't even know The herd will be watching the herd. It should be interesting.

Originally Posted by rconn

So, if one had a crystal ball and knew the jobs data for next Friday, what would one even do w/ that knowledge?

Say, it's very low, even negative again. Would he market tank as recessionary fears grow or would it be a "the fed is certain to cut more" bad news is good news thing?

Or vice versa -- what if it shows healthy, better than expected numbers? Would the market go up or down ("oh no, the fed's gonna stop cutting")?

Maybe the market doesn't even know The herd will be watching the herd. It should be interesting.

Reminds me of Catch 22!! Damned if you do, damned if you don't!
Fit.gif

September 29, 2007

Saturday’s Commentary & Chat, 09/29/2007 6:50 AM ET
What’s wrong with this picture? And, why doesn’t the man have the decency to shut his mouth and let his successor get on with trying to fix the mess his office inherited? Is he another one of these Fed Heads with foot-in-mouth disease?

”Former Federal Reserve Bank Chairman Alan Greenspan has placed some pressure on stocks after commenting today that the odds of a US recession have risen and that housing market troubles have spilled over as a reduction in consumer spending. Greenspan also remarked that hedge funds are "presumably the largest culprit" responsible for the credit crunch.” (Knobias, Friday Sept 28, 2007)
The economy is like a cruise ship at sea. It takes forever to turn around. Moving an economy from growth to recession, ie, from good health to a sickly state, follows conditions set by central banks, finance ministers, and the Sell-side from two to five years prior. Ergo, if Greenspan is pointing us to a US economy moving into recession, he is pointing to his own nose.

Moreover, his remark that hedge funds are “the largest culprit” is almost too funny to come out of the mouth of a central banker and economist. This is like ‘Rodney Dangerfield stlll can't get no respect’ kind of funny. Reminds me of the 2000-2002 market crash that was blamed on – get this – ‘day traders’.

I’d laugh but I have to cry that people so incompetent can be put into positions of such immense responsibility. The ‘Peter Principle’ ought to be renamed the ‘Greenspan Principle’. Others at the Fed are taking his lead.

Following the Greenspan Principle, it’s only a matter of time for Prof. Bernanke to show the world what power can do to a brilliant mind. Turn it to sawdust.

Judging on his remarks and the timing of those remarks (at 2pm Friday in New York, just two hours before the end of the quarter-year), next on the list of Fed idiots to be promoted up the power hierarchy is the St. Louis Fed President Bill Poole. Only a scholarly but absent-minded professor like Poole would fail to understand that making a market-moving remark an hour or two prior to the close of the quarter is the wrong thing to do.

This is the same person who, a month ago, was roundly criticized by CNBC personalities Larry Kudlow and Jim Cramer for making incredibly stupid comments. On behalf of the public, they demanded his resignation.

With leadership by people like Greenspan and Poole, it’s not too difficult to discover why America is in the economic difficulties its in at this point.

Here from the St. Louis Fed’s home page today is the Fed’s highlighted presentation of Poole’s remarks on Friday afternoon. I think that Jon Stewart must have played a key role in the speech writing.

"In a Sept. 28 speech in New York, St. Louis Fed President Bill Poole talked about the differences in thinking between Fed and private sector forecasters. Unlike traders and portfolio managers who make decisions based on up-to-the-minute data, Fed policymakers take a longer view.

He explained the care policymakers must take to avoid creating economic disturbances with the comments they make. "One way to avoid misinformation is to avoid providing any information. Put another way, if my mouth is not open, I cannot put my foot into it, "Poole said. "In my view, however, it is important to try to convey correct information. I do not believe that I would be doing my job if fear of providing misinformation led me to provide no information."


I mean, really. Is this content deserving of front page highlighting by the Fed? Maybe Bill Poole is auditioning for The Daily Show? Who knows?

I do know that Bill Poole can be called an idiot for his Friday afternoon timing in saying, "It would be a mistake to bake in the cake more rate cuts." Jay Leno should have such timing.

Can you tell from this chart the precise moment that Prof. Poole made that comment to a question from the audience?




Yes, 1400 hours is 2:00pm ET.

On another matter, according to the Reuters/University of Michigan index by the same name, consumer sentiment remained unchanged at the end of September. “The 83.4 reading matched the August report but still remains lower than the 90.4 index in July, signalling consumers believe the economic situation has not improved despite fed liquidity injections and rate cuts.” (Knobias)

Here’s the (Bill Cara) Buy-side Index (LOL; it’s the S&P500):
July (1455.27)
Aug (1473.99)
Sept (1526.75)

Traders say thank you, Prof. Bernanke. Consumers, though, are less than impressed, say Reuters/University of Michigan.

And speaking of impression, the ill-timed Bill Poole remark cost traders -0.6 pct of the value of their US portfolio assets in a single hour. Two hours from the end of the quarter-yearly accounting period, Bill Poole, was not the time to opine, “It would be a mistake to bake in the cake more rate cuts". He should have heeded his own words, placed today up in a billboard on the home page of the St. Louis Fed, “If my mouth is not open, I cannot put my foot into it.”

In one hour, portfolios around the world dropped -$100 billion (actually, a little over $97 billion). Thank you, Prof. Poole. What was that you were saying fifteen minutes earlier about your feet and your mouth?



http://www.billcara.com/archives/200...0929.html#more

Greenspan is just trying to drum up business for his new book:

The Age of Turbulence: Adventures in a New World

It came out last week, so he is going around the lecture circuit and TV stations trying to pump up interest and sell a few copies.

Pay no attention to the man behind the curtain.

Recession chatter gets louder

The fear factor has spiked in recent weeks as a series of indicators signal that Wall Street's troubles are starting to spread to Main Street.

By Peter Eavis, Fortune writer
September 28 2007: 1:07 PM EDT


(Fortune Magazine) -- Housing price declines. Slowing job creation. Profit warnings from the country's biggest retailers. To an Econ 101 student, those are telltale signs of an imminent recession. Not surprisingly, the R-word has dominated talk among bankers for weeks.

"We're very close to stall speed in the economy," says Paul Kasriel, director of economic research at Northern Trust. And it's not just the usual Chicken Littles talking about it: Everyone from top auto executives to normally ebullient tech venture capitalists are making noises about the slowing economy. Former Treasury Secretary Larry Summers, now at hedge fund D. E. Shaw, is adamant that there's a greater than 50% chance of a recession.

So what's really happening? By most economists' terms, a recession is defined as two or more consecutive quarters of GDP decline -- something we haven't seen since 1991. By that narrow definition we're not even close. Of 50-plus economists surveyed by research firm Blue Chip Economic Indicators, not one is predicting a recession. They still expect GDP to grow 2.6% next year.

http://money.cnn.com/2007/09/28/maga...ion=2007092813

Will it be break-out or break-down this week? The Bulls are still in control!

Robo

S&P 500 (SPX) & Nasdaq 100 (NDX) Timing
S&P 500 Index (SPX) Chart Analysis

Last week we wrote:

"...On Tuesday of this week the Federal Reserve announced a cut in the Fed Funds, as well as the Discount Rate, of 1/2%. They also stated they were ready to cut rates further as needed. The resulting rally was so strong that by the close of trading, the up volume vs. down volume was 30 to 1."

This week:

While this week traded mostly sideways, with the S&P 500 Index - SPX closing only a slight fraction higher, it was an acceptable week considering the huge Fed inspired rally of the previous week.

Such news event inspired rallies usually are followed by at least some profit taking, so a week of sideways trading is much better than a week of selling.

That said, the SPX is still lagging the Nasdaq, which ended the week with solid gains. The Nasdaq has also broken out to new rally highs, while the SPX remains about 2% below new highs.

Based on the Nasdaq's breakout and the S&P's strength, we are watching for a breakout here also. In fact it is very much needed to keep this rally going, as a failure here would be quite bearish.

We note that the CBOE Volatility Index - VIX is indicating that some selling may be ahead for the SPX, but it does not have to be a major setback as long as it does not become severe nor extended. Before long, the SPX needs to punch through those prior highs.

The chart shows the SPX closed above both the 1516.25 resistance level (last) Tuesday (see below chart). Friday's close remained above the upper resistance level and continues to forecast a run for the highs at SPX 1553.08.

The chart also shows that we have the prior highs as a Wave 5 top. Typically that is the final high of a long-term advance. Obviously, this would have to be in error if we trade above SPX 1553.08 as we expect and a move above the old highs would forecast higher highs and a different Wave forecast.

Once the SPX breaks out, we will review the larger Wave picture and make changes according to the new data.

Also, when we close above the prior highs we will begin posting new targets for this advance. Hopefully we will be posting these as soon as next week's reports.

The SPX portion of this strategy is BULLISH and in the Rydex Nova Fund - RYNVX (or other bullish S&P index fund)



http://timing.typepad.com/timer/

ISM slowest in six months. Citigroup 60% drop in earnings. Walgreens profit drops an unexpected 3.8% due to higher cost and lower profit on generic drugs.

The rally on the rumor sell on the news of a possible rate cut.

Pending home sales and Pepsi are the news today.