This Week in Stocks: 8/18 - 8/24/07

[Show-me]

http://www.briefing.com/GeneralCont...vestor&ArticleId=NS20070817121517LookingAhead

The Week Ahead

Last Update: 17-Aug-07 12:14 ET

The coming week is light on scheduled events. That might be a good thing as it could offer a reprieve from all of the volatility.
Retailers dominate the earnings calendar, which is a sure sign we have reached the end of the quarterly reporting period.
The economic calendar, meanwhile, doesn't offer much until Friday when the Durable Orders and New Home Sales reports are released.
One thing participants should keep a close eye on is how the market reacts to negative news. We will hear more. Trading higher in the face of negative news would suggest the market is more comfortable with the idea that it has been priced in, or that it is at least manageable now given the Fed's actions.
________________________________________________________________
Monday, August 20:

• Earnings: Lowe's (LOW)
• Economic Data: Leading Indicators
• Conference Schedule: Noble Financial Small-Cap Conference/Micro-Cap Symposium; 12th Annual Oil & Gas Conference
• Fed Speakers: None

Tuesday, August 21:

• Earnings: Target (TGT); Staples (SPLS); Saks (SKS); BJ's Wholesale (BJ); American Eagle (AEO); Medtronic (MDT); Pep Boys (PBY)
• Economic Data: None
• Conference Schedule: Noble Financial Small-Cap Conference/Micro-Cap Symposium; 12th Annual Oil & Gas Conference
• Fed Speakers: Richmond Fed President Lacker speaks to Risk Management Association

Wednesday, Aug. 22:

• Earnings: Talbots (TLB); Tech Data (TECD); Toll Brothers (TOL); Abercrombie & Fitch (ANF); Foot Locker (FL); Gymboree (GYMB); Hot Topic (HOTT); Intuit (INTU); Men's Wearhouse (MW)
• Economic Data: Dept. of Energy Inventory report
• Conference Schedule: Noble Financial Small-Cap Conference/Micro-Cap Symposium; 12th Annual Oil & Gas Conference
• Fed Speakers: None

Thursday, Aug. 23:

• Earnings: Barnes & Noble (BKS); Hormel Foods (HRL); Gap (GPS); Marvell (MRVL); Brocade (BRCD)
• Economic Data: Weekly Initial Claims
• Conference Schedule: Noble Financial Small-Cap Conference/Micro-Cap Symposium; 12th Annual Oil & Gas Conference
• Fed Speakers: None

Friday, Aug. 24:

• Earnings: AnnTaylor (ANN); Burger King (BKC); HJ Heinz (HNZ)
• Economic Data: Durable Orders; New Home Sales
• Conference Schedule:
• Fed Speakers: None

 

[Spaf]

The Lilly Pond Report
Sunday August 17, 2007
by Spaf for the Tadpole Savings Pond​

The Frog Report, Le Charts, Doodles, The Lilly Pad, Tea Leaves, and The Tin Box.

The Frog Report:
Croak.............................................The 13 day moving average for SPX was trending bearish, slightly under the 200 dMA and well below the 50 dMA. The Bollinger bands retained a large width indicating market volatility. Noted the band width does appear to be reducing. The Stochastics oscillator has registered bullish with %K above %D and above 20 (at 29.80) and no longer considered as oversold. Fridays upswing was not backed with a reliable indicator, and may have been an emotional reaction of sorts from the Fed cut of discount rates.

The Stock Traders Almanac list the "Best Six Months" for the DOW between November 1st and April 30th. There are multiple factors that say lets wait and see; the subprime debacle, housing, slowing economy, and hurricanes. In tune with the Wendy's commercial, before I buy a burger I'd like to see the beef!

Le Chart
[$SPX]
Large Caps

Charts courtesy of www.StockCharts.com​

Doodles:
$SPX....1445.94 -09.70 for the week....00000...........00000
Stops.............................................Alert (-1%)....Trail (-2%)

Crude closed at.................................71.98 +0.98 for the week ending.
Oil Markers.......................................<70= ok, 70-80= worry, >80= panic (maybe).
NYMEX Link.......................................NYMEX
$WTIC Link.......................................$WTIC

The Lilly Pad
Location..........................................100% G-fund.

Tea Leaves:
Leaves............................................Capital preservation.

Tin Box.
TSP (week ending).............................G=12.07..F=11.41..C=16.19..S=19.36..I=22.73
......(end of 2006)..............................G=11.71..F=11.14..C=15.69..S=18.76..I=22.22

 

[Show-me]

Injections aren’t just for Botox.

My coworkers have asked me this question. What is it when the Fed injects liquidity? I'll post this brief article for those of you that have the same question.

http://www.nytimes.com/2007/08/19/weekinreview/19basic.html?ref=us

The Basics
The Banks Roll Up Their Sleeves

By JEREMY W. PETERS
Published: August 19, 2007
Injections aren’t just for Botox.


In times of financial uncertainty, the Federal Reserve makes what are known as “liquidity injections” into the banking system. There’s no syringe. No needle. In fact, the Fed doesn’t even use real money. A “liquidity injection” is Wall Street parlance for cheap, easy loans to banks.

Over the last two weeks, the Fed has injected tens of billions of dollars into the market to calm financial markets spooked by fears that credit is tightening. How does that work exactly?

Injections usually are not necessary. Banks typically borrow money from each other for brief periods to shore up cash reserves. A bank seeking a short-term loan from another bank will offer up something it owns, like a mortgage-backed security, to guarantee repayment. And voilà! it gets the loan.

But as recent events have demonstrated, these aren’t normal times.

Banks lately have grown stingy about making loans, even to the most credit-worthy institutions. The reason is the uncertainty about the value of the collateral after the collapse of the subprime mortgage market. Banks looking for short-term loans face the prospect of paying higher interest rates.

Enter the Federal Reserve. One of the Fed’s most important jobs is to ensure that the interest rates that banks charge one another do not fluctuate too much. To keep interest rates from rising, it can offer up liquidity — Fedspeak for a loan — to banks in need so they do not have to borrow at high rates.

“What they’re doing now is to make sure there’s plenty of cash in the system,” said Ethan Harris, chief United States economist for Lehman Brothers. When the Fed injects liquidity, it is not actually dipping into its cash reserves, but crediting a dollar amount to the balance sheets of the banks. “All they do is write down a number and credit that amount of cash to the bank,” Mr. Harris said. “It’s a bookkeeping entry.”

 

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http://biz.yahoo.com/ap/070819/wall_street_week_ahead.html?.v=3

AP
Wall Street Awaits Fed's Next Move
Sunday August 19, 1:50 pm ET
By Madlen Read, AP Business Writer Wall Street, Keeping Close Eye Out for Fed's Next Move, Awaits New Housing Market Data

NEW YORK (AP) -- The Federal Reserve may have thrown Wall Street a bone Friday by lowering the rate it charges banks, but if this week's housing market data and corporate headlines portend more gloom, it may have to toss another.

So far, Wall Street, beset by fears that credit problems in mortgage and corporate lending will cripple the economy, has been stubbornly signaling to the central bank that it wants a bailout -- ideally, by way of a cut in the benchmark fed funds rate.

With the Fed's next meeting not scheduled until Sept. 18, investors may stay jittery over the coming weeks as they watch the central bank to see if it will lower rates before that point.

Stocks got a boost Friday, thanks to the cut in Fed's discount rate, but few market participants are breathing a sigh of relief yet. Many on Wall Street are still in panic mode; even when the Fed started injecting large amounts of cash into the banking system through repurchase agreements two weeks ago, the Dow Jones industrial average continued on its steep downward slope, sliding 812 points over six trading days.

Last week, the Dow finished down 1.21 percent; the Standard & Poor's 500 index ended down 0.53 percent; and the Nasdaq composite index ended down 1.57 percent.

This week is light on economic data, so it's improbable that the market will garner any lasting direction from upcoming government reports. One piece of data that will be widely watched, though, is the Commerce Department's report Friday on new home sales and prices. Economists surveyed last Friday by Thomson Financial predicted, on average, that sales of new single-family homes will fall in July to a seasonally adjusted annual rate of 825,000 units, down from 835,000 in June.

Most likely, Wall Street will keep an eye out for any indications from the Fed that it might take more steps to prevent the stock market from falling further, and any news from lenders or hedge funds about the state of the credit environment.

A SLIM SCHEDULE FOR ECONOMIC DATA ...

The Conference Board on Monday will report on leading economic indicators. The index is expected to rise 0.3 percent for July, compared with June's 0.3 percent decline.

Also Monday, the Chicago Federal Reserve releases its July index on national business activity.

On Thursday, the Commerce Department releases its monthly measure of durable goods orders. Durable goods orders are anticipated to have risen 1.0 percent in July, a slightly smaller jump than the increase in June.

... AMID A FEW IMPORTANT EARNINGS

This week won't bring a huge number of quarterly financial results, but there are a few that investors will be watching for insight into consumer spending and the housing market.

On Tuesday, Target Corp. is expected to report a second-quarter profit of 80 cents a share. The discount retailer closed at $61.18 Friday, in the upper half of its 52-week range of $46.35 to $70.75.

Also Tuesday, BJ's Wholesale Club Inc. is anticipated to post earnings of 41 cents per share. The discount warehouse chain closed at $29.43 Friday, in the lower portion of its 52-week range of $25.18 to $39.15.

Toll Brothers Inc. releases quarterly results Wednesday and is expected to report a fiscal third-quarter profit of 6 cents a share. The homebuilder closed at $22.63 Friday, in the lower half of its 52-week range of $18.85 to $35.64.

On Friday, Burger King Holdings Inc. is expected to post a fiscal fourth-quarter profit of 27 cents a share. The fast food chain closed at $23.67 Friday, in the upper half of its 52-week range of $12.99 to $27.04.

 

[Show-me]

Fed injected another $3.5 bln and Countrywide is laying off. Good luck trying to find a job in that industry.

 

[Show-me]

Fed Action Reduces Downside Risk for Stocks

Last Update: 20-Aug-07 07:51 ET

The S&P 500 index fell more than 10% over five weeks. This occurred because of concerns that liquidity problems in the credit markets would extend to the real economy. There has in fact been little change in the macro-economic fundamentals. The Fed actions on Friday are more than symbolic. They address these concerns. That reduces the downside risk to the stock market.

The Problems are Real

There is no denying that the problems caused by rising delinquencies and defaults on subprime mortgages are real.

These problems include losses at financial firms holding securities backed by these mortgages. They also include liquidity problems for firms holding these securities that are unable to price or sell the securities.

The housing sector has also been in a deep slump for over a year. The heightened subprime problems are tightening mortgage lending standards and will prolong and perhaps deepen the housing downturn.

Yet, there is still simply no evidence that the problems on Wall Street and in the housing market have extended to the broader market.

But the Concerns are Overdone - for Now

Here are some facts.

Payrolls have risen an average 135,000 the past three months covering May-July data. That is a 1.2% annual rate.

Industrial production is up 0.7% over those same three months. That is a 2.8% annual rate.

Personal consumption expenditures are up at a 4.8% annual rate for the currently available data for that same period (July data is not yet out).

Second quarter real GDP was up at a 3.4% annual rate, and nonresidential investment was up at an 8.1% annual rate.

The macro-economic data outside of the housing sector have shown, at worst, a modest softening.

It is therefore not surprising that earnings forecasts for companies outside of the financial sector have not been lowered to any significant degree. Forecasts for earnings for the S&P 500 in aggregate for the third and fourth quarter have not been altered significantly over the past few weeks despite the problems on Wall Street. Expectations call for about 5% growth in the third quarter and about 10% in the fourth.

more at........... http://www.briefing.com/GeneralCont...estor&ArticleId=NS20070820075152TheBigPicture

 

[FUTURESTRADER]

This is looking like aug 98 somewhat...first leg down ~10%, followed by 2 weeks of consolidation, followed by another 10% for that 20% 'bear market', but then bottomed. I don't recall the catalysts for the fall, maybe the beginning of the original 'asian contagion'?

 

[Show-me]

Wow, what a difference a nap can make.

 

[Spaf]

This month in stocks
by Spaf​

I ran across a old Vietnam cartoon published by Hal Atkins. It kind of depicts the current Stock Market. I hope Hal doesn't mind a reposting! Ifn he does, will delete this post.....Anyway thanks Hal!

With all the volatility, here is where we are?
or is it where is here we are?​

The Cartoon
[It's over sized, but smaller and it can't be read]​

View attachment 1944​

 

[Show-me]

Looks like more waffling and bond are the place to be for now.

 

[Spaf]

Show_me.....

I agree the "safe" funds are the place to be! This subprime debacle has spread all over the place!

Bunny hopping equities in this market is like hitting your thumb with a hammer! Put the hammer down and your thumb will feel a lot better!

Looks like more waffling and bond are the place to be for now.

 

[tsptalk]

If you haven't seen it, please vote for the T-shirt slogan here ...

http://www.tsptalk.com/mb/showthread.php?t=4722

Thanks!

 

[Show-me]

http://money.cnn.com/news/newsfeeds/articles/newstex/IBD-0001-19050848.htm

Amateur Hour At The Fed
August 21, 2007: 08:05 PM EST



Aug. 21, 2007 (Investor's Business Daily delivered by Newstex) -- Monetary Policy: Treasury Secretary Henry Paulson says he has "great confidence" in Federal Reserve Chairman Ben Bernanke and his handling of the credit panic. Wish we could say the same.
The former Ivy League professor can be expected to make some rookie mistakes after stepping into longtime chief Alan Greenspan's shoes. But has he learned from them?
Rewind to March. In testimony before Congress, Bernanke insisted the damage to the markets and economy was "contained" within the subprime mortgage sector. "At this juncture," he intoned, "the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained."
In fact, it had spread like wildfire. By August, investors had learned that Alt-A mortgage lenders, investment banks and even foreign mutual funds had been exposed to the subprime rot.
On Aug. 7, with Wall Street in turmoil, the Bernanke Fed met and acknowledged the crisis. "Nevertheless," it said in a statement, "the economy seems likely to continue to expand at a moderate pace."
So it stubbornly kept interest rates tight, against the better advice of many (including this paper).
Two days later, a reporter asked President Bush about the market meltdown. "I am told there is enough liquidity in the system to enable markets to correct," he said.
He was told wrong. Stocks tanked the very next day, forcing Bernanke to pump some $40 billion into the very system he apparently had assured Bush had plenty of liquidity. He since has injected $60billion more in liquidity.
But the bad news just kept coming. So last week, Bernanke took the rare action of lowering interest rates between meetings. It appeared he finally had seen the error of his ways. After months of assurances that the subprime rot was contained and underestimating the liquidity needs of investors, he finally abandoned his academic models and faced up to the reality on the street.
"Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward," the Fed said Aug. 17 in a statement. "The downside risks to growth have increased appreciably."
Only, the about-face didn't come with a cut in the federal funds rate -- the Fed's benchmark rate. Bernanke instead cut the discount rate, a largely symbolic move.
Banks only go to the discount window in emergencies -- when they can't get overnight loans from other banks charging the fed funds rate. Very few dollars are lent through the discount window.
It's almost as if Bernanke doesn't want to admit he was wrong not to lower the fed funds rate on Aug. 7, when he had a chance.
Whatever his reasons, the coy discount-rate move didn't calm market fears. It may no be enough to avert a recession.
There are signs the mortgage meltdown is bleeding into the economy. Payroll job growth is slowing. This week, Capital One Financial Corp. (NYSE:COF) announced it would slash 2,000 jobs.
Bernanke is paid to read the tea leaves. Can he not see that the subprime debacle is only the tip of the iceberg?
Trillions of dollars worth of adjustable-rate mortgages will reset in the next few years (see chart). Falling home prices across the country will make it harder for borrowers to refinance. Foreclosures surged 93% in June from a year earlier, hitting a record high.
The wave of resets could kill consumer spending -- and economic growth -- if the Fed doesn't pre-empt the looming disaster with a 50-basis-point cut in the fed funds rate.
It should act now and not wait until next month's meeting.

Newstex ID: IBD-0001-19050848
Originally published in the August 21, 2007 version of Investor's Business Daily.

 

[fedgolfer]

Many of these stocks that were in the headlines in the current run up look to be on the edge of falling over and filling their morning gaps... see AAPL, BHP.

IFT deadline sucks. Momentum could send if over, profit takers could start us on the road to a retest of the lows.

 

[Show-me]

Bernanke: The un-Greenspan

The Fed may well end up slashing interest rates, but the Greenspan era of pumping up market bubbles with repeated cuts is over, predicts Fortune's Peter Eavis.

By Peter Eavis, Fortune writer
August 23 2007: 6:01 AM EDT


NEW YORK (Fortune) -- It may be the most important development to emerge from the recent market turbulence: The Federal Reserve, under Chairman Ben Bernanke, is going back to being a central bank.

Judging by its cautious and finely-calibrated responses through a very ugly August, the Fed appears keen to put the Alan Greenspan years firmly in the past and take a much more orthodox approach to monetary policy. While the Fed will probably cut interest rates as early as next month, its behavior in August strongly suggests that Bernanke will avoid using interest rates to deliberately spark big increases in lending, the high risk strategy pursued by Greenspan from 2001 to 2004.

"I think Greenspan would have cut rates already. So I do think things are beginning to look different at the Fed," says Paul Kasriel, economist at Northern Trust.

A change at the Fed would have far-reaching consequences for the U.S. economy and the stock market. Initially, a much less accommodating Fed will be perceived as a reason for bearishness. But, over the longer term, market players may well see a less dysfunctional central bank as a good thing that could begin the process of cutting borrowing levels in the U.S., something that has to happen if the American economy is not going to seize up every time interest rates rise.

http://money.cnn.com/2007/08/22/magazines/fortune/eavis_fed.fortune/index.htm

 

[clester]

I smell a sell off brewing this afternoon.

 

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Ford chief urges Fed action

CEO Alan Mulally says economic growth is a higher priority than inflation right now, paper reports.

August 24 2007: 6:54 AM EDT


NEW YORK (CNNMoney.com) -- Ford CEO Alan Mulally became the latest high-profile business executive to suggest that the Federal Reserve needs to cut interest rates, according to a report published Friday.
Noting that credit conditions were posing a "big headwind" to the company's turnaround plan, Mulally told the Financial Times he is concerned about the state of the larger economy.

http://money.cnn.com/2007/08/24/news/companies/ford_fed/index.htm

 

[Show-me]

The headlines today are not looking horrible except for all of the crying about the need for the Fed to lower the rates.

I almost seem like the big boyz are trying to bully the Fed into a rate reduction.

Next week will be a ride with all of the ED out.

 

[Show-me]

What a blow out Durable Goods number!

 

[Birchtree]

We got a nice rally cooking at this point in time - could today be another triple digit gain? Well, why not. I actually could use some nice K days.