As investors anticipate the coming week, I daresay US market participants will enjoy a welcome, albeit temporary, boost in optimism. The fervor in DC for Obama's inauguration should be palpable to the rest of us watching it on television. Recalling the heroics of a pilot called Sully will help as well. The third factor, as corny as it sounds, is that the woebegone Arizona Cardinals franchise has just earned its first Super Bowl appearance. If they can go on to win it all, perhaps it could be a sign that our economic outlook is not beyond despair after all. As the late Louis Rukeyser noted ahead of Superbowl 36 when heavily favored (14 points) St. Louis "Greatest Show on Turf" faced New England, who else could win but a team named "Patriots" in the aftermath of the 9/11 WTC attacks?! Ironically, Kurt Warner will be a starting QB this year for the underdog Cardinals as he was seven years ago for the "mortal lock" Rams.
MONDAY. Federal holiday: MLK birthday.
TUESDAY. Is IBM going to be beat EPS estimates for the 15th straight Q? Probably. Excellent snapshot of the health of corporate costumers; JNJ is the orphan-and-widows type stock that is supposedly ideal in this environment, but its rich 1.3 PEG ratio has me wary. Can only grow via large acquisition so that should temper LT enthusiasm as well considering "cheapness" is abundant. Update: No surprises
WEDNESDAY. AAPL numbers should report strong numbers, but I suspect the focus on CEO Jobs' future to dominate the earnings call and lead to a renewed sell-off. There is no reason to anticiapte that management will handle this issue any better than they have until the stock gets hammered; EBAY will get lots of press coverage, but this is a company still trying to fix its business even despite Meg Whitman's departure last year. I see minimal value of extrapolating EBAY news too heavily. The charts of both companies looks terrible. Avoid. Update: No surprises. AAPL bulls looking past CEO health. EBAY was a disaster.
THURSDAY. GOOG analyst call may be filled with as much discussion of cost control as growth prospects, despite its dominant position, which means it's hard to see the stock hitting $400 any time soon. That being said I expect EPS to handlily exceed consensus on aggressive cost cutting. We'll see if investors discriminate the quality of earnings or just be temporarily happy with a "beat;" Is MSFT monopolistic Windows cash cow showing any sign of obsolescence? Despite the recent good news of Xbox sales outpacing Playstation 3, MSFT is dead money until there is a major non-economic catalyst that can be identified. Update: No surprises. MSFT announced major job cuts, and stock opened down nearly 9%.
FRIDAY. GE stock is well underwater since Jeffrey Immelt became CEO in 2001. Timing wasn't favorable, but he has also done little to justify anything but a conglomerate discount by repeatedly disappointing Wall Street. GE became a wannabe bank, too, and is suffering accordingly. Avoid. Update: On a mixed day, GE was down almost 11% despite the ostensible relief of not announcing a feared dividend cut. The vehement denial was not confidence inspiring; start poking around $9.
THEME OF THE WEEK: Companies announcing that they are suspending revenue and earnings guidance. Don't expect a major move in the indexes as bad earnings news will be offset by the anticipation that the size of the stimulus may need to be increased [perverse logic, I know]. The view of measures helping consumers pay down debt won't be dismissed as ineffective because that needs to take place before discretionary spending can be justified since credit is still difficult to obtain and job markets continue to deteriorate.
Disclosure: No positions.
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