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The Week Ahead - August 9

08/08/2010

Last Friday's disappointing jobs report and the post-market corporate news from Hewlett Packard (HPQ) should have vacationing money managers draining cell phone batteries checking in with the office early this week.

In addition, the Federal Open Market Committee (FOMC) meets on Tuesday, August 10. If further Quantitative Easing is offered, I expect renewed Treasury purchases or support for mortgage backed securities to be the desired method.  I will also be keeping an eye on the economic data releases such as CPI, Consumer Confidence, and Retail Sales on Friday, August 13. Initial Jobless Claims on Thursday will be interesting, as will Wednesday's Trade Balance.

The Q2 earnings season is concluding with over 90% of the S&P 500 Index already reporting. This week, the season closes out with earnings reports from:

Tyson Foods (TSN) on Monday, August 9
Walt Disney (DIS) on Tuesday, August 10
Cisco (CSCO) on Wednesday, August 11

Thursday presents some critical consumer discretionary and staples earnings from companies such as Nordstrom (JWN), Kohl's (KSS), Estee Lauder (EL), Sara Lee (SLE), and JC Penney (JCP). 

Unfortunately, the political influence from Washington D.C. remains uncomfortably high for the capital markets. Therefore, it remains important to gauge the D.C. landscape and determine if policy makers have the political will to utilize fiscal stimulus in the form of tax cuts or incentives to aid the slowing recovery. This condition will remain with us throughout the Fall 2010.

Finally, I offer some of my favorite charts - credit spreads continue to improve and the U.S. dollar continues to weaken -  both favorable conditions.

Moody's Bond Indices Corporate Avg. August 5, 2008 to August 5, 2010

Source: Bloomberg

Moody's Bond Indices Corporate Avg. April 1, 2010 to August 5, 2010

Source: Bloomberg

US Dollar August 10, 2009 to August 6, 2010

Source: Bloomberg

US Dollar April 1, 2009 to August 6, 2010

Source: Bloomberg

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