18 Jul 2003

Posted at 16:35h in The Friday Brief by
The earnings reporting season is in full swing now with a quarter of S&P 500 companies reporting this week.  The results were quite good on balance as numerous companies soundly beat analysts’ estimates.  Those companies beating analysts’ estimates span a broad range of industries.  They include Caterpillar, SanDisk, Boise Cascade, Georgia-Pacific, Bank of America, Merrill Lynch, USA Truck, Marriott Int’l, Coca Cola, Ford, Johnson & Johnson, Stryker, New YorkTimes, and BB&T.  The list of companies surprising negatively is much shorter.  But it includes some notables like Kraft Foods, Fannie Mae, FleetBoston, Hershey Foods, Sears, and Microsoft.  

27 Jun 2003

Posted at 16:39h in The Friday Brief by
On Wednesday the Federal Reserve policymakers did something they rarely do.  They cut rates even while suggesting the economy is improving.  Furthermore, they suggested they do not plan to tighten policy (raise rates) to preempt a potential burst of growth.  The Fed cut the benchmarkU.S.interest rate to a 45-year low of 1% to boost economic growth and prevent further slowing of inflation.  Their statements and actions suggest that rates will remain low, even fall further, for an extended period of time.  Basic economics suggests that as businesses and investors begin to accept that low interest rates are here to stay, they will begin investing in longer term and riskier projects to create economic growth.  But we know the major problem facing investors and business leaders today is a lack of confidence.  The latest cut is an attempt by the Fed to show that they are willing to do what is necessary to reinvigorate economic growth. 

20 Jun 2003

Posted at 16:43h in The Friday Brief by
Early this week investors were treated to a very nice surprise when the Federal Reserve reported that manufacturing in New York State expanded considerably more than expected this month.   Orders and sales grew the most since January, bolstering expectations the economy will accelerate in the second half.  The DOW rose 202 points as investors said the report may foreshadow a strengthening in U.S. manufacturing, which contracted from March through May.  The New York results prompted Bear, Stearns & Co. and Lehman Brothers Inc. to raise their forecasts for Thursday's Fed report on factories in the Philadelphia area according to Bloomberg.

13 Jun 2003

Posted at 16:50h in The Friday Brief by
During the next two weeks, as the second quarter comes to a close, we will hear from those corporations who wish to better prepare their shareholders for the actual results they expect to report later in July and August.  The ‘pre-announcement’ season is typically used by corporations to soften the blow of bad earnings news.  Pre-announcements can be vague and, therefore, cause a less a dramatic impact on the stock than the reporting of actual results might.  At this point the companies themselves don’t know their final results, so they must be somewhat vague.