Vous êtes sur la page 1sur 8

26 January 2011 The Intelligent Investor

U.S.
The Economic Monitor Series. Free Edition.

INSIDE THE REPORT MARKETS AT A GLANCE

 Stock recommendations and price targets from top  The stock market had little reaction to the Fed, which said high
unemployment still justifies a $600 billion bond-buying program
brokerage firms that has helped equities rally in the last few months. The DJIA
edged up 8.25 points, or 0.07 percent, to end at 11,985.44.
 Analysis and views on In Global Challenge, Obama
Urges 'Big Things'  U.S. Treasuries sagged after the Federal Reserve gave a lukewarm
grade to the economy, a view that some traders see as overly
 Economic Indicator Watch pessimistic. Benchmark 10-year Treasury notes fell 25/32 in price
for a yield of 3.43 percent, up almost 10 basis points on the day.
 Important Events Scheduled on January 27  The dollar pared gains against the yen immediately after the Fed's
statement, dropping to 82.20 from 82.50 before the statement. But
Economic Events it rebounded as U.S. benchmark yields rose.

 Gold rose, snapping a four-day losing streak. Spot gold rose 0.5
 IMF Fiscal Affairs Department hold press briefing to percent to $1,339.92 an ounce by 3 p.m. EST.
release the Fiscal Monitor Update - 1430 GMT
 U.S. crude rallied above $87 a barrel, as President Barack Obama's
call for lower corporate taxes spurred hopes for higher profits and
Corporate Events greater energy demand. U.S. crude for March delivery settled
$1.32 higher, or 1.32 percent, at $87.33 a barrel, rebounding after
 Amazon.com, Celgene, Colgate-Palmolive, six straights days of losses on rising inventories as well as worries
Lockheed Martin, Microsoft and Motorola are about global economic recovery.
some of the S&P 500 companies reporting quarterly
results
STOCK INDICES
Top Stories
INDEX LAST CHNG % CHNG

 Budget deficit to hit $1.5 trillion in 2011: CBO DJIA* 11985.44 8.25 0.07
Nasdaq* 2739.5 20.25 0.74
 New homes sales at 8-month high
S&P 500* 1296.63 5.45 0.42

 Boeing profit falls NYSE Composite* 8193.64 52.51 0.64

Global Dow* 2165.69 7.17 0.33


 WellPoint beats estimates
* CLOSING VALUES

 Sara Lee rejects private equity buyout bid


CURRENCIES
 Toyota issues largest recall ever
INDEX LAST PRIOR

Euro (EUR/USD) 1.3705 1.3682

U.K. Pound (GBP/USD) 1.5925 1.582

Japanese Yen (USD/JPY) 82.21 82.25

All prices are at 04:32 PM EST

FUTURES
LAST CHANGE

Crude Oil, Feb. 87.65 1.46

Natural Gas, Mar. 4.495 0.005

Gold, Dec, Feb. 1345.00 12.70

Copper, Mar. 428.60 6.00

All prices are at 04:43 PM EST


The Intelligent Investor - U.S.
The Intelligent Investor - U.S.

STOCK RECOMMENDATIONS BY BROKERAGE HOUSES

BROKERAGE/COMPANY ACTIONS RATING

Jefferies

Altera Corp Raises price target to $40 from $35 Hold

Baker Hughes Raises price target to $79 from $69 Buy

CA Inc Raises price target to $28 from $24 Buy

Corning Inc Raises price target to $22 from $18.25 Hold

Quest Diagnostics Raises to buy from hold Buy

Disclaimer: The views and investment tips expressed by investment experts are their own, and not that of IBTimes or its management. We advise users to check with certified experts before
taking any investment decisions.

ECONOMIC INDICATOR WATCH ON 27 JANUARY 2011

Durable Goods (MoM)

Forecast: 1.5pct Prior: -0.3pct

Ex-Transportation (MoM)

Forecast: 0.8pct Prior: 3.6pct

Ex-Defense (MoM)

Forecast: 0.6pct Prior: -1.3pct

Nondefense ex-air (MoM)

Forecast: 1.5pct Prior: 2.6pct

The Commerce Department will release data on U.S. manufactured goods for the month of December at 0830 EST. In the November report, new
orders for U.S. manufactured goods excluding transportation rose more than expected, to record their largest gain in eight months. Overall orders
dropped by a larger than expected 1.3 percent last month, dragged down by a plunge in bookings for civilian aircraft and motor vehicles. Durable
goods orders excluding transportation increased 2.4 percent, the largest increase since March, after a 1.9 percent drop in October. The report also
showed non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending rebounded 2.6 percent in November
after dropping 3.6 percent the prior month.

Pending Home Sales Index (MoM)

Forecast: 1.0pct Prior: 3.5pct

The National Association of Realtors will release their report on Pending Home Sales Index for the month of December at 1000 EST. The Pending
Home Sales Index, based on contracts signed in November, rose 3.5 percent to 92.2 from a downwardly revised 89.1 in October.

EST/GMT INDICATOR PERIOD UNIT F’CAST PRIOR

0830/1330 Initial Claims w/e k 405.00 404.00

4 Week Average k -- 411.75


Continuing Claims w/e mln 3.85 3.86
0830/1330 Chicago Fed Index Dec -- -- -0.46

1100/1600 K.C. Fed Survey Jan -- -- 21.00


1200/1700 Chicago Midwest Dec -- -- 81.10

Time:TBA Building Permits Dec mln -- 0.64


The Intelligent Investor - U.S.

ANALYSIS AND VIEWS

In Global Challenge, Obama Urges 'Big Things'


By Gerald Helguero, IBTimes

President Barack Obama reminded Congress in his annual address Tuesday that in the U.S. "We do big things," as he urged a united approach to
resolving the nation's jobs and economic problems by spending in ways that will boost U.S. competitiveness globally while simultaneously reducing
the nation's high deficits.

"We do big things. From the earliest days of our founding, America has been the story of ordinary people who dare to dream. That's how we win the
future," Obama told a joint session of Congress in the nation's capital.

"The idea of America endures. Our destiny remains our choice," he said. "[A]nd the state of our union is strong."

Obama urged Congress to set aside thoughts of the next Presidential election in nearly two years, and resolve to boost spending on education,
infrastructure, and policies that will improve U.S. innovation as a way to get the economy back on track.

Obama also proposed ways to rein in spending in other areas, but acknowledged that his specific proposals Tuesday night only dealt with 12
percent of the budget.

He said the major cuts would come from other areas, which he addressed generally in Tuesday's speech. Cuts would need to come in domestic
spending, defense spending, health care spending, and spending through tax breaks and loopholes, although he didn't give specifics. The
President's budget to be presented next month is expected to give a very detailed look.

Economists foresee that U.S. unemployment will remain above 8 percent for more than two-thirds of the nation's metropolitan areas in 2011 and
above 9 percent in at least one third.

"The speech was encouraging in that the President sounded like someone ready to get serious about fixing the deficit. But if he is going to get
serious, he is going to need to get specific, and if not now, when?" said Maya MacGuineas, President of the Committee for a Responsible Federal
Budget. "The longer we wait, the greater the risk we don't get it done in time."

The President's address to the nation also comes a year ahead of the flurry of activity that will accompany the next general election in November of
2012. That will include a battle for Congress - which is currently divided between Democrats and Republicans. The Presidential race, which will likely
feature Obama on the Democratic side, will also include a Republican candidate who will go through a long selection process within the party over
the next year.

Liberals will say Obama has moved to close to the center with a proposal for a five year spending freeze in domestic spending, and push for
corporate tax cuts, notes Wendy Schiller, an associate professor of political science at Brown University, but adds that conservatives will say the
president does not propose enough cuts.

"[M]ost objective political observers will say that this was a centrist speech designed to unify the country behind initiatives that will benefit the largest
portion of the voting population - the middle class," Schiller said.

President Obama began his address by saying that the events surrounding the shootings in Arizona earlier in the month had reminded Washington
that each person "is a part of something greater - something more consequential than party or political preference."

"We are part of the American family," he said.

Obama also said he believed that Congress could and must work together since voters had decided to split power among the two major parties in
the House and Senate.

"We will move forward together, or not at all - for the challenges we face are bigger than party, and bigger than politics."

U.S. Competitiveness
The President said that the main issue at stake was not the 2012 election but rather U.S. jobs and U.S. leadership in the world.

"At stake is whether new jobs and industries take root in the country, or somewhere else. It's whether the hard work and industry of our people is
rewarded. It's whether we sustain the leadership that has made America not just a place on a map, but a light to the world. " Obama said.

Obama called on Congress and the country to take Action.

"[T]o win the future, we'll need to take on challenges that have been decades in the making," he said.

"We know what it takes to compete for the jobs and industries of our time. We need to out-innovate, out-educate, and out-build the rest of the
world," Obama said in highlighting his competitiveness agenda.

Innovation
Obama said the "rules had changed" in a single generation as technology increased efficiency and lowered the costs of doing business. He said that
while "none of us" could predict with certainty what the next big industry would be, the U.S. was the best innovator.

"We are the nation that put cars in driveways and computers in offices; the nation of Edison and the Wright brothers; of Google and Facebook. In
America, innovation doesn't just change our lives. It's how we make a living," he said.
The Intelligent Investor - U.S.

ANALYSIS AND VIEWS (Contd…)

"Our free enterprise system is what drives innovation. But because it's not always profitable for companies to invest in basic research, throughout
history our government has provided cutting-edge scientists and inventors with the support that they need," he said.

Obama called for investments in biomedical research, information technology, and clean energy technology. He called for Congress to pay for
innovation by eliminating "billions in taxpayer dollars we currently give to oil companies."

"I don't know if you've noticed, but they're doing just fine on their own. Son instead of subsidizing yesterday's energy, let's invest in tomorrow's he
said."

Allocating funds for innovation was "an investment that will strengthen our security, protect our planet, and create countless new jobs for our
people," he said.

Education
Obama noted that higher education in the U.S. has taken hit, with the percentage of people with college degrees ranking 9th globally.

He said the start of greater educational achievement needed to begin with parents, but commended his administration's programs that reward
states for providing new ways of tackling problems.

"If you show us the most innovative plans to improve teacher quality and student achievement, we'll show you the money," he said of his "Race to
the Top" program, which takes the form of a competition between the 50 U.S. states.

Obama also addressed a teachers' shortage and greater financing opportunities for students.

"[W]e want to prepare 100,000 new teachers in the fields of science, technology, engineering, and math," Obama said noting that the older
generation of teachers is retiring.

He also urged Congress to approve a permanent college tuition tax credit worth $10,000 for four years of higher education, a move to make college
more accessible in the long-term.

Obama also tied education to immigration policies, calling on Congress to change policies that today expel the children of undocumented workers
born in the U.S. studying in the nation's schools. He also said policies were pushing students from abroad to leave the country after completing
advanced degrees.

Obama reiterated a call for a broad approach illegal immigration which not only enforces current laws and protects the nation's the borders, but also
by addresses "the millions of undocumented workers who are now living in the shadows."

Infrastructure
The last component of his competitiveness agenda was for infrastructure spending, urging that the U.S. "redouble" efforts to improve the nation's
"crumbling roads and bridges" and create jobs.

He urged creating incentives private investors to tackle the infrastructure priorities. He also called for 80 percent of Americans to have access to high-
speed rail transportation within 25 years. In five years he said it would be possible for 98 percent of all Americans to have high-speed Internet access.

Deficit
To rein in the deficit, Obama proposed a spending freeze on annual domestic spending for the next five years, saying it would reduce the deficit by
more than $400 billion over the next decade.

He noted his specific proposals only dealt with "little more than 12 percent of our budget."

He said that cuts needed to be made "[b]ut let's make sure that we're not doing it on the backs of our most vulnerable citizens," he said.

There is some but not total agreement on the issue of cuts between the President and Republicans, MacGuineas said.

"We will certainly see a clamping down on domestic discretionary spending over the next few years--the area both the President and House
Republicans are focusing on," she said.

"But when it comes to entitlement and tax reforms, the heart of a comprehensive budget deal, the areas of agreements seem much, much slimmer,
and thus the likelihood for action much less," she said.

The spending freeze is not a big cut for now, Schiller said.

"Given that inflation is so low now it is not that big a cut, but if inflation rises at all, this freeze will have a more significant impact," she said.

Obama also called on Congress to address Social Security issues to make sure the pension system was strengthened going forward, although he
showed openness to some changes.

The President then drew the line against a permanent extension of tax cuts for the richest 2 percent of Americans, those earning more than
$250,000.
The Intelligent Investor - U.S.

ANALYSIS AND VIEWS (Contd…)

"Before we take money away from our schools, or scholarships away from our students, we should ask millionaires to give up their tax break," he
said.

Tax Reform, Healthcare, Free Trade


The President also urged reforms in the tax code, urging Congress to "get rid of loopholes" that benefit only some companies at the expense of
others, and lower the corporate tax rate for the first time in 25 years "without adding to our deficit." He called for simplifying the individual tax code.

Obama's speech was very conciliatory to the new Republican majority, "especially with his proposal to reduce regulations on small businesses, and to
revamp corporate taxes," Schiller said.

On the healthcare reform law passed last year, the President said he would work with Congress to improve it "by correcting a flaw in the legislation
that has placed an unnecessary bookkeeping burden on small business."

While he didn't specifically mention Republican efforts to repeal the entire law, he said he would not support a taking away coverage for pre-existing
conditions, increasing the health insurance costs for small businesses, reducing prescription drugs coverage for seniors, and giving uninsured
students a chance to stay on their parents' coverage.

Obama also said he would pursue free trade agreements with Panama, Colombia. He said he would also continue with trade talks involving the Asia
Pacific region and global multilateral trade talks.

Fixing government regulations which place "unnecessary burdens on businesses, is also an ongoing effort of his Administration, he said.

Foreign Policy and Security


The President said "the Iraq War is coming to an end" as the number of troops remaining in the country dwindles and a new government is taking
power.

While fighting extremism within U.S. borders, Obama urged a fight "with the conviction that American Muslims are part of our American family."

In the Afghanistan war, Obama said there was "tough fighting ahead" but said the U.S. and allies were helping strengthen the Afghan people so they
could eventually take the lead.

"And this July, we will begin to bring our troops home," Obama said. A deal reached with allies in the NATO alliance and Afghanistan late last year
calls for the Afghan government to take the lead in combat operations in 2014.

Obama also touched on other foreign policy issues, such as maintaining the nation's resolve to defeate al Qaeda across the Middle East, the passage
the nuclear arms reduction treaty with Russia known as START, ongoing tough sanctions against Iran, and a commitment with South Korea to get
North Korea to abandon its nuclear weapons.

The President also noted that with U.S. support, South Sudan was able to "vote for independence after years of war." Obama also said the U.S.
supported the people of Tunisia amid strong political turmoil in the country.

He also called for providing military families "with the care and benefits they have earned" and noted that the law forcing gay service members to be
dismissed had been repealed. He also called on colleges to accept military recruiters on their campuses.
The Intelligent Investor - U.S.

TOP STORIES

Budget deficit to hit $1.5 trillion in 2011: CBO


The budget deficit will hit $1.5 trillion in 2011, or 9.8 percent of the GDP, according to estimates from the Congressional Budget
Office (CBO). The estimates assume that current laws remain unchanged. The CBO cited "sharply lower" tax revenues and elevated
stimulus spending as the causes for the ballooning budget deficit in the past two years. CBO noted that 2011's projected deficit-to-
GDP percentage of 9.8 percent is almost 1 percentage point higher than the 2010 figure and roughly equal to the 2009 figure of 10.0
percent, the highest in 65 years. Moreover, revenues to fund the Social Security program will decline by over $70 billion in 2011
compared to 2009, mostly because of the deduction in payroll taxes in 2011.

New homes sales at 8-month high


According to the Commerce Department report the U.S. single-family home sales raced to their highest level in eight months in
December as the sales jumped 17.5 percent to a seasonally adjusted 329,000 unit annual rate after a downwardly revised 280,000-unit
pace in November. Not only the sales but the prices were also highest since April 2008, the department said. The median sales price
for a new home increased 12.1 percent last month from November to $241,500, the highest since April 2008. In another report, the
Mortgage Bankers Association's index of mortgage application activity dropped 12.9 percent in the week ended Jan. 21.

Boeing profit falls


Boeing Co. reported a decline in profit for the fourth quarter. The plane maker said its fourth-quarter net
income dropped 8 percent to $1.16 billion from $1.27 billion last year. On a per share basis, earnings fell 11
percent to $1.56 from prior year's $1.75. The result was helped by favorable tax settlement of $0.50 per
share, partly offset by a special one-time contribution to Boeing's charitable trust of $0.05 per share.
Company’s total revenues for the fourth quarter declined 8 percent to $16.55 billion from $17.94 billion in
the prior-year quarter as the commercial airplanes revenue decreased 11 percent to $8.18 billion on lower
expected 777 and 747 airplane deliveries.

WellPoint beats estimates


WellPoint Inc said its fourth-quarter net income was $548.8 million, or $1.40 per share. For the same period it was $2.74 billion, or
$5.95 per share, a year earlier, when WellPoint recorded gains from the $4.68 billion sale of its drug benefit business. The company
said excluding items, earnings of $1.33 per share topped estimates by 10 cents. Meanwhile, the company offered a cautious a 2011
earnings forecast that could fall short of Wall Street's target as it confronts new spending rules from the recently passed healthcare
overhaul. WellPoint projected 2011 profit at $6.30 per share. "We continue to view 2011 as a base year from which we can grow in the
future," WellPoint Chief Executive Officer Angela Braly told analysts on a conference call. WellPoint's revenue fell 4 percent to $14.42
billion, about $160 million above analyst targets.

Sara Lee rejects private equity buyout bid


Sara Lee Corp has rejected a takeover bid by a group of private equity firms, according to a report in the New York Post. The
consortium of private equity firms -- Apollo Management, Bain Capital and TPG Capital – offered last week to purchase the foods
group for $18 per share, a price Sara Lee deemed too low. The Post also noted that while the private equity companies might have
raised enough money to pay $20 per share, they were uncomfortable paying that price. Meanwhile, other sources said that earlier this
week JBS, a Brazilian beef processor made a verbal offer for Sara Lee; while still another source said private equity group Blackstone
Group was involved in JBS's chase of Sara Lee.

Toyota issues largest recall ever


Toyota has issued yet another recall, its largest ever. This time of nearly 1.7 million cars, including its top-selling including Lexus IS and
GS sedans in the U.S., for problems related to its fuel pressure sensor, and problems with fuel lines that are prone to cracking, both of
which could cause fuel to leak in the engine compartment and for the cars to, well, explode. Of the 1.7 million, 255,000 are of its luxury
Lexus brands in the U.S., 10,000 in Europe and 1.3 million in Japan. The recalls impact of its 2006-07 Lexus GS300/350 sedans, its 2006
-09 Lexus IS250 sedans and its 2006-early 08 Lexus IS350 sedans. The recall is the latest in a string of recalls and safety issues for the
carmaker, the world’s second largest behind Germany’s Volkswagen-Porsche. The cost of the recall will total about $240 million,
according to a company statement, but further tarnishes the automaker’s image. The carmaker has recalled over 12 million cars since
the end of 2009, most of which were sold in the U.S. At the end of last year, Toyota agreed to pay about $32 million in fines in the U.S.
to settle government probes of two of its previous recalls, after earlier paying a $16.4 million fine over a previous recall.
The Intelligent Investor - U.S.

THE NEXT TRADING DAY

Economic Events
 Carlo Cottarelli, Director of the IMF Fiscal Affairs Department; Philip Gerson, senior adviser in the IMF Fiscal Affairs Department; and Manmohan
Kumar, Assistant Director in the IMF Fiscal Affairs Department hold press briefing to release the Fiscal Monitor Update - 1430 GMT

Company Events
 Amazon.com will release its Q4 results. Analysts estimate an EPS of 88 cents per share, up from 85 cents reported in the year-ago
quarter. It posted net income of $231 million or $0.51 per share for the third quarter, up from $199 million or $0.45 per share in the
prior year quarter.

 Analysts expect Celgene to report a profit of 73 cents per share for the fourth quarter, up from 62 cents in the same quarter last year.
Company's third-quarter net income increased to $281.15 million or $0.60 per share from $216.82 million or $0.46 per share last year.

 Colgate-Palmolive is due to announce its Q4 results. The street estimates a profit of $1.23 per share, almost flat from $1.21 in the
corresponding quarter last year. It’s third-quarter net income increased to $619 million or $1.21 per share from $590 million or $1.12
per share last year.

 Wall Street expects Lockheed Martin to announce a profit of $2.11 per share for the fourth quarter, slightly down from $2.17 reported
in the prior-year quarter. Net earnings in the third quarter declined to $571 million or $1.57 per share from $797 million or $2.07 per
share in the same period last year, and $825 million or $2.22 per share reported in the preceding second quarter.

 Microsoft will release its Q2 results. The street estimates a profit of 68 cents per share, down from 74 cents in the same quarter last
year. The company reported first-quarter net income of $3.574 billion or $0.40 per share, down from $4.373 billion or $0.48 per share
reported in the same quarter last year.

 Motorola Solutions will announce its Q4 results. The profits have declined steeply in one years time. Analysts expect a profit of $1.06
per share, against a profit of $4.41 reported in the fourth quarter in the prior year. Motorola expects earnings from continuing
operations in a range of $0.14 to $0.16 per share, excluding the Networks business and excluding stock-based compensation and
amortization of intangibles expenses of about $0.04 per share.

Company Name Period F’cast Prior Company Name Period F’cast Prior

Baxter International Inc. Q4 1.1 1.03 Invesco Ltd. Q4 0.4 0.25

Franklin Resources Q1 1.91 1.54 Janus Capital Group Inc. Q4 0.21 0.2

Ball Corp. Q4 0.92 0.84 KLA-Tencor Q2 1.06 0.28


Bristol-Myers Squibb Q4 0.47 0.47

Caterpillar Inc. Q4 1.27 0.41


L-3 Communications Holdings, Q4 2.31 1.98
Chubb Corp. Q4 1.58 1.66 Eli Lilly Q4 1.1 0.91
CONSOL Energy Q4 0.56 0.78
Microchip Technology Q3 0.57 0.37
Compuware Corp. Q3 0.15 0.11

D.R. Horton Q1 -0.03 0.56 Mead Johnson Nutrition Q4 0.56 0.48


Danaher Q4 0.66 0.56 Newell Rubbermaid Q4 0.32 0.27
EQT Corp. Q4 0.4 0.52

Eaton Q4 1.67 1.35


Procter & Gamble Company Q2 1.1 1.49
Federated Investors, Inc Q4 0.43 0.51 QLogic Q3 0.47 0.31

This report is produced by


International Business Times
For questions or comments
reach us at
researchanalysis@ibtimes.com

For more information about


our products visit
www.ibtimes.com

© IBTimes 2010. All rights reserved.