13 September 2010

THE ECONOMIC MONITOR U.S.
Free Edition
MARKETS AT A GLANCE

INSIDE THE REPORT

Stock recommendations and price targets from top brokerage firms Important Events Scheduled on 14 September

The DJIA gained 81.36 points, or 0.78 percent, to 10,544.13. The S&P 500 climbed 12.35 points, or 1.11 percent, to 1,121.90. The dollar fell 0.6 percent to 83.63 yen, still near a 15-year low around 83.34 yen on electronic trading platform EBS. Benchmark 10-year notes traded 17/32 higher in price for a yield of 2.74 percent, down from 2.80 percent late Friday. U.S. crude for October delivery settled up 74 cents at $77.19 a barrel. U.S. December gold futures settled up 60 cents at $1,247.10 an ounce.

Economic Events

Treasury Department holds weekly sale of 4-week bills American Petroleum Institute issues weekly national petroleum report

Corporate Events

Best Buy second quarter (2011) results The Kroger second quarter (2010) results Pall Corporation fourth quarter (2010) results

STOCK INDICES
INDEX DJIA* NYSE Composite* Nasdaq* S&P 500* LAST 10544.13 7156.18 2285.71 1121.9 11698.91 652.28 1897.79 1921.67 4447.44 507.57 CHNG 81.36 88.67 43.23 12.35 146.76 15.82 25.98 29.33 46.26 5.31 % CHNG 0.78 1.25 1.93 1.11 1.27 2.49 1.39 1.55 1.05 1.06

Breaking News

HP to buy ArcSight Liberty Mutual Agency to raise fund in IPO BAE plans to sell U.S. aero assets Nokia's mobile unit chief resigns LabCorp to buy Genzyme Liberty Mutual Agency to raise fund in IPO Hertz sweetens Dollar Thrifty deal Carlyle scraps Arinc sale, seeks IPO-sources Enbridge pipeline stays shut U.S. August deficit is $90.53 billion Geithner says recovery not fast enough IMF urges stimulus to help 'dire' job market Bank stocks rise on Basel norms Bidder to appeal ruling on AIG Taiwan unit-Paper

DJ Total Stock Market* Russell 2000* Global Dow* Nasdaq 100* DJ Transportation Avg* S&P 100* * CLOSING VALUES

CURRENCIES
INDEX Euro (EUR/USD) U.K. Pound (GBP/USD) Japanese Yen (USD/JPY) LAST 1.2872 1.5423 83.65 PRIOR 1.2711 1.5357 84.20

All prices are at 04:13 PM EDT

FUTURES
SETTLE CHANGE 0.74 0.052 -0.60 8.00 0.00

Crude Oil (Sept) Natural Gas (Oct) Gold (Dec) Copper ( Dec) Wheat (Dec)

77.19 3.935 1245.9 348.65 747.5

All prices are at 04:03 PM EDT

THE ECONOMIC MONITOR - U.S.
STOCK RECOMMENDATIONS BY BROKERAGE HOUSES
BROKERAGE/COMPANY UBS Boeing Halliburton Lockheed Martin Northrop Grumman Raytheon Simon Property Stryker Corp Zimmer Holdings Bernstein Huntington Bancshares BB&T Corp Marshall & Ilsley Corp Regions Financial Corp Zions Bancorp Credit Suisse Applied Materials KLA-Tencor Novellus Systems PG&E Corp Raymond James Chevron Chesapeake Energy Exxon-Mobil Range Resources Corp Citigroup Goldman Sachs Morgan Stanley Goldman Sachs Autozone 3M Kaufman Bros Salesforce.Com Baird Western Digital Raises price target to $140 from $120 Neutral Raises price target to $140 from $120 Buy Raises target price to $213 from $211 Removes from conviction buy list Sell Buy Cuts Q3 share view to $2.30 from $3 Cuts Q3 share view to $0.10 from $0.58 Cuts to outperform from strong buy Cuts to market perform from outperform Cuts to market perform from outperform Cuts to market perform from outperform Outperform Market-perform Market-perform Market-perform Cuts target price to $12.25 from $13.50 Cuts target price to $35 from $4 Cuts target price to $35 from $39.90 Cuts to neutral from outperform Neutral Raises to outperform from market perform Cuts price target to $41 from $43 Raises to outperform from market perform Raises to outperform from market perform Raises to outperform from market perform Outperform Outperform Outperform Outperform Outperform Cuts price target to $69 from $72 Raises price target to $43 from $39 Cuts price target to $74 from $78 Cuts price target to $64 from $65 Cuts price target to $49 from $52 Cuts to neutral from buy Cuts price target to $60 from $66 Cuts price target to $62 from $72 Neutral Buy Neutral Buy Neutral Buy Buy Buy ACTIONS RATING

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.

MARKET PERFORMANCE

DJIA
A. Stocks started higher on with investor sentiment bolstered by a burst of corporate deals and after signs of robust economic growth in China. The Dow Jones added 81.05 points to 10,543.82. B. Dow has been undermined by weakness among consumer staples plays like Coca-Cola and McDonalds. Big pharma play Merck and integrated oil giant Exxon Mobil were also laggards. After a 100-point rise earlier in the day, the Dow Jones was lately up 68.64 points, or 0.7%, at 10,531.34, with 21 of its 30 components gaining, led by Alcoa Inc., up 3.3%.

C.

THE ECONOMIC MONITOR - U.S.
COMPANY NEWS COMPANY NEWS (contd…)

HP to buy ArcSight
Hewlett-Packard Co agreed to buy ArcSight Inc for about $1.5 billion in cash to gain security software. ArcSight shareholders will receive $43.50 a share which is 24 per cent more than the stock’s September 10 closing price. ArcSight, a maker of software used to identify suspicious activity on a corporate network, may help HP better incorporate security features into other products. Net income at ArcSight almost tripled to $28.4 million in the fiscal year that ended in April. Sales increased 33 per cent to $181.4 million in the period.

Enbridge pipeline stays shut
Enbridge's Line 6A pipeline carrying Canadian crude oil to U.S. refineries and oil hub in Cushing, Oklahoma, remained shut on Monday. No date has been set for restarting the pipeline, which was shut Thursday as oil was bubbling up through the soil in a industrial section of Romeoville, Illinois.

ECONOMY NEWS

Liberty Mutual Agency to raise fund in IPO
Liberty Mutual Agency Corp filed with U.S. regulators to raise $1.22 billion in an initial public offering of its shares. In an amended filing with the SEC, the company said it expects the offering of 64.3 million class A shares to be priced at $18 to $20 a share. The company said it will use proceeds from the offering to repay debt. Underwriters for the IPO include Citigroup, BofA Merrill Lynch, J.P. Morgan, Mitsubishi UFJ Securities and Wells Fargo Securities.

U.S. August deficit is $90.53 billion
Treasury Department data showed that the United States posted a $90.53 billion budget deficit in August. The government has now posted a budget deficit for a record 23 straight months, the Treasury Department said. The department said the budget gap so far for fiscal 2010 was $1.260 trillion, smaller than the $1.371 trillion posted for the first 11 months of fiscal 2009. Receipts totaled $164 billion in August, higher than the prior year's $145.53 billion in August receipts.

BAE plans to sell U.S. aero assets
BAE Systems plans to sell as much as $2 billion worth of U.S. aircraft and vehicle controls, it may help the company focus on defense services and raise cash for potential purchases. Wells Fargo and JPMorgan Chase has been hired by the company to find out option for the so-called platform solutions business, including a possible sale, the company. The unit includes hybrid propulsion systems for buses and trucks as well as flight controls used by Airbus and Boeing.

Geithner says recovery not fast enough
Treasury Secretary Timothy Geithner said the U.S. economy was recovering but not fast enough. Geithner urged Congress to act quickly on extending expiring tax cuts for the middle class and on a proposal by President Barack Obama to provide new federal financing for rebuilding U.S. roads, bridges and other infrastructure.

Nokia's mobile unit chief resigns
Anssi Vanjoki, the head of Nokia's mobile solutions unit is resigning, while outsider Stephen Elop will be replacing him as chief executive of the world's biggest cellphone maker. Nokia has also stated its intention on hiring Elop, a Canadian Microsoft executive with Silicon Valley credentials, to replace embattled CEO Olli-Pekka Kallasvuo .

ECONOMY NEWS

IMF urges stimulus to help 'dire' job market
The International Monetary Fund said the world's rich countries need to extend fiscal stimulus and job growth initiatives to fix a "dire" labor market that could threaten entire societies. The IMF said more and more workers worldwide were unable to find jobs for longer periods, weakening social cohesion and raising risks of unrest and even undermining democracy. "The labor market is in dire straits," IMF Managing Director Dominique StraussKahn told the one-day meeting, adding that the Great Recession had left a "wasteland of joblessness".

Hertz sweetens Dollar Thrifty deal
Outdoing a rival bid from Avis Budget Group Inc, car rental company Hertz Global Holdings Inc. sweetened $1.56 billion deal to buy Dollar Thrifty Automotive Group Inc. It raised its bid for Dollar to $50 per share, including a $10.80 per share increase in the cash component of the offer. The price also includes $122 million of options and restricted shares.

LabCorp to buy Genzyme
Genzyme Corp said it agreed to sell its genetic-testing business to Laboratory Corp of America Holdings for $925 million in cash. Confirming the report, LabCorp said the deal has a net cash cost of about $795 million to the medical-testing company. LabCorp said it obtained a funding commitment from Citi to provide debt financing for the transaction. According to the LabCorp also committed to offer jobs to the unit's nearly 1,900 employees, including senior management, upon closing.

Bank stocks rise on Basel norms
Bank stocks soared in U.S., Europe and Asia as regulators gave firms more time than analysts expected to obey with firmer capital requirements meant for preventing future financial crises. Regulators reached a consensus that more than doubles capital requirements for the world’s banks, while giving them as long as eight years to comply in full at a meeting held in Basel, Switzerland. U.S., U.K. and Switzerland pushed for a maximum of five years, while Germany had sought to give firms a decade to make the transition. (See Special Report)

Bidder to appeal ruling on AIG Taiwan unit-Paper
One of the bidders for American International Group's Taiwan unit, Primus Financial Holdings will appeal the regulator's decision to block the deal, the Economic Daily news reported. The Economic Daily news said Primus did not want to give up on the Nan Shan unit and would also consider bidding again if AIG put the unit back on sale. The paper said that if AIG put Nan Shan on sale again, the price would be much lower because of projected losses of T$23 billion ($723 million) this year at Nan Shan.

Carlyle scraps Arinc sale, seeks IPO-sources
Private equity firm Carlyle Group has withdrawn its plans to sell Arinc Inc. People familiar with the matter said the company failed to find a buyer for the defense and aviation company in the past six months. Carlyle hired Goldman Sachs early this year to advise it on the sale of Arinc, but now it’s pursuing an initial public offering for Arinc, the sources said.

THE ECONOMIC MONITOR - U.S.
NEXT TRADING DAY CORPORATE RESULTS
DATE - 14/September2010
COMPANY NAME EVENT

Economic Events
WASHINGTON - Treasury Department holds weekly sale of 4-week bills, 1130/1530 The U.S. Treasury awarded $35.00 billion in four-week bills at last week's auction at a high rate of 0.090%. The Treasury received bids totaling $145.43 billion and accepted $35.00 billion. The Treasury will offer $30 billion in four-week bills, the maturity date will be October, 14 with a minimum bid amount of $100. WASHINGTON - American Petroleum Institute issues weekly national petroleum report, 1630/2030 The last weeks’ EIA report on Thursday highlighted stocks of crude oil and petroleum products edged lower in the September 3 week giving a slight price boost to oil which is up about 50 cents near $76 in immediate reaction to the data. Oil stocks fell 1.9 million barrels with gasoline stocks down 0.2 million barrels percent and distillates down 0.4 million. Gasoline demand has held steady at 9.4 million barrels per day for most of the past two months though the year-on-year comparison has been softening, now at plus 1.1 percent for the lowest rate since mid-June. Heavy supply and only moderate demand for gasoline isn't holding back production as refineries increased gasoline output in the week to 9.5 million barrels per day, up 0.2 million barrels in the week. Gasoline production is about as strong as it's been all year. Refineries operated at 88.2 percent in the week. The drop in imports, to the lowest level since April, is notable in this report. Private reports have been reporting declines in OPEC sailings, a reflection of heavy global supply, no better than steady demand, and perhaps cartel efforts to keep oil prices steady near $75.

Cracker Barrel Old Country Store, Inc. Q4 2010 Thermogenesis Lakeland Industries Inc Nevada Gold & Casinos Inc Schiff Nutrition International, Inc. Majesco Entertainment Company WPCS International Incorporated Bakers Footwear Group, Inc. Q4 2010 Q2 2011 Q1 2011 Q1 2011 Q3 2010 Q1 2011 Q2 2010

MARKET BRIEFING

Corporate Events
WallStreet expects Best Buy to report a profit of 44 cents per share for the second quarter (FY11), up from 40 cents for the same period (FY10) a year ago. The consumer electronics chain said in its recent first quarter net profit and sales were hurt by a sharp decline in prices for television sets. The company said its net earnings in quarter ended May 29, 2010 (Q1FY11) stood at $155 million, up 1.3 percent year-on-year (YoY) from $153 million for the same quarter a year ago. The retailer's revenue also climbed 6.8 percent YoY from $10.095 billion in the first quarter 2010 to $10.787 billion. Operating income climbed 5.7 percent YoY from $296 million to $313 million. However, selling, general, and administrative costs (SG&A) also climbed to 23 percent of revenue, as compared to 21.9 percent of revenue in from the same period a year ago, eroding profit. Best Buy said the jump was driven by the addition of new stores, expanded investments, the timing of discretionary expenditures and the impact of other non-recurring items, as well as fluctuations in foreign currency rates. WallStreet expects The Kroger to report a profit of 36 cents per share for the second quarter (FY10), up from 39 cents for the same period (FY09) a year ago. The largest American retail reported on a dip in the recent first quarter profit due to higher costs and intense competition. Kroger, the second-largest general retailer in the country (after Wal-Mart), said its net profit in the quarter ended May 22, 2010, slipped 14.1 percent compared to the year before, from $435.1 million, $0.66 a share, to $373.7 million, or $0.58 a share. Kroger, which also runs fuel centers in the parking lots of its supermarkets, said that, excluding fuel sales, its total sales increased 3.1 percent in the first quarter over the same period last year. Identical supermarket (or a supermarket that has been open without expansion or relocation for five full quarters) sales, without fuel, increased 2.4 percent in the first quarter over the same period last year. Pall Corporation is expected to post a profit of 64 cents per share for the fourth quarter (FY10), up from the 57 cents for the same period (FY09) a year ago. The water filtration company reported in the recent third quarter an EPS of $0.58, which topped the consensus estimate of $0.50. The total sales for the quarter were $262.3 million with a gross margin of 56%. The company said their Life Sciences sales up over 6%, while Industrial sales up 5%. The net earnings for the quarter were $70 million over $44 million for the same period a year ago.

U.S. stocks advanced to their highest levels in five weeks on Monday, taking the S&P 500 index near the top of its summer range on upbeat Chinese factory data and new global banking rules. The rally sent the S&P 500 above its 200-day moving average for the first time since early August, which was seen as a bullish sign. Global regulators agreed to force banks to more than triple their top-quality capital reserves in hopes of preventing another credit crisis. But the new rules, known as "Basel III," provide transition periods that could extend to January 2019 or later, more time than many bankers expected. JPMorgan Chase rose 3.5 percent to $41.15 as one of the top boosts to the Dow. The KBW Bank index gained 3.1 percent. The DJIA gained 81.36 points, or 0.78 percent, to 10,544.13. The S&P 500 climbed 12.35 points, or 1.11 percent, to 1,121.90. The Nasdaq Composite jumped 43.23 points, or 1.93 percent, to 2,285.71. The dollar was on track for its biggest one-day slide against the euro in two months as strong Chinese data boosted currencies of countries like Australia that are big sellers to the world's second largest economy. The decline was due to recent better-than-expected U.S. employment data and new global banking rules, investors began the week in an upbeat mood. New data showing Chinese factories ramped up production last month and money growth beat expectations backed the view that the markets' outlook had grown too gloomy. The dollar fell 0.6 percent to 83.63 yen, still near a 15-year low around 83.34 yen on electronic trading platform EBS. U.S. Treasuries prices rose as bargain-hunters snapped a three-session losing streak caused by lessening pessimism over the economy and a poor 30-year bond auction. The Federal Reserve's latest bond purchases and a defensive reallocation into bonds ahead of the government's retail sales data on Tuesday also spurred the market rebound. Benchmark 10year notes traded 17/32 higher in price for a yield of 2.74 percent, down from 2.80 percent late Friday. Earlier the 10-year yield touched technical support at 2.85 percent, which was also the highest in a month. The 30year bond last traded up 18/32, with a yield of 3.84 percent, down from 3.88 percent on Friday. Oil prices rose nearly 1 percent to a one-month high, spurred by an extended shutdown of a major Canada-U.S. crude pipeline and strong Chinese demand growth and industrial output. U.S. crude for October delivery settled up 74 cents at $77.19 a barrel, the highest settlement price since August 11. In London, Brent crude rose 87 cents to $79.03 a barrel. Brent posted a premium of more than $3.50 a barrel to U.S. crude last week, its highest since mid-May, but this was at $1.84 by Monday's close. Enbridge Line 6A pipeline carrying Canadian crude oil to U.S. refineries and a crucial oil hub in Cushing, Oklahoma, remained shut as workers continued digging around a leaky section of pipe in Romeoville, Illinois, near Chicago. Gold ended flat while silver rose to its highest level since early 2008, as upbeat Chinese factory data and new global banking rules boosted optimism about the economy. Wall Street rose on the economic news, which boosted silver, a precious metal that also has industrial uses. But investment demand kept gold within about 1.5 percent of an all-time high. Spot gold was at $1,244.30 an ounce by 2:55 p.m., down slightly from $1,245 in New York on Friday. Gold remains within around 1.5 percent of the all-time highs set in late June at $1,264.90. data on jobless benefits. U.S. December gold futures settled up 60 cents at $1,247.10 an ounce.

THE ECONOMIC MONITOR - U.S.
ECONOMIC INDICATOR WATCH ECONOMIC CALENDAR
DATE TUE 09/14 EDT 0745 0830 0830 0855 1000 1000 1700 INDICATOR ICSC/GS Report ww Retail Sales mm Ex-autos mm Redbook mm Business Invents IBD Consumer Conf ABC CCI Mortgage Index Refinancing Index Import Prices Export Prices Empire State Index Indust Output mm Capital Utilization Current Account Q2 Initial Claims 4 Week Average Continuing Claims Producer Prices mm Producer Prices yy Ex-Food/Energy mm Ex-Food/Energy yy Net Cap Inflows Foreign Buy,T-bnds Philly Fed Index SEMI Book/Bill Consumer Prices mm Consumer Prices yy Ex-Food/Energy mm Ex-Food/Energy yy CPI index level Real Earnings Reuters/UMich Sent Current Conditions Expectations ECRI Weekly Index Cleveland Fed CPI F’CAST NA 0.30% 0.30% NA 0.50% NA NA NA NA 0.30% 0.20% 8.0 0.20% 75.00% -$125 bln 460k NA 4.46 mln 0.30% 3% 0.10% 1.30% NA NA 2.0 NA 0.20% 1.10% 0.10% 1% 218.3 0.10% 70 79 64.2 NA NA PRIOR -0.4% 0.40% 0.20% 3% 0.30% 43.6 -43 880 4926.5 0.20% -0.20% 7.1 1% 74.80% -$109 bln 451k 477.75 k 4.478 mln 0.20% 4.20% 0.30% 1.50% $44.4 bln $33.3 bln -7.7 1.23 0.30% 1.20% 0.10% 0.90% 218 0.20% 68.9 78.3 62.9 122 0.10%

ICSC-Goldman Sachs Report (Weekly)
Forecast: NA Prior: -0.4%
ICSC-Goldman Sachs (ICSC-GS) chain store sales index for the week ending September 4 declined by 0.4% on a week over‐week basis, while the year-overyear pace moderated to 1.8%, its slowest since May 22 (+1.3% year on year).

Source: International Council of Shopping Centers

Retail Sales (August)
Retail Sales (MoM) - Forecast: 0.3% Prior: 0.4% Retail Sales Ex-Autos (MoM) - Forecast: 0.3% Prior: 0.2%
Americans spent less at most retail stores in July and inflation remained tame as high unemployment and weak job growth fueled fears of a slowing economic recovery. A busy month for car dealerships and higher gas prices lifted overall retail sales 0.4 percent last month, the Commerce Department said last month. It was the first overall gain in three months. Still, most retailers reported declines. Excluding autos and gasoline sales retail sales fell 0.1 percent last month. Sales were down 1 percent at department stores and also dropped at specialty clothing stores, furniture stores, hardware stores and appliance stores.

WED 09/15

0700 0700 0830 0830 0830 0915 0915

THU 09/16

0830 0830 0830 0830 0830 0830 0830 0830 0900 0900 1000 1800

Source: Department of Commerce

Business Inventories (July)
Forecast: 0.5% Prior: 0.3%
U.S. business inventories rose in June to their highest level in a year while sales fell, suggesting consumer demand may have been weaker than firms had anticipated. The Commerce Department said last month inventories climbed 0.3 percent to $1.36 trillion, the highest since May 2009. That followed a 0.2 percent gain in the prior month, and exceeded Wall Street forecasts for a 0.2 percent rise.

Source: Department of Commerce

Redbook (Weekly)
Forecast: NA Prior: 3%
The Johnson Redbook Retail Sales Index was up 3.0% in the first week of September. Month-to-date, September was up 3.0% compared to September of last year (relative to a revised target of a 2.9% gain).

FRI 09/17

0830 0830 0830 0830 0830 0830 0955 0955

Source: Redbook Research

IBD Consumer Confidence (August)
Forecast: NA Prior: 43.6
Consumer confidence fell 2.5 percent in August from July as Americans remained unconvinced by government efforts to revive the economy, Investor's Business Daily and TechnoMetrica Market Intelligence said in August. The IBD/ TIPP Economic Optimism Index slipped to 43.6 in August from 44.7 in July. Readings above 50 indicate optimism, while those below 50 point to pessimism. The index is now at its lowest level since October 2008, 3.8 points below its 12month average of 47.4, and 0.8 points below the 44.4 level IBD reported in December 2007 when the recession began.

0955 1030 TIME TBA

Source: Investor's Business Daily and TechnoMetrica Market Intelligence

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