20 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 Forecasts on Economic Indicators

The DJIA was up 145.77 points, or 1.37 percent, at 10,753.62. The S&P 500 was up 17.12 points, or 1.52 percent, at 1,142.71. In late afternoon New York trade, the dollar was 0.1 percent lower against a currency basket at 81.314. The 10-year Treasury note added 9/32 in price to yield 2.71 percent, down from 2.74 percent at Friday's close. U.S. crude for October delivery rose $1.20 to settle at $74.86 a barrel, trading from $73.32 to $75.45. U.S. gold futures for December delivery settled up $3.30 at $1,280.80 an ounce.

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List of companies earnings that hit and miss the analysts’ expectations

Important Events Scheduled on 21 September

Economic Events

Financial Crisis Inquiry Commission holds field hearing to hear testimony from people of State of Florida Treasury Department holds weekly sale of 4-week bills; sells 52-week bills

STOCK INDICES
INDEX DJIA* NYSE Composite* Nasdaq* LAST 10753.62 7266.02 2355.83 1142.71 11932.06 669.98 1929.26 1989.43 4475.12 516.36 CHNG 145.77 111.37 40.22 17.12 191.64 18.54 24.71 33.60 41.46 7.32 % CHNG 1.37 1.56 1.74 1.52 1.63 2.85 1.30 1.72 0.94 1.44

Corporate Events

Adobe Systems, Carnival Corporation third quarter results AutoZone fourth quarter results Cintas Corporation, ConAgra Foods first quarter 2011 results

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S&P 500* DJ Total Stock Market* Russell 2000* Global Dow* Nasdaq 100* DJ Transportation Avg* S&P 100*

Breaking News

IBM to buy Netezza Corp Safran, BAE to split security firm L-1 Lennar quarterly profit beats McAdams new COO at Verizon BP completes leaking well seal Discover posts higher-than-expected profit Clorox may sell automotive care business-report Homebuilder sentiment unexpectedly flat Recession ended in June 2009: NBER Soft recovery means slow U.S. job growth: OECD Not yet clear if moves to pressure China legal: USTR BofA may test new pricing packages: Report

* CLOSING VALUES

CURRENCIES
INDEX Euro (EUR/USD) U.K. Pound (GBP/USD) Japanese Yen (USD/JPY) LAST 1.3065 1.5548 85.72 PRIOR 1.3037 1.5623 85.80

All prices are at 04:19 PM EDT

FUTURES
SETTLE Crude Oil (Oct) Natural Gas (Nov) Gold (Dec) 74.61 4.016 1279.3 351.1 730.5 CHANGE 0.95 -0.187 1.80 -1.10 0.00

Copper ( Dec) Wheat (Dec)

All prices are at 04:08PM EDT

THE ECONOMIC MONITOR - U.S.
STOCK RECOMMENDATIONS BY BROKERAGE HOUSES
BROKERAGE/COMPANY Goldman Sachs Family Dollar Freeport-McMoran GAP Nucor Corp US Steel Vulcan Materials Wisconsin Energy FBR Boston Properties Equity Residential Prologis Public Storage UBS FedEx Corp Ford Motor SanDisk Corp JP Morgan Boeing Cummins Lockheed Martin RBC AutoZone BB&T Corp Xilinx Exane BNP Paribas Applied Materials KLA-Tencor Barclays Autozone ICE Sandler O'Neil Aflac SLM Corp Raises to buy from hold Raises price target to $16 from $14 Buy Buy Raises price target to $225 from $210 Raises price target to $124 from $120 Equal-weight Overweight Starts with price target of $13 Starts with neutral rating Underperform Neutral Raises price target to $208 from $195 Cuts price target to $28 from $31 Cuts to sector perform from outperform Sector perform Sector perform Sector perform Cuts price target to $82 from $89 Raises price target to $97 from $88 Cuts price target to $91 from $94 Neutral Neutral Overweight Raises price target to $106 from $100 Cuts price target to $16 from $17 Cuts price target to $50 from $55 Buy Buy Buy Raises price target to $97.50 from $90.50 Raises price target to $49.50 from $47 Cuts price target to $14.50 from $15 Cuts to underperform from market perform ---Underperform Raises to neutral from sell Raises to buy from neutral Raises to neutral from sell Cuts to neutral from buy Cuts to neutral from buy Cuts price target to $30 from $37 Raises to buy from neutral Neutral Buy Neutral Neutral Neutral -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 pulled higher Monday after a gauge of the housing industry remained at a multi-month low in September. The Dow Jones rose 56.76 points to 10,664.61. Among the Dow's strongest performers, Home Depot gained 1.9%. All but one of the Dow’s 30 components rose, including International Business Machines Corp., which was up 1.4% after the company said it would buy business-software firm Netezza Corp. Dow Jones was up 137.44 points, or 1.3%, to 10,745.07. Investors cheered earnings from a financial services firm and a home builder along with a call from the National Bureau of Economic Research that the recession that started in late 2007 had ended in June of last year. The Dow Jones gained 145.77, or 1.4%, to 10,753.62, lifted by 29 of its 30 components. Blue-chip gains were led by American Express, up 4.2%.

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

IBM to buy Netezza Corp
IBM Corp revealed that it would buy Netezza Corp for $1.7 billion to expand beyond the computer hardware business. Netezza's share rose in the market due to the deal values of $27 per share. IBM said it expects the acquisition, which is subject to Netezza shareholder approval, to close in the fourth quarter. IBM said the deal will boost its analytics business, which helps companies reduce the time and cost of analyzing business information. According to a regulatory filing the merger agreement with IBM sets a termination fee of $56 million.

Clorox may sell automotive care business-report
Clorox Co is close to selling its auto-care business to private equity firm Avista Capital Partners for $750-$800 million, Bloomberg said. The sale of STP and Armor All auto-care brands may be announced in the coming days, the agency said, citing two people with knowledge of the matter. The maker of household cleaning products maker’s Dan Staublin declined to comment to the agency.

ECONOMY NEWS

Homebuilder sentiment unexpectedly flat
The National Association of Home Builders/Wells Fargo Housing Market Index was unchanged at 13. Not only the NAHB survey showed the current sales conditions gauge for single-family home sales remained unchanged but the sales expectations measure for the next six months also remained unchanged at 18. The index reflecting prospective buyer traffic fell a point to 9, the lowest since March 2009. David Crowe, NAHB chief economist said, "The stall in the nation's housing market continues."

Safran, BAE to split security firm L-1
France's Safran and BAE Systems have agreed to buy units of the U.S. based company L-1 Identity Solutions. Safran will buy its core biometric identity business for $1.1 billion while BAE Systems will buy the government consulting services business for $296 million. BAE Systems will also pay $296 million in cash for the L-1 division as consideration to be funded from the company’s existing cash resources, which encompasses three firms SpecTal, Advanced Concepts and McClendon. The L-1 businesses balance the activities of its existing USbased Intelligence & Security arm, while the acquisition will boost its customer support and services business, the company said. L-1 would be paid $12 a share in cash in the deal. Safran, makes aero engines, military goggles and security equipments and BAE Systems is a global defence, security and aerospace company.

Recession ended in June 2009: NBER
According to the National Bureau of Economic Research the recession ended in June 2009. The NBER said its declaration did not mean the economy had "returned to operating at normal capacity" and cautioned that economic activity sometimes remains below normal well into expansion.

Lennar quarterly profit beats
Lennar Corp posted higher-than-expected quarterly profit. For the third quarter ended August 31, it posted earnings of $30 million, or 16 cents a share, compared with a year-earlier loss of $171.6 million, or 97 cents per share. The company benefited from orders placed before the home buyer tax credit expired. Revenue rose 14 percent to $825 million but orders fell 15 percent.

Soft recovery means slow U.S. job growth: OECD
OECD Secretary-General Angel Gurria called high unemployment among U.S. youth "a tragedy within the tragedy" of the downturn, adding it was devastating for young Americans who had equipped themselves through education for jobs that are not appearing. "During the 2007-2009 recession, unemployment rose for 2-1/2 years before peaking in the fourth quarter of 2009 at 10 percent of the labor force, suggesting that it could be early 2013, at best, before the rate returns to its pre-recession level," the OECD said in a U.S. outlook.

McAdams new COO at Verizon
Verizon Communications Inc named Lowell McAdam as its president and chief operating officer. The announcement was part of a broader management shuffle ahead of Ivan Seidenberg's expected retirement next year. McAdam will take on his new role as COO October 1 and will be replaced at Verizon Wireless by its current COO Daniel Mead.

REGULATORY NEWS

Not yet clear if moves to pressure China legal: USTR
U.S. Trade Representative Ron Kirk said that the Obama administration has not determined yet whether various proposals in Congress aimed at pressuring China to revalue its currency are legal under World Trade Organization rules. He told reporters it was ultimately up to Congress to decide whether to pass currency legislation. But if it does act, it is important that bill is consistent with WTO rules. Ron Kirk told reporters at an event at the Port of Baltimore,” It’s not a clear call."

BP completes leaking well seal
BP has finally declared that it has permanently sealed the leaking well in the Gulf of Mexico, U.S. officials said. An additional relief well cut through the original well, helped BP engineers to fill it with cement in a permanent seal. The U.S. government has also asked the firm put aside $20bn into a fund to pay for costs of dealing with the leak in addition to $8bn spent directly on the clean-up operation. BP internal report said that it accepted its mistake, but also added that the responsibility for the explosion and subsequent leak should be shared by several companies and was due to decisions by “multiple companies and work teams”.

BofA may test new pricing packages: Report
Financial Times reported that Bank of America Corp plans to test different pricing packages in a bid to recover some of the $4.3 billion in revenue it expects to lose from new restrictions on bank and credit card fees. The largest U.S. retail bank may create a tiered price system that rewards its best customers for maintaining a minimum current account balance. Customers who do not adhere to certain rules will be charged a higher fee, the newspaper said.

Discover posts higher-than-expected profit
Discover Financial Services posted a higher-than-expected quarterly profit. The credit card lender and transaction processing network reported profit of $260.6 million, or 47 cents per share. The company's portfolio of credit card loans fell by $2.9 billion from the previous year, to $45.2 billion.

THE ECONOMIC MONITOR - U.S.
NEXT TRADING DAY ECONOMIC INDICATOR WATCH

Economic Events
MIAMI - Financial Crisis Inquiry Commission holds field hearing to hear testimony from people on the ground about the causes and effects of the financial and economic crisis in their communities. The field hearing will be held on Florida International University Campus at 9 A.M. ET. The first session will look on "Overview of Mortgage Fraud", second session will be on "Uncovering Mortgage Fraud in Miami", and the final session will be on "The Regulation, Oversight, and Prosecution of Mortgage Fraud in Miami." WASHINGTON - Treasury Department holds weekly sale of 4-week bills; sells 52-week bills, 1130/1530 The U.S. Treasury will auction $25 billion in 4-week bills, followed by a $25 billion sale of 56-day cash management bills on Wednesday. The Treasury will also sell $25 billion in 52-week bills with maturity on September 22, 2011.

Home Building (August)
Building Permits - Forecast: 0.56 million Prior: 0.559 million Housing Starts - Forecast: 0.55 million Prior: 0.546 million
U.S. home building increased at a much weaker pace than expected in July, though sturdy growth in industrial output implied the embattled economy has enough strength to keep growing. Housing starts rose 1.7 percent to a seasonally adjusted annual rate of 546,000 units, the Commerce Department said, but below market expectations for a 560,000-unit pace. New building permits, which give a sense of future home construction, dropped 3.1 percent to a 565,000-unit pace last month, the lowest level since May 2009. Financial markets had expected a 580,000-unit rate.

Corporate Events
WallStreet expects Adobe Systems to report a profit of 49 cents per share for the third quarter, up from 35 cents for the same period a year ago. The software major had reported higher earnings for the recent second quarter, helped by successful launch of creative suite 5. Revenues for the quarter increased 34 percent, which exceeded analysts’ expectation. The company's earnings were $148.61 million or 28 cents a share, compared to $126.07 million or 24 cents a share in the same period of last year. Total revenues for the quarter rose to $943.04 million from $704.67 million in the preceding year quarter. AutoZone is expected to post a profit of $3.7 per share for the fourth quarter, down from $4.47 for the same period a year ago. The largest U.S. auto-parts retail chain, reported a much higher-than-expected profit in the recent third quarter, helped by higher demand for replacement parts and new store openings. The company's net income increased 16.7 percent to $202.7 million, or $4.12 per share, in the third quarter ended May 8 from $173.7 million, or $3.13 per share, a year earlier. Sales rose 9.9 percent to $1.8 billion, compared with analysts' estimates of $1.7 billion. Domestic sales at stores open at least one year increased 7.1 percent. AutoZone opened 21 U.S. stores during the quarter, bringing its total to more than 4,300 in the United States and 212 in Mexico. WallStreet expects ConAgra Foods to report a profit of 39 cents per share for the first quarter, slightly up from 38 cents for the same period a year ago. The Healthy Choice dinner’s maker posted a lower profit in the recent fourth quarter that just missed expectations, hurt by higher potato costs at its Lamb Weston frozen potato unit. For the fiscal fourth quarter that ended May 30, ConAgra's net income was $90.6 million, or 20 cents a share, compared with $174.7 million, or 39 cents a share, a year earlier. Excluding one-time items, the company earned 39 cents a share, a penny below the average forecast of analysts polled by Thomson Reuters I/B/E/S. Sales fell 5 percent to $3.06 billion. Analysts expect Carnival Corporation to report a profit of 14 cents per share, down from $1.33 a year earlier for the third quarter. The cruise operator posted results that fell short of Wall Street estimates in the recent second quarter, citing higher fuel costs and volatile foreign exchange rates. In the second quarter, Carnival reported net income of $252 million, or 32 cents per share, compared with $264 million, or 33 cents per share, a year ago. Rising oil prices cost the company 20 cents per share in the second quarter. Carnival does not hedge its fuel exposure. Cintas Corporation is expected to post a profit of 38 cents per share for the first quarter, down from the 43 cents for the same period a year ago. The uniforms and business service provider reported a rise in recent fourth-quarter profit driven by top line growth and improved margins, as well reflecting the absence of hefty one-time charges incurred in the year-ago period. The company earned $55.48 million or $0.36 per share in the quarter, compared to $4.07 million or $0.03 per share in the prior-year period. Total revenue for the quarter grew to $909.45 million from $878.68 million last year.

Source: Department of Commerce

Redbook (Weekly)
MoM - Forecast: NA Prior: -0.1% YoY - Forecast: NA Prior: 2.9%
Redbook Research said in last week’s seasonally adjusted weekly data on U.S. chain store sales, year-over-year for the week rose by 2.9 percent. The year-overyear U.S Chain stores sales on the month of September 2010 rose by 2.9 percent, while month-over-month in September declined by 0.1 percent for the week ending September 10.

Source: Redbook Research

FOMC Rate Decision (8 times a year)
Forecast: 0.25% Prior: 0.25%
The Federal Reserve is expected to tread water at a policy-setting meeting Tuesday with a renewed promise to keep its portfolio from shrinking but no new steps to ease monetary policy. Lack of action, however, should not be construed as indicating a lack of debate. Policymakers need to decide if and when to launch further large-scale asset purchases to support the sluggish recovery. The central bank acknowledged in August that the U.S. recovery had lost momentum and Chairman Ben Bernanke said the Fed would renew efforts to stimulate growth if the outlook soured appreciably.

Source: Federal Reserve Open Market Committee

ABC/Washington Post Consumer Confidence (Weekly)
Forecast: NA Prior: -43
ABC News reported last week that its weekly index of U.S. consumer confidence held steady in the latest week, though it remains in deeply negative territory. The ABC Consumer Comfort Index stayed at -43 for the week that ended Sept. 12. The index was at the same level in the previous week. The index hit an all-time low of -54 in the week to December 1, 2008, and then again in the week to Jan. 25, 2009. The index has not been in positive territory since March 2007.

Source: ABC News/ Washington Post

THE ECONOMIC MONITOR - U.S.
MARKET BRIEFING

ECONOMIC CALENDAR
TUE 09/21 0745 0830 0830 0855 1415 1700 WED 09/22 0700 0700 1000 THU 09/23 0830 0830 0830 1000 1000 1000 FRI 09/24 0830 0830 0830 0830 1000 1030 ICSC/GS Report Housing Starts (Aug) Build Permits (Aug) Redbook (mm & w/e) FOMC meeting result FF rate ABC CCI (w/e) Mortgage Index Refinancing Index FHFA Home Price (Jul) Initial Claims 4 Week Average Continuing Claims Existing Home Sls (Aug) Existing home sls (Aug) Lead Indicators (Aug) Durable Goods (Aug) Ex-Transportation Ex-Defense Nondefense ex-air New Home Sales (Aug) ECRI Weekly Index NA 0.55 mln 0.56mln NA NA NA NA NA NA 450 k NA 4.46 mln 4.1 8.40% 0.10% -1% 1% -0.40% 2% 0.29 mln NA 0.8 0.546 mln 0.559 mln -0.1 0%-0.25% -43 801.5 4396.1 -0.3% 450 k 464.75 k 4.485 mln 3.83 mln -27.20% 0.10% 0.40% -3.70% 0.40% -7.20% 0.276 mln 122.6

The S&P 500 closed at a four-month high as a long-awaited break above a technical range and a flurry of positive corporate news increased investor optimism. The break came a day before a Federal Reserve meeting in which the central bank is expected to renew a promise to keep its portfolio from shrinking but is not seen taking new steps to ease monetary policy. The Dow Jones Industrial Average was up 145.77 points, or 1.37 percent, at 10,753.62. The S&P 500 was up 17.12 points, or 1.52 percent, at 1,142.71. The Nasdaq Composite was up 40.22 points, or 1.74 percent, at 2,355.83. IBM was among the top boosts to the Dow after it agreed to buy Netezza Corp for $1.7 billion in the latest in a string of large tech deals. Shares of IBM rose 1.2 percent to $131.78. The dollar slipped broadly with investors positioning for the possibility the U.S. Federal Reserve may suggest the need to inject more stimulus into the economy. The U.S. central bank meets on Tuesday and the chance of more Fed quantitative easing, highlighted differences in policy among major central banks, as the Australian dollar hit a two-year high on hawkish Reserve Bank of Australia comments. In late afternoon New York trade, the U.S. currency was 0.1 percent lower against a currency basket at 81.314, after falling earlier to 81.046, near a five-week low of 80.865 hit last week. The euro rose 0.1 percent to $1.3061 after climbing as high as $1.3120, helped by a rise in European shares, though sentiment toward the single currency was still dented by concerns about Ireland's finances. The prices of long-dated U.S. Treasuries rose after the Federal Reserve completed its first Treasury purchases for the week, as traders placed bets on the size of the Fed's upcoming debt buys. The Federal Reserve Bank of New York announced on Monday it had increased the size of its purchases of Treasuries with maturities of between six and 10 years by half compared with last month. The 10-year Treasury note added 9/32 in price to yield 2.71 percent, down from 2.74 percent at Friday's close. The 30-year bond gained 16/32 to yield 3.88 percent, down from 3.90 percent late on Friday. The gains at the long end of the Treasury curve unwound a bit of the curve steepening that resulted from Japan's intervention in the foreign exchange market last week. Bonds avoided taking a significant hit from an announcement by the National Bureau of Economic Research (NBER) that the U.S. recession ended in June 2009. Oil rose by almost 2 percent toward $75 a barrel, snapping a four-day slump, tracking broad gains in equity markets that were buoyed by optimism about the strength of the economic recovery. Oil also drew strength from an expected drop in crude oil inventories in the United States following the outage on one of the main pipelines delivering crude from Canada last week. U.S. November crude closed up $1.27, or 1.7 percent, at $76.19 a barrel. U.S. crude for October delivery rose $1.20 to settle at $74.86 a barrel, trading from $73.32 to $75.45. The October contract expires on Tuesday. Gold rose slightly, hitting record highs for a third consecutive day as funds kept buying the metal on a weaker dollar and a report showing U.S. homebuilder sentiment stayed in the doldrums. The possibility of Fed stimulus kept many traders bullish about gold, which remained sharply below its inflation-adjusted all-time high above $2,200 an ounce. Spot gold hit a record $1,283.70 an ounce, then pared gains. It stood at $1,277.60 an ounce at 3:16 p.m, up from $1,275.95 late in New York on Friday. U.S. gold futures for December delivery settled up $3.30 at $1,280.80 an ounce.

CORPORATE RESULTS
DATE - 21/September2010
COMPANY NAME Analogic Avantair Point.360 Progress Software EVENT Q4 2010 Q4 2010 Q4 2010 Q3 2010

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