Crazy World of Options!

The second week of September will be one with very few scheduled catalysts. Just 21 companies have been confirmed to report, with Pall Corporation (PLL) being the only representative of the S&P 500. The economic calendar is essentially barren until Friday, when August import price, retail sales, industrial production and industrial capacity utilization data will be released. In addition, the second-quarter current account balance, July business inventories and the initial September University of Michigan consumer confidence survey results will be published.

There are two other events of note. Tuesday is September 11. (Our prayers continue to go out all of those who lost loved ones in the terrorist attacks.) A new video by Osama bin Laden is expected to be released as al-Qaeda leaders and sympathizers like to take advantage of the holiday to spread propaganda. Rosh Hashanah, the Jewish New Year, starts on Wednesday at sundown and lasts until Friday at sundown. Trading volume will mostly be impacted on Thursday since not all Jews observe the second day. L’shanah tovah.

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After enjoying a three-day weekend, traders are going to come back to their latest obsession: the Fed. The guessing game as to what the Fed is going to do about rates will continue until Sep 18.

Complicating matters will be the release of two key economic reports. The Institute for Supply Management (ISM) will publish the results of its August survey of the manufacturing sector on Tuesday. On Friday, the Department of Labor will issue August employment numbers. Both reports could show that despite all of the fuss about the credit markets, the economy continued to expand in August. Additionally, both reports provide insight into inflationary pressures with the ISM measuring prices paid and the Labor Department calculating wage growth.

As odd as it may sound, the worse possible scenario could be if the two reports showed economic growth with modest inflationary pressures. The reason is that such a scenario would not provide any clarity as to what the Fed will do at its Sep 18 meeting. Sustained growth would enable the Fed to let the market work things out, while moderating inflationary pressures could allow the Fed to lower rates. Oy.

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The U.S. stock markets are attempting to recover from the credit worries and appear on track to post modest gains for the third full week of August as I write this on Friday morning. The monthly performance is still in doubt, however, with the major indexes only a day’s move away from being up or down. More telling, perhaps is the technical picture with the Dow, S&P 500 and the Nasdaq trading just below the 90-day moving average and the 200-day moving average showing signs of flattening.
So will the final five days of August provide the much needed boost?

Computer maker Dell (DELL) might provide some optimism when it reports on Thursday after the close. However, it is just one of six S&P 500 companies scheduled to report and the others are not bellwethers: Big Lots (BIG), Ciena (CIEN), H&R Block (HRB), Novell (NOVL) and Sears Holding (SHLD). Overall, we have confirmed that 80 companies will report.

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ECONOMIC VIEW
Not much to talk about this coming week. Watch for Energy related news, however, as tropical storms lash into the Gulf and hit land fall this week. Late in the week expect the market to “price-in” their bets in anticipation of the following week’s FOMC minutes on Aug 28.

ECONOMIC EVENTS FOR WEEK OF AUGUST 20 TO AUGUST 24, 2007
Events Monday August 20
10:00 am Leading Indicators

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Hi guys, i was just surfing around in forum of channelnewsasia.com on the situation being going on in our world stock market.

and i come across this topic on USA bankrupt. for those whom are interested, refer to http://forum.channelnewsasia.com/viewtopic.php?t=82867, from the documentary being shown, i can say it look and is scary!!!

The Crash The Coming Financial Collapse of America 1

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(NEW YORK) A group of Wall Street titans is joining forces to create a rival venue to Goldman Sachs Group’s private system to trade the stocks of companies that do not want the scrutiny and regulatory burdens of going public.
Citigroup, Lehman Brothers, Merrill Lynch, Morgan Stanley and Bank of New York Mellon Corp on Tuesday said they had established the Open Platform for Unregistered Securities.

The firms say Opus-5 ‘will provide trade reservation, shareholder tracking and transfer management for privately offered equity securities.’

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Highligh
The central banks have been moving to stave off a potential credit crunch by pumping money into the banking system. The action is being caused by a growing number of financial firms who are encountering liquidity problems. Central bankers seem be aware that many recessions have been caused by a sudden swing from hubris to a credit crunch as rationality reappears; the recent moves to put more liquidity into the system is clearly an attempt to prevent history from repeating itself.
Although down materially on Thursday and continuing to decline as I write this on Friday morning, the U.S. markets remain in pretty strong shape. For the week, the S&P 500 and the Nasdaq are essentially flat with the Dow down slightly. Relative to 12 months ago, all three indexes are up by double-digit margins. Such returns are hardly a sign of fear being priced into stocks.

August has historically been a tough month for stocks. The combination of earnings season ending and summer vacations leads to increased volatility and a lack of catalysts driving stock prices higher. Adding to the mix over the very near-term will be options expiration, which will occur next Friday, Aug 17.

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It seem like there is a lot articles on CDO stuff. And for those had read up the CDO article on my previous post will get a idea of the risk involved in CDO.

The following article from business Times futher highlight the ugly butt of CDO. I have “bold” a few lines in the report which disgust me in some way. For whose whom invested in CDO, do re plan your exit plan!

http://www.businesstimes.com.sg/sub/news/story/0,4574,243940,00.html?
(SINGAPORE) With fears swirling around the US sub-prime market, OCBC Bank and United Overseas Bank yesterday stepped in to provide more details of their exposure to collateralised debt obligations (CDOs).
 
Both banks said that their exposure was relatively small and was not expected to have a material impact on their earnings or capital. The asset management arms of both banks had dabbled more aggressively in CDOs, but this was done so on behalf of global investors, who alone bore the risks linked to these investments.

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Companies That Could Issue Positive Earnings Surprises during the Week of Aug 6 - 10

Foster Wheeler (FWLT) has topped expectations by an average margin of 45 cents per share over the past four quarters. During the past month, one of the five covering brokerage analysts raised his forecast for second-quarter earnings, pushing the consensus estimate up by three cents to $1.33 per share. Foster Wheeler is scheduled to report on Wednesday, Aug 8, before the start of trading.

JA Solar Holdings (JASO) completed its IPO last February and then proceeded to top expectations for its first reported quarter as a publicly-traded company. Ahead of the Chinese solar cell manufacturer’s second-quarter report, brokerage analysts have been revising their projections upward. The consensus estimate calls for profits of 20 cents per share, two cents above the average projection of a month ago. JA Solar is scheduled to report on Wednesday, Aug 8, before the start of trading.

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Companies That Could Issue Positive Earnings Surprises during the Week of July 30 – Aug 3

Activision (ATVI) recently said that it expects to exceed its previous fiscal first-quarter guidance for revenues of $425 million and earnings of three cents per share. The video game maker has shipped more than eight million units of Spider-Man3, Shrek the Third, Transformers and Guitar Hero II. Two of the 13 covering brokerage analysts adjusted their projections in response, sending the consensus estimate up by a penny to five cents per share. The Most Recent Consensus is more bullish at six cents per share. ATVI has exceeded expectations twice during the past four quarters. Activision is scheduled to report on Thursday, Aug 2, after the close of trading.

A few weeks ago, CommScope (CTV) raised its guidance for second-quarter earnings. The wire and cable maker expects sales to have totaled between $500 and $510 million and for operating margins to be in the range of 15-16%. Previously, the company had forecast revenues of between $490 and $510 million and operating margins of 14.5-15.5%. (Strong demand has been allowing cable makers to enjoy pricing power for the past several quarters.) Nearly all of the covering brokerage analysts raised their forecasts in response, causing the second-quarter consensus estimate to rise by three cents to 76 cents per share. The Most Recent Consensus is more bullish at 77 cents per share. CTV has topped expectations for 12 consecutive quarters. CommScope is scheduled to report on Monday, Jul 30, after the close of trading.

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