Inflation and Earnings

123jump.com Staff
09 Oct, 2005
New York City

It seems that Fed is active these days in convincing market that it is ready to fight inflation. It will be more comvincing if Fed shows a similar dispay of conviction and resolve telling the U.S. Congress to observe fiscal discipline. Fed's bark in the recent weeks may be directed at the wrong tree. Under the watchful eyes of Fed when the interst rates have touched 41-year low of 1%, federal budget surplus of the nineties has turned to a growing deficit.

Inflation, trade deficit and retail sales are few of the economic data to be released this week.

Market is in a state of inflation alert with the active campaign by three regional Federal Reserve Bank presidents sending hawkish signals to fight the inflation. If fighting inflation is Fed’s job then preventing inflation from occurring in the first place is also the job of Fed.

This Fed in the last six years has shown little success in convincing the U.S. Congress that rising debt of the Federal government will inevitably leads to higher inflation. Whether the Fed is ready to fight the inflation or not, inflation is on the rise and it is widely viewed that this Fed is lagging when it comes to curbing the root cause of all inflations, the Federal government deficit.

For the month of September, Department of Labor is to release on Friday Consumer Price Index at 0.9%, up from 0.5% in August. Core inflation measure is expected to rise 0.2% compared to 0.1% in August.

Commerce Department is to release international trade and services deficit for the month of August on Thursday. August deficit is expected to rise to $59.3 billion from $57.9 billion in July. The U.S. has not registered annual trade surplus since 1976.

On Thursday Commerce Department is to release September retail sales growth of 0.2%. August retail sales were 2.1% on the back of strong auto sales driven by heavy discounts. Without the auto sales, September retails sales are expected to decline to 0.6% from 1% in August.

The earnings season is set to begin this week with at least eight companies to draw investors’ attention. S&P 500 companies are expected to deliver another quarter of earnings growth of 14% or better mostly on the strength of energy companies’ performance. Here is a list of earnings to watch for the week.

Genentech Inc., ((DNA)) biotechnology company, is expected to report on Monday Q3 net profit of 30 cents per share on revenue of $1.64 billion, up vs. net profit of 24 cents per share in the same time last year. The company stock has declined 3% over the past three months.

Infosys Technologies Ltd., ((INFY)) consulting and information technology services provider, is forecasted to report on Tuesday Q2 net profit of 46 cents a share on revenue of $509.03 million, up from net profit of 35 cents a share in the year-ago period. The company share has lost 7% over the last three months.

Apollo Group Inc., ((APOL)) higher education programs provider, is expected to report on Wednesday Q4 net profit of 65 cents a share on revenue of $595.68 million, up vs. a profit of 52 cents a share in the year-ago period. The company share has lost 18% over the last three months.

Fairchild Semiconductor International Inc., ((FCS)) semiconductor solutions manufacturer, is expected to report on Thursday Q3 net loss of 1 cent a share on revenue of $346.45 million, down vs. net profit of 26 cents a share in the same time last year. The company stock has declined 10% over the last three months.

First Data Corp., ((FDC)) electronic commerce and payment services provider, is forecasted to report on Friday Q3 net profit of 61 cents a share on revenue of $2.69 billion, up vs. net profit of 57 cents a share in the year-ago period. The company share has lost 2% over the last three months.

Apple Computer ((AAPL)) is expected to report earnings of 36 cents a share compared to 16 cents a year ago after-the-close on Tuesday. The Apple Computer stock is up 50% in the last quarter and up 300% from the December 2004 low. The success of iPod and iPod Nano has catapulted Apple stocks as a darling of growth investors. Investors have doubted the in the last two quarters whether the company can maintain the current revenue and earnings growth.

Advanced Micro Devices, ((AMD)) the microprocessor and memory maker is expected to release earnings of 8 cents vs.12 cents a year ago. The stock has jumped close to 30% in the last three months of trading and is up 70% from a year ago.

On Friday, General Electric, ((GE)) is expected to report earnings of 44 cents compared to 38 cents a year ago on revenue growth of 7% to $41 billion.