Sunday, February 18, 2007

Weekly Look Ahead

(US markets will be closed Monday for President's day)

Last week went mostly according to Finance Wonk expectation. There was strength in the markets based on some weakening inflation indicators but the Fed indicated in speeches that they were ready to act quickly if needed. Fed Chief Bernanke seemed fairly rosy on the economy, commenting that "the U.S. economy seems likely to expand at a moderate pace this year and next, with growth strengthening somewhat as the drag from housing diminishes."

This week on Wednesday the minutes from the January Fed meeting will be released, and thoroughly parsed by the market. Assuming no surprises there is no reason the market cannot continue its slow upward drift.

A handful of "name" companies are scheduled to report earnings this week. The market should be more resilient to earnings weakness now than it will be sensitive to inflation data. Weakness at Wal-Mart, for example, might be seen as less of a threat to growth than a weakness in inflation and should not cause undue hysteria.

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