The Week Ahead: The recent lowering of interest rates, although designed to ease liquidity shortages from sub-prime mortgages, is the Fed's response to prevent recession. In doing so the Fed has opened wider the threat of greater inflation and dollar depreciation neither of which are good outcomes. Reports of concern will be the existing home sales and consumer confidence survey on Tuesday, durable goods on Wednesday, the 2nd quarter final GDP along with new home sales on Thursday, and personal income and spending stats on Friday.

Stocks to Watch: Companies specializing in fertilizers continue to do well as Mosiac Company (MOS) was upgraded to hold from sell by a major brokerage. Other companies include Agrium (AGU), CF Industries (CF), and Terra Industries (TRA). The energy services firm of I H S Inc. reported good revenue and earnings growth last quarter as the stock made a fresh breakout. Tektronix Inc. (TEK) fell below its 200 day moving average as its orders fell 5% from the previous year and earnings will be near flat next quarter versus this quarter.

Special Note: An easing monetary policy by the Fed may have revived some takeover speculation, but an interesting development contrary to this is the reversal of a decision by the buyout group led by Goldman Sachs and Kohlberg, Kravis, and Roberts to complete an $8 billion acquisition of Harman International (HAR). This is the first major private deal to come undone since the current credit turmoil began. The breakup may encourage other private equity firms to bail out of deals now less profitable due to rising costs of financing.


Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.


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