Inflationary indicators and the corporate earnings tidal wave rules the week ahead!

4/14/2008 4:16 pm CT Saturday

By Dave Harris

First of all, I hope you all remember to send your tax returns out by April 15^th. Enjoy those lower rates on your dividends and capital gains while it lasts. If either the Obama or Clinton camp wins, I think it will be the end of all that. As George Harrison sang, "it's one for you 19 for me…because I'm the taxman". But enough about politics and mop-tops, because this week we get a boat load of earnings from the likes of chipmaker Intel (INTC) and Johnson & Johnson (JNJ) on Tuesday. Abbott Labs (ABT), banks JP Morgan (JPM) and Wells Fargo (WFC) come out Wednesday. Also watch for Honeywell (HON), Citigroup (C), and Xerox (XRX) Friday. All of which when combined with the economic data can sway the market in one direction or another.

I believe this Tuesday's inflation reading at the wholesale level, or the PPI, and Wednesday's CPI are the major economic highlights this week. This economy has slowed to near recessionary levels. On Friday, the bellwether General Electric (GE) disappointed with a lower full-year guidance and quarterly profit. It wasn't that bad, really. The company still has a strong business model, and full year guidance is at 2.30 per share versus over 2.40 announced previously. In our weaker economy, this should be expected. The market over-reacted and bought the stock way down to just over $32. I would buy it here.

Indeed, the economic data lately suggests this slow growth. Consumer confidence is way down. Last month's same-store sales were generally disappointing at the retailers, although Wal-Mart (WMT) wasn't bad. Housing is still painful. Oil is sky high. Is there much to like here?

Yes. The beaten down companies like Walgreen's (WAG), Google (GOOG), Motorola (MOT) are a few blue chips on my buy list. My golden rule of investing is to buy what's unpopular now and hold until it becomes popular.