DAVE HARRIS: This is Dave On Stocks Podcast #50, with many more ahead. If you're a long time fan of the show, I really appreciate it. If you're a first time listener, thanks for checking it out. I'm Dave Harris. I'm a long term investor with a perspective on the stock market along with individual stock advice. This show is for Monday April 2^nd 2007.

Kraft's spin off from Altria (MO) becomes official today. The symbol for Kraft is KFT. Early this week we get Automobile and truck sales. We'll see if there's any improvement in the struggling industry when the data comes out Tuesday. The big economic news comes out Friday with the jobs report for March. The surveys include average hourly earnings, non-farm payrolls and average workweek data for last month. The report will also offer a fresh reading on unemployment. Investors are starting to focus on the upcoming earnings season. Earnings begin April 10^th.

Good news came Friday that consumer spending and personal incomes went up .6% in February. That was double what the street expected. Latest data on economic growth calmed fears that the economy is slowing down too fast. GDP rose 2.5% in the 4^th quarter, which was above expectations of a 2.2% rise. Unfortunately, some on Wall Street think this means the Fed is less likely to cut rates as soon as we thought. But I'm still expecting a rate cut later this year. Keep in mind that economic growth at this pace is pretty slow, and the GDP is showing a slowdown compared to last year. Also in the report, core inflation (which excludes food and energy) looks a little better rising only 1.8% in the 4^th quarter vs. 2.2% in the third. However, core inflation over the last 12 months rose 2.4 %. That is above the Fed's so-called comfort zone of 1-2%. But I still think the Fed will eventually cut rates in response to the weak housing and autos situation. Investors are still concerned that the housing and subprime problems will drag our economy into a recession. I think the media is blowing it all out of proportion and people are overreacting. At Capitol Hill last week, Fed chairman Ben Bernanke said those problems, particularly subprime, have not significantly hurt the broader economy. However, that area has to be monitored closely. Even though the second half of 2006 showed slower core inflation, Bernanke said it was uncomfortably high, which concerned Wall Street. But I think the slow but solid economic growth is intact, and I stand by the strong employment data. Unemployment is down by 4.5%. The latest report from the Labor Department said jobless claims fell by 10,000 to 308,000, that's lower than expected. More people are working. Durable goods orders went up 2.5% in February, which was slower that the 3.5% increase the market expected. But that's good news. I think this is exactly the kind of slower growth we need now. It's also what the Fed wants to control inflation pressures, and that's why they raised interest rates. The economy needs to keep moving along at a steady but slower pace while avoiding a recession. I think this will keep the economy on track for sustainable growth, and that's why I suggest long term investments in large cap quality stocks in this environment.

Drug Store Walgreens (WAG) reported a 25% rise in second quarter profit. That was better than expected. Sales of prescription drugs went up an impressive 16.4%. The company also had a great holiday sales period. EPS was .65 cents vs. .51 cents last year. Same store sales went up nearly 9%. I continue to recommend Walgreens on the solid earnings and because the company keeps growing. Well over 5,600 stores are in operation. In 3 years, there will be over 7,000 stores. Walgreens is a strong buy. The stock closed down .31 cents to $45.89 per share on Friday.

I like financial services company Citigroup (C). Some stories are floating around that they may help Barclays in the U.K. bid for ABN Amro (ABN). There's also a possible restructuring in the works with 15,000 jobs cut. I think Citigroup’s plans to expand their business in China offers great potential for real growth. Charles Prince, the chief exec, said their network in China will grow to provide banking, investment services and more and add to the growth of capital markets. The company recently increased their quarterly dividend by 10%. I have a buy recommendation on Citigroup. This is a nice diversified financial company. They report earnings on April 16^th. I think the stock is going to $60 per share. Citigroup closed down .06 cents to $51.34 per share Friday.

Kimberly-Clark (KMB), the maker of Kleenex and Scott products, issued a slightly higher outlook for the first quarter on stronger sales in the states and emerging markets. The company continues its restructuring plan. The full year forecast remains unchanged in the range of $4.10-$4.20 per share. That's generally in line with analyst views. Shares closed on Friday at $68.49 with an earnings multiple of 21.09. I like the stock at this cheap price and think it's headed to $75.

Stocks are having trouble getting into rally mode as crude oil continues upward due to issues with Iran. On Friday, crude was at near a 6 month high at $65.87. Oil and energy companies have gained some momentum including Exxon Mobil (XOM), Chevron Corp. (CVX), ConocoPhillips (COP) and Schlumberger (SLB).

In other economic news, the Chicago PMI showed expansion with a March reading 61.7 from 47.9 in February, and that was better than expected. Business looks good in the Midwest. March consumer confidence came in lower than the previous month according to the University of Michigan's consumer survey. Still, employment is good and consumers are out spending money given the significant increase in chain store sales compared to last year.

On Friday, the last trading day of the first quarter, the DOW closed a touch higher by 5.60 to 12,354.35. The NAZDAQ rose 3.76 to 2,421.64. The S&P 500 fell 1.67 to 1,420.86.

Thanks for listening to Dave On Stocks-The 50^th Podcast. I'm Dave Harris. I'll be back again soon with the next show. Write me with any questions or comments at the "contact us" link on this page. My website is www.daveonstocks.com. This is Dave On Stocks.