WHAT’S ON TAP?

28% of the S&P 500 reports earnings next week.  Economic news is relatively light so the focus will be almost entirely on earnings.   The only non-earnings event is Bernanke’s appearance before Congress on Tuesday and Wednesday.   Bernanke has a tendency to handle these situations with doctor like precision so don’t expect him to say anything remotely disappointing.  On the economic front:

• Monday: June Leading Indicators
• Wednesday: weekly crude inventories
• Thursday: weekly initial jobless claims
• Friday: Revised July University of Michigan consumer sentiment

On the earnings front we get reports from 10 Dow components: 3M, American Express, AT&T, Boeing, Cat, Coke, Dupont, Merck, Microsoft, and Pfizer.   The move this past week might have been a bit too much too fast, but I would remain bullish heading into this week’s reports.  A number of market leaders will provide earnings next week and I would expect more of the same “better than expected” reports.   Apple, Caterpillar, Ebay, Microsoft, Morgan Stanley, Pepsi, Wells Fargo, & Amazon all report and my estimates are substantially higher than the analysts almost across the board.  We also get news out of UPS on Thursday where I expect to hear more signs that the economy is stabilizing and earnings are gaining some traction though still miserable.  It’s hard to imagine that we’ll find a lot of sellers into next week, but as earnings season gets deeper I would begin to leg out of the risk trade.  These earnings are not a sign of economic strength, but rather the overall incompetence of the analyst community.  The top line growth is not there to sustain such a move in stocks.   Cost cuts will only take EPS so far….

Drink up this weekend in preparation to strap your boots up Monday morning – there’s a lot on tap….