THE ECONOMIC MONITOR

22 September 2010

U.S.
Free Edition

INSIDE THE REPORT MARKETS AT A GLANCE

 Stock recommendations and price targets from top  The DJIA ended down 21.72 points, or 0.2%, at 10,739.31, with 18
of its 30 components declining. The S&P 500 slid 5.50 points, or
brokerage firms 0.5%, to 1,134.28.

 Forecasts on Economic Indicators
 Important Events Scheduled on 23 September
Economic Events
 Financial Crisis Inquiry Commission holds final
field hearing at Sacramento
 The euro was sharply higher for a second straight day, rising as
high as $1.3440 before retreating to $1.3394 still up 1.1 percent.
 The 10-year Treasury yield reached a 3-week low of 2.52 percent
in intraday trading.
 On the New York Mercantile Exchange, November crude fell 26
cents, or 0.35 percent, to settle at $74.71 barrel, trading from
$73.84 to $76.00.

 Federal Reserve Bank of Chicago holds the 13th  U.S. gold futures ended up $17.80 an ounce at $1,292.10.
International Banking Conference

 Freddie Mac issues weekly U.S. mortgage rates STOCK INDICES

 ICI weekly money market mutual fund data INDEX LAST CHNG % CHNG

DJIA* 10739.31 -21.72 -0.20

Corporate Events
NYSE Composite* 7210.83 -35.12 -0.48

 Nike first quarter 2011 results Nasdaq* 2334.55 -14.80 -0.63

S&P 500* 1134.28 -5.50 -0.48
Breaking News DJ Total Stock Market* 11826.46 -65.14 -0.55
Russell 2000* 656.71 -7.95 -1.20
 Potash Corp sues BHP
Global Dow* 1932.22 3.78 0.20
 Adobe plunges on concerns of weak product Nasdaq 100* 1982.76 -6.35 -0.32
demand DJ Transportation Avg* 4467.64 -43.63 -0.97

S&P 100* 513.83 -1.70 -0.33

 General Mills posted profits
* CLOSING VALUES
 Jefferies misses estimate
CURRENCIES
 Sharp to buy Recurrent Energy
INDEX LAST PRIOR
 CarMax beats estimate Euro (EUR/USD) 1.3393 1.3235

U.K. Pound (GBP/USD) 1.5662 1.5616

 Home loans demand fall
Japanese Yen (USD/JPY) 84.53 85.10
 Banks must move to meet Basel III-ECB's Wellink All prices are at 04:11PM EDT

 Senators to probe SEC's Stanford investigation

FUTURES
 Novartis wins approval from FDA
SETTLE CHANGE

 Sanofi drug fails in late-stage trial Crude Oil (Oct) 74.66 -0.31
Natural Gas (Nov) 4.103 0.036

Gold (Dec) 1292.90 18.60

Copper ( Dec) 357.30 9.20
Wheat (Dec) 720.50 0.00

All prices are at 04:02 PM EDT

THE ECONOMIC MONITOR - U.S.

STOCK RECOMMENDATIONS BY BROKERAGE HOUSES

BROKERAGE/COMPANY ACTIONS RATING

UBS
Adobe Systems Cuts to neutral from buy Neutral
AutoZone Raises price target of $255 from $235 --
Carnival Corp Raises price target to $47 from $43 Buy
Constellation Energy Sets short term buy rating Buy
Host Hotels Starts with price target of $18 Buy
Marriott Starts with price target of $42 Buy
Starwood Hotels Starts with price target of $60 Buy
BofA Merrill
Adobe Systems Cuts to neutral from buy Neutral
Applied Materials Cuts price target to $12.50 from $14 --
KLA-Tencor Cuts price target to $40 from $43 --
Novellus Systems Cuts price target to $31 from $36 --
Jefferies
Adobe Systems Cuts price target to $33 from $38 Buy
News Corp Starts with price target of $15 Hold
Time Warner Starts with price target of $42 Buy
BB&T Capital
Consol Energy Starts with hold rating Hold
Massey Energy Starts with buy rating Buy
Peabody Energy Starts with buy rating Buy
Howard Weil
Exxon Mobil Removes from focus list with a rating of market outperform Market Outperform
Hess Raises to market outperform from market perform Market Outperform
Schlumberger Cuts price target to $78 from $81 Market Outperform
Credit Suisse
Adobe Systems Cuts to neutral from outperform Neutral
Carnival Corp Raises price target to $42 from $3 Neutral

Disclaimer: The views and investment tips expressed by investment experts are their own, and not that of IBTimes or its management. We advise users to check with
certified experts before taking any investment decisions.

MARKET BRIEFING

 U.S. stocks ended lower, led by the Nasdaq's decline after Adobe Systems discouraging revenue outlook and disappointment over Microsoft's new
dividend. The Dow Jones Industrial Average ended down 21.72 points, or 0.2%, at 10,739.31, with 18 of its 30 components declining. The S&P 500 slid
5.50 points, or 0.5%, to 1,134.28, held down by the financial sector, dropping 1.6%. The Nasdaq Composite fell 14.80 points, or 0.6%, to 2,334.55. The
Computer Desktop Software group fared the worst as Adobe Systems plunged 19% on a weak sales outlook. Adobe already was a laggard in the
software sector prior to today's decline. Media and chip equipment makers were also among the session's worst performers. Transportation, retail and
homebuilders bucked the trend.

 The U.S. dollar slid to a five-month trough against the euro and saw its lowest level against the yen since Japan's intervention last week as markets
braced for more monetary easing from the Federal Reserve. The Fed said on Tuesday it was prepared to start pumping billions of new dollars into the
economy, likely via purchases of Treasury bonds, to boost growth if necessary. That would further depress U.S. debt yields, which are already at record
lows in some maturities, and weaken demand for U.S. assets. The dollar was last down 0.7 percent at 84.52 yen. It touched a 15-year low of 82.87 yen on
EBS trading platform last week before Japanese authorities intervened, sending it sharply higher to just shy of 86 yen. The euro was sharply higher for a
second straight day, rising as high as $1.3440 before retreating to $1.3394 still up 1.1 percent.

 Benchmark U.S. Treasury yields fell to their lowest levels in three weeks in a price rally fueled by traders' bets that Japanese buyers would use Treasury
purchases as part of an effort to stem the yen's advance against the U.S. dollar. Japanese authorities officially intervened in currency markets last week to
keep the yen from climbing too high for its export driven economy. Officials buy Treasuries as vehicles for the dollars they've purchased during efforts to
keep the yen lower. Longer U.S. debt maturities rose in price for the fourth consecutive session and outperformed shorter-dated notes. The 10-year
Treasury yield reached a 3-week low of 2.52 percent in intraday trading. The 30-year Treasury bond was up 27/32, its yield easing to 3.74 percent from
3.79 percent on Tuesday.

 U.S. crude oil futures prices slipped after government inventory data showed U.S. crude and oil product stocks rose last week. The U.S. Energy
Information Administration's report said U.S. crude oil and gasoline stocks rose last week, against expectations stocks would be down. Earlier oil prices
had been lifted by the dollar's weakness after the U.S. Federal Reserve raised expectations of more monetary easing. The greenback's slide and a
possible threat to Gulf of Mexico energy operations from tropical weather helped limit crude oil's losses. On the New York Mercantile Exchange,
November crude fell 26 cents, or 0.35 percent, to settle at $74.71 barrel, trading from $73.84 to $76.00.

 Gold jumped for a fifth straight day, hitting record highs near $1,300 an ounce as the dollar tumbled the day after the Federal Reserve raised
expectations that more monetary easing was on the way. Silver also hit a 2-1/2 year peak at above $21 an ounce, near its highest in 30 years as investors
poured into exchange traded funds in search of cheaper safe-haven assets. Spot gold hit a new record of $1,296.10 an ounce and was trading at
$1,290.90 an ounce at 3:37 p.m. EDT, showing a 0.4 percent gain on the day. U.S. gold futures ended up $17.80 an ounce at $1,292.10. In addition to
dollar weakness, gold has gotten a boost from concerns about the stability of the financial system and the outlook for fiat currencies in general.
THE ECONOMIC MONITOR - U.S.
COMPANY NEWS
Potash Corp sues BHP
Potash Corp filed a lawsuit against BHP Billiton which seeks to block the
mining giant's $39 billion hostile bid. The lawsuit has been filed in a U.S. District
Court in Chicago. Potash alleges that BHP
misrepresented and failed to inform investors about
material facts. It also accuses BHP of engaging in
fraudulent, deceptive and manipulative behavior
related to its offer. BHP said the lawsuit is entirely
without merit and that it intends to contest the matter
vigorously. BHP said in a statement, "While Potash
Corp's actions seek to deprive its shareholders of a
fully financed all-cash offer, we do not believe this lawsuit will interfere with, or
delay our offer."
Adobe plunges on concerns of weak product demand
Adobe Systems Inc saw a fall 21 percent in pre-market trade after the software
maker forecast soft demand for its flagship software package. The company said
while demand for Creative Suite 5 (CS5) continued to be positive, sales in Japan
and to its U.S. education customers could be weaker-than-expected.
Even at least three brokerages cut their ratings on Adobe's stock to "neutral."
BofA Merrill Lynch said while it remained bullish about Adobe's Flash product to
penetrate mobile markets, growth in core CS5 business appears to be slowing.
UBS, which also had a "buy" rating previously, said it now expects the company
to trade at a lower price-to-earnings multiple than it had expected earlier.
General Mills posted profits
General Mills Inc posted quarterly profit slightly better than expected and
affirmed its full-year target, saying growth should speed up as the year
progresses.
General Mills said it expects the intense promotions seen across the industry to
ease over the next year as commodity costs rise, giving manufacturers less of a
cushion with which to fund those discounts meant to lure still-cautious
consumers.
Jefferies misses estimate
Jefferies Group Inc missed Wall Street estimates as revenue was dragged by
lower asset management fees and income from managed funds. Its quarterly
profit nearly halved from a year-ago. Net income available to common
shareholders for the third quarter was $46.3 million, or 23 cents a share,
compared with $86.3 million, or 42 cents a share, in the year-ago period. Net
revenue fell 26 percent to $520.1 million. Asset management fees and income
from managed funds fell to $786,000 from $21.0 million a year ago.
Sharp to buy Recurrent Energy
Sharp Corp revealed its plans to buy solar power company Recurrent Energy
for up to $305 million, expanding Sharp's footprint in the solar field. Privately-
held Recurrent Energy focuses on small-scale projects of up to 20 megawatts
and it has a pipeline of more than 2 gigawatts of projects planned in the United
States, Canada and Europe.
CarMax beats estimate
CarMax Inc, the largest U.S. retailer of used cars, posted seventh straight quarter
profit as customers continued to shy away from splurging on new cars in a
sluggish economy.
CarMax said used cars sales rose about 11 percent in the second quarter to
$1.89 billion. Same-store sales of used vehicles rose 4 percent, reflecting this
trend as economic conditions continue to remain uncertain. For the June-August
period, the company reported net income of $107.9 million, or 48 cents a share,
compared with $103.0 million, or 46 cents a share, a year ago.
ECONOMY NEWS
Home loans demand fall
Demand for home loans fell for a third straight week last week, while prices for
single-family homes retreated further in July.
The Mortgage Bankers Association said that loan
applications to buy homes fell 3.3 percent and in
another report the Federal Housing Finance
Agency's house price index dropped 0.5 percent
after falling 1.2 percent in June. Prices for single-
family homes retreated as the housing market
struggles for balance with less government support.
The Mortgage Bankers Association's index measuring both purchase and
refinancing applications last week fell 1.4 percent. In the 12 months to July, the
FHFA house price index fell 3.3 percent. It is down 13.8 percent below its April
2007 peak.
Banks must move to meet Basel III-ECB's Wellink
ECB Governing Council member and head of the Basel Committee on Banking
Supervision Nout Wellink said that the banks must move to meet new tough
rules on capital as soon as possible despite the long-phase in period for some of
the requirements.
Wellink said regulators should stop banks paying out dividends or bonuses if
they fall short of the new minimum capital requirement even if the final deadline
to meet the rules has not yet passed.
"Banks should not be permitted to increase their distributions if they are still
below the ultimate target but feel they can take their time to get there," he said.
REGULATORY NEWS
Senators to probe SEC's Stanford investigation
A report authored by SEC Inspector General David Kotz accused the Securities
and Exchange Commission of bungling its investigation of Allen Stanford's
alleged $7 billion dollar Ponzi scheme will be the subject of a U.S. Senate hearing.
The SEC filed charges against Stanford in February 2009, accusing the Texas
financier and three of his companies of selling billions of dollars of fraudulent
certificates of deposit.
Novartis wins approval from FDA
Swiss drugmaker Novartis AG's multiple sclerosis pill Gilenya won U.S. approval.
The U.S. Food and Drug Administration's approval for broad use of Gilenya to
treat U.S. patients with relapsing MS, the most common form of the often
debilitating disease.
Sanofi drug fails in late-stage trial
Sanofi-Aventis, the French drugmaker which was planning to buy Genzyme to
enhance its drug portfolio could suffer difficulties
as the experimental medicine for limb ischemia
failed in a late-stage trial. The company said that
its treatment NV1FGF, which was earlier known as
Temusi, could not meet its expectation in early
Phase III trial designed to demonstrate superiority
over placebo in preventing major amputation or
death. Full report of the unsuccessful clinical trial
will be presented at the American Heart Association annual meeting on Nov. 16,
2010.
THE ECONOMIC MONITOR - U.S.

NEXT TRADING DAY ECONOMIC INDICATOR WATCH

Economic Events Jobless Claims (Weekly)

SACRAMENTO, CA - Financial Crisis Inquiry Commission holds field hearing to
hear testimony from people on the ground about the causes and effects of the
financial and economic crisis in their communities.
The Financial Crisis Inquiry Commission, which is trying to get to the bottom of
the Wall Street crash and subsequent Great Recession, holds its last major public
hearing tomorrow in Sacramento. The panel will hear testimony about the
Sacramento housing and mortgage markets and the impact of the financial crisis
on the region; mortgage origination, mortgage fraud and predatory lending in
the Sacramento region; the mortgage securitization chain from Sacramento to
Wall Street; and the impact of the financial crisis on Sacramento neighborhoods
and families.
Federal Reserve Bank of Chicago holds the 13th International Banking
Conference
CHICAGO - Former Basel Committee chair Tommaso Padoa-Schioppa, advisor
to Greek government, addresses the Chicago Fed's International Banking
Conference - 2345 GMT
Initial Claims - Forecast: 4500,00 Prior: 450,000
4-Week Average - Forecast: NA Prior: 464,750
Continuing Claims - Forecast: 44,600,000 Prior: 44,850,000
New U.S. claims for jobless benefits hit a two-month low for the week ending
September 11, hinting at some stability in the labor market, while the contraction
in factory activity in the Mid-Atlantic region slowed in September. US initial
jobless claims in the week ending September 11 unexpectedly declined 3,000 to
450,000, the lowest level in two months, from the previous week’s upwardly
revised 453,000, figures from the Labor Department showed. The 4-week
moving average fell 13,500 to 464,750. Continuing claims in the week ending
September 4 dropped 84,000 to 4,485,000 from the preceding week’s upwardly
revised 4,569,000. The 4-week moving average of those continuing claims
decreased 7,500 to 4,503,000. The insured unemployment rate for the week
ending September 4 declined to 3.5% from the prior week’s upwardly revised
3.6%.

CHICAGO - Federal Reserve Bank of Chicago President Charles Evans gives Source: Department of Labor
opening remarks before the 13th International Banking Conference hosted by
the Federal Reserve Bank of Chicago - 1440 GMT
Existing Home Sales (August)
In conjunction with the International Monetary Fund, the Federal Reserve Bank
of Chicago will hold its thirteenth annual International Banking Conference on Existing Home Sales (MoM) Forecast: 41,000,000 Prior: 38,300,000
September 23–24, 2010. The purpose of these conferences is to address current
issues affecting international financial markets. Existing Home Sales (MoM % ) Forecast: 8.4% Prior: -27.20%
WASHINGTON - Commerce Secretary Gary Locke speaks before the Center for Sales of previously owned U.S. homes took a record plunge in July to their
American Progress (CAP) conference, "Regional Innovation Clusters: Advancing slowest pace in 15 years, underlining the housing market's struggle to find its
the Next Economy" - 1300 GMT footing without government aid. Existing home sales dropped a record 27.2
percent from June to an annual rate of 3.83 million units. June sales were revised
WASHINGTON - Assistant Treasury Secretary for Financial Institutions Michael down to a 5.26 million-unit pace from a previously reported 5.37 million.
Barr speaks before the Aspen Institute Congressional Briefing: "Tapping Tax
Time" - 1200 GMT Source: National Association of Realtors
WASHINGTON - Freddie Mac issues weekly U.S. mortgage rates, 1000/1400
Lead Indicators (August)
U.S. 30-year mortgage rates rose for a second straight week for the week ended
September 16, while those on 15-year mortgages dropped to a record low, said Forecast: 0.1% Prior: 0.1%
Freddie Mac in last week’s survey. Interest rates on U.S. 30-year fixed-rate
mortgages, the most widely used loan, averaged 4.37 percent, up from the
The Conference Board's index of leading economic indicators rose 0.1 percent in
previous week's 4.35 percent and down from its year-ago level of 5.04 percent,
July after dropping 0.3 percent in June, reinforcing signs of sluggish third-quarter
according to the survey. Meanwhile, 15-year fixed-rate mortgages averaged 3.82
growth.
percent, down from 3.83 percent last week, the lowest since Freddie Mac began
surveying this loan type in 1991.
Source: Conference Board
WASHINGTON - Treasury Department weekly announcement of 3- and 6-
month bill sale offerings; announces 2-, 5- and 7-year notes sales, 1100/1500 CORPORATE RESULTS
WASHINGTON - ICI weekly money market mutual fund data, after 1600/2000 DATE - 23/September2010

Total money market mutual fund assets decreased by $24.55 billion to $2.814 COMPANY NAME EVENT
trillion for the week ended Wednesday, September 15, the Investment
Company Institute reported last week. Taxable government funds decreased by Comtech Telecommunications Q4 2010
$1.11 billion, taxable non-government funds decreased by $20.17 billion, and tax Neogen Q1 2011
-exempt funds decreased by $3.26 billion.
Park Electrochemical Q2 2011

Corporate Events Rite Aid Q2 2011

Texas Industries Q1 2011
WallStreet expects Nike to report a profit of
Finish Line Q2 2011
$1.01 per share for the first quarter, down
from $1.04 cents for the same period a year Vail Resorts Q4 2010
ago. The sportswear giant reported a 53
percent growth in earnings for the recent Corgenix Medical Corp Q4 2010
fourth quarter, helped by higher sales from TIBCO Software Inc. Q3 2010
emerging markets and improved in-line
product margins. Nike recently revealed its growth strategy, targeting revenue of Qualstar Corp Q4 2010
$27 billion in the next five years. Revenues for the fourth quarter increased 8 General Finance Corporation Q4 2010
percent to $5.08 billion from $4.71 billion in the preceding year quarter.
Excluding changes in currency exchange rates, net revenues rose 4 percent. Scholastic Corporation Q1 2011
Spectrum Control Inc Q3 2010
THE ECONOMIC MONITOR - U.S.

DAILY EARNINGS HITS & MISSES AS ON 22 SEPTEMBER, 2010

DIFFERENCE REV ACT DIFFERENCE
COMPANY PERIOD CURRENCY EPS EST EPS ACT REV EST (mln)
EPS (mln) REV (mln)

Carmax Q2 USD 0.40 0.48 0.08 2268.50 2341.90 73.40

General Mills Q1 USD 0.63 0.64 0.01 3569.70 3533.10 -36.60

Jefferies Group Q3 USD 0.31 0.23 -0.08 571.60 609.30 37.60

Life Partners Holdings Q2 USD 0.56 0.54 -0.02 29.50 30.30 0.80

ECONOMIC CALENDAR MARKET PERFORMANCE

THU 09/23 0830 Initial Claims 450 k 450 k

0830 4 Week Average NA 464.75 k
DJIA
0830 Continuing Claims 4.46 mln 4.485 mln

Existing Home Sls

1000 4.1 3.83 mln
(Aug)
Existing home sls
1000 8.40% -27.20%
(Aug)
1000 Lead Indicators (Aug) 0.10% 0.10%

FRI 09/24 0830 Durable Goods (Aug) -1% 0.40%

0830 Ex-Transportation 1% -3.70%

0830 Ex-Defense -0.40% 0.40%

0830 Nondefense ex-air 2% -7.20%

New Home Sales

1000 0.29 mln 0.276 mln
(Aug)

1030 ECRI Weekly Index NA 122.6

MON 09/27 0830 Chicago Fed Index NA NA
Chicago Midwest
1200 NA 81.4
(Aug)

TIME TBA Building Permits NA NA A. Stocks opened slightly higher in the morning in the wake of the
Federal Reserve signaling it stood ready to provide more stimulus
TUE 09/28 0745 ICSC/GS Report ww NA NA
to stave off deflation and boost the economy. The Dow Jones
0855 Redbook mm NA NA gained points with 20 of its 30 components opening higher. Blue-
0900 S&P CS 20 mm sa NA 0.30%
chips were lifted by a 1.5% gain in shares of aluminum giant Alcoa,
up 1.6%.
0900 S&P CS 20 mm nsa NA 1%
0900 S&P CS 20 yy 3.20% 4.20% B. The downturn came amid broad-based selling, but pressure has
become particularly intense around financials which were down by
Consumer Confidence
1000 54 53.5 1.5% and tech stocks down by 1.3%.
(Sep)

Richmond Fed Mfg

1000
(Sep)
NA 11 C. Alcoa, Procter & Gamble, and IBM were among the best
performing blue chips, while Microsoft, JPMorgan Chase, and
1000 Mfg Shipments NA 11
Hewlett-Packard were atop the list of laggards.
1000 Service Revenues NA -10

1700 ABC CCI NA NA

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