Financials Review on Feb 22, 2011

Trouble overseas and the question is, what will happen to the global production of oil? Libya is seeing air force pilots defect and New Zealand had a large earthquake which has negatively affected the country's currency. Let's talk numbers so it is easier to see why traders might be fearful this morning. Libya creates an estimated 1.8 million barrels of crude a day which is 2% of the world global output. The other kicker is Libya sits on the biggest oil reserves in Africa. Investors may become concerned due to raw materials growing and of course the word some are fearing, inflation. When consumers have to pay more at the gas pump they have less money to spend on essentials. The U.S. Dollar Index and gold could see buy orders over the next few days if the events overseas worsen. This could put pressure on the stock market today. (1)

Over the past 21 months Wal-Mart has posted drops in sales and is blaming dollar stores as to why they are losing money. Sales overall have risen 2.5% to $115.6 billion which did not meet the expectations of Wall Street.(2) Home Depot beat sales and quarterly profit estimates as more and more people took on maintenance improvements. Net income rose over $240 million from last year at this point. (3)

Today the Case-Shiller 20-city Index is forecasted to come in at -2.2% and consumer confidence is expected to grow from 65.6 to 67.0. Wednesday existing home sales are forecast to be 5.40m which is up from the last announcement of 5.28m. Thursday initial claims will be announced and are forecast to be the same as the last announcement of 410k. Durable orders are forecast to grow to 3.6% which is revised from -2.5%. New home sales are expected to be 310k and forecasts might come in higher at 335k. Friday, there will be a GDP estimate that is expected to be raised by 0.2% to 3.4%. Michigan sentiment is forecasted to 75.5 up from 75.1 when last announced. (4)

- Frank LaMantia, Financials Guru

1 http://finance.yahoo.com/news/Libyan-turmoil-hits-stocks-as-apf-1471605558.html?x=0&sec=topStories&pos=main&asset=&ccode=
2 http://www.cnbc.com/id/41702728
3 http://www.cnbc.com/id/41702997
4 http://biz.yahoo.com/c/e.html