Stock Market Analysis

Analyst Wire July 10, 2006 MICHELLE CARUSO-CABRERA, CNBC ANCHOR: Eight minutes until the top of the hour, and second-quarter earnings season kicks off later today. Alcoa (AA) reporting after the closing bell. Earnings season, will it help the markets shake off what was a rough week last week? Let`s look ahead to today`s trading session with David Buik, marketing director at Cantor Index. web site citibanks ignon

David, good to see you. We had a rough Friday because of 3M`s (MMM) warning and also the weaker-than-expected headline number on the jobs report. Tell us, when it comes to this morning, we are seeing the futures in positive territory. Does it look like a good open?

DAVID BUIK, MARKETING DIRECTOR, CANTOR INDEX: Well, I think to start with, Michelle, it looks like a reasonable opening, I think what we call over here, it might be just the remnants of a dead-cat bounce, perhaps slightly oversold, particularly the Dow, which was down 134 points. We are expecting the Dow to open up 25, 3 up on the Nasdaq, and 2 on the S&P 500. As you so rightly said, the warning or the confessional on 3M was disappointing. But there again we shouldn`t be really too worried about that. Because it is only the LCD platforms that was really badly affected. But, also we did have, of course, Applied Micro Devices (AMD) as well, which also wasn`t particularly encouraging. After hours, as you say, we get Alcoa. And we are expecting quite a big increase in earnings per share, up to 85 cents, from 46 cents last time. And then later in the week, we think the two key ones are Pepsi (PEP) on Thursday, that is up only probably 76 from 70 cents, and then your great GE (GE), which we consider the barometer of the marketplace. But unfortunately the marketplace does not necessarily agree with us, because even if it produces a decent result, which is a broad spectrum across the U.S. economy, it doesn`t ignite the various indices to the degree it should. And there again we are expecting earnings per share up 47 cents, from 44. I think we were disappointed with the payroll numbers, because if we are going to see a drop in growth by the end of the month — I beg your pardon, by the end of the year, then you won`t be able to counteract it against any possible interest rate rises. I think and we should be encouraged, Michelle, though, that we are going to see, if Thomson Financial is right, a 12.3 percent rise in S&P 500 earnings for the quarter as against this time last year, and probably a very.

CARUSO-CABRERA: Yes.

BUIK: . strong run from the financials and also energy could be up as much as 15 percent.

CARUSO-CABRERA: What do you think, earnings season enough to finally get investors focused on profits instead of the Federal Reserve?

CHRISTINE TAN, CNBC ANCHOR: David, hi. Christine here in Asia.

BUIK: Hello over there.

TAN: Japan, of course, a big — hi. The big event to watch out for, BOJ meeting later this week. Is that going to be a big market-moving event?

BUIK: Well, I think everybody has been massively disappointed by what happened to the Nikkei during the course of the last three months. Obviously and investors got embroiled in second- and third-tier stocks. And when they couldn`t get out of them because of liquidity problems, they vented their spleen on the Nikkei. We think the Japanese economy is in pretty good nick. And it was nice to see the 300 bounce we saw — 300- point bounce we saw in the last two hours of trading today. And I think it is a question now of seeing what Fukui has to say, whether they are going to implement interest rate changes. But I think we shouldn`t be too discouraged by that because it means that the economy is still on the move. website citibanks ignon

CARUSO-CABRERA: Yes. Big event this week, huh? Can you imagine, the Bank of Japan finally raising interest rates after all of these years? David, good to see you this morning, thanks for joining us.

BUIK: Thanks so much.

CARUSO-CABRERA: David Buik is marketing director with Cantor Index. As you heard David, he says that they are getting indication that we are going to have a positive open here in the United States. And, indeed, futures are in positive territory, and above fair value. Dow futures, 35 points above fair value. Nasdaq futures more than 5 points above fair value. And S&P futures, more than 3 points above.

END