Saturday, March 18, 2006

Market Wrap/Weekend Preview

The S&P 500 had an awesome week, to say the least. Widespread belief that the Fed may be nearing the end of the monetary tightening cycle sent shares higher across the board.

The February core CPI was tame, but the underlying trend in inflation hasn't changed dramatically. Economic expectations haven't changed either -- economic data this past week was mixed. On balance, the economic data left first quarter forecasts for real GDP near a 4.5% annual rate. Market sentiment is clearly on the up & up. Both oil futures and the 10-year bond yield closed lower.

On the earnings front, the brokers had the spotlight -- Goldman Sachs (GS) absolutely killed Q1 and we remain bullish on the name with a feasible $166 price target. At less than 12x 2007 earnings, we can't think of one reason not to own this investment banking powerhouse.

On an unrelated note, smoothie chain Jamba Juice was acquired on Monday by a group of private investors (SVI) for $265M. Little did we know that this fast growing chain was bringing in $345M in annual revenues -- obviously, SVI got itself a great deal, we think. We've been following Jamba Juice for about a year now; we are very bullish on Jamba's lifestyle brand and look forward to its explosive expansion plans. So be on the lookout.

Over the weekend, we'll initiate coverage on The Sports Authority (TSA) children's apparel retailer Carter's (CRI), and in a triple play special on technology, Cisco (CSCO), JDS Uniphase (JDSU), and chipmaker Texas Instruments (TXN).

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