Cisco, Disney, Sara Lee, Macy, and J.C. Penney

CHICAGO--([ BUSINESS WIRE ])--Zacks.com releases the list of companies likely to issue earnings surprises. This weeka�s list includes: Cisco (Nasdaq: [ CSCO ]), Disney (NYSE: [ DIS ]), Sara Lee (NYSE: [ SLE ]), Macy (NYSE: [ M ]) and J.C. Penney (NYSE: [ JCP ]). To see more earnings analysis, visit [ http://at.zacks.com/?id=3207 ].

"Earnings estimate revisions are the most powerful force impacting stock prices."

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Heading for the Home Stretch

The third quarter earnings season is now almost over, but the key word is "almost." Next week, a total of 610 firms will report, but only 21 of those will be S&P 500 firms. We define any fiscal period ending in August, September and October to be the third quarter.

We are getting to the point where most of the remaining firms had fiscal period-ends in October. Many of those are retailers. The firms reporting next week include many of interest, including: Cisco (Nasdaq: [ CSCO ]), Disney (NYSE: [ DIS ]), Sara Lee (NYSE: [ SLE ]), Macya�s (NYSE: [ M ]) and J.C. Penneya�s (NYSE: [ JCP ]).

On the economic data front, things will also be quieter than they were this week. We start the week with wholesale inventories numbers for September. On Wednesday, we get the Trade Deficit numbers, which are probably the weeka�s most important numbers. Thursday brings the other deficit -- the budget one -- as well as the usual initial and continuing unemployment claims data.

Monday

Nothing of significance.

Tuesday

Wholesale inventories are expected to have increased by 0.6% in September on top of a 0.8% increase in August.

Wednesday

The Trade Deficit is expected to decline ever so slightly in September to $46.2 billion from $46.3 billion in August. Over the last year, exports have been growing nicely, but unfortunately imports have been growing even faster. The increase in the trade deficit has been a huge drag on the economy. If the trade deficit had managed to stay unchanged in the third quarter from the second, the economy would have grown at 4.0% rather than 2.0%. The weak dollar should help improve the trade deficit over time, although rising oil prices make the job more difficult. Our oil addiction is responsible for close to half of the overall budget deficit. Curing that addiction, or even moderating it a bit, would go a long ways toward improving the overall economy.

Thursday

Weekly initial claims for unemployment insurance come out. They rose by 20,000 in the last week, to 457,000. On the other hand, they have fallen in seven of the last ten weeks. After a huge downtrend from mid-April through the end of 2009, initial claims have been locked in a tight atrading range.a Look for them to fall modestly next week. We probably need for weekly claims (and the four-week moving average of them) to get down to closer to 400,000 to signal that the economy is adding enough jobs to make a dent in the unemployment rate. A rate of over 500,000 signals that the unemployment rate is probably headed back up and a high probability of a double dip. The current numbers are consistent with the sort of jobless recovery we have been seeing so far this year, some absolute job growth, but not enough to really put much of a dent in the vast army of the unemployed.
Continuing claims have also been in a downtrend of late. Last week they fell by 42,000 to 4.34 million. That is down 1.456 million from a year ago. Some of the longer-term decline due to people simply exhausting their regular state benefits which run out after 26 weeks. Federally paid extended claims rose by 358,000 to 5.013 million, but that is still up 924,000 from a year ago. Looking at just the regular continuing claims numbers is a serious mistake. They only include a little over half of the unemployed now given the unprecedentedly high duration of unemployment figures. A better measure is the total number of people getting unemployment benefits, currently at 9.353 million, which is up 316,000 from last week. The total number of people getting benefits is now 534,000 below year-ago levels. The big unknown is if those people are actually finding new jobs, or simply slipping into abject poverty with no income at all. Make sure to look at both sets of numbers! Many press reports will not, but we will here at Zacks.
The Federal Budget Deficit is expected to continue its downward trend on a year-over-year basis. Yes, that is right, its downward trend. This is the start of a new fiscal year. Fiscal 2010 had a budget deficit that was $110 billion LESS than fiscal year 2009. To start off fiscal year 2011, the consensus is looking for red ink of $166.0 billion down from $176.4 billion to start off fiscal year 2010. The data is not seasonally adjusted, but is extremely seasonal, so month-to-month comparisons are worse than useless, they are outright misleading.

Friday

No numbers of any particular significance.

Dirk Van Dijk, CFA, is the Chief Equity Strategist for Zacks.com.

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Cisco, Disney, Sara Lee, Macy, and J.C. Penney