Intelligent Investor US edition January 6 2011

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06 January 2011 The Intelligent InvestorU.S.

The Economic Monitor Series. Free Edition.

U.S. stocks slipped as soft retail sales and a sharp rise in the dollarleft investors edgy a day ahead of December's employment report.

The DJIA slipped 25.58 points, or 0.22 percent, to 11,697.31

U.S. Treasury prices gained, as investors squared positions after avolatile selloff on Wednesday and set up for employment data onFriday that is expected to set the direction of interest rates for themonth. Ten-year note yields have traded below 3.5 percent sinceMay of last year. The notes yields have traded below 4 percent

since the credit crisis hit in 2008.

The dollar slipped 0.1 percent against the yen to 83.17.

Gold fell for a fourth consecutive session, as the dollar rose onsigns the U.S. economic outlook was improving, but technicalbuying lifted prices off their lows. Spot gold fell 0.4 percent to$1,371.70 an ounce at 3:28 p.m. U.S. gold futures for Februarydelivery settled down $2 at $1,371.70.

U.S. crude oil futures prices fell 2 percent and settled below $89 abarrel, pressured by the dollar's strength and as disappointingDecember retail sales weighed on U.S. stock indexes. On theNYME, February crude fell $1.92, or 2.13 percent, to settle at$88.38 a barrel, having traded from $87.85 to $90.71.

MARKETS AT A GLANCE

STOCK INDICES

CURRENCIES

INDEX LAST PRIOR

Euro (EUR/USD) 1.3011 1.3155

U.K. Pound (GBP/USD) 1.5467 1.5512

Japanese Yen (USD/JPY) 83.3 83.26

All prices are at 04:27 PM EST

FUTURES

INDEX LAST CHNG % CHNG

DJIA* 11697.31 -25.58 -0.22

Nasdaq* 2709.89 7.69 0.28

S&P 500* 1273.85 -2.71 -0.21

NYSE Composite* 8000.90 -39.14 -0.49

Global Dow* 2103.02 -2.32 -0.11

* CLOSING VALUES

LAST CHANGE

Crude Oil, Feb. 88.33 -1.97

Natural Gas, Mar. 4.372 -0.069

Gold, Dec, Feb. 1372.1 -1.6

Copper, Mar. 432.35 -8.45

All prices are at 04:16 PM EST

INSIDE THE REPORT

Stock recommendations and price targets from topbrokerage firms

Analysis and views on Is LinkedIn in hurry to go forIPO ahead of Facebook? & FAO warns of 'food

price shock' in 2011

Economic Indicator Watch Important Events Scheduled on January 07

Economic Events

Federal Reserve Chairman Ben Bernanke testifies onthe Economic Outlook before the Senate Budget

Committee - 1430 GMT

Corporate Events

No company results scheduled for release

Top Stories

Jobless claims up

Costco December sales up

Moody's raises 2010 earnings outlook

Monsanto posts profit in Q1

LinkedIn plans to go public

Constellation posts strong profit

Seattle Genetics, Pfizer in drug technology deal

Goldman plans to end Facebook solicitation



The Intelligent Investor - U.S.

STOCK RECOMMENDATIONS BY BROKERAGE HOUSES

BROKERAGE/COMPANY ACTIONS RATING

BofA Merrill

Amazon.com Raises price target to $198 from $190 —

Credit Suisse

American Express Raises price target to $40 from $38 — BB&T Cuts to underperform from neutral —

Discover Financial Raises price target to $20 from $19 —

Lennar Cuts to neutral from outperform —

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.

Economic Events

Federal Reserve Chairman Ben Bernanke testifies on the Economic Outlook before the Senate Budget Committee - 1430 GMT

Ben Bernanke appears before the Senate Budget Committee on Friday, his first appearance in a new session of Congress shaped by a resurgent Republican Party.

Friday's face-off will likely be just a warm-up for some of the more strident challenges facing the Fed in the House of Representatives, where perennial Fed critic RonPaul -- now chair of a panel that oversees the central bank -- may spearhead a Tea Party onslaught against the institution.

Over coming months, lawmakers will likely grill Fed officials over their $600 billion bond-buying program, debate the central bank's need to have a mandate to keepunemployment low, and push for greater scrutiny of Fed activities, including its monetary policy deliberations.

Company Events

No company results scheduled for release.

THE NEXT TRADING DAY




Is LinkedIn in hurry to go for IPO ahead of Facebook?By IBTimes Staff Reporter

LinkedIn, the network service for professionals, is planning to go public and is reportedly discussing about a possible IPO, said aReuters report quoting sources.

The report said the company has already selected its financial underwriters and chosen book runners like JP Morgan, MorganStanley and Bank of America. "An IPO is just one of many tactics that we could consider," a LinkedIn spokesman told Reuters onWednesday. News about the possible IPO by LinkedIn has raised speculations in the market as to whether the company is jumping

into the IPO race ahead of Facebook to capitalize on a positive mood in the market.

Earlier, investigations by US regulator Securities and Exchanges Commission (SEC) have instigated rumors that the popular socialnetworking site, Facebook, which was on the verge of going public, settled for shareholding pattern. As per the norms, the companyhas to keep the number of shareholders below 500 to prevent making it a public firm, which Facebook has managed. It was reportedthat the SEC believed that the private trade of the limited shareholder's stock have increased Facebook's estimated value by billions of dollars. To avoid investigation by the SEC, there were speculations and rumors that Facebook, with 500 million users, might decide togo public. LinkedIn, on the other hand, with over 80 million active users, is hoping to attract investors before any such plans byFacebook take shape. The estimated valuation of the IPO is still not known.

ANALYSIS AND VIEWS

ANALYSIS AND VIEWS

FAO warns of 'food price shock' in 2011By Amulya Nagaraj, IBTimes

Food prices will continue to haunt the world in 2011, even as the U.N's Food and Agricultural Organization warned of 'food priceshock' on Wednesday.

FAO's benchmark index of farm commodity prices shot up in December, exceeding levels of the 2007-08 food crises. Commodityprices, including coffee, sugar, corn, meats and oilseeds rose 4.3 percent in December to 214.8, and shot up 25 percent for the year,after rising 20 percent in 2009. Much of the rise was spurred by growing demand as the economy continues to recover across theworld. Additionally, food shortages due to crop failures by a drought in Russia, floods in China last year, along with heavy floods inAustralia in January, send food grain pricing soaring.

Inflation in food grain prices is becoming a major concern in developing nations such as India and China, where the governments andpolicy makers are fighting what seems to be a losing war against food price inflation. However, Abdolerza Abbassian, a senioreconomist at the FAO in Rome, said that the increase was 'alarming' but the situation was not yet similar to the 2007-08 crisis, whenhigh food prices sparked riots in countries such as Haiti, Bangladesh and Egypt.

In 2010, rising bread prices had led to riots in Mozambique, though the FAO did not term the shortage a 'crisis.' Abbassian believesthat commodity prices will probably rise further. Even so, the report noted that the prices for rice, one of the two most importantcommodities, had remained mostly stable.

Wheat prices, in the meanwhile, rose last week on reports of heavy floods in Queensland, Australia that destroyed much of the crop just before the harvest, as well as delayed shipment of several other products including sugar and coal.

The weather conditions will probably keep food prices high over the next several months, the report said. Meanwhile, U.K. continuesto fear that rising poultry prices could hamper economic growth. Inflation was around 3.3 percent in November, mostly driven byhigher prices for food, particularly poultry.

Wheat and corn prices are also rising in the U.K. based on speculations that the U.S. could pass a tax credit for corn-based ethanolproduction, putting further pressure of poultry farmers.




TOP STORIES

Jobless claims up

According to the U.S. Labor Department, new claims for jobless benefits moved higher last week but four-week average fell to anearly 2-1/2-year low. Initial claims for state unemployment benefits increased 18,000 to a seasonally adjusted 409,000. The four-week moving average of unemployment claims fell 3,500 last week to 410,750, the lowest level since late July 2008. The number of

people still receiving benefits under regular state programs after an initial week of aid fell 47,000 to 4.10 million in the week endedDec. 25. The number of people on emergency unemployment benefits fell 133,625 to 3.58 million in the week ended Dec. 18, thelatest week for which data is available. A total of 8.77 million people were claiming unemployment benefits during that period underall programs.

Costco December sales up

Costco Wholesale Corp.'s sales at warehouse clubs open at least a year climbed 6 percent in December. The company said its salesat U.S. warehouse clubs open at least a year increased 4 percent for the five weeks ended January 2 and internationally the figureclimbed 12 percent. Costco said Thursday that its total sales increased 11 percent to $9.19 billion in December, helped by sales fromits Mexico joint venture but narrowly missed analysts’ expectations.

Moody's raises 2010 earnings outlook

Moody’s Corp., has raised its outlook on earnings and revenue. Moody’s expects full-year earnings per share to range from$2.08 to$2.14, compared with a previous forecast of $1.90 to$1.96. The credit rating company raised its guidance previously on October 28after reporting a 35percent jump in third-quarter earnings. Moody’s said 2010 revenue rose about 13 percent from 2009, comparedwith a previous forecast of “high-single to low-double-digit” percent growth.

Monsanto posts profit in Q1

Monsanto posted a profit in its first quarter as the early orders for spring planting of corn and soybean seeds were up. For the firstquarter that ended on Nov. 30, Monsanto reported earnings of $6 million, or a penny a share, compared with a year-earlier loss of $19 million, or 3 cents a share. The company said it benefited from a 9 percent reduction in expenses, due mainly to restructuringmoves in the prior year. Its net sales increased 8 percent to $1.8 billion. All major crop segments reported increases, led by corn seedand trait sales, which rose to $614million from $569 million. Although, soybean seed and trait sales totaled $226 million, up from$201million a year earlier.

LinkedIn plans to go public

LinkedIn is planning to go public in 2011, three sources familiar with the matter revealed to Reuters. the social networking site forprofessionals has selected its financial underwriters too. Morgan Stanley, Bank of America and JPMorgan are among the bookrunners.

Constellation posts strong profit

Constellation Brands Inc posted a strong quarterly profit and raised its full-year forecast as its net income rose to $139.3 million, or65 cents a share, in the third quarter, ended on November 30, from $44.1 million, or 20 cents a share, a year earlier. The US wine and

spirits maker said its net sales fell 2.2 per cent to $966.4 million, with the company citing the divestiture of its UK cider business.Although, total spirits sales rose eight per cent. Constellation said it now expects full-year earnings before one-time items in the rangeof $1.80 to $1.85 a share, up from its previous forecast of $1.63 to $1.78 a share. It also increased its annual target for free cash flow by$100 million to a range of $475 million to $525 million.

Seattle Genetics, Pfizer in drug technology deal

Pfizer will give $208 million to Seattle Genetics in a deal under which Pfizer will be able to utilize Seattle Genetics’s antibodytechnology to treat a single cancer. Now, Pfizer will be responsible for research, product development, manufacturing andcommercialization of products, Seattle said in a statement. The deal involves development of antibodies to a single cancer targetusing Seattle Genetics' antibody-drug conjugate (ADC) technology.

Goldman plans to end Facebook solicitation

According to the reports by the Wall Street Journal, interest in Facebook shares is so strong that Goldman Sachs Group Inc plans tostop soliciting interest from potential investors. The securities firm received orders of "several billion dollars," the paper reported onWednesday, citing people familiar with the situation. Meanwhile, Regulators are scrutinizing a $500million investment and acommitment to raise at least $1billion more in Facebook this week by Goldman Sachs and Digital Sky Technologies. The SEC isreviewing whether the number of shareholders in Facebook has exceeded a 499 limit in order to remain private.




This report is produced byInternational Business TimesFor questions or commentsreach us [email protected]

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© IBTimes 2010. All rights reserved.

ECONOMIC INDICATOR WATCH ON 06 JANUARY 2011

Non-farm Payrolls (Dec)

Forecast:175k, Prior: 39k

Manufacturing PayrollsForecast:-10k, prior: -13k

Private Payrolls

Forecast: 180k, Prior: 50k

Unemployment

Forecast: 9.7%, Prior: 9.8

Avg Hrly Earnings

Forecast: 0.2%, Prior: 0.0%

Avg Work Week

The Labor Department will release payroll data at 0830 EST.

U.S. nonfarm payrolls likely increased by 175,000 in December, according to poll, instead of the 140,000 expected before.

Economists kept their median U.S. unemployment rate forecast for December at 9.7 percent.

U.S. employers likely stepped up hiring in December after adding a meager 39,000 jobs in November. That would mark the third straight month of gains and probablyhold back the unemployment rate from rising further after November's surprise spike to 9.8 percent.

Consumer Credit (November)

Forecast:1 bln, Prior: 3.4 bln

TheFederal Reserve will release data on consumer credit at 1500 EST.

Total U.S. consumer credit rose $3.4 billion in October on rising student loans,which offset a decline in revolving credit, including credit cards.

EST/GMT Indicator Period Unit F’cast Prior

0940/1440 ECRI Inflation Dec -- -- 99.6

1030/1530 ECRI Weekly Index w/e 12/31 -- -- 128.8

Documents

Intelligent Investor US edition January 6 2011