• October sales dropped for big-name retailers Macy’s Inc. (M), Target Corp. (TGT) and Gap Inc. (GPS) a result of continuing job losses and widespread credit drought that took the spirit out of consumer spending. Same-store sales climbed 2.4% at Wal-Mart Stores Inc. (WMT), as tight-budget shoppers searched for cheaper prices, Bloomberg reported.

• A day after forecasting a 5% to 10% annual revenue drop, Cisco Systems Inc. (CSCO) said it will invest $100 million sales to small businesses, Reuters reported. Despite a weaker global economy, Cisco said it sees a window to expand sales of routers, switches and other equipment.

• Blackstone Group LP (BX) posted its biggest quarterly loss, shedding $502.5 million in the third quarter, or 44 cents a share, Bloomberg reported. Blackstone is the world’s largest private-equity firm who went public 18 months ago, right before the credit crisis depleted the value of its holdings and made acquiring financing more difficult.

• The International Energy Agency said that import prices for crude oil will “likely” average $100 a barrel from 2008 to 2015, MarketWatch reported. The opposite happened Thursday, as December crude futures fell $3.51 to $61.77 a barrel. The official IEA 2008 Energy Outlook will be released on Nov. 12.

• Mattel Inc. (MAT) said yesterday (Thursday) it is cutting about 1,000 jobs worldwide. The maker of Barbie and Fisher Price products said the positions equate to 3% of its global work force and will reduce its professional and management staff by 8%. Mattel last month reported fiscal third-quarter profit rose less than 1% to $238.1 million.

• DirecTV Group Inc. (DTV), the nation’s largest satellite TV operator, yesterday (Thursday) announced third-quarter earnings rose 14%. The company reported net income of $363 million, or 33 cents per share, up from $319 million, or 27 cents per share, a year ago. Revenue rose 15% to $4.98 billion. Revenue in Latin America jumped 49% to $658 million.

• Fidelity Investments said yesterday (Thursday) it is cutting nearly 1,300 jobs this month, with more layoffs coming early next year. The layoff notices, set to go out later this month, amount to about 2.9% of Fidelity’s total work force of 44,400. A second round of cuts is planned for the first three months of 2009.

• The number of U.S. workers filing new claims for jobless benefits fell by 4,000 last week to 481,000, the Labor Department reported yesterday (Thursday). The department revised up its estimate for jobless claims the week prior to 485,000. The four-week moving average of claims, a less volatile measure, was unchanged at 477,000 last week.

Source: Global Investing Roundups Friday, November 7th, 2008

Still, a few prominent players are set to report this week led by The Walt Disney Co. (DIS) (entertainment), Cisco Systems Inc. (CSCO) (tech), and American International Group Inc. (AIG) (financial services).

The Microsoft Corp. (MSFT)/Yahoo Inc. (YHOO) (and occasionally Google Inc. (GOOG)) soap opera will be worth watching – if only to make sure that Microsoft’s withdrawal isn’t a cover ploy for a hostile run at Yahoo [For a related news story in this issue of Money Morning that details Microsoft’s decision drop its pursuit of Yahoo, please click here].

A slow schedule on this week’s economic calendar will prompt a much greater focus on the dollar as investors speculate on whether the price run-up in commodities – and oil – is at, or near its end. Gold prices will help make that determination [For a related news analysis of gold prices in this issue of Money Morning, please click here].

U.S. Federal Reserve Chairman Ben S. Bernanke is scheduled to address the Columbia Business School on mortgage issues, though he’ll surely also be asked about central bank policies by a rapt audience whose members will hang on his every word. [Wasn’t he supposed to be on vacation?]

Last week’s earnings saw some energy companies that were benefiting from the most recent surge in energy prices. Though Exxon Mobil Corp. (XOM) only claimed the second-highest profit ever (it also holds the title for the single best quarter ever), the results nevertheless disappointed Wall Street, which was obviously pulling for a new record.

Likewise, Chevron Corp. (CVX) and BP PLC (BP) reported favorable periods. In the wake of the recent initial public offering (IPO) of credit-card processor Visa Inc. (V), rival MasterCard Inc. (MA) doubled its earnings last quarter as its international business helped overcome domestic weakness. Consumer-products giant The Procter & Gamble Co. (PG) also received good news from overseas with higher sales of consumer goods like diapers (Pampers), razors (Gillette), and shampoo (Head & Shoulders) from certain emerging markets.

Not all was rosy, however, as Sun Microsystems Inc. (JAVA) and food giants Kellogg Co. (K) and new Warren Buffet favorite Kraft Foods Inc. (KFT) each fell prey to the continued economic “challenges” in the U.S. market.

On the transactional front, investor Kirk Kerkorian will boost his stake in Ford Motor Co. (F), in turn a nice boost for the domestic auto industry. Time Warner Inc. (TWX) will be spinning off its 84% stake in its cable operation, Time Warner Cable Inc. (TWC).

And privately held M&M’s-maker Mars Inc. will buy Wm. Wrigley Jr. Co. (WWY) for over $20 billion in cash with financing help from famed sweet-tooth junkie, Warren Buffett.

Market Matters

Recession? What recession? For days, weeks, even months now, naysayers had been predicting the emergence of that dreaded “R” word with the release of 1st quarter GDP. Additionally, they claimed that the labor picture would continue to worsen, gas prices would hit $4 a gallon by summer, the dollar would be worth next to nothing, corporate earnings would signal more “gloom and doom,” and high-net-worth investors would be making dramatic allocation shifts from the “risky” equity markets.

Not so fast … the data released last week appeared to portray an economy closer to a rebound – far from the dire business climate the gloom-and-doomers had been predicting. A stronger dollar that may have placed a ceiling on oil (and other commodities) prices, and rich folks seemed to be looking for bargains in stocks.

Do we here at Money Morning buy into that totally bullish scenario?

Not necessarily.

But we do agree that the next few days, weeks, and months are going to get more interesting.

The latest Fidelity Investment’s Millionaire Outlook reported (mildly) bullish findings among its surveyed investors who have average investable assets topping $4 million. Instead of decreasing their equity allocations, 27% of these millionaires plan to add stock positions during the next 12 months. Only 7% expect to sell out of equities, which logically deduces 66% will be staying the course. Real estate seems to be another “favored” asset class, as 14% of respondents say they will increase exposure to related investments. That doesn’t quite sound like “gloom and doom” at once.

Oil flirted with the $120 a barrel level before sliding on a stronger dollar and news that the Fed may play the “wait and see” game (see below). Equity investors again took a “things could have been worse” approach and sought out value in the aftermath of last week’s economic and earnings reports. Some analysts believe that a stronger dollar will mean the end to the rally in commodities, and investors (hedge funds) will take some related profits and move back into stocks.

Despite all the recent negativity, the Dow Jones Industrial Average surged more than 500 points in April, and the Standard & Poor’s 500 Index and Nasdaq Composite Index both rose about 5% – hardly the recessionary results many had been anticipating.

At midday in New York, the blue-chip Dow Jones Industrial Average Index was down 25.57 points (-0.21%), to trade at 12,276.49. The tech-laden Nasdaq Composite Index dropped 6.65 points (-0.29%), to reach 2,269.17. And the broader Standard & Poor’s 500 Index decreased 3.31 points (-0.25%), to hit 1,325.01.

The basic materials sector (up 0.87%) and the conglomerates sector (up 0.61%) posted the biggest gains, while the capital goods sector (down 0.42%) and the technology sector (down 0.49%) posted the largest declines.

“The market is digesting the whole banking and financial issues, but the market has still to digest the recession story and how much of a damage to earnings we’ll get,” Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank AG (DB), told MarketWatch.

Tech shares such as Dow-component International Business Machines Corp. (IBM) and Cisco Systems Inc. (CSCO) were down. Intel Corp.’s (INTC) earnings release is slated for after the market the closes this evening.

Oil futures traded near $114 a barrel, boosting energy stocks such as Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX).

In overseas markets early today, Japan’s Nikkei 225 Index gained 0.6% with an increase of 73.07 points to close at 12,990.58. Hong Kong’s blue-chip Hang Seng Index inched up 0.4% with a 90.13-point gain, to close at 23,901.33.

European bourses were up, with the Paris-based CAC40, London’s FTSE 100, Madrid’s IBEX 35 and the Frankfurt-based DAX all posting slight gains.

At midday, the dollar had gained ground against the yen (up 0.486%) and the pound sterling (up 0.540%), but lost ground against the euro (down 0.051%).