It will be interesting to see how the FOMC approaches this meeting. The current Fed Funds target rate is 0-0.25%, which in and of itself is rather strange. It is a moving target, not a fixed rate. Who determines which rate is used? My guess is this meeting will be used to clarify what the rate is. The Fed will either officially reduce it to 0% in a continued effort to resuscitate the economy, or lock it in at 0.25%. This would at least leave the Fed with one perceived bullet in the gun.

The rest of the week has a full slate, which starts this morning with the December Existing Home Sales report. Expectations are for a slowdown of 40k units versus the previous month, and I think that is overly optimistic. The housing reports last week both fell flat on their face so I don’t think this report, or the New Home Sales report on Thursday, will come anywhere close to expectations.

Tuesday morning sees the release of the Consumer Confidence report for January, and this one is a tough read for me. It is expected to be the same as the December reading of 38. I am not sure which one will have a bigger impact on the reading: consumers getting excited about a change in leadership, or fearful of more job cuts. I guess it all depends on when the reading was taken.

Earnings:
Mon: AXP, AMGN, CAT, HAL, MCD, TXN
Tues: BMY, DD, GILD, JAVA, YHOO
Wed: PFE, SBUX, WFC
Thurs: MMM, AMZN, CELG, CL, LLY, JNPR,
Fri: CVX, XOM, HON, PG,

Source: Fed Counts Bullets, Earnings Dominate Calendar

This from Investment U:

As is usually the case, I’m sitting here writing from my comfortable home office in rural northeast Pennsylvania. I often marvel at the fact that even from my remote location, I’m able to do research and submit copy over a broadband connection.

Of course, 20 years ago we never would have thought of broadband penetration as a necessary component to our nation’s infrastructure. Back then most of us interacted with our televisions far more than with our computers.

Now, it’s hard for most of us to imagine life without a high-speed Internet connection, especially if you work from home as I do. For millions of Americans, broadband is the enabler for telecommuting, giving many more options when it comes to who to work for and where to work. Most homes are quiet environments with limited distractions, and generally result in higher productivity than their noisy company office counterparts.

It wasn’t too many years ago that I was saddled with dialup. Trying to be productive with a dialup connection is like trying to type with your nose. It can be done, but it takes a lot longer…

Broadband Penetration Across The United States

It is somewhat ironic that the most powerful nation in the world ranks twenty-fifth when it comes to broadband penetration. Indeed, only a little over 50% of American households have high-speed Internet connections. Compare that to South Korea, which has a broadband penetration of nearly 90%.

Before you fault the U.S. Congress, know that there are no less than three broadband expansion bills that were introduced in 2007. While there has been much debate (hot air) regarding a national broadband initiative, Congressional action hasn’t been forthcoming. What a surprise…

But if President-elect Obama has his way, every household could soon have the opportunity for a high-speed hookup. As he states on his website: “America should lead the world in broadband penetration and Internet access.” He thinks we should provide “true broadband to every community in America.”

If Congress and the new President are searching for a broadband penetration model to work from, they need look no further than one of America’s own states: Kentucky.

Broadband Penetrates Kentucky By 95%

Just a few years ago – 2004 to be exact – only 60% of Kentuckians had access to a broadband connection. Three years later 95% had access… an increase of 60%. But this didn’t just happen by accident.

“ConnectKentucky” is the bluegrass state’s arm of the larger, national, non-profit Connected Nation. Widely seen as the national model for digital inclusion, Connected Nation promotes higher broadband penetration and adoption.

Although it initially targeted four states – Kentucky, Ohio, Tennessee and West Virginia – the ultimate focus is all 50. Connected Nation’s research states that every 7% increase in broadband adoption could result in the following benefits:

• Job creation of around 2.4 million
• Annual health care cost savings of $692 million
• Annual fuel savings of $6.4 billion
• 3.2 billion fewer pounds of CO2 emissions per year
• 3.8 billion hours saved by accessing broadband from home
• $134 billion in direct economic impact

If Connected Nation’s numbers are anywhere close to those above, President-elect Obama might just be on to something. Of course, this gargantuan task translates into some real investment opportunities on this side of the fence.

7 Ways to Connect to Broadband Penetration Profits

One way to play the broadband penetration build-out is via specialty chipmakers that supply chips to the equipment companies. The following four companies all specialize in producing broadband chips:

• Broadcom (Nasdaq: BRCM)
• Conexant Systems (Nasdaq: CNXT)
• Texas Instruments (NYSE:TXN)
• Standard Microsystems (Nasdaq: SMSC)

Another way is via equipment makers like Cisco Systems (Nasdaq: CSCO) and Juniper Networks (Nasdaq: JNPR). Cisco and Juniper’s equipment – at the heart of all broadband networks around the world – controls many different kinds of Internet traffic and directs it to its final destination.

A third way would be via Corning (NYSE: GLW), one of the world’s largest manufacturers of optical fiber, optical cables and other hardware and equipment components for the telecommunications industry.

It’s clear that President-elect Obama has many challenges facing him once he sets up shop. But you can bet that this Blackberry-toting, tech-savvy guy wants to be connected everywhere he goes. And so do we.

Source: Broadband Penetration: 7 Ways to Profit From Our Biggest Infrastructure Need

Buy, Sell or Hold: Cisco Systems Inc.

By Horacio Marquez

During the Internet boom in the latter part of the 1990s, Cisco Systems Inc. (CSCO) was the king of the “must-have” stocks, with shares of the maker of telecommunications-networking gear soaring 400% from June 1998 to March 2000.

At Friday’s close of $23.61, Cisco’s shares are down 69% from their all-time high of $77.31 and 31% from their 52-week high of $34.24, as most investors realize this will never be the great growth stock that it was a decade ago.

But that doesn’t mean investors should write off Cisco. Quite the opposite, in fact.

When it comes to Internet-infrastructure gear, Cisco remains the proverbial “800-pound gorilla,” the market leader and dominant-industry player.

Cisco recently reported strong earnings, meeting market expectations. Company Chief Executive Officer John Chambers – who is well known for “telling it like it is” – issued some rather cautious comments in conjunction with an upcoming performance guidance that was otherwise fairly strong.

Since then, Chambers has become much more confident in Cisco’s ability to achieve his long-term annual profit growth target of 12% to 17%. As the U.S. economy reaccelerates, technology-related spending by U.S. corporations – which accounts for about half of the capital outlays in this country – should be very robust for three key reasons:

First and foremost is that Cisco’s business, which enables computer-network and telecommunications-system connectivity, is a major way companies can improve productivity.

And right now — despite the ongoing slowdown — US companies are awash with cash, which is typically deployed in the year’s second half.
Finally, the United States actually lags other countries in terms of broadband-network deployment, and needs to close the gap in order to enhance its competitive position in the world markets.

Not that Cisco is a one-trick pony in terms of focusing only on the US market. Indeed, Cisco is a global player and is enjoying very strong growth throughout the world’s emerging markets and in Asia, which includes recent major deals in China and in the left-for dead Japan. The company is even active in Europe, despite that region’s recent slowdown. Broadband is the name of the game and, as one analyst said, Cisco is the “Internet infrastructure king.”

From a financial standpoint, Cisco is virtually bulletproof. It has a $140 billion market cap and no debt. The company last year earned $7.33 billion on sales of $34.9 billion, dwarfing such rivals as Juniper Networks Inc. (JNPR), Nortel Networks Corp. (NT) and France’s Alcatel-Lucent (ADR: ALU).

This year, revenue will advance 13% and profits 10%. After that, investors expect profits to grow at a 15% annual clip — an alluringly brisk rate for a company as large as Cisco.

Investors don’t get many chances to invest in a terrific company at bargain prices. Earlier this month, while the NXTcomm 2008 global-telecom conference was under way in Las Vegas, Cisco’s shares dropped 6.5% – for no clear reason. Some analysts worry that telecom providers – the telephone and cable companies that, up to now, were the key growth drivers at Cisco and its sector compatriots – would go the way of the enterprise sector and cut back on their equipment outlays.

But those fears are overblown. Besides, rival Juniper Networks hasn’t taken market share from Cisco.

Action to Take: BUY. Cisco has once again protected its crown:

[Editor’s Note: Horacio Marquez was working as a vice president of the Merrill Lynch Emerging Markets Fixed Income Group in 1994 when he correctly predicted that both Argentina and Mexico were headed for currency crises - cementing his reputation as one of currency crises for both Argentina and Mexico. Now Marquez brings that expertise to you with the newly created “Shadow Stock Trader” specialized trading service. To find out how to subscribe, please click here.]

Source: Buy, Sell or Hold: Cisco Systems Inc.