No major disappointments in Europe regarding 4Q01 figures. (page 1 of 3)

US Stocks

The consensus is for no change on Wednesday's FOMC. The 4Q results will remain the dominant factor. The costs of lay-off are still showing up in the current earnings reports, the next 3 - 6 months will be crucial, if the unemployed fail to find employment within this period, consumption and bad debt will be negatively effected.

JP Morgan Chase (JPM $34.99) closed below $35.00 on last Friday due to its exposure to Kmart, price levels getting attractive. Our buy range is $32 to $35

Adding the following stock on our watch list:

CVS Corp. (CVS $28) is close of our buy level of $26, the company will be announcing 4Q on Feb-5-02 of $0.239, a 53% decline from a year ago.

For this week, earning publications will be issued for Park Place entertainment (PPE) Jan-29-02 -$0.049 & Aflac Inc. (AFL) Jan-31-02 $0.341

US Technology

On a week-on-week basis, the NASDAQ Composite Index rose 0.38% to 1937 after an encouraging speech by Fed Chief Alan Greenspan and some positive earnings surprises.

Last week, Amazon.com (AMZN US, $14.44, CSFB rating: Buy) and EMC Corp (EMC US, $19.90, CSFB rating: upgraded to Strong Buy) surprised investors with better than expected numbers and gave a relatively nice outlook for the second half of the year as their businesses appeared to be improving. Besides AMZN and EMC, other technology companies like Compaq Computers (CPQ US, $11.95, CSFB rating: Buy), Nokia Corp (NOK US, $23.12, CSFB rating: Strong Buy), Cisco Systems (CSCO US, $19.13, CSFB rating: Buy) have also reiterated the similar views, along with pick-ups in order inflows.

For the week ahead, we expect the positive sentiment (based on the improving company outlook) to be tested by the macro economical data that is to be released.

Potential downside risk to the Nasdaq Composite Index is initially expected to be at 1830 (or -5.5% away from present levels).

Looking further ahead, we expect technology issues to be relatively sober on the company news front as most technology companies have already completed their earnings reporting for the quarter. With this in mind, we will now focus on the stocks that have delivered and/or raised expectations, as well as targeting companies that posses good potentials to deliver above average growth rates. As an example, we are focusing on EMC, which gave an encouraging outlook with an upside bias. Though we are cautious in the short-term on the overall technology space, as well as the storage sector, EMC's positive guidance lends us temporary support to improve our views on the sector in the medium term.

We believe the storage area network (SAN) is one of the increasingly important parts of the corporate IT infrastructure. The rapidly growing data flow over the corporate networks, broadband access, intranets etc require not only a huge storage capacity, but also the management of this stored data. SAN is breaking up that bottleneck. And, companies like EMC, Brocade Communications (BRCD US, $35.57, CSFB rating: Hold), Qlogic Corp (QLGC US, $47.73), Veritas Software (VRTS US, $45.22, CSFB rating: Strong Buy) or Emulex Corp (EMLX US, $44.39, CSFB rating: Hold) are the major players within the segment. We believe that the SAN industry is big enough to accommodate more than one winner (out of those names) due to the fact that there are only few overlaps in the respective product portfolios. Nevertheless, while our views are improving in the SAN segment, we are still cautious on buying the stock at the current time.