Stevens Indictment Helps Democrats

With the recent indictment of Senator Ted Stevens of Alaska on charges stemming from a bribery investigation, makes it more certain that the Democrats will pick up more seats in the Senate. At the very least they should pick up at least five to eight seats and there is the possibility that they could pick up enough seats to stop filibusters. The Republicans are in danger of loosing seats in: Alaska, Colorado, New Mexico, New Hampshire, Maine, Mississippi, North Carolina, Oregon, Minnesota, Kentucky, and Texas.

Bottom Line: The Democrats are on a roll right now. The Stevens indictment only makes the Republicans look corrupt and out of touch with the people.

Future Oil Production Will Rise

Demand for oil is softening. There are no shortages. Everywhere individuals and businesses are adopting permanent energy saving techniques. The warnings about running out of oil are incorrect. Even with older wells in the U.S. and Europe slowing down, new innovations and huge reserves off the Coast of Brazil could potentially put 50 billion barrels on the market. Other likely large fields include: the Arctic, the U.S. Coast, and the West African Coast. Supplies will outpace demand despite the continuing rapid growth in the emerging countries.

Bottom Line: The doom and gloom forecast made a decade ago underestimated the impact that conservation, alternative energy and the the new fields will have. Look for oil production to rise 11%

Upcoming Events and Economic Numbers

Monday August 4

Personal Income: consensus: -.1% prior: 1.9%

Personal Spending: consensus: .5% prior: .8%

Factory Orders: consensus: .7% prior: .6%

Tuesday August 5

ISM Services: consensus: 48.0 prior: 48.2

FOMC Meeting and Statement

Wednesday August 6

Oil Inventories: prior: -81K

Thursday August 7

Jobless Claims: prior: 448K

Pending Home Sales: consensus: -1.3% prior: -4.7%

Friday August 8

Productivity: consensus: 2.6%

Upcoming Earnings

Monday August 4

Fannie Mae (FNM): Before the open: estimate: -.69

Tuesday August 5

Cisco Systems (CSCO): After the close: estimate: .39

Wednesday August 6

Verisign (VRSN): After the close: estimate: .23

Stock Buys

American Express (AXP). We like this as a contrarian and valuation play. It has a forward PE of 11.96. Analysts have become negative on the stock with 13 rating it a sell or hold. While six have it rated as a buy or strong buy. AXP has a history of paying and raising its dividend going back to 1977. At current oversold levels a move to 45.00 is possible.