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Preview | WEEK OF APRIL 15-21

Preview

April 15, 2002|Reuters, Associated Press

Flood of Earnings Reports Is Expected

A tidal wave of earnings reports will flow this week from household names and some of the bluest of the blue chips: fast-food chain McDonald's Corp., financial services bellwether Merrill Lynch & Co., auto makers General Motors Corp. and Ford Motor Co., and computer sector giants IBM Corp., Intel Corp. and Microsoft Corp. (See accompanying chart).

Investors also will sift through a slew of reports on the U.S. economy. These include data on business inventories, consumer prices, housing starts, industrial production, international trade and weekly unemployment statistics, as well as the leading economic indicators, a key forecasting gauge.

"We will continue to get data pointing to economic recovery. We need corporate [earnings] numbers to show the same," said Michael Kayes, chief investment officer of Eastover Capital Management, which oversees $300 million.

This week's economic reports:

* Today, the National Assn. of Home Builders is scheduled to issue its index for April, which measures the sentiments of home builders about home sales and home buyer traffic.

* Tuesday, the Commerce Department reports on housing starts for March, which are expected to slow to an annualized figure of 1.686 million from 1.769 million in February.

Also, industrial production numbers for March, which are expected to support recent data suggesting a mild rebound in that key sector, will be released.

Also, the Labor Department will report the consumer price index for March, expected to be up 0.5%, after February's gain of 0.2%, according to economists polled by Reuters. Excluding volatile food and energy prices, the March core CPI is seen up 0.2% after rising 0.3% in February.

* Wednesday, the Commerce Department discloses the U.S. trade deficit in goods and services for February. It probably widened to $29 billion from $28.5 billion in January.

Also, Federal Reserve Chairman Alan Greenspan will testify on the U.S. economy and monetary policy to the Joint Economic Committee of Congress.

* Thursday, Wall Street will watch for the March index of leading economic indicators, which economists expect to rise 0.3% after a flat February reading.

Reuters

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State Lawmakers to Urge Restrictions for Auditors

Corporations would be required to change auditing firms every four years under legislation expected to be proposed today by California lawmakers in response to the Enron and Andersen accounting scandals.

The measures also would restrict consulting work by auditing firms. Critics say the firms' dual role as consultants can create conflicts of interest for auditors, which are supposed to maintain their objectivity.

Lawmakers touted their bills as consumer protection legislation needed to restore investor confidence. They said California investors need better information and protections to make wise decisions.

Most of the proposed bills are unnecessary or should be handled nationally instead of creating piecemeal regulations in 50 states, said Mike Ueltzen, past president of the California Society of Certified Public Accountants.

Assemblyman Lou Correa (D-Anaheim) said that California can be a national leader. It's not uncommon for businesses to face both state and federal rules, he said.

Other proposed legislation would require accountants to keep audit working papers for seven years, and bar accountants from taking jobs with former clients for two years after leaving their accounting firms. The restrictions would apply only to auditors registered in California.

Associated Press

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McDonald's to Report on Social Responsibility

Stung by unfavorable attention it has attracted as a symbol of rampant globalization, McDonald's Corp. is touting its record of promoting animal welfare, protecting tropical rain forests and hiring disadvantaged workers.

Today, the world's largest fast-food chain plans to issue a 45-page document on a broad range of issues, including relationships with employees, suppliers, the environment and local communities in the 121 countries where it operates.

The report provides a detailed look at McDonald's 50-year history of social responsibility, with topics ranging from fair wage practices to job training and education, transportation and community outreach such as its Ronald McDonald House charities.

"We understand that people have questions about the brand, and we have an obligation to talk about the business in a much broader way than just how much money we're making," Chief Executive Jack Greenberg told Reuters. "I think we recognize this obligation of being more open and more transparent about issues that are of increasing importance."

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