Monday, April 25, 2011

The Baltic Dry Index And What It May Be Telling Us

Just as with the stock market, I've maintained that the advance seen since the early 2009 lows, in other asset classes, are also counter-trend moves. This view has not changed and based on my research I believe that once these counter-trend bounces have run their course, the longer-term secular bear will again reassert himself. In doing so, I look for all asset classes to decline in conjunction with the phase II decline of the ongoing secular bear market, which I believe is similar to the 1966 to 1974 secular bear market.

It is widely believed that the economy has bottomed and that the worst is behind us. It is also widely believed that the Fed has every thing under control and that "they" will not let bad things happen to us. Well, they were also in "control" in 2000 and I would hope that you all remember the nearly 40% decline into the 2002 low. They were also in "control" in 2007 as the 54% decline seen by the Industrials began and it was not until the market and the economy hit their natural cyclical bottoms that these declines were halted. Of course, once the lows were made the Fed was credited for having saved the world. Fact is, the Fed is not in control. Rather, they react to the natural cyclical forces of the market. In doing so, their reactions ultimately only serve to make matters worse. As an example, it should be obvious that the reactions surrounding the decline into the 2002 low and the efforts to stimulate the economy into 2007 created not only the housing crisis and the rising commodity prices that were seen into the 2008 top, but also the credit crisis and the collapse which all made the decline into 2009 worse than the initial problem they were trying to solve in the first place. People want to think that someone is in control and that "they" won't let this or that happen. Fact is, "they" are not really in control and all "they" do is react and in doing so, again, "they" only serve to make matters worse and I believe that this time is no different. As the markets moved down into the 2009 lows the Fed pulled out all the stops and have literally thrown the kitchen sink at keeping things afloat. But, fact is, the markets moved into their natural cyclical lows in 2009 and once these counter-trend bounces have run their course, we should see that once again, all "they" have done is to make matters worse.

Now I want to take a look at the Baltic Dry Index, which does not lend itself to speculation or manipulation as do stocks or commodities. This chart can be found below. In this chart I show data going back to 1985. I have identified the longer-term cycle that has historically averaged some 3 years from low to low. For a year now, the indications have been that this cycle has already peaked. For those who are not familiar with this index, I have copied the following documentation from

"The Baltic Dry Index is a daily average of prices to ship raw materials. It represents the cost paid by an end customer to have a shipping company transport raw materials across seas on the Baltic Exchange, the global marketplace for brokering shipping contracts. The index is quoted every working day at 1300 London time. The Baltic Exchange is similar to the New York Merc in that it is a medium for buyers and sellers of contracts and forward agreements (futures) for delivery of dry bulk cargo. The Baltic is owned and operated by the member buyers and sellers. The exchange maintains prices on several routes for different cargoes and then publishes its own index, the BDI, as a summary of the entire dry bulk shipping market. This index can be used as an overall economic indicator as it shows where end prices are heading for items that use the raw materials that are shipped in dry bulk.

The BDI is one of the purest leading indicators of economic activity. It measures the demand to move raw materials and precursors to production, as well as the supply of ships available to move this cargo. Consumer spending and other economic indicators are backward looking, meaning they examine what has already occurred. The BDI offers a real time glimpse at global raw material and infrastructure demand. Unlike stock and commodities markets, the Baltic Dry Index is totally devoid of speculative players. The trading is limited only to the member companies, and the only relevant parties securing contracts are those who have actual cargo to move and those who have the ships to move it."

It is my belief that the weakness seen in the Baltic Dry Index is confirming my conclusions that the rallies out of the 2009 lows are likely counter-trend bear market affairs and not a result of strong fundamental growth nor of a sustained "recovery." Through my research I have identified a very specific DNA Marker that has appeared at every single top in stock market history. I have also identified similar data for commodities and other indexes as well. Once the DNA Markers are in place, not only will the stock market be at great risk, but so will commodities and the economy as a whole. The key now will be the formation and confirmation of the DNA Markers to cap these rallies and this is all covered on an ongoing basis in the monthly research letters at Cycles New & Views. With this all said I want to warn you that just as the talking heads and politicians did not see or understand the setup that led to the declines into the 2000 top or the 2007 top, they do not see nor do they understand the current environment -- and even if they did, I can promise you that they would not tell you. For the record, I did have the advantage of my research and the DNA Markers to guide me during those periods. As a result, it did in fact allow me to identify not only the 2000 top in equities, months before it became obvious, but also the 2007 top in equities, the 2008 top in commodities and even the top in housing in 2005, all ahead of time.

I sincerely hope that people are listening now. There is another downturn ahead of us.

Staggering Security Holes In Power, Water, and Oil Grid Infrastructure; 40% of Utility Companies Expect to Be Attacked in the Next 12 Months

IT security firm Mcafee’s recent protection report In the Dark: Crucial Industries Confront Cyberattacks [PDF] highlights the ever growing threat of digital attacks on the nation’s core infrastructure systems.

At one time, proprietary and locally controlled computers were responsible for monitoring and maintaining everything from electricity distribution to water treatment. But, as companies look to reduce costs and simplify command and control operations, critical infrastructure systems are being connected directly to the internet, making it much easier and much more likely that they could be attacked by foreign governments, hackers, or criminals.

This year, in a sequel report, we focused on the critical civilian infrastructure that depends most heavily on industrial control systems. As with the first report, we used survey data, research, and interviews to obtain a detailed picture of cyber risks in these sectors. The sectors on which this report focuses — power, oil, gas, and water — may well be the first targets for a serious cyberattack.

What we found is that they are not ready. The professionals charged with protecting these systems report that the threat has accelerated — but the response has not. Cyberexploits and attacks are already widespread. Whether it is cybercriminals engaged in theft or extortion, or foreign governments preparing sophisticated exploits like Stuxnet, cyberattackers have targeted critical infrastructure.

We found accelerating threats and vulnerabilities. For the second year in a row, IT executives in the critical infrastructure sector told us that they perceive a real and growing cyberthreat. Denialof- service attacks on energy networks increased. Extortion attempts were also more frequent in the CIP sectors. And hostile government infiltration of their networks achieved staggering levels of success.

Despite these vulnerabilities, many power companies are doubling down on the danger; they are implementing “smart grid” technologies that give their IT systems more control over the delivery of power to individual customers — or even to individual appliances in customers’ homes. Without better security, this increased control can fall into the hands of criminals or “hacktivists,” giving them the ability to modify billing information and perhaps even control which customers or appliances get electricity. But security is not a priority for smart grid designers; according to Woolsey, who two years ago chaired a group that published a report for the Department of Defense on grid vulnerabilities. Ninety to ninety-five percent of the people working on the smart grid are not concerned about security and only see it as a last box they have to check.

One of the more startling results of our research is the discovery of the constant probing and assault faced by these crucial utility networks.Some electric companies report thousands of probes every month. Our survey data lend support to anecdotal reporting that militaries in several countries have done reconnaissance and planning for cyberattacks on other nations’ power grids, mapping the underlying network infrastructure and locating vulnerabilities for future attack.

More than 40 percent of the executives we interviewed expect a major cyberattack within 12 months — an attack, that is, that causes severe loss of services for at least 24 hours, a loss of life or personal injury, or the failure of a company.

Up until a couple years ago, the threat of total infrastructure failure existed only in the sphere of science fiction. Recently, however, the vulnerabilities of the physical hardware on power grids, water utility grids and other important infrastructure elements were made perfectly clear with the spread of the Stuxnet virus, which wrecked havoc on Iranian nuclear facilities. The virus, often referred to as malware, literally destroyed the physical centrifuges responsible for the enrichment of uranium by forcing them to spin out of control. All the while monitoring stations reported perfectly normal conditions.

The scary thing? Stuxnet isn’t isolated to just Iranian nuclear facilities:

Our data indicates that the Stuxnet virus did indeed have a global reach. Around 40 percent of respondents found Stuxnet on their computer systems. Stuxnet was more likely to appear in the electricity sector, where 46 percent of respondents found the malware.

Stuxnet was an extraordinary advance in sophistication over the kinds of malware used by the criminal underground. The Belarusian security firm that initially identified Stuxnet at first believed it to be a backdoor for hackers. But closer inspection revealed the complex nature of the virus. It features multiple exploits that were previously unknown, has Microsoft Windows driver modules that had been signed using genuine cryptographic certificates stolen from respectable companies, contains about 4,000 functions, and uses advanced anti-analysis techniques to render reverse engineering difficult. It is almost certainly the work of a government, not a criminal gang.

In fact, Stuxnet was the work of a government – reportedly two of them. It is believed that intelligence agencies within the United States and Israel are responsible for its conception.

What this shows is that advanced computer scripts and malware target not just personal computers, but highly advanced, purportedly secure critical systems. Those who would attack the nation’s infrastructure could bring these systems down for not just 24 hours using traditional denial-of-service attacks, but potentially weeks and months by executing programs that directly attack the grid’s hardware .

A cyberattack on the US grid would be devastating.

Imagine, for a moment, what such an attack on our water utility plants might look like. While water safety conditions monitored by engineers on remote computer systems attached to the internet might look perfectly normal on the surface, a malicious virus may be at work behind the scenes, controlling the delivery (or lack thereof) of water treatment chemicals into an entire city or region’s water supply.

A similar attack could occur on the electrical grid, sending surges to vital transformers across the nation. Because many of our systems are decades’ old, they could be overwhelmed, much like Iran’s Siemens-built centrifuges. In such a scenario, because of the lack of availability of the damaged equipment and the sheer size of such a widespread attack, it could take weeks or months to repair.

There are roughly 150 oil refineries in the United States, and most of them are likely running on similar hardware, from well known industry manufacturers. Is it that much of a stretch to consider the possibility that a coordinated attack on these systems could send pressure and a host of other control mechanisms in our refineries out of control – all the while engineers monitoring the systems notice nothing out of the ordinary? Such an attack, even if partially successful, could cripple the entire country.

As infrastructure is further centralized, our exposure to potentially catastrophic events continues to increase. Not only is much of our nation’s infrastructure hardware outdated, but the security on newly integrated 21st century smart-grids is lax at best.

We’ve seen coordinated attacks on our stock trading systems. We’ve seen that high security nuclear control systems can be compromised. We know that governments, cyber criminal extortion gangs, hackers and shadow intelligence agencies are actively working on viruses, malware and gaming scenarios designed specifically to crush utility infrastructures on a national scale.

The threat is real. It is present. If such an attack were ever executed there will be nothing emergency responders could do, especially in the case of a widespread, coordinated onslaught of the grid.

Author: Mac Slavo

Date: April 22nd, 2011
Visit the Author's Website:

China Proposes To Cut Two Thirds Of Its $3 Trillion In USD Holdings

All those who were hoping global stock markets would surge tomorrow based on a ridiculous rumor that China would revalue the CNY by 10% will have to wait. Instead, China has decided to serve the world another surprise. Following last week's announcement by PBoC Governor Zhou (Where's Waldo) Xiaochuan that the country's excessive stockpile of USD reserves has to be urgently diversified, today we get a sense of just how big the upcoming Chinese defection from the "buy US debt" Nash equilibrium will be. Not surprisingly, China appears to be getting ready to cut its USD reserves by roughly the amount of dollars that was recently printed by the Fed, or $2 trilion or so. And to think that this comes just as news that the Japanese pension fund will soon be dumping who knows what. So, once again, how about that "end of QE" again?

From Xinhua:

China's foreign exchange reserves increased by 197.4 billion U.S. dollars in the first three months of this year to 3.04 trillion U.S. dollars by the end of March.

Xia Bin, a member of the monetary policy committee of the central bank, said on Tuesday that 1 trillion U.S. dollars would be sufficient. He added that China should invest its foreign exchange reserves more strategically, using them to acquire resources and technology needed for the real economy.

And as if the public sector making it all too clear what is about to happen was not enough, here is the private one as well:

China should reduce its excessive foreign exchange reserves and further diversify its holdings, Tang Shuangning, chairman of China Everbright Group, said on Saturday.

The amount of foreign exchange reserves should be restricted to between 800 billion to 1.3 trillion U.S. dollars, Tang told a forum in Beijing, saying that the current reserve amount is too high.

Tang's remarks echoed the stance of Zhou Xiaochuan, governor of China's central bank, who said on Monday that China's foreign exchange reserves "exceed our reasonable requirement" and that the government should upgrade and diversify its foreign exchange management using the excessive reserves.

Tang also said that China should further diversify its foreign exchange holdings. He suggested five channels for using the reserves, including replenishing state-owned capital in key sectors and enterprises, purchasing strategic resources, expanding overseas investment, issuing foreign bonds and improving national welfare in areas like education and health.

However, these strategies can only treat the symptoms but not the root cause, he said, noting that the key is to reform the mechanism of how the reserves are generated and managed.

The last sentence says it all. While China is certainly tired of recycling US Dollars, it still has no viable alternative, especially as long as its own currency is relegated to the C-grade of not even SDR-backing currencies. But that will all change very soon. Once the push for broad Chinese currency acceptance is in play, the CNY and the USD will be unpegged, promptly followed by China dumping the bulk of its USD exposure, and also sending the world a message that US debt is no longer a viable investment opportunity. In fact, we are confident that the reval is a likely a key preceding step to any strategic decision vis-a-vis US FX exposure (read bond purchasing/selling intentions). As such, all those Americans pushing China to revalue, may want to consider that such an action could well guarantee hyperinflation, once the Fed is stuck as being the only buyer of US debt.

Is gold rising because America is broke?

Gold prices shot up to a new record of $1,512.50 an ounce in New York late on Friday, posting a record weekly gain and maintaining a six-week winning streak.

While a lot of gold investors are laughing all the way to bank the world over, gold's super cycle rally could have ominous meanings for the Us economy.

Analysts have pointed out that gold's advance into what is termed as a super cycle does not bode well for the US economy.

A sustained gold and oil boom indicates that the dollar is slipping into grave danger and the economy closer to collapse, according to Daily Markets analyst Michael Snyder.

"... when these commodities go up in price it is a sign that the U.S. dollar is dying and that our country is getting closer to economic collapse," Snyder wrote recently.

He explained that when the gold and silver prices soar, it indicates that investors everywhere in the world are losing trust in the dollar and the U.S. government treasuries. And they seek out something they can trust more.

"The U.S. has been running trillion dollar deficits for several years now, and this has created a lot of new money." And he says the rest of the world is now seriously doubting the sustainability of U.S. government debt.

The factors that fuelled this unseemly gold rally are numerous, but the most prominent ones are panic over the state of fiscal stability in the U.S, a weak dollar, spiralling crisis in the Middle Eastern oil hub of and sustained uncertainty over European economic health, coupled with new sources of instability in Japan.

And among these it's dollar that is hurting the most. It’s no coincidence that dollar had fallen back to near-three-year lows against major currencies when precious commodity prices shot through the roof.

And the prospects for the dollar are bleaker in the months to come. Interest rates are at a record low and the Fed has still not looked like they are going to rise any time soon. Besides, the federal budget deficit puts added pressure on dollar, precipitating its possible fall towards the 2008 lows.

This is why analysts think the gold super rally is likely sustain well into the coming years. Analysts quoted by Reuters said they thought gold prices could touch $1,700 an ounce in 2015.

What the gold rally means to the dollar and the American people is obvious from the rush pawn shops see across the United States. "For many Americans struggling to make ends meet, the gold boom has meant a heart-breaking trip to the pawn shop, selling off jewellery to pay the bills," UK's Daily Mail wrote in an article.

"A lot of people don't want to sell their jewellery, but they have to ... It's their monthly mortgage payment or whatever the case is ... We hear a lot of sad stories," says Steven Bumb, part owner of Santa Cruz Pawn, according to the report. People also flock to gold parties where they can discreetly sell gold to meet their cash requirements.

High unemployment levels also drive people to the thriving wee -buy-your-gold markets across the country.

The commodity rally is not just limited to gold. Silver outperformed gold again in the last week, recording an 8.4 percent weekly gain as against gold's 1.5 percent gain. Silver prices hit another all-time peak of $46.69 an ounce.

The Standard Chartered bank report said gold prices could reach $2100 by 2014 per ounce and that as high a price as $5000 per ounce by the end of the decade is possible. The bank said gold prices are yet to hit the super cycle as demand from the emerging economies like China and India will scale to peak levels later in the current decade.

Fed branch in San Antonio cutting most staff

The Federal Reserve plans to eliminate most of its workforce at its San Antonio branch by the end of this year as part of a previously announced restructuring.

The branch will shed 71 of 84 positions as the result of it outsourcing its cash department
{read NEW central usa Republic Treasury Banking 'changes'} to an armored carrier.

The cuts will start June 24.

There are no plans to close the branch.

All departments of the branch are impacted by the reductions except for public affairs and research, the latter headed by senior economist Keith Phillips. Blake Hastings, vice president in charge of the branch, will remain. Assistant Vice President Karen Diaz is retiring, said Alexander Johnson, a spokesman for the Federal Reserve Bank of Dallas.

Hastings wasn't available for comment Monday.

The branch has served as the Fed's cash distribution and processing facility for the Central and South Texas market. It will become a cash depot, with a private company deploying currency to the financial institutions served by the branch. The decision to transfer the work was made last year after a yearlong study.

Some of the workers issued pink slips will retire, while others will be able to transfer to other Fed offices, Johnson said. Severance packages will be offered to those who don't transfer.

In addition to Diaz, the affected employees are 28 law enforcement personnel, 26 workers in cash services, 14 in building and management services, and two human resources personnel, according to a letter Hastings sent to the Texas Workforce Commission last week.

The Federal Reserve Bank of Dallas opened the San Antonio branch in 1927. It has operated at 126 E. Nueva St. since 1956, when it employed 145 people, according to its website.

Johnson said the Fed could not discuss its plans for the 90,000-square-foot building.

The State Bar of Texas has leased 6,075 square feet in the branch since 2005, Bar spokeswoman Kim Davey said. It's a regional office for its chief disciplinary counsel. Seventeen people work in the office.

That Home You Bought In 1979 Has Lost 8.5% Of Its Inflation-Adjusted Value

Home values have already collapsed to 2003 levels.

But an even more grim picture comes when you adjust for inflation. That home you bought in 1979 has lost 8.5% of its inflation-adjusted value.

From Chart Of The Day:

For some perspective on the all-important US real estate market, today’s chart illustrates the inflation-adjusted median price of a single-family home in the United States over the past 41 years. Not only did housing prices increase at a rapid rate from 1991 to 2005, the rate at which housing prices increased — increased. That brings us to today’s chart which illustrates how the inflation-adjusted median home price is currently 38% off its 2005 peak. That’s a $100,000 drop. In fact, a home buyer who bought the median priced single-family home at the 1979 peak has actually seen that home lose value (8.5% loss). Not an impressive performance considering that more than three decades have passed. It is worth noting that the median priced home is currently in the bottom half of a price range that existed from the late 1970s into the mid-1990s.


Jumbo Mortgage Loan Squeeze: Will it Affect Home Prices?

Starting October 1, the maximum loan amount from Fannie Mae and Freddie Mac will drop from $729,750 to $625,500.

The correct amount is zero because government should not be in the mortgage business at all. However, this is a small step in the right direction and it will increase costs of mortgages that exceed the maximum.

Reuters reports Home buyers try to beat "jumbo" loans squeeze

It was only in recent years that the loan limits went so high. Mortgages that are too big to be sold to Fannie and Freddie are termed jumbo loans and are backed privately. Until 2008, all home loans over $418,000 were considered jumbo loans. In that year, a stimulus-focused Congress twice raised the limit on loans the government would back in high cost areas, first to $625,500 permanently, and then to $729,750, temporarily.

Since then, Fannie and Freddie have backed an increasing share of that market. In 2010, so-called "jumbo conforming" loans, those over $417,000 and government-backed, made up 6.73 percent of loan originations, according to CoreLogic.

That top temporary limit was extended twice, but is expected to expire at the end of September.

Private lenders are preparing to step in, according to Guy Cecala of Inside Mortgage Finance, a research firm. In the last quarter of 2010, private lenders originated more loans over $417,000 (the traditional jumbo market) than did government agencies, he said.

Investors like the fact that jumbo loans tend to be safer and more profitable than smaller ones. The privately-backed mortgages require bigger downpayments (currently about 30 percent of the home's value, instead of the 20 percent more typical in less expensive loans), which adds security.

Also adding to their allure, the loans carry higher interest payments; the spread between the so-called conforming loans backed by Freddie and Fannie and jumbo loans is running about 0.5 percentage points higher, said Cecala. Furthermore, a higher proportion of jumbo loans are made on a variable rate basis, which is less of burden for holders, Cecala said.
The article tells a sop story of a couple rushing to buy now ahead of the increase because the two bedroom house they live in will soon not be big enough because a child is on the way. The couple only wants to put down 10%.

For every person rushing to buy a bigger house now, there will be others who will simply be priced out. More importantly, if there is a "rush" of any nature between now and October, there will be a vacuum of buyers later, with falling prices as a direct consequence.

Regardless of which way it plays out between now and September, it will be increasingly more expensive and require a bigger down payment to get a jumbo-sized loan starting in October. This will have a dampening effect on home prices.

Mike "Mish" Shedlock

Investors gear up for 'heart of earnings season'

The first wave of quarterly financial results has come and gone, and investors have liked what they've seen. As a bigger batch of companies open their books next week, corporate earnings will continue to remain in focus.

The week ahead includes reports from nine Dow components, including Exxon Mobil (XOM, Fortune 500), 3M (MMM, Fortune 500), Procter & Gamble (PG, Fortune 500) and Microsoft (MSFT, Fortune 500), and 180 members of the S&P 500, such as Coach (COH), Netflix (NFLX), and Starbucks (SBUX, Fortune 500).

"Corporate results are driving the market right now," said Timothy Ghriskey, chief investment officer at Solaris Asset Management. "Now we're getting into the heart of earnings season, so they'll remain at the forefront of investors' minds."

Of the 137 S&P 500 companies that have already posted results, about 75% have beat earnings and sales estimates, according to Thomson Reuters. Profits have climbed by more than 18%, while revenues have increased 2% from a year ago.

Last week's better than-expected results left investors more confident and spurred an advance in the stock market. The Dow's (INDU) 1% uptick helped the blue-chip index end the week at a nearly 3-year high. The S&P 500 (SPX) also rose 1%, while the Nasdaq (COMP) finished up 2%.

"We've had several days of strong earnings, strong revenues, and results above expectations," Ghriskey said. "Overall, we should see more of the same."

On the economic front, investors will be looking for updates on the housing market, consumer sentiment and spending, and an initial reading on first-quarter economic growth.

They will also tune in for Federal Reserve Chairman Ben Bernanke's inaugural press conference Wednesday afternoon, after the central bank's two-day meeting on the nation's economic outlook and monetary policy ends.

On the docket

Monday: The new home sales index for March from the Census Bureau is due at 10 a.m. ET. The index is expected to have risen to a seasonally adjusted annual rate of 280,000 units, up from 250,000 the previous month.

After the closing bell, Netflix will announce first-quarter financial results. Analysts polled by Thomson Reuters expect the online movie rental company's profit to surge almost 80%, as sales climb 43% from a year earlier.

Tuesday: Before the opening bell, 3M (MMM, Fortune 500), Coca-Cola (KO, Fortune 500), Coach, Delta (DAL, Fortune 500), Ford (F, Fortune 500), and UPS (UPS, Fortune 500) will post financial results, among others.

The Case-Shiller 20-city home price index is expected to have decreased 3.2% in February after dipping 3.1% in January.

After the start of trading, the Conference Board releases its Consumer Confidence index for April. Economists forecast it to have edged up to 64.4, from 63.4 in March.

Seattle-based (AMZN, Fortune 500) is on tap to announce quarterly earnings Tuesday afternoon.

Wednesday: The earnings onslaught continues, with Boeing (BA,Fortune 500) and BP (BP) expected to announce results.

In the afternoon, investors will briefly turn their attention to the economy, as tight-lipped Bernanke holds his first of what will become four regular press conferences a year. The speech and question-and-answer session will follow the Fed's two-day meeting on monetary policy.

Reports on durable orders are also out on Wednesday.

After the bell, earnings from Aflac (AFL, Fortune 500), Baidu (BIDU), and Starbucks will take the stage.

Thursday: Before the start of trading, Exxon Mobil (XOM, Fortune 500) is expected to deliver a $10 billion profit, up 60% from a year ago, on revenue of $115 million.

PepsiCo (PEP, Fortune 500), Procter & Gamble and Sprint Nextel (S,Fortune 500) will reveal their quarterly earnings in the morning too.

Also on tap: The Department of Commerce will release its initial reading on economic growth during the first three months of the year. Economists expect the economy expanded at a rate of 1.7% during the first quarter.

Weekly initial claims data is due as well. Claims are expected to fall back to 390,000 in the latest week, after hovering above the key 400,000 level for two consecutive weeks.

Later in the morning, a report from the National Association of Realtors is expected to show a 1.5% rise in pending home sales for the month of March.

After the closing bell, analysts expect Microsoft will post a quarterly profit of $4.8 billion, up 20% from a year ago, on sales of $16.2 billion.

Friday: Dow components Caterpillar (CAT, Fortune 500), Chevron (CVX,Fortune 500) and Merck (MRK, Fortune 500) are all on tap to delivery quarterly results prior to Friday's opening bell.