7 Gut checks

Need to Know AUGUST 05, 2013 7 gut checks before the stock market opens By Barbara Kollmeyer   Reuters Good morning. It's looking like one of those classic summer trading days ahead, with stock futures drifting gently lower. But as far as the rally's concerned, with more record closes notched Friday , the numbers show investors have been diving into stocks.  They poured a record $40.3 billion into U.S. equity mutual funds and ETFs in July, according to fresh TrimTabs data . Bonds lost $21.1 billion in after a record $69.1 billion was pulled out in June. TrimTabs's David Santschi says the past two months have seen the most volatile flows they've ever measured. That data also showed, though, that cash remains king. Maybe retail investors are snapping up stocks, but value managers aren't finding enough cheap stocks worth bothering over and are sticking to cash, says Reformed Broker's Josh Brown . "The S&P 500 currently sells for a fair-market multiple historically and a rich multiple considering what the growth picture currently looks like," says Brown. The current state of valuation: "We're not cheap here and would benefit greatly from either a real correction in stock prices or a revenue growth spurt to justify current valuations." But neither of those appear to be on the horizon. BTIG's Dan Greenhaus notes that while 75% of companies beat EPS estimates so far this Q2 earnings season, 55% beat on sales, but revenue is up just 2.4% over the year -- and 1.8% excluding financials. And in Q1, sales growth was less than 1%. Of course, Greenhaus says, as many others have, that no one is really questioning this rally much. "We imagine our clients will begin wondering whether retail is again coming into the market at just the wrong time." The S&P 500 marked another all-time closing high on Friday.  So are we bubble or bargain territory ? Seeking Alpha explores. Read more about the lopsided stock rally  and also MarketWatch's latest Trading Strategies on how to make money off money . And also, even if investors are headed out for vacation, those sticking around should know that August can be a tricky month . Key market gauges: September crude  up has turned south, looking weak along with the dollar. The New Zealand dollar dropped nearly 2% at one point after China and Russia reportedly banned some milk products from Fonterra Cooperative Group  . The Nikkei fell  1.4% and Europe stocks inched up after some decent euro-zone PMI services data. Stock futures were languishing. The economy: There's really just one data point for Monday's calendar, in what'll be a fairly quiet week overall, with the ISM nonmanufacturing index for July skedded later. However, where data is lacking, Fed speakers will be in plentiful supply this week and closely watched for more taper talk. Dallas Fed President Richard Fisher kicks things off Monday. Away from the U.S., HSBC's gauge of China's service sector showed no change from last month at 51.3, which still indicates growth. The same survey from the government showed the gauge moving to 54.1 from 53.9. Euro-zone business activity also showed more green shoots. Earnings: Before the market open, Tyson Foods  is due to report, with consensus calling for earnings of 60 cents. The buzz: Apple shares are up nearly 1% in premarket. On Saturday, the Obama administration vetoed a U.S. trade body's ban on the sale of some iPhones and iPads, saying it was giving rival Samsung "undue leverage." More than $1 billion was wiped off Samsung's market value early Monday , while some say Apple is going to get a sales boost out of this. Berkshire Hathaway   saw a 46% jump in profit, reporting late Friday. Berkshire also booked derivatives gains of $322 million, versus losses of $693 million a year ago. HSBC   is off over 5% in premarket after net profit missed forecasts . Green Mountain Coffee Roasters . Should investors be worried about challengers to the coffee roaster? Barron's says maybe so. No signs of progress in the cable dispute between CBS and Time Warner , says The Wall Street Journal. The chart of the day: Go ask August. CXO Advisory Group has the month all laid out in this chart, which shows the average month-to-date percentage change in the S&P 500  by trading day during August from 1990 through 2012. What the chart shows is that the S&P 500 tends to be a bit weak in August, with that sluggishness largely not recovered by the second half of the month. While results are only "mildly suggestive," CXO says, it notes that for 1990-2012, 13 Augusts have been winners and 10 have been losers. CXO Advisory Group The call of the day: Donald Yacktman, founder of Yacktman Asset Management has been going on the offensive, and Oracle  is one of his picks, notes Stockpucker . Other reasons to like Oracle: the company's expected to see revenue up 6% for both 2013 and 2014, it has a dominant position in the enterprise software market, an ironclad balance sheet and has been returning cash to shareholders. And shares have been languishing -- off just over 2% year-to-date. Random reads: A far cry from that messy New York mayoral race. A toddler mayor gets re-elected , and he's much wiser at 4. Android's answer to Apple's Find my iPhone is almost here . Speaking of smartphones, security experts say a app-controlled luxury toilet is vulnerable to attack . U.S. embassy closures have been extended into the end of the week amid that terror threat . Potentially threatening the euro-crisis lull , Berlusconi, aka "Il Cavaliere," is apparently off to the clinker. Here's a look at his greatest moments . Even a vegetarian might be tempted by the $332,000 burger . Here's what stuffing a Russian flag in your pants will get you --an early ride home . And A-Rod is expected to get a 214-game suspension on Monday afternoon, but fear not, he's expected to appeal and play on , at least for now. Need to Know starts early and is updated as needed until the opening bell, but sign up here  to get it delivered once to your e-mail box. Be sure to check the Need to Know item. The e-mailed version will be sent out at approximately 8:45 a.m. Eastern. Follow @bkollmeyer  on Twitter. Get the latest news on our mobile site: http://www.marketwatch.com/m MarketWatch has sent you this newsletter because you signed up to receive it. To ensure you receive this newsletter in the future, please add marketwatchmail.com to your list of approved senders. Sent to: alanrussell@princetoncap.com Unsubscribe | Subscribe Copyright 2013 MarketWatch, Inc. All rights reserved. MarketWatch, the MarketWatch logo, and BigCharts are registered trademarks of MarketWatch, Inc. By using this site, you agree to the Terms of Service and Privacy Policy (updated 6/26/07). 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