Pigs at the Minnesota state fair have tested positive for the H1N1 "swine" flu virus in preliminary tests.

Confirmation tests are pending, but this could be bad news and cause panic within the pork industry. Pork belly futures and companies like Smithfield Foods (NYSE: SFD), Tyson (NYSE: TSN), and Hormel (NYSE: HRL) are a few that could be affected.

Here are some highlights from last week's earnings coverage from BloggingStocks:

• Best Buy Inc. (NYSE: BBY) was downgraded by one analyst ahead of next week's Q2 earnings report.
• Campbell Soup Co. (NYSE: CPB) better-than-expected Q4 and full-year profit failed to impact the share price.
• FedEx Corp. (NYSE: FDX) boosted its Q1 earnings guidance ahead of next week's quarterly report.
• JoS. A. Bank Clothiers Inc. (NASDAQ: JOSB) saw its Q2 earnings jump higher than expected.
• Korn/Ferry International (NYSE: KFY) swung to a Q1 net loss as revenue plunged despite cost cuts.
• lululemon athletica inc. (NASDAQ: LULU) strong Q2 numbers topped estimates and drove shares higher.

Pork producer Smithfield Foods (NYSE: SFD) confessed Tuesday morning to a first-quarter loss of $107.7 million, or 75 cents per share, notably worse than its year-ago loss of just $13.2 million, or 10 cents per share. Excluding one-time charges, SFD would have swallowed a loss of 56 cents per share for the recently concluded quarter. Revenue for the period fell by more than 13% to $2.72 billion.

Both figures fell short of analysts' expectations, which called for a loss of 53 cents per share on $2.82 billion in revenue. Thanks to the twin factors of the recession and the still-spreading H1N1 virus -- a.k.a. the "swine flu" -- Chief Executive Larry Pope said, "I feel like the world has been against us for 12 months." (While H1N1 cannot be contracted by consuming pork products, the pork industry has suffered nevertheless by association.)

Investors and analysts may be wondering whether the market rally is really over, and whether this signals more trouble ahead for the economy. Well, the Federal Reserve is scheduled to release its next Beige Book report of economic conditions on Wednesday, offering a glimpse of where things stand. The Beige Book report in July suggested that, in some of the 12 Fed districts, the economy appeared to be stabilizing, suggesting that the recession may have reached its bottom, but offering little sign of a recovery. Retail activity remained weak and employment numbers were not good. Yet the minutes of the FOMC August meeting seemed a bit more optimistic about the economy.

In addition to the Beige Book report, the TIPP Economic Optimism Index is scheduled to be released Tuesday, and the University of Michigan Consumer Sentiment Index comes out Friday. So by the end of the week, we could have a good gauge of the mood about the U.S. economy.

Tyson Foods (NYSE: TSN) is up 9% in early afternoon trading as I write this. The company's second-quarter earnings release is driving the buying. According to this article, Tyson reported an adjusted loss of $0.05 per share. The market was expecting a loss of $0.06 per share. So I guess the market was pretty happy about that.

Wall Street was probably encouraged by something else as well. If you take a look at the actual release, head on down to the statement of cash flows. Last year at this time, Tyson generated $144 million in cash from operations during the six-month period. This year, the company made $407 million from operations. Some nice changes in working capital helped out.

After testifying before a Senate committee about AIG (NYSE: AIG) last week, the Fed's Ben Bernanke participates in a Council of Foreign Relations event Monday evening.

Economic data due to be released this week include wholesale trade and job vacancies for January on Tuesday morning, the U.S. Treasury budget for February on Wednesday, retail sales for February and business inventories for January on Thursday morning, and the U.S. trade balance for January on Friday morning.

Last week, Bank of Montreal (NYSE: BMO), one of Canada's oldest and largest banks, reported growth in its fiscal fourth-quarter earnings. But it may be the only one that does, as at least two of the Canadian banks scheduled to report fourth-quarter numbers this week have already released preliminary results that warn of lower earnings due to debt write-downs and trading losses.

Analysts surveyed by Thomson Reuters expect Toronto-based Canadian Imperial Bank of Commerce (NYSE: CM) to post earnings 42.6% lower than a year ago, or $1.28 per share. CIBC beat estimates by a penny in the third quarter, but missed by a penny in the period before that. The bank faces a class-action lawsuit related to investments in collateralized debt obligations consisting of U.S. subprime mortgages. Shares have climbed 20.7% from a recent 52-week low of $39.52, but are down 37.8% in the past three months.

Toronto Dominion Bank (NYSE: TD), Bank of Nova Scotia (NYSE: BNS), and Royal Bank of Canada (NYSE: RY) are expected to report more modest earnings declines of $1.01 per share, $0.73 per share, and $0.83 per share, respectively. All three Toronto-based banks topped estimates in the third quarter. Toronto Dominion and RBC have recently announced plans to offer shares in order to raise capital. Toronto Dominion and Scotiabank have been trading near 52-week lows, and their share prices are down around 39% in the past three months. But only Toronto Dominion has a consensus buy recommendation from analysts.

Rising commodities prices led both Smithfield Foods Inc. (NYSE: SFD), the nation's largest pork producer and processor, and poultry producer Sanderson Farms Inc. (NASDAQ: SAFM) to report quarterly losses on Tuesday.

Smithfield Foods said it lost $12.6 million, or 9 cents per share, in its fiscal first quarter due in part to a $20.1 million write-down in the value of commodity contracts. The Smithfield, Va.-based company had reported a profit of $54.6 million, or 41 cents per share, a year ago.

Revenues rose 20% to $3.14 billion in the quarter. Analysts surveyed by Thomson Reuters had forecast a loss of 4 cents per share on $2.87 billion in sales.

In addition to hurting from high costs for such ingredients as grain and fuel, Smithfield also faces an oversupply of meat on the market, which is keeping prices for pork lower. To help push prices up, meat producers such as Smithfield have announced intentions to cut supply.

Shares of Smithfield fell 88 cents, or 3.7%, to $22.71 in morning trading. That's up from a 52-week low of $16.61 in early July, but shares have fallen about 21% since the beginning of the year.

Results for the tech stocks in last week's preview were a mixed bag, some beats, some misses, some in line. By and large, expectations for tech companies reporting results this week remain high, though. Here's what analysts surveyed by Thomson Financial are anticipating in the way of earnings, as compared to the same period of the previous year.

• Solarfun Power Holdings Co. Ltd. (NASDAQ: SOLF): $1.48 EPS (+73.0%) on sales of $1.3 billion (+171.0%)
• Marvell Technology Group Ltd. (NASDAQ: MRVL): $0.21 EPS (+71.4%) on sales of $836.7 million (+27.4%)
• Solera Holdings Inc. (NYSE: SLH): $0.29 EPS (+51.7%) on sales of $137.0 million (+11.8%)
• Applied Signal Technology Inc. (NASDAQ: APSG): $0.14 EPS (+42.9%) on sales of $46.4 million (+17.4%)
• China Finance Online Co. Ltd. (NASDAQ: JRJC): $0.14 EPS (+42.6%) on sales of $13.3 million (+131.5%)
• OSI Systems Inc. (NASDAQ: OSIS): $0.38 EPS (+36.8%) on sales of $162.0 million (+6.0%)
• LaBarge Inc. (AMEX: LB): $0.27 EPS (+33.3%) on sales of $71.6 million (+10.4%)
• Esterline Technologies Corp. (NYSE: ESL): $0.69 EPS (+11.6%) on sales of $374.6 million (+14.8%)
• Dell Inc. (NASDAQ: DELL): $0.36 EPS (+11.1%) on sales of $15.9 billion (+7.8%)
• HEICO Corp. (NYSE: HEI): $0.46 EPS (+13.0%) on sales of $147.1 million (+10.5%)
• Daktronics Inc. (NASDAQ: DAKT): $0.17 EPS (flat) on sales of $141.5 million (+17.0%)
• Novell Inc. (NASDAQ: NOVL): $0.05 EPS (flat) on sales of $241.4 million (-0.7%)
• Omnivision Technologies Inc. (NASDAQ: OVTI): $0.29 EPS (-17.1%) on sales of $172.5 million (-0.4%)
• Sigma Designs Inc. (NASDAQ: SIGM): $0.39 EPS (-18.8%) on sales of $58.7 million (+37.9%)

Smithfield Foods (NYSE: SFD) shares are falling after the company reported adjusted fourth-quarter profit of $2.4 million, or 1 cent per share, below analysts' expectations of 7 cents per share. Losses in the hog unit, blamed on high feed costs contributed to the big drop in earnings. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on SFD.

After hitting a one-year high of $35.79 in July, the stock hit a one-year low of $23.75 in January. This morning, SFD opened at $29.10. So far today the stock has hit a low of $28.22 and a high of $29.35. As of 12:15, SFD is trading at $28.76, down 1.37 (-4.5%). The chart for SFD looks bullish and steady before today's drop, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $35 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in four and a half months as long as SFD is below $35 at October expiration. Smithfield would have to rise by more than 23% before we would start to lose money. Learn more about this type of trade here.

SFD hasn't been above $35 for more than a few days in the past year and has shown resistance around $32 recently. This trade could be risky if the cost of feed grains relax in the coming months, but even if that happens, this position could be protected by resistance SFD might have around $32, where it topped out last month.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in SFD.

Reuters reports that workers at Quality Pork Processors Inc in Austin, MN have contracted a new disease -- symptoms include inflammation of the spinal cord, mild weakness, fatigue, numbness and tingling in the arms and legs. The source of these symptoms appears to be these workers' use of compressed air to blow pork brains out of the skull cavity.

Why is this happening? A doctor has been studying 18 Minnesota patients, all of whom have evidence of nerve involvement, typically affecting the legs. He said tests showed patients had damage to the nerves at the root level near the spinal cord, and at the far reaches of their motor nerves, where the nerves connect with muscle.

Why should investors care about this? It's worth looking at whether any publicly traded pork processors use the same technique that Quality Pork Processors does for blowing out pork brains. One candidate for further study is Smithfield Foods (NYSE: SFD), a global pork processor. So far the pork workers have not sued their employer for the disease. But if the problem becomes more severe and widespread, it could affect pork processor profits.

And that would cause nerve problems for investors as well as workers.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

With the markets still in a choppy/consolidation mode (or perhaps worse), it's best to consider including a few defensive stocks in your portfolio, and with the aforementioned in mind Smithfield Foods is worth an evaluation.

Smithfield Foods (NYSE: SFD) is the world's largest pork processor and hog producer. The company's products include fresh pork and processed meats sold under the Packerland, John Morrell, Lykes, Patrick Cudahy, and Smithfield Premium names.

Analysts expect Smithfield's F2008 revenue to increase 15-25% after a modest increase in F2007.

Meanwhile, beef margins are expected to widen, offsetting likely narrower hog margins. An improved product mix, including an expansion of value-added products, also has gladdened analysts' hearts.

Smithfield Foods (NYSE: SFD) is the largest hog producer and pork processor in the world, offering fresh pork, smoked and boiled ham, bacon, sausage, hot dogs and ready-to-eat foods. Products are sold under such brand names as Smithfield, John Morrell, Cumberland Gap, Patrick Cudahy, Cook's Ham and Armour-Eckrich Meats. Smithfield is also the fifth-largest beef processor in the United States. Hormel Foods (NYSE: HRL) and Tyson Foods (NYSE: TSN) are major competitors.

The company surprised the Street late last month when it reported fiscal Q2 EPS of 24 cents and revenues of $3.46 billion. Analysts had been looking for 21 cents and $3.28 billion. Management noted that packaged meat profit margins more than doubled and earnings from international meat processing rose sharply. The SFD price popped on the news and then moved into a bullish "flag" consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

While stocks boomed yesterday on the Fed's 50 basis point rate cut, Smithfield Foods Inc's (NYSE: SFD) stock dropped as analysts wrote that improved pork production in China could lead to excess production being sent to the U.S. market.

Due to this increase in supply, pork prices have declined more than 11% recently, according to a China news report. The recovery of pork production could be a sign that the swine flu, which set the industry back for years, is finally under control in this part of the world.

In August, Smithfield announced it would sell 60 million pounds of pork to China, but it appears the Chinese do not need it all. It looks like we have an ugly supply and demand imbalance building in the pig business.

Back on Tuesday, JP Morgan recommended investors buy shares of Virginia-based Smithfield Foods, Inc. (NYSE: SFD) into their earnings report, with expectations of a strong quarter. Early this morning, the Virginia-based hog, pork and beef producer blew away third-quarter earnings, reporting Q1 earnings per share (EPS) of 47 cents, well over the consensus of 42 cents.

To help achieve this monumental quarter, Smithfield continued its focus on higher margin and fully processed products, a strategy that had produced better margins in their pork segment a year ago. "Generally, the second and third quarters are the best for the pork segment as demand generally improves as we enter the Fall holiday period," CEO C. Larry Pope said in a statement today. Pope expects the live hog market to remain strong for the next six-to-twelve months. Excluding the problems in Romania, Pope said he was "reasonably optimistic about the remainder of fiscal 2008."

With a solid first quarter behind them, does this mean the best is yet to come for Smithfield? Despite the market facing some pressure today, Smithfield Foods is up $2.40, to $32.47.