Stock Market Report 09-02-10

Stock Market Report
Greek Factor: -1

We found nothing to look forward to in the Weekly Jobless Claims data this morning, and with the Monster Employment Index also dipping, there's little reason to feel comfortable about tomorrow's Employment Report. Whatever the market does intraday today will probably offset itself by close, as traders focus on the critical jobs data due tomorrow morning. Therefore, this stock market report advises that we are more likely to slip at least slightly today, not on the data, but on the pending release for tomorrow. The "Greek Factor" ranges from +3 to -3, and is a subjective measure of The Greek's view of the market impact of individual and aggregate news and the day's scheduled events.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

(Tickers: NYSE: LTD, NYSE: CLR, NYSE: CRM, NYSE: HRB, Nasdaq: ASPN, NYSE: DLM, Nasdaq: SEAC, Nasdaq: SCMR, Nasdaq: ARST, NYSE: BTH, Nasdaq: CASC, Nasdaq: FNSR, OTC: OGZPF.PK, NYSE: KKD, Nasdaq: LAYN, NYSE: MEI, NYSE: MOV, NYSE: ZQK, Nasdaq: TTWO, NYSE: COO, NYSE: TD, Nasdaq: ULTA, Nasdaq: UTIW, NYSE: VIP, NYSE: WBD, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ, NYSE: GS, NYSE: MS, NYSE: C, NYSE: JPM, NYSE: JEF, NYSE: BAC, NYSE: WFC, NYSE: TD, NYSE: PNC, NYSE: RHI, NYSE: KFY, NYSE: MAN, Nasdaq: KELYA, Nasdaq: JOBS)

Stock Market Report

Thursday's jobs data arrived from Monster World Wide (NYSE: MWW) and the Labor Department. The premarket radar was fixated on the Weekly Jobless Claims Report, given recent tidal play. This stock market report also covers Factory Orders and Pending Home Sales, and the Fed Chief is addressing Congressmen while the ECB offered its latest monetary policy. It's a busy day, including also Chain Store Sales and a slew of other corporate news.

Weekly Jobless Claims
Greek Factor: -1

The popular press wants to call this a positive swing factor, but I'm sorry to say, it just is not. The 472K claims for the week ending August 28 came in 6,000 lower than the prior week's revised count. Is this really a reason to celebrate? Should we really call this a "weak" claims count, like one TV reporter labeled it? The latest reading only exceeded the economists' consensus forecast by 2,000, but what the press is misunderstanding is that the market needs change here. More of the same lousy state of labor affairs will not cut it, as far as stock market drivers go.

For months now, weekly claims have stubbornly held in the area they currently reside, and it's not a healthy place to be. This is more evident in the measly change in the four-week moving average, which eased by only 2,500, to 485,500. And, oh by the way, last week's figure for weekly claims was revised higher, to 478K, from the initially reported 473K. Where do we find good news here?

Monster Employment Index
Greek Factor: -1

Monster WorldWide's (NYSE: MWW) metric of online job demand today showed its MEI Index fell two points in August to a mark of 136. That's bad news from a solidly supportive data-point most months. August, however, marks the second month of decline in the measure, from July's 138 and June's 141. Monster points to the year-over-year improvement from last August's 121, but stock traders know very well that the change from July matters far more. Current trend dictates trade; the guy on the trading floor might say, "What have you done for me lately."

The drivers of the decline are supportive of the case for economic stagnation. Manufacturing and transportation & warehousing slowed down hiring in August; even the annual growth rate eased in these sectors. Also, troublesome news came as consumer-driven sectors exhibited mixed trends. Retail trade and accommodation and food services edge up, while arts, entertainment and recreation recorded slight decline. This report offers another negative for trader sentiment.

Chain Store Sales
Greek Factor: Important

Retailers will be reporting chain store sales for the month of August throughout the day today, and in the next few days. With Labor Day again pushed out a bit, the results might not be top of the class this back-to-school season. July's data was mixed, but the total pace of sales left something to be desired. Same-store sales were up only 2% in July.

Productivity & Costs Data
Greek Factor: 0

Given the deceleration in Q2 GDP, economists were already looking for a decrease in productivity of -1.9%, quarter-over-quarter. What they got was about that, a decline of -1.8%. The data was so close to forecast because it was a revision, not due to brilliant economists being spot-on. Imagine that! It was a revision and it was expected, so its impact is diluted, but it still reflects or reinforces a negative case against the economy and trader sentiment. Since the revision was slightly better than expected, we might call this a neutral factor today, but that still feels like a reach. Unit labor costs move inversely to production, obviously, and so the cost increase improved to 1.1%, versus expectations for a rise by 1.2%.

ECB Monetary Policy
Greek Factor: 0

The European Central Bank (ECB) kept rates unchanged at 1.0% at its latest monetary policy meeting. It also extended emergency lending activities, and so not much new here.

Fed Speak
Greek Factor: Important

Cleveland Federal Reserve Bank President Pianalto will address the Fed's neighborhoods conference. Remember, Ohio was hard hit by the forced downsizing of the US auto industry. Fed Chairman Bernanke is being grilled today by the Financial Crisis Inquiry Commission; catch the must see TV at C-SPAN.

Factory Orders
Greek Factor: 0

Factory Orders were reported for the month of July at 10:00 AM. Orders fell 1.8% in May and another 0.6% in June (revised from -1.2%). Economists were looking for an increase of 0.3% for July, based on recent Durable Goods Orders data. The range of views varied widely, with the highest expectation at +0.5% and lowest at -1.2%.

July's actual data showed factory orders increased by a lesser degree than expected, moving 0.1% higher. June's orders were revised to a better result though, and that change impacted the result for July against expectations. Net net, we seemed to get little surprise here and with orders growing only slightly, we view the report a neutral driver for the day.

Pending Home Sales
Greek Factor: +1

After dropping 2.6% in June, July's Pending Home Sales Index might have fallen even further in August, given the sad state of affairs since the expiration of government stilts, err tax incentive. Instead, the Pending Home Sales Index recovered 5.2%, to 79.4. The report offers a pleasant surprise for beaten down housing stocks. Toll Brothers (NYSE: TOL) is up 1% at this hour.

Natural Gas Inventory
Greek Factor: +1 for Economy, -1 for Nat Gas

The EIA reported on Natural Gas Inventory again at 10:30 Thursday. For the week ended August 27, natural gas stocks increased 54 Bcf, and measured 169 Bcf above the five-year average for this time of year. However, they were 208 Bcf below last year's level. Natural gas sold off on the news and seems poised toward $3.50 on nearest futures contract.

Corporate News Drivers

On the corporate schedule, Limited Brands (NYSE: LTD) gives its prerecorded sales call. Salesforce.com (NYSE: CRM) appears on the Caris & Co. Bus Tour. Continental Resources (NYSE: CLR) presents at the Hodges Capital Management Investment Forum.

The EPS schedule highlights news from H&R Block (NYSE: HRB), Aspen Technology (Nasdaq: ASPN), Del Monte Foods (NYSE: DLM), SeaChange International (Nasdaq: SEAC), Sycamore Networks (Nasdaq: SCMR), ArcSight (Nasdaq: ARST), Blyth (NYSE: BTH), Cascade Corp. (Nasdaq: CASC), Finisar (Nasdaq: FNSR), Gazprom (OTC: OGZPF.PK), Krispy Kreme Doughnut (NYSE: KKD), Layne Christensen (Nasdaq: LAYN), Methode Electronics (NYSE: MEI), Movado (NYSE: MOV), Quiksilver (NYSE: ZQK), Take-Two Interactive (Nasdaq: TTWO), The Cooper Cos. (NYSE: COO), Toronto Dominion Bank (NYSE: TD), Ulta Salon Cosmetics & Fragrance (Nasdaq: ULTA), UTi Worldwide (Nasdaq: UTIW), Vimpel-Communications (NYSE: VIP), Wimm-Bill-Dann Foods (NYSE: WBD).



Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Jobs News - Layoffs May Lie

Light Layoffs May Lie

The releases of the latest data from ADP and Challenger, Gray & Christmas this morning offered a negative message that was overshadowed by positive data from China. However, we feel investors should pay attention to our insight as Friday's Labor Department report queues up.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

(Tickers: NYSE: RHI, NYSE: KFY, NYSE: MAN, NYSE: MWW, Nasdaq: KELYA, Nasdaq: JOBS, NYSE: JOB, Nasdaq: CECO, Nasdaq: PAYX, NYSE: ASF, Nasdaq: KFRC, NYSE: TBI, NYSE: DHX, NYSE: SFN, NYSE: CDI, Nasdaq: CCRN, Nasdaq: ASGN, NYSE: AHS, Nasdaq: BBSI, Nasdaq: HHGP, NYSE: SRT, Nasdaq: RCMT, Nasdaq: VSCP, OTC: ASRG.OB, OTC: MCTH.OB, OTC: IGEN.OB, OTC: STJO.OB, OTC: TNUS.OB, Nasdaq: TSTF, OTC: STTH.OB, OTC: PSRU.OB, OTC: CRRS.OB, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ)

Jobs News

Net net, we found the day's labor data worrisome. Where a nominal improvement in announced corporate layoffs enthused some, we were mostly unimpressed. While we hope the slow pace of firings portends positive things for the job market, we worry it's just another case of corporate managers lacking foresight. What follows is a more detailed review of Challenger's Job-Cuts Report, which was covered briefly in today's stock market morning report.

Challenger Job-Cuts Data

With the market rising, the popular press attached a powerful positive note to the Challenger data this morning. However, the report really only offered moderately positive good jobs news.

Planned monthly layoffs eased to 34,768 in August, which compared favorably against just about any historical record. August's declared layoffs were in fact the lowest in a decade, but that news is not as impressive when we look at the numbers. July's layoff record showed 41,676, and June's listed 39,358. While it's certainly nice to see the lowest number of firings in such a long span, the numbers do not vary all too much from recent trend. That said, the result tells a story when compared against last August's count of 76,456. And as far as the year goes, Challenger reports year-to-date total declared layoffs of 374,121, 65% less than last year.

It's important to remember that less layoffs do not necessarily translate into more hiring, though there certainly should be a relationship between the two. Perhaps this activity would precede new hiring. Still, the data-point is not a strong positive economic factor for long-term forecasting, when found in the absence of significant economic growth.

When comparing August against any other month, we need to remember that it is perhaps the slowest month for economic activity in America, if not July. Just as you likely vacationed this month, so did corporate executives, middle managers and human resource representatives, and so there is clearly going to be less discretionary layoff activity in August. We suggest investment enthusiasts wait to see how September and October shape up before popping the champagne corks.

We can't neglect the good jobs news here though. If layoffs are saturated, and if companies are operating at tight capacity, then we might be about as wound up for a growth driven jump in hiring as we could possibly be. That means that should economic activity find a catalyst, perhaps from China and friends, then job growth might soar.

Challenger reports that the government or public sector is the fastest flowing source of layoffs these days. The government and non-profit sectors have announced 112,378 layoffs this year so far, or roughly 30% of the total. This is understandable given the pending November elections and political unwillingness to raise taxes. Therefore, local and state governors are cutting costs, which means less police, firemen and workers at the local Department of Motor Vehicles. I just renewed my drivers license yesterday, and due to the loss of my photo card, had to sit behind 40 other people while 2 to 3 reps (they took a lot of breaks) covered the traffic. There were five empty desks, where servers might have been in the past. This is the trade-off we make for a balanced budget.

The most potent driver of job cuts in August was the industrial goods sector. This fits in with all the news we've been receiving about manufacturing, outside of today's gain in the ISM Manufacturing Index. Some 6,236 announced layoffs were derived from the sector in August. That said, the year-to-date total for the sector (16,962) pales in comparison to last year's number (101,591).

The greatest concern for investors should be the possibility that layoff activity reflects less, the tight employment state, and more, the inability of managers and corporate strategists to foresee a pending dip into recession, or at least a dragging stagnant economic state. We expect this is the case, since managers were late to start firing, and then overdid it once panic spread.



Article should interest investors in Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX), Kelly Services (Nasdaq: KELYA), SFN Group (NYSE: SFN), CDI Corp. (NYSE: CDI), Cross Country Healthcare (Nasdaq: CCRN), On Assignment (Nasdaq: ASGN), AMN Healthcare Services (NYSE: AHS), Barrett Business Services (Nasdaq: BBSI), Hudson Highland Group (Nasdaq: HHGP), StarTek (NYSE: SRT), RCM Technologies (Nasdaq: RCMT), VirtualScopics (Nasdaq: VSCP), American Surgical (OTC: ASRG.OB), Medical Connections (OTC: MCTH.OB), iGen Networks (OTC: IGEN.OB), St. Joseph (OTC: STJO.OB), General Employment Enterprises (NYSE: JOB), Total Neutraceutical (OTC: TNUS.OB), TeamStaff (Nasdaq: TSTF), Stratum (OTC: STTH.OB), Purespectrum (OTC: PSRU.OB) and Corporate Resource Services (OTC: CRRS.OB).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Stock Market Analysis 09-01-10

Stock Market Analysis
Greek Factor: +2

The market got all giddy this morning, thanks to solid economic data out of China that we've well covered in the paragraphs below. However, take note that the ADP labor market data received this morning gives good reason for caution as we near Friday's all important Labor Department release. The "Greek Factor" ranges from +3 to -3, and is a subjective measure of The Greek's view of the market impact of individual and aggregate news and the day's scheduled events.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

(Tickers: Nasdaq: AAPL, NYSE: LMT, NYSE: F, NYSE: RHI, NYSE: KFY, NYSE: MAN, NYSE: MWW, Nasdaq: JOBS, NYSE: JOB, NYSE: GD, NYSE: RTN, NYSE: COL, NYSE: ROP, NYSE: HNZ, NYSE: SAI, NYSE: BF-A, NYSE: BF-B, NYSE: BGP, NYSE: PSS, Nasdaq: EXPR, Nasdaq: AMSWA, Nasdaq: CWST, Nasdaq: CHRS, NYSE: CGA, Nasdaq: FCEL, NYSE: GCO, Nasdaq: GIII, Nasdaq: GLBC, NYSE: GEF, NYSE: HOV, NYSE: IL, Nasdaq: JOYG, Nasdaq: LTXC, Nasdaq: MAGS, Nasdaq: MATK, NYSE: OXM, Nasdaq: TTPA, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ)

Stock Market Analysis

Today's stock market analysis highlights the importance of emerging markets on US trade. China released some reassuring data, and it's carrying trade today. That said, the omen offered by ADP, should not be ignored as we near Friday's DOL release. Meanwhile, a mysterious bit of good news from the manufacturing sector seems curious, but is not important due to the insignificance of the current sector. We'll do our best to cover as many of the reports as we can in detail today, within follow up articles.

China Economic Data
Greek Factor: +2

Here's your market moving factor within today's stock market analysis. Chinese manufacturing rebounded while auto sales gained sharply in August. A world of hope is banking on this news today, as it's why people go gaga over China. A measure of manufacturing showed production and new order activity both gained in August.

The HSBC Purchasing Managers Index, a seasonally adjusted index designed to measure the performance of the manufacturing economy in China, improved to its highest level in three months, at 51.9. Meanwhile, the state-sponsored China Federation of Logistics and Purchasing said its PMI rose to 51.7 in August from 51.2 in July. The gain is not much, and it's only slightly above the economic expansion water-line of 50, but even minor improvements in the world's second largest economy bear watching, especially within its manufacturing sector. They translate into big numbers in this manufacturing behemoth. And HSBC's (NYSE: HBC) data-point adds validity to an otherwise suspect producer of information, the government sponsored form.

Meanwhile, Chinese auto sales only solidified reason for positive feeling this morning. Investors worried a bit when China's Q2 GDP pace eased to 10.3%, from 11.9% in Q1. However, the report this morning from the Cabinet's China Automotive Technology and Research Center, showing August auto sales jumped 56% versus the year ago period, to 1.21 million; that helped restore confidence. If China's double-dip basically amounts to a hiccup, then investors have good reason to cheer. There is hope the US might find demand for its exports in China's domestic marketplace, and US manufacturers like Ford (NYSE: F) have growth markets to get giddy about. This is a worthy positive driver this morning, and could carry the day over the employment data. However, the problem is, we have a scary employment data-point scheduled for the close of the week.

Challenger Job-Cuts Report
Greek Factor: +1

Challenger's Job-Cuts Report came first today in the early AM hours. There was no forecast available, and so we simply compare the rate of job-cuts versus recent history for measurement of its market impact. Challenger, Gray & Christmas reports that announced corporate layoffs amounted to 34,768 in August. Now, the popular press has jumped all over Challenger's press release, hyping the fact that the layoff count was the lowest in over a decade. Last month's report for July showed announced corporate layoffs totaled 41,676, and compared against June's 39,358. Is 35K really that much less than recent months? Obviously, that's rhetorical, and I want to also remind readers that we're talking about August, the slowest month for economic activity in America perhaps, if not July. Just as you likely vacationed this month, so did corporate executives, middle managers and human resource representatives. Let's see how September and October shape up before we get too excited here. And one more thing, less layoffs do not necessarily translate into more hiring, though there certainly should be a relationship between the two. I'll give this a small positive factor this morning, simply because the few people trading this week have clearly jumped on the news in the pre-market. Expect the impact to play no role past the morning trading today. This is not a strong positive economic factor for the long-term.

ADP Private Employment Report
Greek Factor: -2

The market is always more interested in ADP's Private Employment Report. Once again, there is no economists' consensus forecast for the data-point. This data-point is instead compared against forecasts of the Labor Department's data, which will be released Friday. The news from ADP was bad for August, as it showed the private sector is estimated to have shed a net of 10K jobs. That offers a bad omen for Friday's data, where economists expect census worker layoffs to take overall change in employment lower by 80K. July's data was revised lower, now showing an increase of 37K jobs, down from +42,000 at initial report. This is a negative factor, as economists are reportedly looking for a positive figure for private nonfarm payrolls. The impact here seems minimized in early trading, but pay attention to the message this report offers the insightful for Friday.

Mortgage Application Activity
Greek Factor: +1

The Mortgage Bankers Association's Weekly Applications Survey was released in the premarket. This week's report covering the period ended August 27 showed the Market Composite Index of mortgage applications increased 2.7%, versus 4.9% the week before. The latest gains came on the 2.8% increase of the Refinance Index, which benefited from even lower contracted mortgage rates. On average, fixed rate mortgage rates for 30-year and 15-year mortgages fell to 4.43% (from 4.55%) and 3.88% (from 3.91%), the lowest in recorded history (1990). Purchase Applications also showed life this week, rising 1.8%. Be careful of seasonals here, as the unadjusted Purchase Index fell 0.4%. Thus, it would be premature to say we've found a rate level that might inspire some home purchase demand. That said, we have to give this data a positive rating this week, as it's clearly positive.

ISM Manufacturing Index
Greek Factor: +1

ISM's latest manufacturing index for August proved counter to economists' expectations. The pros, and we must admit The Greek, saw this index easing further. Economists were forecasting the index to drop to 53.0, from 55.5 in July. However, ISM reported it improved to 56.3. The only reason I have not offered a more positive rating for the data-point is because of the relative insignificance of today's US manufacturing sector. Sorry Ford friends (NYSE: F).

Construction Spending
Greek Factor: -1

Construction Spending fell 1.0% in July, against consensus expectations for a fall of 0.6%. The only reason this factor is not worse, is because nothing new has been reported. The construction market is full of despair. Activity continues to suffer in the absence of the housing tax incentive, but really due to the sorry state of our economy.

Motor Vehicle Sales
Greek Factor: Important

Motor Vehicle Sales will be reported throughout the day. Economists expect the aggregate level of domestic vehicle sales to run at an annual rate of 8.7 million. That would match July's sales rate, which had increased from June's 8.4 million. Combined light truck and auto sales of domestic and imports gained to 11.5 million in July.

Oil Inventory
Greek Factor: Not Important

At 10:30, look for the EIA's Petroleum Status Report. The latest data covering the period ended August 20 showed crude oil inventories increased by 4.1 million barrels. Total motor gasoline inventories increased by 2.3 million barrels. Both crude and gasoline continued to mark above the average range for this time of year.

Fed Speak
Greek Factor: Important

The Fed speaker of the day will be Dallas Federal Reserve Bank President Richard Fisher, with an address scheduled for 12:30. The Fed's Neighborhood Stabilization Summit kicks off in Washington, as the power mongering independent organization takes on home foreclosures this day.

Corporate Wire
Greek Factor: Important

In corporate news, Apple (Nasdaq: AAPL) will introduce a few more blockbuster new products and services Wednesday in its usual grandiose fashion. Presenting at the Morgan Stanley Global Industrials Conference, Lockheed Martin (NYSE: LMT), General Dynamics (NYSE: GD), Raytheon (NYSE: RTN), Rockwell Collins (NYSE: COL) and Roper Industries (NYSE: ROP). Heinz (NYSE: HNZ) has its EPS conference call.

The EPS schedule includes H.J. Heinz (NYSE: HNZ), SAIC Inc. (NYSE: SAI), Brown-Forman (NYSE: BF-A, NYSE: BF-B), Borders Group (NYSE: BGP), Collective Brands (NYSE: PSS), Express (Nasdaq: EXPR), American Software (Nasdaq: AMSWA), Casella Waste Systems (Nasdaq: CWST), Charming Shoppes (Nasdaq: CHRS), China Green Agriculture (NYSE: CGA), FuelCell Energy (Nasdaq: FCEL), Genesco (NYSE: GCO), G-III Apparel (Nasdaq: GIII), Global Crossing (Nasdaq: GLBC), Greif (NYSE: GEF), Hovnanian (NYSE: HOV), IntraLinks (NYSE: IL), Joy Global (Nasdaq: JOYG), LTX-Credence (Nasdaq: LTXC), Magal Security Systems (Nasdaq: MAGS), Martek Biosciences (Nasdaq: MATK), Oxford Industries (NYSE: OXM) and Trintech (Nasdaq: TTPA). Article matters also to NYSE: RHI, NYSE: KFY, NYSE: MAN, NYSE: MWW, NYSE: JOB, Nasdaq: JOBS, NYSE: F.



Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.