Week in Video Review - May 12 - 18

Please enjoy our weekly video review, packed with important economic, geopolitical and humorous content we hope you enjoy.


As always, the opinions expressed within the videos may not agree with the view of "The Greek." Please see our disclosure at the Wall Street Greek website. Interests AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, AMEX: DOG, AMEX: SDS, AMEX: QLD.

Housing Starts See Seasonal Impact, Despite Adjustment

Housing starts lifted the stock market to start the day today, but only until consumer sentiment was reported.

Economic news today was mixed, but it was the one factor that did the market in which raised it this morning, housing.

Housing Starts

April housing starts were reported ahead of forecast today, but we expect seasonality played a role, despite supposed seasonal adjustment. Here's why...

The spring season is typically the strongest selling period for the housing industry. Therefore, economic reporting of housing starts is seasonally adjusted. However, this is an imperfect science. Adjustments are made based on averages over years of study, and in real life, we exist in a world that is anything but average...

The current housing market is in fact within a dramatic decline, perhaps the greatest on record. So, rising from the depths of such dramatic decline should prove quite different than the average seasonal rise. This is a qualitative description of a mathematical relation to help you to see things outside the equation.

Typically, every spring, the housing market performs better than the winter before. There's an average seasonal boost that has been calculated, and that adjustment is applied to newly reported quarters in an attempt to relay what the real change is, excluding seasonal factors. April's starts rose 8.2% over March, but were 30.6% short of the prior April figure. Thus, you can see how we could get an irregular reading this time around. For this reason, there's an error estimation of give or take 14.5% that could apply to the month-to-month figure, but only a 6.7% margin for the year-over-year measure. So, you see, the entire improvement could be explained by error.

Therefore, hold your horses before predicting the housing market turn. We must say though that even we want to believe in it. Permits increased 4.9% over March, but were likewise off 34.3% from the prior year month. Here, the margins of error were calculated at just 1.2% and 1.4%, respectively. Still, let's wait and see how results prove out later on this year before we call a bottom.

University of Michigan Consumer Confidence

Consumer sentiment was reported very weak, at 59.5, short of the forecast for a reading of 62.5. The measure was also down from April's 63.2. However, remember that consumer sentiment is a lagging indicator. By the time Main Street thinks things are dire, the worst is usually over. In any event, the market turned lower once the news broke.

Please see our disclosure at the Wall Street Greek website. Article interests AMEX: DIA, AMEX: SPY, AMEX: QLD, AMEX: DOG, AMEX: SDS, Nasdaq: QQQQ.

Daily Market Recap

Please find Thursday's video review below.



Opinions expressed within the videos may not agree with "The Greek." Article interests AMEX: DIA, AMEX: SPY, AMEX: DOG, AMEX: SDS, AMEX: QLD, Nasdaq: QQQQ, Nasdaq: YHOO.

PreMarket Stock Market Report

We are committed to bringing you premarket news. Please find all the early economic news and corporate events that broke this morning, either within this article or within our sidebar section "Market Moving News" at the Wall Street Greek website.

Before we begin, we want to note that we are omitting discussion of the very important Monthly Oil Market Report released by OPEC this morning, because a second article will detail the petroleum market today, and recent events within it. It's going to be an otherwise busy day, so you'll find plenty of information to keep you occupied here in the meantime.

Weekly Initial Jobless Claims

New unemployment benefits filers numbered 371K for the week ended May 10, 2008. Reported this morning at 8:30 a.m., the measure was forecast just 1,000 below the actual figure, which exceeded last week's measure of 365K. So, "playing it safe," so to speak, worked for economic forecasters this week. We outlined in our weekly market planner that economists seem to keep forecasts for this important labor market barometer near prior week result. We also noted, that while we were disappointed in this fact, sometimes the past does serve as the best predictor of the future, especially with a metric that is reported so frequently (weekly).

Generally, unemployment has held recently, after starting higher earlier this year. The government's tax rebate stimulus might also support the economy over the next few months, and further limit corporate reason for workforce reduction. However, we continue to expect the retail/restaurant space to cut some fat over the course of the year. Weaker players must be weeded out of the saturated marketplace, and we've already seen some bankruptcies, Linen n' Things being the most recent. Department stores like Macy's (NYSE: M) and JC Penney (NYSE: JCP), and mall-based apparel retailers (non-teen) seem to fit the bill for trouble. Price-minded consumers are finding their way to discount shops like Wal-Mart (NYSE: WMT). The high end has held up in specialty, but in broader reaching stores like Nordstrom (NYSE: JWN), which the super-rich would still not consider their store anyway, we've seen signs of trouble as well.

Our theory is that still high costs of living and food and energy inflation, as well as credit unavailability, will continue to pinch consumer spending this year. So, we expect restaurant/retail to layoff a good amount of employees before it's all said and done. Mind you, this does not bode well for commercial real estate either.

Empire State Manufacturing Survey

The New York regional barometer of manufacturing was also reported this morning at 8:30. The General Business Conditions Index, the metric you see headlining at major media, was reported at a negative 3.2, versus consensus forecast for a reading in limbo, at 0.0. While this offers indication of slight manufacturing deterioration in May, it still marked improvement from the reading of -22.2 in March. The figure was just slightly off the 0.6 measure in April. We do not expect the market to react harshly to this mild result, as economic expectations have a low bar to hurdle at this point, despite the forecast for this month's NY figure.

The details of the Empire State report offered some reason for concern. Participants were asked about the prices paid for inputs, and responded that prices had increased 8.7% on average over the past twelve months. Respondents expected prices to continue to rise 6.8% in the coming twelve months. Here's what should concern you most. While manufacturer's selling prices had not risen much over the past 12 months (+2.9%), executives expected to raise prices by a higher level in the coming 12 months (4.1%) in order to offset their input price pressure.

So, while manufacturers shipments had decreased, they were not cutting prices to move goods, often a positive consequence of competition, and instead were raising prices due to inflation in their component and raw materials costs. Margins are being squeezed at these firms, and this explains manufacturers' contribution to the layoff count to date. If the economy were not to recover this year, you could expect more consolidation; even so, we doubt the bottom has been met yet in manufacturing. The Philly Fed Survey is up next today, at 10:00 a.m., and consensus expectations are set much lower for Philly area business conditions. Economists are looking for a reading of -20.0.

Treasury International Capital (March)

Net foreign purchases of long-term U.S. securities measured $80.2 billion in March, marking an increase from $77.9 billion in February. Roughly 60% of foreign investment came from official institutions and 40% from private investors. The figure has increased through each month of this year, but was lower over the trailing 12-months, when compared to the 12 months prior. As the dollar strengthens, or, should it continue to strengthen, we would expect demand to increase.

The momentum trade is over in the dollar, as currency investors now look to hedge bets and reverse them, looking to dollar appreciation. The problem is, the ECB becomes more likely to raise rates with each passing month, in our view. Much depends on the wherewithal of the European economy, and the commitment of Union members to the will of the whole. But, once the ECB starts raising rates, you can expect reconsideration of dollar/euro value (looking for dollar weakness again).

Industrial Production & Capacity Utilization

Here's where the real bad news originated today. Both production and capacity utilization disappointed for the month of April. Production fell 0.7%, versus expectations for a 0.3% drop. Capacity utilization fell to 79.7%, versus expectations for 80.1%. Lower capacity utilization and production means increased likelihood of consolidation and workforce reduction. This is bad news considering the measures missed forecasts. They are therefore likely to lead economists to reduce more general economic forecasts, and phone calls to equity strategists will not be enthusiastic this morning either. This compounds the impact of the regional manufacturing data. If the market declines today, this is the fundamental reason for it, though it may not be the real driver. Even so, we do not expect a significant impact as this result is still an arms length from employment figures and corporate news that would more likely move the market.

Economic Data On Tap

Check in to our "Market Moving News" section to catch the releases of the EIA Natural Gas Report at 10:30 and the Housing Market Index at 1:00 p.m.

Corporate News

Barclay's (NYSE: BCS) hit the news wires early today with its earnings news and another write-down of $1.94 billion, but the company did not announce any new financing plans. However, that seems like just a matter of time.

Carl Icahn is launching a proxy battle to elect some favorable members to the board of Yahoo! (Nasdaq: YHOO). By doing so, he'll put the fate of Yahoo into the hands of its shareholders, and out of the hands of Jerry Yang and the management team. So, you may yet get your $30+ a share, if you vote Icahn's way. We, here at "The Greek," would actually vote against Icahn. We see far too much value creation opportunity at Yahoo! to sell out at the offered price now. While the combined Microsoft (Nasdaq: MSFT), Yahoo! will still find that value, it will drive less of an impact to the giant that is Microsoft. We view the deal better for MSFT than YHOO shareholders as a result.

Please see our disclosure at the Wall Street Greek website. Article also interests: AMEX: SPY, AMEX: DIA, AMEX: DOG, AMEX: SDS, AMEX: QLD, Nasdaq: QQQQ.

Money Minute Market Wrap

Enjoy the daily video market wrap up below.



Views expressed within the video may not agree with the opinion of "The Greek." Article interests AMEX: DIA, AMEX: SDS, AMEX: QLD, AMEX: SPY, AMEX: DOG, Nasdaq: QQQQ.

Economic Data Analysis - Chew on This!

Glue in your dentures tightly, because there's a plateful of economic analysis to chew on today. Between today and yesterday, we absorbed the newest inflation measure, two retail reports, a spot of housing news mixed with mortgage and foreclosure data, an updated energy outlook and weekly inventory, business inventories and import and export prices. Chew on that morsel before you choke on it! We are not schooled in the Heimlich Maneuver here at "The Greek." This article focuses on the big inflation report.

Consumer Price Index (CPI)

The market is rising today on what, on the surface of things, looks like a positive development for inflation. However, the published headline numbers alone do not tell the whole story. Simply looking at the result, would be like passing a great impressionist's painting from three feet away. You really need to back up, take a close look, blink and look again, to understand and make good use of the data. So, let us do that for you.

The headline CPI increased 0.2% in April, while the core figure (ex-food and energy) rose 0.1%. Both results were a tenth of a point below consensus expectations, undeniable good news. Still, Core CPI looked good on the surface, but let's take a step back and look closer at the components. Energy was relatively unchanged, but behind that apparent stagnation were volatile factors that simply moved counter to one another. This created the illusion of stability.

The energy index advanced 1.9% in March, but was relatively unchanged in April. Here's why... In April, petroleum pricing actually backed off, and we know things have changed dramatically for the worse again in May, so we take little solace from this data. Still, while petroleum based energy declined 1.6%, the energy services index saw price rise of 2.5%. This means that inflation is trickling through the system on the energy end of things. We see this happening plain and evidently in gasoline pricing, and with news that some refiners are scaling back capacity. Gasoline refiners, like Valero (NYSE: VLO), Tesoro (NYSE: TSO), Sunoco (NYSE: SUN), Hess (NYSE: HES) and others have been losing money making your cars run, so they've taken to scaling back capacity, thus forcing the competitive marketplace to allow price increase. So, next month, when petroleum prices come in higher in the CPI data, and services continue to rise as well, inflation might also present a more frightening picture for those only passing within three feet of it.

Inflation was clearly evident on the food end of the CPI table. The food index component of the index increased 0.9% in April. The index for food at home (vs. restaurant dining) rose 1.5%, reflecting increase across all major grocery store groups. So, agricultural born inflation continues to more readily pass through to consumers, which makes perfect sense. Food is a need item, a commodity driven resource, and is mostly dominated by large processors who can pass price rise through easily to retail, who of course will pass it on to consumers. Margins are tight when it comes to plain foods, where differentiation is hard to come by. Price increase will therefore be passed forward quickly and efficiently.

So, we say, hold your horses on the good-bye party the market is throwing for inflation. Its demise is greatly overstated.

See our disclosure at the Wall Street Greek website. Article interests AMEX: DIA, AMEX: SDS, AMEX: SPY, AMEX: DOG, AMEX: QLD, Nasdaq: QQQQ.

Stock Market Recap: No Chance in Iran... I Mean Hell

Stocks sagged, but the tech-heavy Nasdaq benefited from company specific news. Yahoo! (Nasdaq: YHOO) may find pressure to accept Microsoft's acquisition bid from none other than Carl Icahn. This is just what Microsoft (Nasdaq: MSFT) and yours truly expected when the software giant recognized Yahoo!'s stall tactics, and backed away from its offer. Another deal was in the news again today as well. Hewlett-Packard's (NYSE: HPQ) acquisition of EDS (NYSE: EDS) has been judged too rich by the market, and HPQ is off 10% in two days as it suffers the penalty.

Congress voted against the president, and against America's best interest in my book, by passing legislation to stop the president's filling of the strategic oil reserve until oil prices fall to a threshold level. This bill has no chance in Iran, I mean hell, of passing through the Oval Office, so why even bother...



If you do not see the video above this text, we encourage you to visit the website via the text link below. As always, the opinions expressed within the video may not agree with the view of "The Greek." Please see our disclosure at the Wall Street Greek website. Article interests AMEX: DIA, AMEX: SPY, AMEX: QLD, AMEX: DOG, AMEX: SDS, Nasdaq: QQQQ.

Retail Sales Sag, but God Bless Ex-Auto

Today's highly anticipated retail sales report offered quite a mix of color. Sales fell 0.2%, as you might have expected, but excluding autos, sales actually rose 0.5%.

April Retail Sales

We've been dreaming about this report over the past two weeks, which probably says something about the quality of life over here at Greek HQ. The report itself offered no letdown from the hype, as it portrayed a bifurcated world. As expected, given recent news from General Motors (NYSE: GM) regarding its plans to cut production further to better match soft market demand, auto sales weighed on the retail figure.

The graphs to the right depict the horror of the automobile industry in a fashion that Terror Film Festival founder "Claw" might enjoy best. That bar shaded in light gray to the right offers the pain of the auto industry via embarrassing public display.

But wait a second, the auto industry is suppose to be on the road to recovery is it not? Ford (NYSE: F) just got a great vote of support in Barron's, and management did not disappoint when America's greatest family run business, as The Greek's favorite cousin and dedicated employee of Ford likes to say, reported earnings.

The cheer was not supposedly limited to Ford either. Remember that breakthrough deal GM signed with the UAW... The company's efforts to cut pension and other employee costs are helping GM also improve its profit (they use to say "cost" over there) structure. Heck, things are well enough at Toyota Motors (NYSE: TM), that the company was recently emboldened to raise prices in the U.S. "So what gives then Greek," you must be thinking.

Hey, let's face it. Credit is tight and Americans are broke! Nobody is lending, and you could not afford it if they were. These legends of manufacturing are saving bucks on the cost end, but sales are not recovering yet. $600 from Uncle Sam might help The Greek make his rent this month, but it's not going to reach far enough for that Maserati I've been dreaming of (hint, hint... super wealthy Greek fans). Heck, it won't even get me a good bicycle in New York City, the showcase of the world. This place is just starting to see real estate values decline (inside Manhattan proper anyway). But it's no better for my fans outside this town either. So, while the auto companies and the stocks benefit from management actions to create value, the most important driver of earnings and value creation, sales, are not so hot.

God Bless Ex-Auto

Meanwhile, in the world "ex-auto" everything is hunker dory? Growth of 0.5% does not a celebration inspire, and the market is kind of drab today partly as a result. I like this term though, "ex-auto." I think the next time someone asks me how I'm doing, I'm going to respond, "well, I'm suicidal, but ex-auto, life's peachy!" Or, "clouds and rain color my day, but for the "core" Greek, rainbows and sunshine light my way!" Thank God for "core," "ex," data mining and the birth/death rate component of the government's employment data. Heck, if not for these things, and the media's coverage of economic cheerleading by Hank Paulson, Ben Bernanke and President Bush, you all might be as negative as the Europeans... Instead, look at you, all excited about buying a plasma TV with your government payout! God bless "ex auto."

Please see our disclosure at the Wall Street Greek website. Article interests AMEX: DIA, AMEX: SPY, AMEX: DOG, AMEX: SDS, AMEX: QLD, Nasdaq: QQQQ.

Stock Market Review: Technology Stocks in the News

Be sure to see this week's edition of "The Greek's Week Ahead" directly below this article, or through the text link offered here.

Monday's news flow was somewhat light on the schedule, but offered unscheduled surprise. Please find all of Monday's highlights within the video below. Summarizing, Hewlett-Packard (NYSE: HPQ) will acquire EDS (NYSE: EDS), and Wal-Mart (NYSE: WMT) posted strong results, while warning on its outlook. Research in Motion (Nasdaq: RIMM) offered a new and improved smart phone, and the market recovered much of Friday's losses. Oil fell $2 as geopolitical tensions aged, and the dollar strengthened.

Please find our disclosure at the Wall Street Greek website. Article interests AMEX: DIA, AMEX: SPY, AMEX: QLD, AMEX: SDS, AMEX: DOG, Nasdaq: QQQQ.

The Greek's Week Ahead - Theme Week

Our Wall Street week ahead article has been engineered to serve as a reference you can look back upon all week long to keep ahead of the economic and corporate news flow.

After last week's geopolitical news flow domination, this week offers several individual themes for each specific day. The President's week, however, will be geared toward preparing the Middle East for the near-term therapy he likely has in mind for Iran. He'll be sure to mix that into the conversation with his Israeli counterpart in between the fireworks and the champagne, as Israel celebrates its 60 year anniversary. Five decades have passed, and not a peaceful day among them it seems.

A Choice This Time. But Which One is Really Correct?

Between John McCain and apparently Barak Obama, it looks like Americans might have a distinct choice to make about Middle Eastern policy. But, is there really a choice, because we suspect the scenario playing itself out will not allow much free play between potential presidential actions. Also, McCain's experience with war, and his wisdom, might actually lead him to make the better-advised decisions. Anyway, we expect GW and Israel to make the important Iranian decision for the incoming president, so it's a non-factor.

Guess what, The Greek, now an Independent with Republican leanings, is actually bending toward McCain, despite our concern that he may have war in his genes at this point. Obama may promise change, but we remain concerned with the risk related to not dealing with Iran now. Change for a peaceful future is a great ideology, but Iran is too far progressed for us to bank on its changing its present direction.

In an ironic twist, it turns out McCain is actually less ballistic than Hillary Clinton. Jest we may, but we completely agree with Hillary's position on Iran. The threat of annihilation is not taken seriously in Iran, and it plainly exists. So, if we would do it, we need them to know we would. That might just prevent the next 9/11, which could be a thousand times worse than the wake up call of nearly seven years ago.

The market continues to wrestle with whether the worst is really over in the financial sector, or if the flow of financial reports exposing further asset write-downs and continued share dilution signal a need to discount stocks further. Last week's news from AIG (NYSE: AIG) and Fannie Mae (NYSE: FNM) raised some doubt, but let's look forward to the week ahead.

The Week Ahead

What happens to stocks this week will likely have as much to do with how geopolitical issues develop as it will with economic data flow. However, there are three key economic reports that could still have an impact.

Monday - Theme-less

A dearth of economic data greets investors on Monday. Lending to the abyss of information, markets in Hong Kong, South Korea and parts of Europe, including France and Germany, will be closed due to religious holidays.

The earnings schedule offers news from Sprint Nextel (NYSE: S), Fluor (NYSE: FLR), MBIA (NYSE: MBI), Cousins Properties (NYSE: CUZ), Tetra Tech (NYSE: TTI), InVentiv Health (Nasdaq: VTIV), PMI Group (NYSE: PMI), 4Kids Entertainment (NYSE: KDE), A.C. Moore Arts & Crafts (Nasdaq: ACMR), Akorn (Nasdaq: AKRX), Answers Corp. (Nasdaq: ANSW), ActivIdentity (Nasdaq: ACTI), American Technology Corp. (Nasdaq: ATCO), Ark Restaurants (Nasdaq: ARKR), Arqule (Nasdaq: ARQL), Artes Medical (Nasdaq: ARTE), Bally Technologies (NYSE: BYI), Basin Water (Nasdaq: BWTR), Building Materials Holding (NYSE: BLG), Calpine (NYSE: CPN), Carmike Cinemas (Nasdaq: CKEK), Century Casinos (Nasdaq: CNTY), Charter (Nasdaq: CHTR), Clearwire (Nasdaq: CLWR), Coeur d'Alene Mines (NYSE: CDE), Cogent (Nasdaq: COGT), Doral Financial (NYSE: DRL), Dynex Capital (NYSE: DX), Emmis Communications (Nasdaq: EMMS), Energy Solutions (NYSE: ES), GeoResources (Nasdaq: GEOI), Hecla Mining (NYSE: HL), Holly (NYSE: HOC), HSBC Finance (NYSE: HTB), IMAX (Nasdaq: IMAX), Imperial Sugar (Nasdaq: IPSU), IndyMac Bancorp (NYSE: IMB), JA Solar (Nasdaq: JASO), Kenexa (Nasdaq: KNXA), Knology (Nasdaq: KNOL), LDK Solar (NYSE: LDK), McDermott Int'l (NYSE: MDR), Medarex (Nasdaq: MEDX), Miller Industries (NYSE: MLR), MTR Gaming (Nasdaq: MNTG), MIVA Inc. (Nasdaq: MIVA), Nanogen (Nasdaq: NGEN), Nelnet (NYSE: NNI), Neurobiological Technologies (Nasdaq: NTII), Orleans Homebuilders (AMEX: OHB), PetMed Express (Nasdaq: PETS), Petrobras (NYSE: PBR), Radian Group (NYSE: RDN), Sirius Satellite (Nasdaq: SIRI), Standard Pacific (NYSE: SPF), Stifel Financial (NYSE: SF), Tercica (Nasdaq: TRCA), Valspar (NYSE: VAL) and XMSatellite Radio (Nasdaq: XMSR).

Tuesday - Consumer Spending (Retail)

Tuesday's theme is certainly consumer spending, with a focus on retail. As usual, the International Council of Shopping Centers starts the day off with its weekly same-store sales report. Remember, last week surprised us with its further improvement that we speculated was likely weather related since the week-to-week change was far different than the year-over-year improvement. Looking back, year-over-year growth of 2.3% compared to a week-to-week decline of 0.2%. Therefore, we would expect this week's year-to-year change to prove more cohesive with recent strife in the space.

Well, at 8:30 our speculation will no longer be necessary, as April's aggregate retail sales are reported. Bloomberg's consensus of economists forecasts a month-to-month decrease of 0.1%, and a 0.3% increase when excluding autos. In March, sales including autos increased 0.2%, rising 0.1% without.

Last week, individual retailers noted chain store sales, and "the cheaper the better" theme played on. Discounters like Wal-Mart (NYSE: WMT), Costco (Nasdaq: COST) and TJX Cos. (NYSE: TJX) continued to outperform department stores and mall-based retailers like JC Penney (NYSE: JCP), Nordstrom (NYSE: JWN), The Limited (NYSE: LTD) and The Gap (NYSE: GPS).

We hope you noted that "The Greek" beat the much more famous and well-paid Bob Dole on The Gap call. When Bob recommended GPS recently on CNBC, we came out critical of the pick. Seems to us Bob's wife must be shopping at an extraordinary location atypical of GPS' overall game.

Import and Export Prices are set for 8:30 a.m. release, with consensus expectations looking for an April increase in import prices of 1.7%. Energy pricing always plays a big role here, and we see no exception this time around, or the next for that matter.

March Business Inventories are scheduled for 10:00, with expectations for a 0.5% increase. That's slightly less than in recent months, but remember, it's not inventories in isolation that matter, but inventories-to-sales. Wholesale inventories were reported last week, and they decreased 0.1%, which was good to see.

Presidential primaries run off in West Virginia and Nebraska. Finally, Fed men Ben Bernanke and Richard Fisher are scheduled to find microphone's on Tuesday, and that's always fun!

Tuesday's earnings include Wal-Mart (NYSE: WMT), Applied Materials (Nasdaq: AMAT), Cameco (NYSE: CCJ), Canadian Solar (Nasdaq: CSIQ), Electronic Arts (Nasdaq: ERTS), Toll Brothers (NYSE: TOL), Fossil (Nasdaq: FOSL), Hill-Rom Holdings (NYSE: HRC), Liz Claiborne (NYSE: LIZ), American Apparel (NYSE: APP), American Science & Engineering (Nasdaq: ASEI), Dish Network (Nasdaq: DISH), Echostar (Nasdaq: SATS), Employers Holdings (NYSE: EIG), Fortress Int'l Group (Nasdaq: FIGI), GigaMedia (Nasdaq: GIGM), Given Imaging (Nasdaq: GIVN), Gushan Environmental Energy (NYSE: GU), Hana Biosciences (Nasdaq: HANB), Helen of Troy (Nasdaq: HELE), Hitachi Limited (NYSE: HIT), Icahn Enterprises (NYSE: IEP), KEMET (NYSE: KEM), Kubota (NYSE: KUB), Nissan Motors (Nasdaq: NSANY), Opnet Technologies (Nasdaq: OPNT), Palatin Technologies (AMEX: PTN), Pan American Silver (Nasdaq: PAAS), Paragon Technologies (AMEX: PTG), Park-Ohio Holdings (Nasdaq: PKOH), Photronics (Nasdaq: PLAB), Repsol YPF (NYSE: REP), Rubio's Restaurants (Nasdaq: RUBO), Russ Berrie (NYSE: RUS), SatCon Technology (Nasdaq: SATC), SenoRx (Nasdaq: SENO), Singapore Airlines (Nasdaq: SINGF.PK), Societe Generale (Paris: GLE.PA), StatoilHydro (NYSE: STO), Supreme Industries (NYSE: STS), TJX Cos. (NYSE: TJX), US Shipping Partners (NYSE: USS), Vector Group (NYSE: VGR), Verasun (NYSE: VSE) and Whole Foods Market (Nasdaq: WFMI).

Wednesday - Inflation

Wednesday's theme is "inflation" with important consumer price and oil information on tap. The Consumer Price Index (CPI) for the month of April is expected to show prices increased 0.3% on the headline, month-to-month, and 0.2% on Core CPI, or after subtracting out food and energy price change (delusional CPI might be more like it). This month's forecast perfectly matches last month's actual change, and I guess lack of deterioration is a good thing?.. Bernanke keeps telling us prices will moderate though.

EIA Petroleum Status is on tap for 10:30 release, and last week noted a build of 5.7 million barrels of oil inventory. What's more important this week is if Hezbollah backs off in Lebanon, if The Wall Street Journal report on Hugo Chavez's aid to Colombian rebels proves poorly researched, and if Iran decides to build wind farms instead of nuclear plants...

The Mortgage Bankers' Association is also on the slate as usual for Wednesday. Overseas, President Bush meets with his Israeli counterpart in Jerusalem, marking the 60th anniversary of the nation's founding.

Wednesday's earnings schedule includes Deere (NYSE: DE), Freddie Mac (NYSE: FRE), Agilent Technologies (NYSE: A), Macy's (NYSE: M), Jack-In-The-Box (NYSE: JBX), Acxiom (Nasdaq: ACXM), Akorn Int'l (NYSE: ATV), Amtech (Nasdaq: ASYS), ArcelorMittal (NYSE: MT), Audiovoxx (Nasdaq: VOXX), Brocade Communications (Nasdaq: BRCD), CAE (NYSE: CGT), China Digital TV (NYSE: STV), CGGVeritas (NYSE: CGV), Compugen (Nasdaq: CGEN), Comstock Homebuilding (Nasdaq: CHGI), Dana Holding (NYSE: DAN), Diana Shipping (NYSE: DSX), Double Hull Tankers (NYSE: DHT), Intelli-Check (NYSE: IDN), Interleukin Genetics (NYSE: ILI), Media Sciences Int'l (Nasdaq: MSII), Memory Pharmaceuticals (Nasdaq: MEMY), NICE Systems (Nasdaq: NICE), O'Charley's (Nasdaq: CHUX), Pioneer Behavioral Health (NYSE: PHC), Protection One (Nasdaq: PONE), ReneSola (NYSE: SOL), Salary.com (Nasdaq: SLRY), Sina (Nasdaq: SINA), Sony (NYSE: SNE), Spartan Stores (Nasdaq: SPTN), Stanley (NYSE: SXE), Steak n' Shake (NYSE: SNS), Synta Pharma (Nasdaq: SNTA), Teekay Shipping (NYSE: TK), Taseko Mines (AMEX: TGB), Telefonica (NYSE: TEF) and Vivendi (Paris: VIV.PA).

Thursday - Manufacturing

Thursday's theme is as clear cut as the two days preceding it, the state of manufacturing. Three separate reports will offer plenty of insight into how the guys who make things are doing. Leading off, the New York Federal Reserve will post its Empire State Manufacturing Survey for May at 8:30. The take on New York area manufacturing looks to show a state of limbo, with Bloomberg's consensus seeing a measure of 0.0, versus +0.6 last month.

In what looks to be a real treat, Industrial Production and the Philly Fed will follow that report up all before you've had your second cup of coffee (I know some of you will be on the third!). Consensus expectations for Philly area manufacturing see a reading of -20.0, compared to last month's -24.9. It's kind of sad really, the clarity in the fact that these expectations are most dependent upon the prior month result, rather than any solid gauge. Of course, the past is often the best forecaster of the near-term future, but I'm very sure from experience, that human weakness is at play here as well, and that's disappointing.

April Industrial Production is set for 9:15 reporting. Production is forecast to decrease 0.3%, compared to an increase of 0.3% in March. Capacity utilization is seen deteriorating to 80.1%, from 80.5%. The direction makes sense, but the intensity might be off; or could international demand for U.S. goods be enough to offset domestic softness in both durables and nondurables. The gauntlet has been tossed.

The auto industry has not been shy about posting cutbacks in production and noting its relevance to current demand. We've seen such moves from General Motors (NYSE: GM), and Ford (NYSE: F) is rumored to be considering putting its old Mercury line to bed. We say, good riddance! Companies should not fall in love with product lines, just as investors should not fall in love with stocks.

Thursday proves to be a busy day, with the regular Initial Weekly Jobless Claims Report also set for the early AM. This one almost religiously sees forecasts matched with prior week results, and almost always proves significantly off that estimate. Economists are looking for new benefits claims to have numbered 370,000 this week; that compares to 365K last week.

Treasury International Capital is also due before the market open. Foreign demand for long-term U.S. securities increased last month to $72.5 billion. The EIA reports on Natural Gas storage at its usual 10:30 a.m. time, just a week after Goldman Sachs (NYSE: GS) added it to its list of energy spikes to fear in the future. Finally, in the afternoon, the National Association of Home Builders will release its Housing Market Index. As you might imagine, this has not offered a party atmosphere of late, and measured 20 at last reading, and through most of this year. Chairman Bernanke will also appear in Chicago, to discuss banking and credit market turmoil. Have some wine with that buffet of information.

Thursday's earnings include Hewlett-Packard (NYSE: HPQ), Kohls (NYSE: KSS), JC Penney (NYSE: JCP), Autodesk (Nasdaq: ADSK), Nordstrom (NYSE: JWN), BMC Software (NYSE: BMC), Urban Outfitters (Nasdaq: URBN), Advance auto Parts (NYSE: AAP), Compuware (Nasdaq: CPWR), Mentor Corp. (NYSE: MNT), Arctic Cat (Nasdaq: ACAT), Blockbuster (NYSE: BBI), China Precision Steel (Nasdaq: CPSL), FreeSeas (Nasdaq: FREE), Gilat Satellite (Nasdaq: GILT), Irvine Sensors (Nasdaq: IRSN), Modtech Holdings (Nasdaq: MODT), National Grid (NYSE: NGG), Noah Education (NYSE: NED), Perceptron (Nasdaq: PRCP), Prestige Brands (NYSE: PBH), Quantum (NYSE: QTM), The Blackstone Group (NYSE: BX), UT Starcom (Nasdaq: UTSI), Yingli Green Energy (NYSE: YGE) and more.

Friday - Housing

After taking a breath following a busy Thursday, Friday offers a couple key data points. Housing is the theme for Friday. Treasury Secretary Paulson is scheduled to talk to few Congressmen on the topic in Washington. Recall, there's a bill working its way through Congress that the president has threatened to veto. Meanwhile, economists expect housing starts moderated even further, to a pace of 940,000 in April, from 947K in March.

The University of Michigan will update its Consumer Sentiment Index for May, and economists are looking for a still drab 62.5 measure. April sentiment was a robust 63.2 (that's sarcasm, we do that here on occasion).

While President Bush closes out his Middle Eastern themed week, some 60 government leaders have a nice weekend planned in Peru. We're looking forward to a possible round 2 between the royals of Spain and Hugo Chavez, or perhaps, a steel cage match between Chavez and the head of Colombia. You know they make unique bow ties over there...

Friday's earnings include Abercrombie & Fitch (NYSE: ANF), Fairpoint Communications (NYSE: FRP), Multi-Color Corp. (Nasdaq: LABL) and Pinnacle Gas Resources (Nasdaq: PINN). Please find our market commentary all week long at the site.

Please see our disclosure at the Wall Street Greek website.

Week in Video Review: May 5 - 11

It was quite a week, including two holidays, MBCW and Mother's Day. The week in video is not short on interesting events either, with a new president taking position in Moscow, the ECB and IMF renewing the fear of inflation, and intensifying geopolitical tensions that took oil prices $10 higher. If you cannot see the video where you are, please visit the Wall Street Greek website.



As always, the views expressed within the videos may not agree with the opinion of "The Greek."

Please see our disclosure at the Wall Street Greek website. Article interests (AMEX: SPY, AMEX: DIA, AMEX: SDS, AMEX: QLD, AMEX: DOG, Nasdaq: QQQQ, NYSE: XOM, NYSE: GE, NYSE: AIG, NYSE: GS).

Geopolitical Factors Drive Markets - Iran Event Nears

Geopolitical issues dominated the news flow last week, driving the stock market down approximately 2% and oil prices up roughly $10.

First, Let's Note the Inflation Factor

Like the Beastie Boys use to say, "It's the new style," new style concern that is, as inflation takes the baton from recession. The European Central Bank (ECB), Bank of England (BOE) and International Monetary Fund (IMF) all pounded that fear down the market’s throat this past week again. That led to an early end to the nascent dollar rally, as The Greek forecast it would just one week earlier. The dollar actually closed the week (EURUSD: 1.55) about where it started it, but ended the period losing some of its earlier gains.

The Geopolitical Factor

Among the catalysts behind the move in the markets, one that certainly had something to do with the double-digit rise in oil prices and decline in stocks, was intensified geopolitical tensions. Stocks sold off on the week, with the Dow Jones Industrials declining 2.4%, the S&P 500 falling 1.8% and the NASDAQ Composite drifting 1.3%.

The market started falling even before the central bank decisions and fear-inducing press conferences. Geopolitical issues and petroleum and gasoline price rise were very likely catalysts behind the market’s dismay. What started during the prior week, with Turkish air raids on Kurdish rebels, and the resulting Kurdish threats of retaliation against American forces in Iraq, continued this past week with new catalysts.

Geopolitical tensions seemed to spread and intensify all week long. The Supreme Leader of Iran announced that his country would not back down to international pressures, and would continue forward with its nuclear program. That same day, a U.S. general declared that America was incapable of engaging Iran now, with fires to put out in both Iraq and Afghanistan.

As if that was not enough, Nigerian petroleum production and distribution came under further stress, as rebels attacked infrastructure in the major petroleum-producing nation. By the end of the week, attention had turned to Venezuela, as The Wall Street Journal reported that it had evidence implicating President Hugo Chavez of actively assisting Colombian rebels.

Meanwhile, a very interesting event is taking place in Lebanon, where Hezbollah has taken over parts of Beirut. The timing of this Hezbollah offensive is very suspect, as perhaps Iran's allys in Lebanon seek to solidify a front for the foreseen conflict ahead.

At the same time, the tiny Republic of Georgia declares that war with Russia is a very real possibility. If I may go out on a tangent for a moment, The Greek very much expects Russia to use the chaos and scrutiny that may result from U.S. involvement against Iran to advantage in its political arguments with Georgia. I fully expect the borders of Abkhazia and Ossetia to end up dominated by Russian troops, and the BTC pipeline to be left in ruins before Russia is finished with this story.

Oil Price Move is Counter to Inventory and Dollar Trend

Take note, there seems to be a clear underlying driver behind last week's oil price movement that is counter to supply trend. After all, petroleum inventories increased sharply again this past week, rising by 5.7 million barrels. Meanwhile, just weeks after Israel staged a nationwide drill more intense than any in its history, Wall Street Greek hears of a closed-door Federal Advisory Committee meeting of the U.S. Nuclear Command and Control System Comprehensive Review Advisory Committee scheduled for early June.

Yes, we mean to insinuate that the bombing of Iran may not be very far off, and may be playing a role behind the rise in oil prices. Goldman Sachs (NYSE: GS), an investment bank often in the know, this week reported expectations for an oil price spike to $200 in the next year or two, and a natural gas price spike as well. These happen to be views The Greek concurs with, due solely to our expectation for a messy confrontation with Iran that could hold some surprising repercussions for the world. So, along with Goldman, some very "smart money" might be behind the counter moves in oil and stocks.

We would not be surprised to discover significant builds across sovereignties in the know. China, of course, is actively growing its own strategic oil reserve. The timing of the events in Israel, the U.S. and Lebanon, escalating Russian pressure on Georgia, and the counter trend move in oil prices and inventory build, while at the same time the dollar had hardly budged by week's end, all point to something else.

Israel Will Do the Initial Bombing

Israel will not allow a volatile, threatening and unpredictable neighbor to gain nuclear weapons capability, or it will at least do everything in its power to prevent that. And, Israel is also not likely to wait for a change on Pennsylvania Avenue to act, because that change could significantly alter the position of its ally in the United States. It at least increases uncertainty, and that uncertainty can be overcome by Israel's acting sooner rather than later. Our timeline is somewhere between the middle of June and end of September. For those who may still view this kind of writing as alarmist, or even delusional, I suggest you wake up from your placid dream state and realize your new reality.

Please see our disclosure at the Wall Street Greek website. Article interests (AMEX: PPA, AMEX: DIA, AMEX: SPY, AMEX: QLD, AMEX: DOG, AMEX: SDS, Nasdaq: QQQQ)

Food Inflation, Ethanol Stocks and the Future

Nearly a year ago we authored an article discussing the secular change in food and energy prices and their likely impact on inflation across the board. We suggested headline CPI was more realistic than the Federal Reserve even understood. We insisted that food and energy price rise would lead to embedded inflation, and rise in the Core CPI.

There were two interesting articles published over the past couple days that add chapters to the inflation saga that is still in the midst of development. The IMF warned yesterday that global inflation was in fact a problem. An organization loaded with representatives who make a lot more money than me, the IMF, brilliantly reported that inflation had reemerged and that the drivers appeared to be "fundamental" in nature. Sound familiar? Yeah, you read that at The Greek last summer, when we said the drivers of food price rise were not seasonal, but secular in nature (a.k.a. IMF's fundamental), and should not be discounted as temporary noise that would weed itself out.

First, I have to acknowledge that I'm not an IMF press release junkie, and so can't be sure of what they were saying last summer. Also, they're definitely reporting on something that is of current importance, so kudos for that. But, imagine how much more productive warnings from institutions like the IMF might have been last year. Rather than reporting the news, why don't we shape it... Hey fellas, I'm available for consultation services if you want to know what's going to happen six months from now!

But let's not be one of those "I told you so" kind of newsletters. Let's look ahead now. First, let's take a closer look at what the IMF had to say, and analyze that (I am as frustrated as De Niro with the pistol and the pillow; it's about time someone who gets paid to know these things woke up right!?).

A Look at the IMF Warning

It's just a regurgitation of my article basically, pointing to growth in the emerging world and developing economies, and how that is driving increased demand for basic commodities, and food and energy. In fact, the IMF notes that emerging and developed economies as a group have accounted for 95% of the growth in demand for oil since 2003.

What the IMF neglected to point out is that the industrialization of China, India and the like have also impacted domestic food supply in the developing world. Farmers are increasingly being wooed away from the fields by the promise of greater opportunities in the big cities that are modernizing at breakneck pace. Factory opportunities are also luring labor away from the fields and patties.

Developments in Crop Planting and Yields

The development of corn based ethanol certainly seems ill-timed now, and will serve as another point of criticism of the Bush Administration as the history books record it. While its worked in Brazil, they didn't damage food pricing at the cost of insuring energy. In the meantime, the wild ride in ethanol stocks has ended up killing a lot of capital. Pacific Ethanol's (Nasdaq: PEIX) 52-week price range is $3 to $16, with the current price at $3 and change.

I find the developments in agriculture an interesting study. Initially, every farmer and his mother rushed to plant corn and join ethanol partnerships. Then corn prices skyrocketed and farmers rushed to plant more corn at the cost of other crop acreage, thus raising the prices of agricultural crops and then proteins across the board. Now, in typical human reactionary pattern, farmers are rushing to plant wheat and soybeans, taking corn crop acreage away. Guess what's happening as a result. Corn crop yield and inventory are expected to see significant decline (analysts surveyed by Thomson Financial see a 47% decrease in corn stocks in 2009 (Aug.)), and corn prices have risen again. In the meantime, the other crops have posted price decline. Where's this all taking us!!!

Ethanol Stocks Might Find New Life (if they can survive)

If recent patterns hold true, corn planting seems sure to increase again, so if oil prices stick high, margins might widen for the ethanol producers in the future. While The Greek believes it's still too early to start counting on that profit opportunity, the key names in the field to place on your radar screens include Verasun Energy (NYSE: VSE), Archer Daniels Midland (NYSE: ADM) and Pacific Ethanol (Nasdaq: PEIX). These stocks are up today, as the market likely reflects an overdone trade in corn, with the news due this afternoon from the USDA.

But, corn based ethanol is definitely not the answer to our energy needs and goal for such independence. Just as import