Today's Morning Coffee - Wall Street Greek Impersonation
Do you ever wake up in the morning to see a Chief Investment Strategist on television quoting your weekly article almost word for word, but calling it his view? Today at 6:00 a.m., it happened to me for the second time. Don't get me wrong, I like that they are reading and that they like me and my views, but shouldn't he be sharing some of his million dollar income with me? I just hope his firm subscribes to my service down the road.
It was easy to express concern about the consumer this morning, as interest rates were on the rise, but five months ago when I was out there on a limb all by myself with this theory, these guys were calling me an "Armageddon Analyst." Remember my article, "Mainstream Armageddon?" Well, welcome to it. I'm mainstream! Now you should be scared. If you want to see the Greek represent himself, rather than being impersonated, email CNBC and tell them about me at squawk@cnbc.com (or squawkbox@cnbc.com- email both to be safe).
Economic Data & Analysis
The RBC Cash Index dropped to 81.4 in June from 87.1 in May, as it marked a ten-month low. It looks like high gasoline prices are important to the consumer after all, and not just a figment of Wall Street Greek's imagination. Weekly supermarket expenditures for the next BBQ are rising too, but Mr. Consumer is spending there since he can't afford to go to restaurants as often as he use to. His house is losing value, while his mortgage and credit card payments are increasing. Also, he just received the whopper of an electricity bill that included his first month's usage of the air conditioner. I think I've painted the picture for you. However, let's say it one more time for the newcomers... Consumer spending is going to decrease, impact retail and other service sectors, drive lower new hiring and increase unemployment, and impact the economy. I believe GDP could get an uplift in the second quarter, but see a leg lower to follow. And 2008, with the prospect of war, looks like a bad year to me. For the newcomers...
On a personal note...
Ipsos puts out the index. Ipsos means height in Greek. One of my favorite uncles once told me something amazing. He said (written for pronunciation) "Stathe stawn ipsos sou!," which wonderfully means, "stand at your height." Perhaps the most uplifting words I ever heard. My Uncle Mark passed away in a hunting accident that impacted me so badly that I went home sobbing from work the minute I heard, poured a couple strong glasses of ouzo for the two of us, and never voted for George Bush over Al Gore that day. He was a great man with a huge heart and I honor him for it.
The U.S. trade deficit narrowed 6.2%. The deficit measured $58.5 billion in April, down from a revised $62.4 billion in March. The gap was the lowest since September 2004, and the drivers were telling. This independent equity research reporter has been telling you about the economic lie that is driving misinterpretation of economic condition. Imports were significantly weaker, while exports were higher in April. As we have been writing, demand for American goods overseas has provided a false sense of security, making the manufacturing sector appear relatively solid when in fact domestic demand appears to be waning. As I've said in the past, American consumers butter the bread of American companies, and eventually even the large cap multinationals in the Dow and S&P 500 indices should show impact from domestic weakness. That same weakness was evidenced in the import numbers. Now that the dollar is gaining strength, foreign sales may lose some punch as well. This is a big part of the call back of Dow shares recently. I feel many experts are misconstruing the future of manufacturing, relying on it to pull us through this economic trough.
The 10-year yield went as high as 5.25% this morning, but has since pulled back some. This is bad bad bad for equity and bond investors and variable rate mortgage holders, as the shift in the yield curve has been seen across duration. I think the curve should keep its normal rising structure, considering the long-term drivers of increasing demand for limited supplies of goods and services. However, I believe the market may not recognize this and the curve may invert again.
International Markets & Geopolitical Topics
The majority of international markets followed the lead of the U.S. In Asia, China issued a recall of U.S. products including raisins and some other meaningless product. The cutesy trade war going on employing Chinese wheat gluten and American raisins as weapons is kind of silly at this point. I would like to see some numbers on the degree of pet food caused pet fatalities, if any of you can share this. I mean it's like China and the U.S. are trying to show each other how they can impact one another. Is that really necessary? Don't they know? Don't we know? If you want to see real damage to the Chinese stock market, wait until the Democrats nominate somebody and the polls show a close enough race to raise China's concern. In the election year, both sides of the table are likely to hedge a bit, whether they favor actions against China or not. Yeah, the period following the primaries are not likely to be good for Chinese equities for many reasons. The Hang Seng Index fell 1.4% today, while the NIKKEI 225 dropped 1.52%. Interestingly enough, and an experiment in how well the insulation of a communist block works, the CSI 300 actually rose 0.94% today.
New Zealand raised rates, driving concern that other Asian and Eastern nations might do the same. Australia's All Ordinaries Index dropped 1.26%. With the open of U.S. markets and bit of a recovery, European shares have turned around today. The DJ STOXX 50 is up 0.24%, while the FTSE 100 is down 0.04%. Clearly, the market remains concerned about the future, so today's rise may be premature. You know my long-term view.
Commodity Markets
Gasoline RBOB futures are down 1.8% at this hour, while WTI Crude is down 1.2%. The easing of tensions between the U.S. and Russia may be playing some role here, but I believe much has to do with profit taking and adjustment after yesterday's ominous warning from OPEC. Recall, OPEC announced plans to reduce investment in new capacity, driven by U.S. and European efforts to develop alternative energy resources. Also, the passing of the cyclone without serious damage to Persian Gulf installations is certainly a relief to prices heading into the weekend.
Stock Specific News
The U.S. International Trade Commission imposed a ban on cell phones containing a Qualcomm (QCOM) chip that it ruled infringes on a patent held by Broadcom (BRCM). The ruling stopped short of barring previously imported models. QCOM is up 1.7% today, while BRCM is 1.3% higher. Reporting earnings on Friday, look for Kellwood Company (KWD), Vail Resorts (MTN), and a couple others.
Thank you for your interest in our articles. (disclosure)
It was easy to express concern about the consumer this morning, as interest rates were on the rise, but five months ago when I was out there on a limb all by myself with this theory, these guys were calling me an "Armageddon Analyst." Remember my article, "Mainstream Armageddon?" Well, welcome to it. I'm mainstream! Now you should be scared. If you want to see the Greek represent himself, rather than being impersonated, email CNBC and tell them about me at squawk@cnbc.com (or squawkbox@cnbc.com- email both to be safe).
Economic Data & Analysis
The RBC Cash Index dropped to 81.4 in June from 87.1 in May, as it marked a ten-month low. It looks like high gasoline prices are important to the consumer after all, and not just a figment of Wall Street Greek's imagination. Weekly supermarket expenditures for the next BBQ are rising too, but Mr. Consumer is spending there since he can't afford to go to restaurants as often as he use to. His house is losing value, while his mortgage and credit card payments are increasing. Also, he just received the whopper of an electricity bill that included his first month's usage of the air conditioner. I think I've painted the picture for you. However, let's say it one more time for the newcomers... Consumer spending is going to decrease, impact retail and other service sectors, drive lower new hiring and increase unemployment, and impact the economy. I believe GDP could get an uplift in the second quarter, but see a leg lower to follow. And 2008, with the prospect of war, looks like a bad year to me. For the newcomers...
On a personal note...
Ipsos puts out the index. Ipsos means height in Greek. One of my favorite uncles once told me something amazing. He said (written for pronunciation) "Stathe stawn ipsos sou!," which wonderfully means, "stand at your height." Perhaps the most uplifting words I ever heard. My Uncle Mark passed away in a hunting accident that impacted me so badly that I went home sobbing from work the minute I heard, poured a couple strong glasses of ouzo for the two of us, and never voted for George Bush over Al Gore that day. He was a great man with a huge heart and I honor him for it.
The U.S. trade deficit narrowed 6.2%. The deficit measured $58.5 billion in April, down from a revised $62.4 billion in March. The gap was the lowest since September 2004, and the drivers were telling. This independent equity research reporter has been telling you about the economic lie that is driving misinterpretation of economic condition. Imports were significantly weaker, while exports were higher in April. As we have been writing, demand for American goods overseas has provided a false sense of security, making the manufacturing sector appear relatively solid when in fact domestic demand appears to be waning. As I've said in the past, American consumers butter the bread of American companies, and eventually even the large cap multinationals in the Dow and S&P 500 indices should show impact from domestic weakness. That same weakness was evidenced in the import numbers. Now that the dollar is gaining strength, foreign sales may lose some punch as well. This is a big part of the call back of Dow shares recently. I feel many experts are misconstruing the future of manufacturing, relying on it to pull us through this economic trough.
The 10-year yield went as high as 5.25% this morning, but has since pulled back some. This is bad bad bad for equity and bond investors and variable rate mortgage holders, as the shift in the yield curve has been seen across duration. I think the curve should keep its normal rising structure, considering the long-term drivers of increasing demand for limited supplies of goods and services. However, I believe the market may not recognize this and the curve may invert again.
International Markets & Geopolitical Topics
The majority of international markets followed the lead of the U.S. In Asia, China issued a recall of U.S. products including raisins and some other meaningless product. The cutesy trade war going on employing Chinese wheat gluten and American raisins as weapons is kind of silly at this point. I would like to see some numbers on the degree of pet food caused pet fatalities, if any of you can share this. I mean it's like China and the U.S. are trying to show each other how they can impact one another. Is that really necessary? Don't they know? Don't we know? If you want to see real damage to the Chinese stock market, wait until the Democrats nominate somebody and the polls show a close enough race to raise China's concern. In the election year, both sides of the table are likely to hedge a bit, whether they favor actions against China or not. Yeah, the period following the primaries are not likely to be good for Chinese equities for many reasons. The Hang Seng Index fell 1.4% today, while the NIKKEI 225 dropped 1.52%. Interestingly enough, and an experiment in how well the insulation of a communist block works, the CSI 300 actually rose 0.94% today.
New Zealand raised rates, driving concern that other Asian and Eastern nations might do the same. Australia's All Ordinaries Index dropped 1.26%. With the open of U.S. markets and bit of a recovery, European shares have turned around today. The DJ STOXX 50 is up 0.24%, while the FTSE 100 is down 0.04%. Clearly, the market remains concerned about the future, so today's rise may be premature. You know my long-term view.
Commodity Markets
Gasoline RBOB futures are down 1.8% at this hour, while WTI Crude is down 1.2%. The easing of tensions between the U.S. and Russia may be playing some role here, but I believe much has to do with profit taking and adjustment after yesterday's ominous warning from OPEC. Recall, OPEC announced plans to reduce investment in new capacity, driven by U.S. and European efforts to develop alternative energy resources. Also, the passing of the cyclone without serious damage to Persian Gulf installations is certainly a relief to prices heading into the weekend.
Stock Specific News
The U.S. International Trade Commission imposed a ban on cell phones containing a Qualcomm (QCOM) chip that it ruled infringes on a patent held by Broadcom (BRCM). The ruling stopped short of barring previously imported models. QCOM is up 1.7% today, while BRCM is 1.3% higher. Reporting earnings on Friday, look for Kellwood Company (KWD), Vail Resorts (MTN), and a couple others.
Thank you for your interest in our articles. (disclosure)
posted by The Greek | 8:36 AM
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