Today's Coffee - Dow 14,000 Minus 526.43

Back by great demand, "Today's Coffee" is geared to provide insight into the flood of international market news, economic data, commodity market activity, geopolitical happenings and company specific news of the day.

Whew! At least it's over, or is it... Now China and Japan have to digest the American market action, and more importantly, it's drivers. With concern now heightened over the potential for a credit crunch in the U.S. and softening consumer spending, heavy exporting nations with high flying shares, like say China, are at risk. Friday could get even uglier in the states if a severe correction ensues in Asia, and my dear friends, Wall Street Greek views that event likely.

ECONOMIC DATA & ANALYSIS

Durable Goods Orders for June

June's report showed durable goods orders rose 1.4%, short of the economists' consensus view for a 2.0% increase, as compiled by Bloomberg. What was concerning here was that ex-transportation equipment, durable goods orders decreased 0.5%, marking the second monthly such decline. Business investment fell again, pulling the rug out from under the bull case that corporations would increase investment. There's one forecast that this report fits perfectly into, and that's Wall Street Greek's detailed economic and market outlook, as provided to you weeks ago in our weekly article, "The Greek's Week Ahead - O' Say Can You See Our Economic Future." In this article and articles that followed during that same week, we outlined our expectation that the market would run up into earnings season, before turning lower no later than two weeks in. Well, here we are backing up from 14,000. Wall Street Greek continues to expect consumer spending data to show an economy losing support. And, time and again we've warned that American multinationals still have their bread buttered by American consumers. We anticipate domestic spending weakness will impact multinationals and then also emerging markets.

New Home Sales (June)

The new homes data offered a quite different view than the vista provided by existing homes earlier this week. New home sales fell to an annual pace of 834,000, missing analysts' consensus for 890,000 and falling off from May's 893,000 (revised). New home inventory increased while the median price of a new home fell. This was in stark contrast to the existing home data, and we believe this data provides a more accurate view of the current situation. Home builders are finally facing up to their reality and pushing out recovery forecasts. We believe you can expect to hear of significant layoffs and increasing property write-downs in the near future.

Beazer Homes (NYSE: BZH) reported earnings today, while Pulte Homes (NYSE: PHM) reported after the bell last night. Beazer was down about 9%, after reporting a quarterly revenue decline of 37% and a loss of $3.20, compared to EPS of $2.37 in the year ago period. Pulte reported 40% lower revenue and a quarterly loss of $2.01, compared to EPS of $0.94 in last year's period. Pulte didn't miss forecasts because it warned analysts recently it would lose $2.00 to $2.10.

Weekly Initial Jobless Claims

First time collectors of unemployment benefits totaled 301,000, below Bloomberg's consensus view for 312,000 and marked a decrease from the week just prior. Remember, we here at Wall Street Greek preach that unemployment will not provide us the early glimpse at labor softness, but that a tail-off in new hiring will first signal the softness we expect from retail and consumer needy businesses, as well as "on the books" losses from home builders. The inside word is that layoffs in construction have been understated due to the amount of illegals in the industry's workforce.

Tomorrow brings the advanced GDP report for the second quarter. We expect the figure will miss the consensus estimate of 3.2%. Michigan Consumer Sentiment will also be reported, and is seen measuring 91.

INTERNATIONAL MARKETS

After the Chinese mainland market took off today, and the Shanghei Composite Index SE broke a record, things could be quite different tomorrow. Given the Dow's drop of 2.26% Thursday, Friday is likely to be tumultuous overseas. This is especially likely, as the source of weakness in the U.S. is concern for a credit crunch and reduced consumer spending. As the U.S. is such an important market for just about every nation, especially the high flying Asian production machines, a collapse in China is perhaps likely Friday. If this happens, Friday portends to get even uglier in the states.

COMPANY SPECIFIC NEWS

Friday's earnings reporters include Active Power (Nasdaq: ACPW), Baker Hughes (NYSE: BHI), Celanese (NYSE: CE), Chevron (NYSE: CVX), Fortune Brands (NYSE: FO), Gene Logic (Nasdaq: GLGC), Idexx Laboratories (Nasdaq: IDXX), Ingersoll-Rand (NYSE: IR), Medco Health Solutions (NYSE: MHS), Sepracor (Nasdaq: SEPR), Veeco Instruments (Nasdaq: VECO) and more.

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