Today's Greek Coffee - Standard Herd & 140k Turks
In Greece, old souls like myself like to drink a Greek coffee in the afternoon, after siesta. It helps drive the passion that drives them to squeeze the lemon of life for all the juice it has.
The market acted like a chicken with its head cut off today, and I'm convinced there is a full moon to blame. Sure, there are plenty of real catalysts out there to drive descent, but I actually think there are too many, and that's shaking the cool of investors. Today's catalysts include warnings from Home Depot (NYSE: HD), Alcoa (NYSE: AA), Sears Holdings (Nasdaq: SHLD) and D.R. Horton (NYSE: DHI). It's truly scary stuff, reminding folks about the troubles of housing, consumer spending and the overall economy.
As if that wasn't enough, Standard & Poor's indicated it may soon downgrade a good deal of subprime debt, placing the debt on "credit watch negative," so to speak. Well duh!?!, it's about time! The rating agency noted the lack of clarity in vision for a housing recovery anytime soon. Maybe they should have been reading Wall Street Greek!
As if that wasn't enough, news broke that confirmed a rumor we first heard weeks ago. A third U.S. Naval carrier fleet is set to join the impressive force already in place in the Persian Gulf. We later discovered the movement of the Enterprise Battle Group was part of a routine action to relieve the U.S.S. Nimitz. Still, this occurred while news hit the wire that Iran was making its own centrifuges. The timing of this news, after Putin's trip to Maine, is conspicuous. It comes at the same time Venezuela's Chavez traversed the seas to Russia and the Middle East. There's too much jostling for position occurring to be ignored. The market does not ignore anything for long, and it's likely to be quite sensitive to geopolitical news in the near-term. Well, if Wall Street Greek heard about the aircraft carrier ahead of time, we're sure plenty of oil traders did as well. If the Nimitz hangs around, this could explain the recent run up in oil prices, even after the Nigerian strike concerns faded.
ECONOMIC DATA & ANALYSIS
The State of the Consumer - ICSC Weekly Same-Store Sales Report
Same-store sales rose 0.1% week-to-week and 2.4% year-over-year for the week ended July 7, 2007. These are not numbers much different than the week before, though the growth rate drifted modestly on the year-to-year figure. We do not even mention the Redbook figure also released today, as it is not a reliable predictor, in our view.
Investor concern was raised today though, with Home Depot and Sears both reporting troubling news. HD shares held up well though. HD management wisely set a floor support to their share price by initiating a tender offer for their own shares. With the tender price set at $39 to $44, and extending to a potential 250 million shares, the pressure from today's guidance news was sustained. HD lowered its guidance for 2007, and blamed the continued softness of its operating environment and the reclassification of its sold wholesale distribution business. HD sees EPS declining 15-18%, versus the 9% it previously expected. We can't help but wonder who the media will blame now that Bob Nardelli is gone.
Sears Holdings' shares, however, didn't fair so well, falling 10% on the day. Sears tried the share repurchase card as well, clearly, with no success. Sears warned that its second quarter, ending in early August, would provide EPS within a range of $1.06 to $1.32, compared to consensus expectations for $2.12 per share, as compiled by Thomson Financial. That's quite a miss! Oh boy, we thought to ourselves. Does this mean the scenario we were looking for to start play out in July and August is actually happening? Maybe, but Sears' news is not enough to provide confirmation. Besides, Sears is a special animal, not indicative of a pure retailer.
Remember, we are looking for consumer spending softness to increase in July and August and potentially lead retailers to consolidate operations, reduce workforce and help the economy into recession. With rates still pressured, the Fed may not react swiftly enough to stave off a GDP drop.
Liquidity Environment - Rating Agency Moves
Wall Street Greek feels vindicated. We were out there on our own in January, as we claimed the housing market was not about to recover. At that time, most considered us an outlier, even a radical publisher. Now we're mainstream with regard to consensus opinion on housing anyway. Nobody was buying into our consumer argument a month ago, when May posted strong results. It's hard to stick to your guns when economists and strategists with impressive corporate names under their pictures are talking recovery. Hard for most that is, but not this independent thinker, and your guide through the herd of yesmen.
Standard & Poor's today announced that it had placed a large group of subprime loan backed securities on "credit watch negative." No kidding!? What do you say to this, better late than never? Even better, Moody's later moved to lower the ratings on $5.2 billion of bonds backed by subprime loans. Standard & Poor's is looking at some $12 billion of bonds to reassess. I can't explain it better than this article, so please read.
Remember Wall Street Greek's forecast for a short term rise in stocks, before an eventual economic downturn and stock decline? I have now had to reassess as well. Forgive me, I thought S&P and Moody's were going to sleep through the whole mess, but who knew! They woke up. Remember my article, "The Greek's Week Ahead - When Liquidity Dries?" Well, I'm getting parched already! It's "when" right now! We anticipated the market would regain enthusiasm for multinationals and help drive market rise for the short period heading into reports, but bang! zoom! shazam! Let's welcome the herd back into the room, and get the heck out of U.S. securities. As a matter of fact, let's start digging a cave to hide our cash in, and ourselves. Wow, I was underweight financials long ago, and the consumer discretionary sector. Now is not the time to change that view. Let's get battle ready. Stick with big health care and consumer staple names, especially those with global exposure, and gold should become popular again as well. We have liked Japan, but will not forever. Eventually, perhaps soon in fact, a softening American consumer will impact Asia in a big way, in our view. You have to own Russian energy firms; I like the Russian market now.
The Geopolitical Factor
So, we heard a few weeks ago a third carrier was rumored headed for the Gulf. I think by now we're all clear that it's possible our troops in Iraq are threatened by more than just the Iraqis. We know Syria is aligned with Iran, but in war there is always surprise. Are you surprised that Russian and Chinese weapons are in the hands of Iranians? Then this will downright shock you. I'm going to enjoy my literary freedom now a bit. Please bear with me.
As shocking as this may sound, have you thought carefully about why Turkey needs 140,000 troops to take out a few poorly organized Kurdish "terrorists?" Seems a bit excessive no? So, who is surrounded, Iran or us? I think I now know what could make our president's legacy even worse, and for the sake of our men in Iraq, I pray I'm wrong. There are significant oil assets in Northern Iraq, besides Kurdish "terrorists." For those who argue my geopolitical ideas are insane, I argue that it is insane to expect the future to follow the past, considering the dynamic circumstances unfolding before our eyes. There is no normal anymore. We've gone and shaken up the water and it's murky now.
Turkey planning more than what it says would surprise me if I was not Greek/American. But, being from a family whose ancestry traces back to a Greek island that Turkey claims is Turkish, due to its proximity to its coast line, leads me in another direction. Do not think for one minute that Turkey will not seek to advantage from our eventual withdrawal from Iraq or from our war with Iran. Any upheaval that occurs in the region could leave one-third of Iraq in Turkish control. Let me tell you about Turkey...
Turkey flies warplanes over my home in Greece every couple months or so. Turkish fighter pilots torment Greek commercial aircraft regularly. Greeks and Turks alike probably are at the root of forest fires that spring up in the two nations like clockwork every summer, in time to potentially influence tourism. The only people at ease now that 140,000 troops are on the east end of Turkey are Greeks, and it's not because they're farther away. It's because Turkey is showing itself to the world. This is the Turkey Greeks know well. Say hello to your friend America, it's that guy with the gun pointed at our backs now that we are facing Iran. Will he shoot past us or will he shoot at us? The answer is clear, to Greeks anyway. He'll shoot wherever suits him.
The Turkish leader claims America promised they would contain Kurdish terrorists and have failed. He says, "Turkey can take care of this problem ourselves." In case you have forgotten, this is the same Turkey that did not allow American jets to use Turkish territory in its effort against Saddam. For those who will claim my Greek heritage influences my views here, I answer, "you're correct," but I also note my close friendship with a Turk. Sorry folks, but the Turks always fire me up.
Tomorrow, we'll talk Pakistan.
Please tell your friends about the Wall Street Greek! We thank you for your support of our advertisers. It and our passion for the markets are the sustaining force fueling our effort. (disclosure)
The market acted like a chicken with its head cut off today, and I'm convinced there is a full moon to blame. Sure, there are plenty of real catalysts out there to drive descent, but I actually think there are too many, and that's shaking the cool of investors. Today's catalysts include warnings from Home Depot (NYSE: HD), Alcoa (NYSE: AA), Sears Holdings (Nasdaq: SHLD) and D.R. Horton (NYSE: DHI). It's truly scary stuff, reminding folks about the troubles of housing, consumer spending and the overall economy.
As if that wasn't enough, Standard & Poor's indicated it may soon downgrade a good deal of subprime debt, placing the debt on "credit watch negative," so to speak. Well duh!?!, it's about time! The rating agency noted the lack of clarity in vision for a housing recovery anytime soon. Maybe they should have been reading Wall Street Greek!
As if that wasn't enough, news broke that confirmed a rumor we first heard weeks ago. A third U.S. Naval carrier fleet is set to join the impressive force already in place in the Persian Gulf. We later discovered the movement of the Enterprise Battle Group was part of a routine action to relieve the U.S.S. Nimitz. Still, this occurred while news hit the wire that Iran was making its own centrifuges. The timing of this news, after Putin's trip to Maine, is conspicuous. It comes at the same time Venezuela's Chavez traversed the seas to Russia and the Middle East. There's too much jostling for position occurring to be ignored. The market does not ignore anything for long, and it's likely to be quite sensitive to geopolitical news in the near-term. Well, if Wall Street Greek heard about the aircraft carrier ahead of time, we're sure plenty of oil traders did as well. If the Nimitz hangs around, this could explain the recent run up in oil prices, even after the Nigerian strike concerns faded.
ECONOMIC DATA & ANALYSIS
The State of the Consumer - ICSC Weekly Same-Store Sales Report
Same-store sales rose 0.1% week-to-week and 2.4% year-over-year for the week ended July 7, 2007. These are not numbers much different than the week before, though the growth rate drifted modestly on the year-to-year figure. We do not even mention the Redbook figure also released today, as it is not a reliable predictor, in our view.
Investor concern was raised today though, with Home Depot and Sears both reporting troubling news. HD shares held up well though. HD management wisely set a floor support to their share price by initiating a tender offer for their own shares. With the tender price set at $39 to $44, and extending to a potential 250 million shares, the pressure from today's guidance news was sustained. HD lowered its guidance for 2007, and blamed the continued softness of its operating environment and the reclassification of its sold wholesale distribution business. HD sees EPS declining 15-18%, versus the 9% it previously expected. We can't help but wonder who the media will blame now that Bob Nardelli is gone.
Sears Holdings' shares, however, didn't fair so well, falling 10% on the day. Sears tried the share repurchase card as well, clearly, with no success. Sears warned that its second quarter, ending in early August, would provide EPS within a range of $1.06 to $1.32, compared to consensus expectations for $2.12 per share, as compiled by Thomson Financial. That's quite a miss! Oh boy, we thought to ourselves. Does this mean the scenario we were looking for to start play out in July and August is actually happening? Maybe, but Sears' news is not enough to provide confirmation. Besides, Sears is a special animal, not indicative of a pure retailer.
Remember, we are looking for consumer spending softness to increase in July and August and potentially lead retailers to consolidate operations, reduce workforce and help the economy into recession. With rates still pressured, the Fed may not react swiftly enough to stave off a GDP drop.
Liquidity Environment - Rating Agency Moves
Wall Street Greek feels vindicated. We were out there on our own in January, as we claimed the housing market was not about to recover. At that time, most considered us an outlier, even a radical publisher. Now we're mainstream with regard to consensus opinion on housing anyway. Nobody was buying into our consumer argument a month ago, when May posted strong results. It's hard to stick to your guns when economists and strategists with impressive corporate names under their pictures are talking recovery. Hard for most that is, but not this independent thinker, and your guide through the herd of yesmen.
Standard & Poor's today announced that it had placed a large group of subprime loan backed securities on "credit watch negative." No kidding!? What do you say to this, better late than never? Even better, Moody's later moved to lower the ratings on $5.2 billion of bonds backed by subprime loans. Standard & Poor's is looking at some $12 billion of bonds to reassess. I can't explain it better than this article, so please read.
Remember Wall Street Greek's forecast for a short term rise in stocks, before an eventual economic downturn and stock decline? I have now had to reassess as well. Forgive me, I thought S&P and Moody's were going to sleep through the whole mess, but who knew! They woke up. Remember my article, "The Greek's Week Ahead - When Liquidity Dries?" Well, I'm getting parched already! It's "when" right now! We anticipated the market would regain enthusiasm for multinationals and help drive market rise for the short period heading into reports, but bang! zoom! shazam! Let's welcome the herd back into the room, and get the heck out of U.S. securities. As a matter of fact, let's start digging a cave to hide our cash in, and ourselves. Wow, I was underweight financials long ago, and the consumer discretionary sector. Now is not the time to change that view. Let's get battle ready. Stick with big health care and consumer staple names, especially those with global exposure, and gold should become popular again as well. We have liked Japan, but will not forever. Eventually, perhaps soon in fact, a softening American consumer will impact Asia in a big way, in our view. You have to own Russian energy firms; I like the Russian market now.
The Geopolitical Factor
So, we heard a few weeks ago a third carrier was rumored headed for the Gulf. I think by now we're all clear that it's possible our troops in Iraq are threatened by more than just the Iraqis. We know Syria is aligned with Iran, but in war there is always surprise. Are you surprised that Russian and Chinese weapons are in the hands of Iranians? Then this will downright shock you. I'm going to enjoy my literary freedom now a bit. Please bear with me.
As shocking as this may sound, have you thought carefully about why Turkey needs 140,000 troops to take out a few poorly organized Kurdish "terrorists?" Seems a bit excessive no? So, who is surrounded, Iran or us? I think I now know what could make our president's legacy even worse, and for the sake of our men in Iraq, I pray I'm wrong. There are significant oil assets in Northern Iraq, besides Kurdish "terrorists." For those who argue my geopolitical ideas are insane, I argue that it is insane to expect the future to follow the past, considering the dynamic circumstances unfolding before our eyes. There is no normal anymore. We've gone and shaken up the water and it's murky now.
Turkey planning more than what it says would surprise me if I was not Greek/American. But, being from a family whose ancestry traces back to a Greek island that Turkey claims is Turkish, due to its proximity to its coast line, leads me in another direction. Do not think for one minute that Turkey will not seek to advantage from our eventual withdrawal from Iraq or from our war with Iran. Any upheaval that occurs in the region could leave one-third of Iraq in Turkish control. Let me tell you about Turkey...
Turkey flies warplanes over my home in Greece every couple months or so. Turkish fighter pilots torment Greek commercial aircraft regularly. Greeks and Turks alike probably are at the root of forest fires that spring up in the two nations like clockwork every summer, in time to potentially influence tourism. The only people at ease now that 140,000 troops are on the east end of Turkey are Greeks, and it's not because they're farther away. It's because Turkey is showing itself to the world. This is the Turkey Greeks know well. Say hello to your friend America, it's that guy with the gun pointed at our backs now that we are facing Iran. Will he shoot past us or will he shoot at us? The answer is clear, to Greeks anyway. He'll shoot wherever suits him.
The Turkish leader claims America promised they would contain Kurdish terrorists and have failed. He says, "Turkey can take care of this problem ourselves." In case you have forgotten, this is the same Turkey that did not allow American jets to use Turkish territory in its effort against Saddam. For those who will claim my Greek heritage influences my views here, I answer, "you're correct," but I also note my close friendship with a Turk. Sorry folks, but the Turks always fire me up.
Tomorrow, we'll talk Pakistan.
Please tell your friends about the Wall Street Greek! We thank you for your support of our advertisers. It and our passion for the markets are the sustaining force fueling our effort. (disclosure)
posted by The Greek | 1:33 PM
1 Comments:
What about the greek warcraft abusing Turkish Commercial Airlines. Ohh yeah well maybe we should talking by giving the prrof otherwise it is just blacken the name nothing than that. Lets talk on the basic fact. We dont like each other fair enough you got island and want more . We gave once we cant give more so I think everybody should see the reflection on the mirror by the way we are not the one at least who are selling the Turkish coffee as Greek coffee everywhere. We have still Greek pubs in Turkey. I dont think you have. SO I dont think your side is flexible enough to forget all the crap history thing. So Iwhat should I do? My uncles died in war I should be very angry and hate is it? Is it the way f humanity ? Let accept our fault and stop abusing the each other. First start from lets cut the abuse in the newwspaper and on the net. It will be may last thing to post a comment regarding this. Because it is no sense just a bunch of crap...
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