Morning Coffee: What's Next for Housing?

(Stocks in article: NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, NYSE: MER, NYSE: LCC, Nasdaq: DPTR, Nasdaq: BIDU, NYSE: M, NYSE: TOL)

On this last trading day of 2007, existing home sales came in better than expected. Hold your horses though, we'll take you through the numbers and show you why the real message is that we have not hit bottom in real estate. That does not necessarily mean we have not bottomed in related stocks, and I've already gone on record looking for a January lift in some of these shares. November's new home sales sank 9%, so this rise in existing home sales to a 5.0 million annual pace from 4.97 million seems contradictory. Also, considering the existing market is much larger than the new market, today's news would seem more important.

However, lost in the numbers is the fact that new home sales data is taken upon the signing of sales contract, while existing data is taken on the closing of the sale, which usually lags by 1 or 2 months. So, if new home sales is the leading indicator, then we should see this existing sales data deteriorate for at least one or two months more. The spring is the most important selling season for housing, so a lot is weighing on what happens after February. Inventory declined, which is a very positive piece of news, but the level remains inflated. Inventory continues too high to support prices and to inspire home builders to look to expansion. We think it will be another 6-12 months before prices stabilize, and much depends on the very volatile geopolitical outlook (I'm talking about Iran).

Consolidation Begins in Retail

Did you notice? It may have already started. Macy's (NYSE: M) is closing nine locations and laying off some 900 employees, though they will have opportunity in nearby stores as they avail themselves. Wall Street Greek is telling you that this will be the them that drives 2008, besides continued geopolitical stresses. Keep your eye on retail, and notice the empty buildings where your favorite stores once offered goods.

Market-Moving News

• Greek: Week Ahead - Ominous al-Qaeda Precedent


• Bloomberg: Existing Home Sales Rose in November


• myway: Bhutto's Husband Becomes the Candidate


• AP/Yahoo!: Pakistan's Shares Crash


• AP/Yahoo!: Asian Markets Strong in '07


• CNBC: Oil Hovers Around $96


• DailyFX: Odds Against Major Dollar Bounce Now


• AP/Yahoo!: Times Square Ball Goes Green


• Forbes: Best Selling Vehicles of 2007


• CNN Money: Real Estate, the Best and Worst of 2007


• Bloomberg: Defaults on Insured Mortgages Rise 35%


• CNBC: Gold Makes Largest Gain in 30 Years


• Yahoo! Earnings Calendar


• CNN Money: Kerkorian Buying into Delta Petroleum (Nasdaq: DPTR)


• AP/Yahoo!: US Air (NYSE: LCC) Addresses Issues in '08


• TheStreet: Baidu (Nasdaq: BIDU) CFO Dies, Shares Fall


• CNBC: Merrill (NYSE: MER) in Talks to Sell Another Big Stake


• TheStreet: Macy's (NYSE: M) to Shut 9 Stores


• Financial Times: Kenya Shady Election Drives Violence


• Economist: Markets in '08


• Iran Daily: Tales from the Dark Side

Your support of our advertisers sustains our effort, so please take a minute to help fuel our bold independent endeavor. Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

The Greek's Week Ahead - Ominous al-Qaeda Precedent

The Greek's Week Ahead has been engineered to prepare you for the events that could impact your portfolio this week.

The week ahead brings with it the turn of the year, but what's in store... Will it just be more of the same? This is the easiest forecast to make, and the one you will see most commonly presented by the talking heads on your favorite financial channel. There will also be the extremists, who will predict extremes in either direction. But this is a topic for a pending article to discuss, "The Year Ahead - 2008," coming soon to Wall Street Greek.

For now, let's just focus on next week. The trouble in Pakistan is the most important issue in the week ahead, despite the employment data due. Chaos has not ceased, but the rise of Bhutto's son to symbolic party leadership at least gives Musharraf's opposition something to focus on rather than destruction. Benazir's husband, Asif Ali Zardari, is taking over active leadership of the party, but he was once known as "Mr. 10%," notorious for taking cutbacks. The wise thing now for President Musharraf to do would be to delay the election and allow the population of the country to ponder the risk of an emotional decision. The world will probably not underestimate that risk either, given Pakistan's store of nuclear warheads.

I've been to a third world country or two in my time, and I have to say, don't judge men by our standards. In poor nations where kickbacks are the norm, however immorally hazardous for the soul this is, it's also the only way for these poorly compensated legislators to survive sometimes. By choosing the public office over private industry, they make a patriotic decision that severely impacts their wallets. This is why corruption runs rampant. The first thing a government that truly seeks the high road should do is to properly compensate legislators, important officials, military commanders and police. It's the only way to reduce corruption that can be corrosive to progress. We have to hope Benazir rubbed off a little bit on Zardari. President Bush looks to be keeping his bets on Musharraf for the sake of the value in keeping the "devil we know."

If Musharraf delayed the election, he would give his opponent a chance to speak, to be heard, to err. He would allow time for the world to weigh in as well. What happens next is yet to be seen, but we will tell you one thing, our trust in Musharraf has decreased significantly also. We now view him as a liar, a serpent even. In order to retain power, he has made a deal with the devil, in fact with every devil that has threatened him. He would deal with a new devil to spear an old one if he had to.

We use to think that his presence in office was a stabilizing force for his country, but we now understand that he is in fact a pressure inducing force that will eventually lead to an explosion, like the one we saw on Thursday that killed that great hope Bhutto represented. We are not saying Musharraf was behind this, but the nonsense coming out regarding the inconsequential cause of death is telling. We know there was gunman; we know there was an explosion. It does not matter if she hit her head or was shot. She died as a result of that attack. It seems Musharraf sees some value in creating illusion, that somehow he will not be blamed for the lack of protection she had if she bumped her head. Now, we believe her own party should have protected her, but Musharraf's actions are still undeniably shady. Even so, we have to weigh the consequences of a Musharrafless Pakistan. But, really, how strong of an ally is he?

The fact that al-Qaeda and Taliban wander Pakistan freely is indefensible. The fact that President Bush trusts Musharraf and Putin is embarrassing, or an ingenious strategy of deception upon deception. She was our gal, Bhutto that is. We wanted her in office, and because of this, her killer could be one of many possible enemies. She could have been as strong an ally as Sarkozy is in France. Al-Qaeda was well aware of this.

We find one thing especially disconcerting about Bhutto's assassination. It bears strong resemblance to the assassination of the head of the Northern Alliance, Ahmed Shah Massoud, which immediately preceded the attacks on the World Trade Center. Considering that New Year's Eve follows by just days this event, and this year's alarm raised by the Chief of Homeland Security when he said he "just had a feeling;" we think there's enough here to be a little worried about this year as much as any. New Year's Eve in Times Square and in every major city is a globally watched event. There is no better way to impact the world with terror than to strike on New Years Eve, in our view. Al-Qaeda itself has been quoted saying some especially ominous things this year, and more than just the usual "we will destroy you all!" Our cause is not to stir alarm, just to remind you of that historical precedence al-Qaeda has of linking assassination with attack.

Let's examine what AQ has to gain from Bhutto's death. Well, unrest now rules Pakistan. If AQ attacks the west now, while chaos rules Pakistan, is Musharraf in position to mobilize forces and efforts against AQ? We say no. The assassination of the Northern Alliance leader was meant to destabilize the most threatening opposition to the Taliban, or sort of insure al-Qaeda's safety after 911. They underestimated us of course, but this was their goal.

Musharraf would clearly be in a difficult position now; at the same time, he just announced some new form of effort (read deception) against AQ on the Afghan border, and this would seem like the complete opposite effect AQ would hope for from the Bhutto assassination... unless al-Qaeda and Musharraf are married. Can we really rule that out as we reflect on Bin Laden's status some six years after the worst attack on American soil in decades?

We do not believe Pakistan is majority fundamentalist militant. However negative sentiment may be toward the U.S., we do not believe the country in majority is militant level negative. Still, the country is near out of control, has a significant fundamentalist presence, and resembles Iran pre-revolution. Thus, we are one bullet in Musharraf's head away from hell. Is it that far-fetched to imagine a foreigner, one of rock star status perhaps, walking into Pakistan and taking leadership like Ayatollah Khomeini did (though he was a patriot of his country). So, is it impossible for Osama Bin Laden to walk into a revolutionary Pakistan and suddenly raise al-Qaeda to nuclear nation state status. We think it's unlikely, considering humanity's love of nationalism, but religion in that part of the world is just about even in importance.

Years ago when I use to talk about Pakistan, and Iran even, and geopolitical unrest, my naive bosses, friends and colleagues, who like most Americans are much more concerned with what's for dinner and how the Yankees are doing, would make fun. We wish the world were as stable as those folks, and as interested in dinner, but unfortunately the world is not. The world is still a very selfish place, and as that greatest generation fades off, we fear the lessons learned by it will be lost as well. We'll discuss the geopolitical picture in broader extent in the "Year Ahead" article. We think you will be surprised with our hope regarding Iran, and President Bush's important decision.

Market-Moving Event Schedule

Monday

New Year's Eve marks the last trading day of 2007, and it will be a full one. The bond market closes at 2 p.m., however, while markets in the U.K. and France shut down early. Markets in Japan, Germany, Russia and Brazil will be closed the entire day. The day also marks the deadline for former European colonies to form new trade and investment relationships with the EU.

While you might otherwise expect it to be a light trading day because it comes just ahead of a holiday and marks the close of the year, tax loss selling still might prove meaningful. If you think not, I ask you to remember how people line up at post offices around the country on April 15th year after year. Procrastinators abound, and so trading on Monday will probably be more active than expected.

Monday is not economic data empty despite its near holiday status. Existing home sales for the month of November are set for release at 10:00 AM EST. Bloomberg places consensus expectations at an annual run rate of 4.97 million sales, which exactly matches October's level. Considering new home sales fell off a virtual cliff in November, dropping 9%, Wall Street Greek expects existing sales to follow suit. We say this because home builders market more actively than real estate agencies, we believe.

The semiconductor industry will take tally of its own health on Monday, as the industry's association issues its November global sales report. Sales were up 5% in October. Monday's earnings schedule includes only SINOENERGY Corp. (OTC BB: SNEN.OB).

Wednesday

As the American market resumes trading, many markets overseas remain closed for another day and even through the week in some instances. With the start of the year, Japan takes over leadership of the Group of Eight industrialized nations.

U.S. motor vehicle sales will lead off the day's economic reports at 7:00 AM, but one resource indicates this report could be a day late this time around, so look to Thursday for it in that case. Bloomberg's consensus of experts sees a December measure of 12.3 million sales. Sales of autos have weakened as the consumer has become strained. As a result, auto industry benefits from cost cutting and renegotiation with the UAW are not having as much impact as would be expected otherwise. In other words, the catalyst for share rise has been somewhat stymied.

At 7:45, the ICSC-UBS will report its now widely followed weekly same-store sales data for the period ended Dec 29. The reporting period (last week) was especially important, as the period just following Christmas accounts for approximately 16% of holiday sales. The period being measured also included the last few days before Christmas, which of course are highly significant sales days. The last week measured showed a year-to-year sales increase of 2.8%.

At 10:00 AM, the ISM Manufacturing Index is expected to reach 50.9 for December. Despite supposedly still strong international demand for U.S. goods, Philly Fed and the Empire State Manufacturing data indicated a softening trend here. Only Chicago-land posted a solid measure this time around. We think ISM could come in closer to 50 or below it, indicating contraction. We expect later readings in January and February will fall sub-50.

Construction spending in November is expected to have decreased by 0.3% when posted at 10:00. October's reading showed a deceleration of 0.8%. At 2:00 PM, the FOMC Meeting Minutes from December are due, and we will find this especially interesting reading. Recall, the Fed told us it was neutral, and then individual public discussions by Kohn, Bernanke, Kroszner and Mishkin left reason to doubt and offered up some confusion and conflicting statements. We expect the minutes will prove less enthusiasm inducing than the 25 point move did in December, and that's not saying much. Be careful treading Wednesday afternoon. The earnings schedule looks empty on Wednesday, but preannouncment season is still here.

Thursday

The big guns of economic and labor concern arrive Thursday morning when the ADP Employment Report, Challenger Job-Cut Report, Monster Employment Index and Initial Weekly Jobless Claims are released. ADP offers up the most important prelude to the Labor Department's report the next day, and the market pays heed to the news. Wall Street Greek believes employment data will show a deterioration of the labor situation in the very near future. We've outlined countless times our view that the next sector of the economy to slip will be consumer sensitive, and that's not breaking news anymore. As retail results falter, and following the busy holiday period, The Greek expects retail/restaurant and other consumer sensitive businesses to begin consolidating operations. Layoffs should precede later store closures, as we are confident that the environment is a saturated one. REITs focusing on commercial space should be a dangerous place for capital now, as should the shares of commercial construction beneficiaries. Jobless claims are seen reaching 345K, and have been noticeably increasing this fall/winter. If you are still standing after the barrage of labor data, November Factory Orders could do you in. However, the consensus is looking for an increase of 0.5% on this measure.

With Pakistan in dismay, and with "Mr. 10%" and a teenager scheduled to take over for Bhutto in the People's Party attempt to win control, oil traders have their hands full this week. That said, they will also receive their regular bit of inventory information from the EIA at 10:30. Remember, last week's supply draw alongside the assassination of Bhutto drove oil up near $100. We could already be there by Thursday, but if not, well we think the odds favor it in the near term.

Thursday's earnings schedule includes Bed Bath & Beyond (Nasdaq: BBBY), Monsanto (NYSE: MON), AngioDynamics (Nasdaq: ANGO), CelebrateExpress (Nasdaq: BDAY), Finish Line (Nasdaq: FINL), Global Payments (NYSE: GPN), Landec Corp. (Nasdaq: LNDC), Neogen (Nasdaq: NEOG), Sonic (Nasdaq: SONC) and UniFirst (UNF).

Friday

Friday's Employment Situation Report is not expected to offer a rally cry, to say the least. Bloomberg's consensus is looking for non-farm payrolls to rise only 70,000, which is a recessionary type number. Wall Street Greek expects unemployment to move higher to 4.8%. All indications are that we are heading over 5% in short time from here. Average hourly earnings are seen appreciating 0.3%, which is hot in our view.

Later Friday at 10:00, the ISM Non-Manufacturing Survey is seen measuring 53.8 for December. Sorry Charlie, we are looking for the service sector to start showing weakness. With small business confidence waning, most signs point toward an all around troubled early start to '08.

At 10:30, the EIA offers its storage information concerning natural gas. Natural gas has not fully paralleled oil's move; in previous energy spikes natural gas has moved into double digits, and it's only in the $7 range now. A lot of this has to do with basically full storage of this fuel source, however, with oil so expensive, we think a good deal of energy users could convert to natural gas from heating oil this spring.

Last, but certainly not least, be on the lookout for that disruptive Don Kohn on Friday, as he's scheduled to find a podium. Recall, it was his voice this past fall that rallied market expectations for the rate cut. Friday's earnings schedule includes A. Schulman (Nasdaq: SHLM), AZZ Inc. (NYSE: AZZ), Piedmont Natural Gas (NYSE: PNY) and Texas Industries (NYSE: TXI).

Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

The Week in Video Review - Dec 28

While the holiday week of 2007 will forever be known as the week Pakistan lost a great hope and possibly its direction toward democracy, we did our best to mix in some positive and happy video coverage of the week that was.



Opinions expressed within the videos do not necessarily reflect the opinion of Wall Street Greek.

Morning Coffee: Housing Falls Further

(Stocks in article: NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, NYSE: TOL, NYSE: HOV, NYSE: BZH, NYSE: DHI, Nasdaq: GOOG, NYSE: C, NYSE: HBC, NYSE: BRK.A, NYSE: BRK.B, NYSE: GCO, NYSE: MYL, NYSE: PFE, NYSE: SGR, NYSE: WMT)

A day after the world shaking assassination of Pakistani opposition leader Benazir Bhutto, oil is moving even higher. Supply draw yesterday and escalating protests on the street in Pakistan have crude approaching $98. I think this is it folks. I think we finally have the catalyst to get over $100 unfortunately, and for as long as unrest reigns in Pakistan, there should be solid oil price support. A few important data points are also impacting the market this morning.

Economic Data Analysis

November New Home Sales fell off of a cliff, reported this morning down 9%. Mind you, there was not too far to fall, after having bounced off a few other ledges already this year on our way down. Sales were running at an annual pace of 647K in November, versus expectations for a 720K run rate. Even with prices still tanking, buyers are unwilling now to enter into a situation where their home equity might immediately lose value after purchase. It's just an unnecessary risk to take, and the market should not improve now until prices stabilize. This will not happen until inventory drops, and with foreclosures still running hot and buyer concern mounting, this should still take a while to begin.

The already well-beaten housing sector just can't bleed much more before dying, and stock movement this morning reflects that. Beazer Homes (NYSE: BZH) immediately moved 2% lower; D.R. Horton (NYSE: DHI) fell 1%; Toll Brothers (NYSE: TOL) eased 0.4%; Hovnanian (NYSE: HOV) was off fractionally. It's a sign that these babies are just about sold out. Investors holding these shares look to keep holding from here, and buy support should come along soon. However, some may go bankrupt anyway, so be careful. I was early to call the move lower, and I'm happy to be first to call a mini-rally in these stocks in January. No portfolio managers wanted to have these shares on their Statement of Holdings going out to fund holders this year-end, but now, there seems value to be had. I would avoid BZH and HOV, but look to add TOL, the best in class in my opinion.

A Greek Story

I want to share a little tidbit from a job interview, an interesting story. A portfolio manager I was speaking with told me he had to hold stocks for diversification's sake, and so he was continuing to hold home builders. This was back in the late summer or fall of 2006. I told him this didn't make sense to me, because there were other options. He had to hold them because everyone else was; if he went out on a limb, he would put his neck at risk. Now let me ask you, would you invest in his fund?

There were plenty of other places to find sector participation while avoiding the clear industry risk that was apparent to me back then. Let me just add another point. I believe in the same interview, with the Director of Research, he asked me what I thought of the retail space. I said, "with tougher times apparently on the way, I would look to high-end retailers and avoid the rest." My view was far from consensus at that time, and he didn't hire me. I'm sure his assets under management are significantly lower this year, and there would seem to be a high likelihood that these PMs are either unemployed or fooling also unwise superiors by blaming their mess on the market. I, however, do not regret speaking my mind over copping consensus views to get a job.

Midwest Activity

Chicago - PMI for December came in above expectations at 56.6, versus much lower expectations. Chicago area manufacturing did not follow the route of the Northeast, where regional data showed softness. Trends don't usually all follow a direct path simultaneously folks, so don't go getting your hopes up based on this report...

Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

Today's Coffee: Pakistan Shakes World

(Stocks in this article: NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, NYSE: SDS, NYSE: GS, NYSE: BA, NYSE: PCG, NYSE: EP, NYSE: SLM, NYSE: C, Berlin: AHX.BE, Nasdaq: YHOO)

In a very important event that should not be overlooked or understated, Pakistan Peoples Party Leader Benazir Bhutto was killed in an attack this morning. As a result, U.S. equities have been shaken and oil and gold are moving higher.

Petroleum Status

Oil immediately moved higher on the news from Pakistan, but it did not move significantly higher. Perhaps the geopolitical factor had already been priced in after events in Turkey, and with the Petroleum Status report due from the EIA, traders were tentative to bid oil higher.

Then, the Energy Information Administration reported inventories fell by 3.3 million barrels. Bam! Oil popped over $97 on that news, and as unrest likely escalates, oil could finally test that century mark. How the Pakistani situation plays out from here is critical. It's likely that this event will raise up another opposition candidate. We believe Musharraf will now wisely postpone the election, as a near-term ballot would not likely work out in his favor.

Unemployment

Weekly Initial Jobless Claims were reported up slightly from a revised higher level. At 349K claims, the reading exceeded the 343K consensus expectation compiled by Bloomberg. Continuing unemployment is on the rise, and insured unemployment is now at 2.1%, up 0.1% week-to-week. This has been evident in the rising unemployment rate as well of course, but today's report has brought some media attention to the subject. We reiterate our message that new hiring should weaken more drastically than the rate of newly unemployed. However, we continue to expect the consumer sector, especially retail/restaurant, to significantly consolidate in the year ahead, further stressing the economy.

Durable Goods Orders

November orders rose just 0.1%, versus expectations for a much larger 3.0%. Excluding transportation, orders fell 0.7%. We should not be surprised that expenditures for big ticket items have waned, nor that housing-related sales have slipped. The business investment proxy that includes non-defense capital goods excluding aircraft fell 0.4%, following a sharper decline in October. These are recession like figures in our view, and you are finally seeing the signs of what we've been pointing to for quite some time now here.

We continue to favor tax loss sale beneficiaries like the investment banks, and other stocks like Yahoo! (Nasdaq: YHOO), recently beaten back and even downgraded by a reactionary stock analyst recently. Avoid advice from those guys; they're just weak.

Market-Moving News

• BBC: Benazir Bhutto Killed in Attack


• CNBC: Crude Moves Higher


• EIA: Petroleum Status Report


• Bloomberg: November Durable Goods Orders Miss Forecast


• Bloomberg: Holiday Spirit Raises Consumer Confidence in December


• DOL: Jobless Claims Move Higher, Running Hot


• CNBC: Goldman (NYSE: GS) Raises Bank Writedown Estimates


• Forbes: China Buys Wall Street


• CNN Money: Weekly Mortgage Activity Softens


• Forbes: China to Let Yuan Appreciate Faster


• AP/Yahoo!: Disaster Losses for Insurers Double


• Yahoo! Earnings Calendar


• AP/Yahoo!: PG&E (NYSE: PCG) Taking Stake in El Paso (NYSE: EP) Pipeline


• TheStreet: Sallie Mae (NYSE: SLM) Raising $2.5 Bln.


• AP/Yahoo!: Boeing (NYSE: BA) Orders Rise


• MarketWatch: Citi (NYSE: C) May Need 40% Cut to Div


• Bloomberg: ACA Capital (Berlin: AHX.BE) Cedes Control to Regulators


• Greek: Week Ahead - Time to Buy!


• Economist: The Geopolitical Week Ahead


• Iran Daily: Tales from the Dark Side

Your support of our advertisers sustains our effort, so please take a minute to help fuel our bold independent endeavor. Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

BREAKING NEWS: Benazir Bhutto Killed in Attack

Pakistan Peoples Party Candidate Benazir Bhutto was killed in a suicide attack in Pakistan today, around 8:00 a.m. EST. Pakistani reaction to this tragic event will be watched carefully today by American traders. Oil is immediately higher, but just slightly. As insensitive as we are sorry this sounds, the market will likely be more concerned about Pakistani reaction, and how unrest may escalate, then it is concerned with the event itself. Gold is moving higher and equities have indicated a lower open, but the moves are not exaggerated. We will be closely monitoring protests and government reaction.

In the past, assassinations have occurred just ahead of major al-Qaeda terrorist acts, including 911. This should set the markets at quite unease through the New Year as a result. Bhutto would have been a much easier target than Musharraf, and yet holds the potential of inciting similar unrest. We advise resisting the urge to panic now, but including a hedge against market downturn in your portfolio. Tax loss losers could get even cheaper now, so if you have not sold yet, you may consider waiting a day or two longer. I expect market reaction to escalate as unrest unfolds in Pakistan and martial law likely ensues.

President Musharraf is going to look quite ugly as a result of this event, whether he is responsible or not. Remember, he removed the top supreme court judge from office just before his reelection review was to be completed. Bhutto has now been killed just ahead of the election that Musharraf was forced to schedule by the international community and Pakistani popular demand. The international community is going to grow more concerned about Pakistan, as Musharraf looks to have an increasingly weaker hold on his country. The UltraShort S&P 500 ProShares (NYSE: SDS) might prove a nice hedging vehicle, and the CBOE Volatility Index (CBOE: VIX-X.W) should move higher in the very near term.

Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

Morning Coffee: Gift Buying Softness

(Stocks in this article: NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, NYSE: TM, NYSE: GM, Nasdaq: COST, NYSE: TGT, Nasdaq: AMZN, NYSE: MA, NYSE: BRK.A)

Welcome back folks. Hope your holiday passed pleasantly, and if it did not, we wish you God's blessing in the year to come.

Happy Holiday Shopping?

This morning, the big question to be answered is how did the holiday shopping go? Did consumers make a go of it or what? Well, the International Council of Shopping Centers posted weekly same-store sales data showing a 2.8% year-to-year increase for the period ended December 22nd. Clearly, the next few days that followed were significant as well. Also, according to ShopperTrak RCT Corp., 16% of holiday sales occur in the week after Christmas. Gift card sales are expected to have risen 42% this year, according to the National Retail Federation, and could prove an important mover of inventory over the weeks to come.

Remember, the population and the economy naturally grows, especially as American longevity extends. So, the deceleration of growth rates is concerning. Mastercard (NYSE: MA) put out an interesting report this morning that noted a 2.4% increase in spending from Thanksgiving to Christmas, excluding gasoline and auto sales. This represents a sharply lower growth rate than last year. Including gas and autos, growth was down to 3.6% from 6.6% a year ago. This news and a late Christmas Eve warning from Target (NYSE: TGT) has the retail sector lower today. Mastercard noted strength in luxury goods and electronic commerce purchases, which coincides with our thoughts about online shopping.

Oil Trade Overdone

Oil is rising upwards of $94 today on new Turkish bombardment of Kurdish positions. 1.9 million barrels a day were shipped out of Iraq in September, which holds the world's third largest oil reserves. Iraq's northern pipeline through Turkey is an important distribution channel, but we would not expect any disruption to shipping to be an ongoing problem if it occurred. There's no surer way to bring the U.S. against Kurdish PKK members in a more direct manner, and Turkey, the country with the most to gain from such an effort, also has much to lose from it. Turkey is content handling the PKK on its own. Iranian meddling is not beyond possibility though. Yet, in the whole scheme of things, this looks like a short-term driver of oil, and we expect the smart way to play this is to use the price strength to take short positions.

October Housing Prices Tank Further

S&P Case Shiller Produced its housing price index for October, showing a 6.7% drop and marking the 10th consecutive such decline. Until inventory is worked down, the housing market is increasingly shifting to a buyers market, but we still have a ways to go. Government efforts to mitigate foreclosures should help some, but we continue to expect foreclosures to run aplenty in '08. However, the drastic increases in year over year figures should dissipate significantly as we have lapped major change.

Market-Moving News

• MarketWatch: Asia Mixed, Europe Closed for Boxing Day


• AP/Yahoo!: Retailers Usher in Post Holiday Consumers With Deep Discounts


• ICSC-UBS Weekly Same-Store Sales Up 2.8% Yr-to-Yr for Week Ended Dec 22


• MarketWatch: Mastercard (NYSE: MA) Notes Holiday Sales Rose 3.6%


• AP/Yahoo!: October Home Prices Show Record Decline


• CNN Money: Hiring in '08 to Slow


• Forbes: Washington's '08 Schedule


• Bloomberg: Crude Up to $94 on Turkish Attacks


• Bloomberg: Dollar May Fall to 95 Vs. Yen


• DailyFX: Trading Lessons from '07


• AP/Yahoo!: Germany Seen Lower '08 Growth Forecast


• Bloomberg: Bank of Japan Minutes Note Concern for Global Growth


• Fortune: How to Play Bonds in '08


• TheStreet.com's Earnings Calendar


• WSJ: Costco's (Nasdaq: COST) Holiday Sales Pretty Good


• TheStreet: Berkshire (NYSE: BRK.A) Buying 60% of Marmon Holdings


• TheStreet: Target (NYSE: TGT) Sales Fall Short


• MarketWatch: Toyota's (NYSE: TM) Plans to Unseat General Motors (NYSE: GM)


• Bloomberg: Turkey Bombarding Kurds


• BBC: Christians Under Attack in India


• Greek: Week Ahead - Time to Buy!


• Economist: The Geopolitical Week Ahead


• Iran Daily: Tales from the Dark Side

Your support of our advertisers sustains our effort, so please take a minute to help fuel our bold independent endeavor. Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

Season's Greetings!

Wall Street Greek wishes our readers season's greetings. God bless you my friends.

Morning Coffee: Don't Panic, Potter is Buying!

(Stocks in this article: NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, NYSE: MER, NYSE: C, NYSE: GS, NYSE: MS, NYSE: GE, NYSE: URI, NYSE: WYE, Nasdaq: TEVA, NYSE: CVX, NYSE: GS, Nasdaq: MAXJ)

"Potter is buying!" exclaimed Jimmy Stewart in It's a Wonderful Life. Goldman Sachs (NYSE: GS) isn't selling either, Goldman is buying, buying up Cheyne Finance, the marquee troubled SIV portfolio. Leading a group of investors, clearly Goldman is once again on the right side of a deal, gobbling up bargains just like Potter. Wall Street Greek believes this is the most important news of the day, and offers further hope for the troubled credit markets and financial system. It also provides a louder buy signal, in our opinion, for investment banks on the cheap. It looks to me like the nonbinding agreement hinges on the investors' ability to negotiate reinvestment opportunities for the creditors of the company. Goldman is looking bright, as usual, as it does not even seem to own yet what it would turnover for profit, if I understand correctly.

Jim Cramer spoke wisely when, last week, he announced Goldman Sachs is a buy. While my only concern is the timing, and possibility of profit taking in early '08, I have to agree the investment banks on the whole look attractive. Jim said Goldman would benefit most from the coming new capital wave driven by sovereign funds. In an important announcement, Saudi Arabia just indicated it would be creating a sovereign wealth fund that could have more than $900 billion to invest. With its neighbors in the Middle East looking to international investment, it appears a competitive nerve has been engaged in Saudi Arabia. The Saudi coffers have been operating under a mandate to invest locally, while other Saudi institutions, individuals and the royal family have not limited themselves in this manner. Also, there's an important benefit to diversification outside the politically strained region that the Saudi's and others cannot ignore.

While Cramer may be right on the valuation of Goldman not being rich versus peers, based on analysts' estimates, the fact remains that some profits could be had from the stock in early '08 and placed into other beaten down shares of GS's rivals like Merrill Lynch (NYSE: MER), Morgan Stanley (NYSE: MS) and Citigroup (NYSE: C). We are shy about touching Citi, with the dividend still at risk, but Citi should clearly be a beneficiary of Saudi investment, considering Saudi royal ownership interest in the firm. In any event, this looks like an interesting sector to consider for '08. The market closes at 1 p.m. today.

Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

The Greek's Week Ahead - Time to Buy!

The Greek's Week Ahead has been engineered to prepare you for the events that could impact your portfolio this week.

The holiday week ahead offers up a shortened period that could prove volatile on light volume. A good portion of the market will be on vacation, sipping eggnog and singing carols, or more likely playing poker and arguing with distant relatives!

The Greek has been vocal on our call to rally as we near the end of the year. I continue to expect a late Santa Claus rally to spread into a full-fledged January effect. A pending recession and bullish stock run can in fact go hand in hand my friends, because seasonal capital flows should find deeply valued beaten down shares now appealing.

401K reshuffling could also play a role in where capital flows, as employees the nation over move capital in a reactionary manner out of losing sectors into winners. For this reason, I expect another early run for emerging market shares boosted by fund flows. In Q4, kitchen-sink write-offs sank shares in lending, investment banking, home building and other industries, and while many of these businesses are not due for imminent recovery, the stocks look cheap in some instances and the market is forward looking.




THE WEEK AHEAD

Monday

Christmas Eve is a trading day my dear friends, however desolate downtown New York will surely be. Whoever does show up for work on Wall Street, or otherwise manages to peruse a portfolio, will likely take off early anyway. Thus, barring any major breaking news surprise, I would expect a light day typical of the pre-holiday type.

Zero economic data is due for release and the earnings calendar is empty as well. However, the New York Stock Exchange will rebalance several indexes, and Barron’s reports that the NYSE U.S. 100 Index will add Transocean (NYSE: RIG), Deere (NYSE: DE), Union Pacific (NYSE: UNP), CME Group (NYSE: CME), Apache (NYSE: APA) and Southern Copper (NYSE: PCU). The index will remove Automatic Data Processing (NYSE: ADP), Cardinal Health (NYSE: CAH), Capital One Financial (NYSE: COF), Fredie Mac (NYSE: FRE), SunTrust Banks (NYSE: STI) and Washington Mutual (NYSE: WM). The trading day before Christmas will be a shortened one, as equity exchanges close at 1 p.m. Interestingly, the Russian Duma holds its first session on Monday. Of course Tuesday marks the Christmas holiday and all markets are closed.

Wednesday

As traders return with full bellies, they will find some important economic data left to digest. Alongside the Redbook Survey, the International Council of Shopping Centers - UBS will report its more closely watched weekly same-store sales data a day later than normal. This week’s report will carry heavy economic message and repercussions for retail stocks and the consumer sector on the whole, since the data covers the week before the gift-giving peak. The year’s sales trends have weakened steadily, and the week just prior offered reported sales growth of only 2.1% year-over-year. The period just after Thanksgiving proved strong, but December has thus far shown weakness. So, a healthy last minute shopping push would not likely play out significantly for December retail sales when reported.

S&P Case-Shiller should indicate further decline in home prices during October. The Bank of Japan is set to release its meeting minutes from October 31 and November 12-13. On the earnings front, the day after Christmas brings an empty stocking.

Thursday

Market participants better be off their leftovers diet by Thursday, because they will be met by a heavy data schedule. Bright and early at 8:30 AM EST, Weekly Initial Jobless Claims should be closely watched and well-covered by the media. Over the last few weeks the number has begun to trend higher. Last week’s measure of 346K was 12,000 more than the week before, and the Fed and most economists agree unemployment is on the rise. Bloomberg’s consensus expects a measure of 343K in this latest reading.

The Greek is specifically looking toward poor consumer spending to drive consolidation in retail, restaurant and other consumer-dependant businesses. The only two earnings reporters on Thursday include a retailer and a restaurant, and so Christopher & Banks (NYSE: CBK) and Luby’s Inc. (NYSE: LUB) carry a heavy burden. The individual reports will likely lead pundits to draw broader conclusions on Thursday.

Strategists have yet to predict the next industry collapse your favorite Greek sees. I believe the next leg lower for this economy will likely be driven by consolidation in the retail/restaurant/consumer sector. As a result, unemployment should rise and a saturated retail environment should become exposed. This in turn should drive a recession in commercial construction.

Also on Thursday morning, Durable Goods Orders for the month of November are expected to have increased 2.5%, according to Reuters (3.0% by Bloomberg’s tally). This is in tune with the prior week released personal consumption growth number, but likely not indicative of what’s to come in December and early ‘08.

Due to the holiday, the Mortgage Bankers Association will post its Purchase Applications Index on Thursday this week. Refinancing activity aided by government and lender efforts to stabilize mortgage streams have generated application activity, despite tighter lending standards and stricter regulatory oversight. Last week’s index measured 422.2.

At 10:00 AM, The Conference Board is due to report its Consumer Confidence Index for December. Friday brought a University of Michigan Sentiment reading of 75.5, which while above expectations fell short of November’s reading. Reuters notes an expectation for a December Conference Board reading of 87.0, versus 87.3 last time around. Bloomberg’s consensus forecasts 86.5 on confidence. At 10:30, though a day later than usual, look for the EIA’s Petroleum Status Report.

Friday

Friday brings two important economic reports. At 10:00 AM, the Census Bureau is set to report New Home Sales for November. Both Reuters and Bloomberg report expectations for an annual pace of 720K, compared to 728K in October. Nothing new for investors to absorb here, and I suggested investors start picking at Toll Brothers (NYSE: TOL) in my article about a month back.

The National Association of Purchasing Managers – Chicago is scheduled to report on Friday. Recent readings from both the Philadelphia and New York area manufacturing sectors have indicated a weakening trend. Chicago could add confirmation when it reports, and Bloomberg’s consensus of economists is looking for a reading of 52.3, which represents expansion.

The EIA’s regular Natural Gas Report has been pushed back a day to Friday this coming week. At 3:00 PM Friday, Farm Prices for December are due, and wheat has been on quite a run. Pressure continues on foods producers and they have been gradually shifting burden to consumers.

Not a creature was stirring, not even a mouse, but three companies are scheduled to close out the very light earnings week: Cal-Maine Foods (Nasdaq: CALM); Charles & Colvard (Nasdaq: CTHR); and Mesa Air Group (Nasdaq: MESA) are due to report. Happy holidays!

(disclosure)

Morning Report: Santa Sighting

(Stocks in article: NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, NYSE: WAG, NYSE: MER, NYSE: CC, NYSE: MMC, NYSE: UBS, Nasdaq: RIMM, NYSE: PHP, Nasdaq: RESP, NYSE: MU, NYSE: C)

Early warning radar has picked up a blip. Though there is a 50/50 chance it could be a Russian multiple warhead missile, bells ringing and children singing seem to indicate it may be Santa Claus. Well, better late than never! Odds are against it being a Russian nuke, with Putin visiting the boardroom of Gazprom to check out his new digs, maybe... An early economic report this morning is helping boost stocks. That said, consumer sentiment at 10:00 could shoot Santa right out of the sky.


Today's Market Factor Analysis:

Personal Income, Consumption and Inflation:

November personal consumption expenditures rose a better than expected 1.1%, versus consensus 0.8%. After adjustment for inflation, consumption rose a strong 0.5%, versus 0.1% in October. While November's strength is impressive, indications are that holiday sales in December have tapered off. The Greek strongly believes the holidays will tap out consumers and help drive recession in Q1. It's like that last sprint to finish a marathon, and then we collapse. Spending outpaced income, meaning consumers are drawing from savings in order to spend. However, we would expect this is typical over the holiday period.

Personal income also rose, but slightly missed expectations as it moved 0.4% higher. We would not expect much better news regarding income in the months ahead, as bonuses are expected lighter in many business lines this year, and we are looking for much employment consolidation in early '08.

The Fed's favored inflation gauge, the PCE Deflator, showed prices moved up 2.2% year over year, and entered the Fed's red flag zone above 2.0%. The Fed seems handcuffed for now regarding its ability to act against rising prices, but this certainly will be on their minds. We expect the Fed will count on some backup of prices that would be expected in recession, or in a slowing economy.

University of Michigan Consumer Sentiment:

Recent readings from this consumer sentiment measure, and others, have not been very uplifting. Expectations for December are for a reading of 74.5, versus 76.1 in November. We are concerned about the recently poor reading in small business confidence. Small businesses have been driving employment growth, and if sentiment there weakens, then employment should lose its base of strength.

Merrill Joins Pack Receiving Foreign Funds:

While UBS (NYSE: UBS) shareholders are up in arms over news that two foreign investors actually combined to fuel capital flow into the firm, Merrill Lynch (NYSE: MER) looks set to join the pack. Merrill is in discussions to bring $5 billion from Singapore's state investment company, Temasek Holdings Ltd., according to the Wall Street Journal. The flood of foreign capital into Wall Street has raised some protectionist eyebrows, but controlling interest has been submitted by none. So, who cares?! To those who argue that in time of heightened national security interest, this could be a problem, I say no way. In times of war, nations seize control and the only risk here is to the foreign investors. Also, I do not expect Dubai or Singapore to declare war anytime soon... China is a whole other story, but we are not going there yet. No stock would be safe to hold in that instance right? So, relax and accept the capital while we need it.

Cramer last night suggested that the next capital wave will be fueled by sovereign investment, and it's clear that this is already happening. Also, as the dollar stabilizes and strengthens, and please see past Greek articles on the topic, foreign capital will find impetus to get in while the bargains are hot. Prices could be going up soon. America is on sale now. I agree with Cramer on this, but I think he's early on his Goldman (NYSE: GS) buy recommendation. I would be short GS into early '08 and look long some of its beaten up rivals, like MER for instance. Citigroup (NYSE: C) still faces that dividend cut risk, but after that plays out, who better to benefit from sovereign investment than the king of the world, Citi.

Market-Moving News

• Bloomberg: Global Stocks, U.S. Futures Advance


• CNN Money: Merrill (NYSE: MER) May Get $5 Bln. Injection from Singapore


• Bloomberg: Personal Spending Healthy, Inflation Heats Up


• ECONOMIC REPORT 10:00: U. Michigan Consumer Sentiment


• DailyFX: Will the Dollar Strengthen Seasonally Again?


• Bloomberg: Muni Bond Insurance Prove Worthless to NY and California


• Platts: Crude Futures Rangebound


• SeekingAlpha: Can the Central Banks Cure What Ails Us?


• CNBC: Putin May Become Gazprom Chairman


• Yahoo! Earnings Calendar


• AP/Yahoo!: Circuit City (NYSE: CC) Looking Poor on its EPS Report


• CNN Money: Marsh McLennan (NYSE: MMC) CEO Out


• Financial Times: UBS (NYSE: UBS) Faces Rebellion Over Funds Injection


• CNBC: Research in Motion (Nasdaq: RIMM) Earnings More Than Double


• Forbes: Philips (NYSE: PHP) Buys Respironics (Nasdaq: RESP)


• TheStreet: Micron (NYSE: MU) Swings to Loss


• AP/Yahoo!: Walgreen (NYSE: WAG) Q1 Rises


• Breitbart: Asteroid Could Hit Mars


• BBC: Europe's Border Free Zone Expands


• Economist: The Geopolitical Week Ahead


• Iran Daily: Tales from the Dark Side

Your support of our advertisers sustains our effort, so please take a minute to help fuel our bold independent endeavor. Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

Greek Coffee: Old & New Economy Contrast

In Greece, old souls like myself like to drink a Greek coffee in the afternoon, after siesta. It helps fuel the passion that drives them to squeeze the lemon of life for all the juice it has. (Stocks in article: NYSE: SPY, NYSE: DIA, NYSE: BSC, NYSE: MBI, NYSE: FDX, Nasdaq: GOOG, Nasdaq: QQQQ, Nasdaq: DCLK, Nasdaq: ORCL, NYSE: RAD, NYSE: CAG)

The day offered an interesting mix of past and present contrast. While the Q3 GDP figure went unrevised, its strength looks sure to falter in coming quarters. Reports from the Philly Fed and Conference Board raise concern over the outlook for Q4. Moving forward, I continue to see consumer softness driving a second leg of weakness for the economy. However, despite this weakness I continue to see a bullish market opportunity on the January effect I expect to present itself this year.

Today's Market Factor Analysis:

Philly Fed Survey

The Philadelphia area manufacturing report indicated quite poorly, and offers up a bad omen for future ISM reports. The Philly Fed Survey came in at a negative 5.7, versus consensus expectations for a positive 6.2, according to Bloomberg. CNBC's Steve Liesman indicated that for whatever reason, the Philly Fed measure seems to offer a good predictor for national manufacturing. A negative reading indicates contraction, and considering the Empire State reading weakness earlier this week, it appears manufacturing is moving into recession.

Leading Economic Indicators

The Conference Board's Leading Indicators posted a 0.4% decrease for November, versus expectations for a 0.3% decline. The drop was the third in four months and offers further evidence that the economy is slowing down precipitously into '08.

Weekly Initial Jobless Claims

New unemployment benefits filers measured 346K last week, which amounted to an increase of 12,000 over the week before. We've noticed a clear trend higher now, and the four-week moving average confirms this as it rose 4,250 to 343K. Remember The Greek's expectation for unemployment to increase even further as consumer spending softness leads to layoffs at retail, restaurant and other consumer services firms. This in turn should drive consolidation and a recession in commercial construction.

Market-Moving News:

• ECONOMIC REPORT: Philly Fed Negative 5.7 Vs. Expected Positive 6.2


• MarketWatch: Jobless Claims Trending Higher


• Bloomberg: Leading Economic Indicators Falls Again


• AP/Yahoo!: Bear Stearns (NYSE: BSC) Reports


• CNN Money: Q3 GDP Unchanged in Last Revision


• CNBC: Dissatisfaction With Economy Increases


• DailyFX: EURUSD to 1.4?


• EIA: Natural Gas Storage Report


• Platts: Crude Lower


• Financial Times: China Raises Rates for Sixth Time


• Yahoo! Earnings Calendar


• AP/Yahoo!: Oracle (Nasdaq: ORCL) Reports Strong Results


• CNBC: MBIA (NYSE: MBI) Shares Fall on Raised Risk


• TheStreet: FTC Approves of Google (Nasdaq: GOOG) Doubleclick (Nasdaq: DCLK) Combo


• Bloomberg: SunTrust Bails Out its Funds for $1.4 Bln.


• CNN Money: FedEx (NYSE: FDX) Profit Falls


• AP/Yahoo!: Rite Aid (NYSE: RAD) Report Letdown


• AP/Yahoo!: ConAgra (NYSE: CAG) Raises Forecast


• BBC: Georgia, Went Too Far? Would the UN Rather Putin Win?


• Economist: The Geopolitical Week Ahead


• Iran Daily: Tales from the Dark Side

Your support of our advertisers sustains our effort, so please take a minute to help fuel our bold independent endeavor. Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

Greek Coffee: U.S. Policy & Goldman's Reversion

In Greece, old souls like myself like to drink a Greek coffee in the afternoon, after siesta. It helps fuel the passion that drives them to squeeze the lemon of life for all the juice it has.

(Stocks in this article: NYSE: GS, NYSE: BBY, NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, Nasdaq: RIMM, Nasdaq: IRBT, NYSE: C, NYSE: BSC)

Hypocrisy

As we, occupier, protector, liberator of Iraq, sit back and watch a foreign nation invade that vulnerable country, I have never been more embarrassed or ashamed. Never have we looked so hypocritical and opportunistic. I, a man who supported the invasion of Iraq and now call for the pressuring of Iran, am ashamed. American ideals are not expressed by watching Turkey attack the populous of a country we are actively policing. I dare anyone to say we are not hypocrites in this instance.

You may rebut that the PKK is a terrorist organization, and to this I would answer, suppose Iran was invading Iraq and killing Kurds? Iran also does not get along with the Kurds. It's not so far fetched to imagine. Do you think America would sit back and watch Iran kill Iraqis, the people we have taken under our wing? No, we would not.

What we are doing with Turkey is preserving an important alliance, but how weak are we to allow Turkey to dictate policy to us? I say, flex your muscles with your allies as well when they get out of line. I'm sure Armenians agree with me on this topic, because what's going on is not much different than the genocide they suffered at the hands of the Turks. It's also not much different than the suffering the people of my island ancestry experienced at their hands. Nearly two centuries have passed, and nothing has changed. Enough!

Goldman

Like Cramer outlined, GS is being taken down. Here's why. There is a mathematical trend, maybe a human condition, called reversion to the mean. Usually, this describes a stock's rise above and fall below its true intrinsic value. In time, the stock should revert to its mean value. Often the market moves above a historic valuation and below it, and this activity generates a mean valuation. History dictates this value is significant and represents normal value. While secular changes can alter the mean, otherwise, it may be a good predictor of future value if your estimates are good.

Goldman Sachs (NYSE: GS) is the lone survivor of the investment banks. Perhaps through ingenious means, or luck, Goldman got onto the right end of trades and actually profited from financial sector woes, or at least offset losses with some smart trading decisions and solid risk management. But, now its valuation differs greatly from that of its peers. In order to keep that valuation, Goldman must continue to make the right decisions.

Outperformance of the past does not guarantee Goldman will make the same standout decisions in the future, and so I believe GS should revert to a mean industry value, and that value is substantially lower in my view. As earnings forecasts are based on past performance, analysts are likely missing the fact that Goldman operates in the same marketplaces as Bear Stearns (NYSE: BSC) and Citigroup (NYSE: C). In this cyclical business, trading earnings are not completely dependent upon a consistent driver. A gain one month could contrast against a loss in the next. This differs from most other businesses, even within the financial sector. Asset managers for instance, and Goldman is also one, earn fees on assets administered, and as that asset base is somewhat consistent and usually growing, you can base related future earnings on past results. Trading income is just different. Other than this, the IPO market and M&A activity could slacken in early '08 despite the Fed's efforts to provide expansionary aid. I just would not own the priciest stock in this business, despite past decision making wins.

While it has preserved more capital, Bear and Citi have raised capital, so I do not see any advantage at Goldman that can be assessed to its past success. Therefore, I expect its estimates are overstated and therefore valuation is as well. Also, I expect any valuation premium it holds due to past performance is not likely to play true either.

Market-Moving News

• AP/Yahoo!: Goldman (NYSE: GS) Slips Despite Strong Q4


• Bloomberg: ECB Injects $500 Bln.


• ECONOMIC REPORT: ICSC-UBS Weekly Same-Store Sales +2.1% Yr-to-Yr


• Bloomberg: SuperSIV Fund to Start Buying in Weeks


• State Street: Investor Confidence Falls to New Low


• CNN Money: FCC Alters Media Ownership Rules


• CNBC: Fed Endorses New Rules for Home Buyers


• CNN Money: New Home Construction Drops


• AP/Yahoo!: Oil Backs Off as Turks Withdraw


• CNBC: House Okays Energy Bill, Bush to Sign


• AP/Yahoo!: Higher Auto Mileage Standards Coming


• Yahoo! Earnings Calendar


• TheStreet: Research in Motion (Nasdaq: RIMM) Takes Tech for Ride


• AP/Yahoo!: Best Buy (NYSE: BBY) Profit Soars


• SeekingAlpha: iRobot (Nasdaq: IRBT) Cleans Up On Army Contract


• Economist: Turkish Incursion, Our Hypocrisy!


• BBC: Zuma Wins Leadership Election


• Economist: The Geopolitical Week Ahead


• Iran Daily: Tales from the Dark Side

Your support of our advertisers sustains our effort, so please take a minute to help fuel our bold independent endeavor. Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

Morning Coffee: Central Bank Big Day

(Stocks in this article: NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, NYSE: TT, NYSE: IR, NYSE: GRP, NYSE: NOV, NYSE: LTR, NYSE: BRK.A, NYSE: BRK.B, NYSE: F, NYSE: TTM, NYSE: AOC)

It's the big day. The first of the united central bank efforts debuts today. The Fed is auctioning $20 billion of term funds in this first round of action. The earth did not shake, and even the Libor didn't move much... However, The Greek believes the government gets the gravity of the situation and is otherwise rightly targeting the underlying collateral and remediating the problem at its root. However, the degree of assistance might need adjustment higher before it's all said and done. Is that bailout? Yes. Is it necessary to avoid financial cataclysm. Yes. So, would you rather have a free market collapse or a bit of socialist medicine for capital market revival? I know what I want for Christmas. Today's copy is abbreviated.

Market-Moving News

• CNN Money: Asia Sinks


• Financial Times: Europe Lower As Well


• AP/Yahoo!: Trade Deficit Lowest in Two Years


• DailyFX: Dollar New Year Celebration?


• Platts: Crude Falls As Dollar Rises


• Bloomberg: International Buys of U.S. Assets Increases, as Dollar Threatens Rise


• CNBC: NY Area Manufacturing Drops to 7-Month Low


• Financial Times: World Food Price Rise Hits Consumers


• ECONOMIC REPORT 1:00: Housing Market Index


• CNBC: Greenspan Sees Stagflation


• Yahoo! Earnings Calendar


• AP/Yahoo!: Ingersoll-Rand (NYSE: IR) Buys Trane (NYSE: TT)


• CNBC: Greenspan Sees Stagflation


• TheStreet: Grant Prideco (NYSE: GRP) to be Bought by National Oilwell Varco (NYSE: NOV)


• AP/Yahoo!: Loews (NYSE: LTR) to Spin Off Lorillard


• SeekingAlpha: Countering Barron's on Berkshire Hathaway (NYSE: BRK.A, BRK.B)


• WSJ: Ford (NYSE: F) Readying Sale, Tata (NYSE: TTM) Seen as Buyer


• MarketWatch: Aon (NYSE: AOC) Selling Unit


• Economist: The Geopolitical Week Ahead


• Iran Daily: Tales from the Dark Side

Your support of our advertisers sustains our effort, so please take a minute to help fuel our bold independent endeavor. Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

Week in Video Review - Dec 15

Please enjoy our video selections for the week just passed.


We try to keep it as entertaining as possible, but some of the videos may raise an eyebrow. The views expressed in the videos are not representative of the views of The Greek, and it is not our intention to make any political or other kind of statement, or to otherwise offend anyone by any of the selections. We hope you find them interesting, and enjoy the comedy selections this week.

Morning Coffee: Markets Dazed & Confused

(Stocks in this article: NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, NYSE: C, NYSE: BDK, Nasdaq: JBLU, Nasdaq: JASO, NYSE: WM, NYSE: WB, NYSE: WFC, NYSE: CFC)

The market seems dazed and confused currently, trying to figure out if the credit market will implode, if the economy will collapse, if inflation will blaze. This makes us vulnerable to outside shock, a negative catalyst. However, I like it. It's also a sign. When fear gets this frantic, I shift to bullishness as the mentors advise us, as the geniuses of our game teach. Oh, there are serious dangers ahead, but the immediate period seems to offer opportunity.

Importantly, capital flows should shift as we move through the end of the year. We should have a short-term bull to start '08, and after that, I agree the first half of the year will likely hold pitfalls and offer a rocky ride for stock investors. And, if Iran falls into place as I expect it could, my outlook for '08 is actually rather negative. Even so, I say that for now we should be long.

1. Inflation Fears, Nov. CPI - Today's Consumer Price Index report put the fear of the inflation God back into the market. He's a Pagan no doubt, and could require sacrifice to be appeased. Steve Liesman of CNBC went so far as to say the Fed would raise rates in the current environment if inflation data sends this same concerning message more consistently. November's CPI showed a 0.8% increase, mostly driven by the expensive price of energy last month. Excluding food (also higher) and energy, the Core CPI showed a 0.3% rise. Both measures exceeded expectations, and the trailing twelve month Core CPI (best for gauging the Fed's view of it) indicated a 2.3% increase, up from 2.2% in October. If stagflation, which is the combination of economic doldrums and inflation (in other words the worst case scenario), rears her ugly head, 2008 could be very challenging.


2. Citigroup's SIV Rescue - Citi announced that in order to avoid the downgrade of seven of its SIVs it would provide required backing, but thus have to bring some of the burden onto its balance sheet. Moody's downgraded Citigroup's debt ratings as a result, but The Greek views this move as productive and wise on Citi's part. I want to reinforce to you my view that the cure to this problem, and the unfreezing of these markets, is clearly tied to reviving the underlying mortgage and credit obligations. I believe the government has clearly embarked on this effort, and as it realizes (hopefully) the extent it must go to insure the stability of the system, we can recover and the instruments can again trade.


3. Oil's Conflicting Factors - I noticed a strange trend this year, winter. It's actually chilly outside, and it's even snowing. Heating oil traders have noticed the pattern as well, and as the Northeast braces for a Nor'easter, the price of crude and heating oil have adjusted upward. At the same time, the economy, and global economies, are forecast to show significant decreases in growth rate. Therefore, I see this current rise in price as a temporary phenomenon, but continued normal winter weather patterns could sustain prices longer. The IEA today issued its revised '08 demand forecast, and as always it does not agree with OPEC. The IEA noted that despite economic pressure ease, demand would increase in '08. OPEC, which has a vested interest in keeping supply tight to demand, seems to always view things in a placid manner in comparison to the IEA's panicked voice.
   

Market-Moving News

• Bloomberg: Consumer Prices Warm


• Financial Times: Global Shares Dazed and Confused


• Bloomberg: Treasuries Decline as Bets Rise Against Future Rate Cut


• DailyFX: Dollar Strength


• Financial Times: Citi (NYSE: C) Launches $49 Bln. SIV Rescue


• Platts: Crude Firms on Heating Oil Rise, Cold Spell


• CNBC: IEA, OPEC Differ on Demand Outlook


• AP/Yahoo!: Senate Passes Trimmed Energy Bill


• Federal Reserve: November Industrial Production Beats View and Capacity Utilization Falls Short


• Bloomberg: Holiday Season Slacking, Online Too


• CNN Money: Greenspan Says Inflation Risk Intensified


• Bloomberg: Wheat Prices Continue Rally


• CNBC: Japanese Biz Sentiment Hits Low


• Yahoo! Earnings Calendar


• AP/Yahoo!: Black & Decker (NYSE: BDK) Cuts View


• TheStreet: Moody's Downgrades Citi (NYSE: C)


• CNBC: JetBlue (Nasdaq: JBLU) Selling Stake to Lufthansa


• SeekingAlpha: JA Solar (Nasdaq: JASO) Gets Boost from Piper Note


• TheStreet: Mortgage Lenders Facing Rehab (NYSE: CFC, WB, WM, WFC)


• BBC: EU, Serbia and Kosovo


• Iran Daily: Tales from the Dark Side

Your support of our advertisers sustains our effort, so please take a minute to help fuel our bold independent endeavor. Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

Morning Coffee: Follow Me

(Stocks in this article: NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, NYSE: SDS, NYSE: LEH, NYSE: GS, Nasdaq: COST, NYSE: HON, Nasdaq: MATK, Nasdaq: JOSB, NYSE: NVS, NYSE: C, NYSE: DOW)

Last December, most would have said it was daring for me to suggest homebuilding and the financial system would fall into despair. In fact, many did, though that's all been forgotten now. Believe it or not, the consensus was looking for housing recovery early this year, while I was calling for another leg lower. Homebuilder CEOs were still in denial, and their stocks were significantly more expensive. I was even labeled an Armageddon Analyst. Can my views discounted any longer...

Now that we are in what many are screaming is in fact Armageddon, I'm here to lead you through the fire. Wall Street Greek is actually looking for near-term equity rebound, and you will require the same courage many of you mustered up last year, but our position must now take the other side of the table.

I suggest you refrain from your victory lap now and not fall in love with your short positions. Government backing and efforts are adding confidence to markets, whether the consensus sees it yet or not. Remember, there is a herd and they are still sounding the bearish cry. How many times have you quoted those famous words about buying into fear and selling into greed? Now I ask, how are you reacting when faced with fear? It's difficult isn't it... That's why extraordinary profits are had by some.

The Greek believes capital flows should return in favor of equities as tax loss selling runs dry and value is to be had. Why has the investing public forsaken the lessons of the past? The answer lies in human psychology. Kitchen sink write-offs are a norm in this kind of environment, and you should not allow yourself to be frightened into a corner while corporations do what they can now to clean their books for a fresh '08.

Santa is on his way and the January Effect should be extra effective this year, in my view. If Q4 GDP or corporate profits spur the market into panic, Bernanke and Mishkin are well-schooled in the art of sharp rate cut (I'm talking 100 bps if necessary), and you could expect a big move in such a scenario. If the economy holds, then the current of action will be viewed positively and market confidence returns as well. The caveat here is that we are now extra vulnerable to external catalysts like terrorism or geopolitical conflict. But, we should not let fear rule. The economic headline is drifting from the business page to front page news, yet another sign that the end could be near. I'm looking for a short-term move with a high level of expectation; looking further than that is yet difficult.

1. November Retail Sales Beat - Sales increased 1.2%, ahead of the expected 0.6% increase. Excluding autos, sales rose 1.8%, versus a 0.7% expectation. So, the late start to holiday shopping, while it was early based on the calendar, saved the month. We say late because sales data was soft heading into the holiday. As we suggested in a previous article, unemployment remains low and the holidays are the holidays. People will shop, and retailers will discount if necessary. We have seen earlier and earlier discounting as retailers try to secure the holiday purchase ahead of their competitors. Gasoline prices have been running high, while easing off the peak in recent weeks; gasoline impacts this figure, as it includes the sales of your local pump stations. So, The Greek took solace in the specific data point that excludes gasoline; it showed a rise of 0.6%. Another positive, almost all measured sectors of retail showed improved sales. The consumer is not dead yet.


2. November Producer Price Index - PPI increased 3.2%, versus 1.6% expected, and Core PPI excluding food and energy, rose 0.4% versus 0.2% seen. A little hot... Steve Liesman of CNBC pointed out the many factors that play roles in PPI impacting consumer prices, where Fed attention is focused for inflation measure. While it's true that a higher PPI does not necessarily imply an increase in CPI this month, it does imply pressure is increasing on future prices. Margins can only tighten so much for retailers to bear, and at some point, no matter how tight competition may be, consumer prices will rise. Net net, there is no way to view a rise in PPI in a positive light. CPI will be closely watched tomorrow.


3. Unemployment Claims - At 333K, weekly benefits filings improved off last week's level, which also improved from the week before it. The Greek remains uncomfortable with the long-term trend here, however suttle it has thus far proven. I continue to look for consolidation in the retail/restaurant/other consumer sector in '08, which will in turn impact commercial construction as well, in my view. Therefore, we also expect unemployment to continue on the increase. While I'm bullish stocks now, I'm still looking for a recessionary quarter or two, or more depending on what plays out with Iran and how well we mitigate credit concerns.


4. LIBOR Shows Positive Signs - While the article I have posted for you below focuses on the sticky LIBOR rate, it has eased off recently higher points. The fate of the economy rests significantly on our ability to mitigate credit risk tied to exotic asset backed securities extending beyond mortgages. We cannot allow this disease to spread to other consumer credit markets.

Market-Moving News

• CNN Money: Japan Leads Asia Lower


• CNN Money: Europe Follows Lower


• AP/Yahoo!: Lehman (NYSE: LEH) Loses Less than Expected


• Bloomberg: November Retail Sales Ahead Consensus at +1.2%


• BLS: November PPI +3.2%, Core +0.4%


• DOL: Weekly Initial Unemployment Claims at 333K


• Bloomberg: LIBOR Gets Sticky, but has Narrowed Gap a Bit


• CNN Money: AMT Fix Passes House


• Platts: Crude Stabilizes


• Bloomberg: LBOs Find New Funding Source


• Bloomberg: NY Fed Head Says, That's Not All Folks


• Economist: Unclogging the System


• FT: Asian Banks Refrained from Joining Counterparts


• CNN Money: Goldman (NYSE: GS) CEO May Break Bonus Record


• Yahoo! Earnings Calendar


• AP/Yahoo!: Costco (Nasdaq: COST) Q1 Profit Up 11%


• CNBC: Honeywell (NYSE: HON) Guides for Higher '08
• Greek: Did You Catch Our Martek (Nasdaq: MATK) Buy Call Yesterday?


• MarketWatch: Jos A. Bank (Nasdaq: JOSB) Profit Climbs 27%


• Forbes: Novartis (NYSE: NVS) to Cut 2,500 Jobs


• TheStreet: Can Pandit Save Citi (NYSE: C)?


• MarketWatch: Kuwaiti Venture for Dow Chem (NYSE: DOW)


• BBC: EU Landmark Treaty


• Economist: The Geopolitical Week Ahead


• Iran Daily: Tales from the Dark Side

Your support of our advertisers sustains our effort, so please take a minute to help fuel our bold independent endeavor. Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

Martek (Nasdaq: MATK) Earnings Preview

(Stocks in this article: Nasdaq: MATK, NYSE: ABT)

One of my favorite turn-around stories, Martek Biosciences (Nasdaq: MATK), a name I followed as an analyst, has gotten cheaper, and mostly on general market turmoil. With the company set to report earnings at the end of the day today, the report could offer an opportune catalyst for the stock this week. In any event, I like the shares over the long-term.

At the conclusion of my article on October 13, 2007, “Riding the Martek Roller Coaster,” I wrote, “we view MATK attractive now for picking at, and would certainly look to add shares on any broad market weakness.” Broader market weakness has in fact played a role in Martek’s shares’ decline off its high. Keeping risk in mind, we have to ask, is there good reason for this decline that might be related to systematic risk, and what other reason might exist. I believe there is some risk, because if consumers are constrained and food prices are generally high, it may matter less to a good many price-sensitive shoppers whether there is healthy for your heart lifesDHA™ in their food or not. They will not pay up for it at some threshold price level.

However, I do not think the economic situation has progressed enough to significantly impact the health pay-up purchase, and more importantly, Martek is making great inroads in a good deal of food categories and with new business partners. Still, analysts are becoming challenged to understand the importance of price versus the opportunity available in the food products category. For now I expect the existing trend of food products penetration growth will prevail in driving operational results, as the opportunity remains significant and relatively untapped.

The shares currently trade at about 30X the $0.86 consensus EPS estimate for FY 08 (Oct.). Analysts have yet to revise long-term EPS growth forecasts much, and still look for a five-year rate of 18%. However, growth in FY 08 is seen at 36.5%. I continue to expect earnings growth to exceed expectations, and project a 25% three-year rate. Applying my estimate, MATK’s P/E-to-growth rate ratio amounts to 1.2X, which I view as very cheap for a healthy growth story. The opportunity exists here because the market has yet to buy into MATK as a reliable growth idea. Investors still get antsy around earnings report time. However, my feeling is that the company has finally gotten the reigns on its horse, or rather control of it.

Over the last few months, the news from the company has been mostly of the favorable variety. Business operations seem to be progressing in many facets. Martek just penned a deal with baby food maker Beech-Nut to offer baby food products including lifesDHA ™. This is the natural extension from baby food that should have happened long ago, in my opinion. Mothers first become aware of the importance of DHA while taking prenatal vitamins or when learning about infant formula offerings. Therefore, they are likely to continue seeking it for their child when they go shopping for solid baby food. I think this deal and others like it could play a role in a potentially improved FY 08 outlook offered by the company. Analysts have not made much change, while adjusting FY 08 estimates up $0.02 in the last 30 days.

The company also came out victorious in several patent infringement cases, settled several lawsuits and also better insured stability of business when patents run out. In that regard, Martek entered into a long-term sole source deal with Abbott Laboratories (NYSE: ABT), where Martek will exclusively provide its additive to Abbott Nutrition’s Similac Advanced brand of infant formula. Two-thirds of the company’s infant formula market is now under long-term contract.

The company’s recent class action settlement is to be fully covered by Martek’s insurer, so we should not see an impact from that. The company’s recent settlement with OmegaTech shareholders requires the company to issue another 341K shares (about 1.1% of shares outstanding according to Yahoo! Finance) and recognize roughly $10 million of goodwill upon issuance. I view this as relatively insignificant to ongoing operations outside of minimal share dilution.

I’ll sum up my opinion like this: any time you have to pay something you might not otherwise have needed to, it means less capital is available for other uses and that’s bad. Still, in using shares, the company mitigated that capital constraint somewhat, or rather shifted the burden to shareholders. However, the dilution impact appears minimal and not significant to the valuation of ongoing operations and those related cash flows. Thus, if news of a small impact to FY 08 does affect the stock price in the future, I would view it as a buying opportunity. And let’s not forget that in exchange for that compensation, Martek acquired important strategic assets and rights.

Finally, the company recently took part in a ThinkEquity Partners conference, something I’m not sure they would have done if they had a very horrible skeleton to report on Wednesday. There are no guarantees of anything in life, but even if some unforeseen news frightens investors, MATK would become an even more attractive buy in my eyes, and remains a stock I like for ‘08. Risk caveats aside, I would own MATK for the long-term based on my favorable view of its valuation and product opportunity.

Your support of our advertisers sustains our effort, so please take a minute to help fuel our bold independent endeavor. Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

Morning Coffee: Rally Time

(Stocks in article: NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, NYSE: SDS, NYSE: WB, NYSE: PNC, NYSE: BAC, NYSE: COF, NYSE: XOM, NYSE: SLM, NYSE: MMM, NYSE: GWW, Nasdaq: WMGI)

Just when you think Ben has let you down, Uncle Ben shows up with creative mitigation. My plate today includes a side portion of crow, but recall that my concerns about the FOMC policy decision were geared to what I thought the Fed would do, not what it should do. Also, it will not intimidate my future forecasts, and this I promise.

After the announcement, I was immediately concerned that the group had not narrowed the margin for the discount rate in order to increase its appeal, but today's action mitigates that concern. Funding should now be available even to shy banks that do not want to alert the market of their stresses. The Fed will not disclose bidder information. The coordination of the effort also helps sooth the market's concern that foreign central banks, especially in Europe, might do something detrimental to the dollar through combat against local inflation. It's funny, just when I thought the Fed was too reactionary (where I wanted proactive measure), it turns out the market and all of us involved are even worse.

The timing of today's action was effective in shutting up Fed critics, myself included. One thing we must never forget is that the Fed always has our backs, however late or reactionary they may be at times. That's important to note, though its been well-reinforced in memory now. I expect this action, in concert with rate reduction and Treasury efforts to improve the reliability of the underlying collateral should go a good ways to restoring some liquidity.

This group is far from perfect though. The Fed has communication issues. I suggest, if I may, that they limit intermeeting discussions by individual representatives and speak in one voice at all times. This would improve clarity of message and reduce market speculation and misunderstanding. The reason I questioned Ben's leadership yesterday was because of the mixed messages coming out of the group, and it's up to the leader to control that. While members can of course express personal opinion, it's probably best for the rest of us that they do so through the better controlled Fed press room and not off-location addresses that while seem perhaps more casual to speakers, are intensely followed by the Street. If this occurs, then comments like Poole's "the Fed will ease only in calamity" earlier this year will never reach market ears. Also, Kohn will not have to qualify his statements and confuse Greeks.

Anyway, this is a buy signal. I believe that if you missed the start of this rally, it's not too late to partake. I do not want to rehash in too much detail, but the kitchen sink write-offs are coming to an end, and tax loss selling should be as well. Capital will be flowing and valuations will be growing. Santa and the January effect should be evident to all, and to all a good trade.

Market-Moving News

• Federal Reserve: Important Central Bank Action


• Bloomberg: Fed Action


• CNN Money: Asia Summary


• Financial Times: London, Europe Started Down


• Federal Reserve: Dec 11 FOMC Statement


• DailyFX: 2008 Rate Outlook


• Financial Times: Wheat Crisis


• Platts: Crude Trade Ahead of Status Report


• Bloomberg: Trade Deficit Widened in October


• AP/Yahoo!: U.S., China Agree on Interdependence


• CNBC: Mortgage Applications Rise


• MarketWatch: Import Prices Got Hot


• WSJ: Greenspan on the Crisis


• CNN Money: Capital One (NYSE: COF) Delinquencies Rise


• Yahoo! Earnings Calendar


• CNBC: Bank of America (NYSE: BAC) Warns


• AP/Yahoo!: Wachovia (NYSE: WB) Boosts Q4 Write-Down Estimate


• AP/Yahoo!: PNC Bank (NYSE: PNC) Warns


• TheStreet: Exxon (NYSE: XOM) Plans New LNG Terminal


• AP/Yahoo!: Sallie Mae (NYSE: SLM) Warns


• CNBC: 3M (NYSE: MMM) Sees Double Digit '08 Growth


• AP/Yahoo!: Wright Medical (Nasdaq: WMGI) Forecasts Rising Profits


• AP/Yahoo!: Grainger (NYSE: GWW) Nov. Sales Rise 10%


• Forbes: Explosion Rocks Beirut


• Economist: Grisly Attack in Algeria


• The Greek's Week Ahead - Alone on an Island, "Fed Will NOT Cut!"


• Economist: The Geopolitical Week Ahead


• Iran Daily: Tales from the Dark Side

Your support of our advertisers sustains our effort, so please take a minute to help fuel our bold independent endeavor. Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

Breaking News: Important Fed Action

Before this morning's article, it's important you are aware of this new Fed action reminiscent of its post 9/11 action. This triggers a buy signal in my opinion, but I will review it more closely in the "Morning Coffee."

Fed Action of December 12

Wishy Washy FOMC

This group is lacking the strong leadership of years past. The context of its statements seem to go from one angle to another from month to month, and are contradicted too often. It seems to lack vision and is losing the confidence of the market. While I think Ben is intelligent, I'm having trouble with his leadership.

The statement below reads to me, "we're clueless, but despite our intellectual paralysis, we will do what you ask us to eventually if you pressure us hard enough." That's good though, and rate aid is necessary, so after this bit of regurgitation, I would continue to look for rally later this month and in January on discounted, tax loss sale impacted shares. That said, I would have liked to have seen a larger move on the discount rate this time around.

Here's the official FOMC announcement copied word-for-word below:

Release Date: December 11, 2007

The Federal Open Market Committee decided today to lower its target for the federal funds rate 25 basis points to 4-1/4 percent.

Incoming information suggests that economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending. Moreover, strains in financial markets have increased in recent weeks. Today’s action, combined with the policy actions taken earlier, should help promote moderate growth over time.

Readings on core inflation have improved modestly this year, but elevated energy and commodity prices, among other factors, may put upward pressure on inflation. In this context, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully.

Recent developments, including the deterioration in financial market conditions, have increased the uncertainty surrounding the outlook for economic growth and inflation. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; William Poole; and Kevin M. Warsh. Voting against was Eric S. Rosengren, who preferred to lower the target for the federal funds rate by 50 basis points at this meeting.

In a related action, the Board of Governors unanimously approved a 25-basis-point decrease in the discount rate to 4-3/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, and St. Louis.

Morning Coffee: Herd Mentality

(Stocks in article: NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, NYSE: WM, NYSE: TXN, NYSE: C, NYSE: MRK, NYSE: BA, NYSE: T, NYSE: HRB, NYSE: KR, Nasdaq: SBUX)l

Shoulda, woulda, coulda is what market participants could be saying this afternoon, as they consider their oversight of The Greek's warnings. One thing that you can count on here is that I will not follow the herd based on fear of making a mistake. I will stand by my convictions, and sometimes I'll be wrong, but I think I've steered you correctly for the most part so far.

All the buzz this morning is again surrounding the Fed, and in a clear signal to me of the indecision that encompasses the current meeting, the FOMC has convened early today. If everything were a given, there would not even be a need to meet, but if you call the boys in early, something is probably cooking. I expect another "close call," using the Fed's own words from the last meeting notes.

It is amazing to me how information and opinion feed on themselves and build momentum so powerfully. The herd mentality has never been stronger than that view which surrounds the market certainty that a Fed hike "will" happen. I see journalists speaking about the decision as if it has already occurred. My dear friends, you have gotten ahead of yourselves. The Fed will not cut rates, after heated debate. I'm a small voice overpowered by the roaring of a speeding freight train on this one. It's clear investors would be served to hedge against the risk I outline, since a cut is so well built in to the markets, and I believe erroneously.

1. Fed Buzz! - If and when the Fed decides to NOT act on the Fed Funds Rate, while cutting the Discount Rate, the market would probably ignore the accompanying supportive statement. This afternoon's collapse would be dramatic as a result. I expect it would continue into the next day and perhaps through the week, and as we retouch or surpass recent lows, that is when I would prepare to pounce on stocks for a rally into early 2008. Now, if the Fed does cut rates by a quarter point, the market may retrace a bit anyway. In that scenario, I would buy into that weaness late this afternoon. If the Fed goes nuts and cuts by 50 points, I would suck it up, eat my crow, and buy immediately. In all of these scenarios, I see a buying opportunity relatively soon. Clearly, I would be a little late if rates are reduced, but better late then never. And if the Fed does not act, please remember me and tell others, because I am alone on this island, and it's cold and lonely. It takes courage to go out on a limb like this based on conviction, and this is clearly evident in the unequivocal unanimity of opinion for a rate cut. Not one expert is willing to express doubt, and there is no courage on Wall Street today. Reiterating, my view is based on what I expect the Fed to do, NOT what I think it should and eventually will do.


2. ICSC-UBS Weekly Same-Store Sales - Sales posted a 2.3% increase last week, and the consumer is clearly showing his cards. It's a poor hand. A recent survey found below showed expectations for Q4 GDP growth have fallen to 1.0% from 1.5% most recently. Retail sales for November are due for release this Thursday, and only the week after Black Friday could save the month, which could benefit from an earlier Thanksgiving.


3. October Wholesale Trade - At 10:00 a.m., October Wholesale Trade was reported. Inventories were unchanged, as compared to consensus expectations for wholesale inventories to rise 0.5%. Inventories grew 0.1% and 0.8% in August and September, respectively. This says to me that businesses are taking heed of market signals, not that sales have accelerated.
   

Market-Moving News

• CNN Money: Asia Jumps


• Financial Times: Europe Falls


• CBOT: Fed Funds Futures See 100% Probability of 25 Pt. Cut


• DailyFX: Are Funds Futures Wrong?


• SeekingAlpha: Fed Will Not Cut


• Bloomberg: Economic Growth to Slow to 1% in Q1


• CNBC: Small Business Confidence Tanks


• ECONOMIC REPORT: October Wholesale Trade - Inventories Unchanged Vs. Consensus +0.5%


• ICSC-UBS Weekly Same-Store Sales +2.3%


• Platts: Crude Inching Higher


• Bloomberg: Chinese Inflation Heats, Trade Gap Widens


• Yahoo! Earnings Calendar


• AP/Yahoo!: H&R Block (NYSE: HRB) Losses Soar


• Bloomberg: AT&T (NYSE: T) Raises Dividend and Buyback


• Financial Times: Citigroup (NYSE: C) Offloads SIV Assets


• CNBC: Merck (NYSE: MRK) Plans Late Stage Trials, Backs Forecast


• AP/Yahoo!: Washington Mutual (NYSE: WM) Drastic Measures


• AP/Yahoo!: Kroger (NYSE: KR) Net Up 18%


• MarketWatch: Texas Instruments (NYSE: TXN) Raises Outlook


• MarketWatch: Boeing (NYSE: BA) 787 Back on Track


• AP/Yahoo!: Starbucks (Nasdaq: SBUX) Downgraded


• BBC: Israeli Tanks Push Into Gaza


• BBC: CIA Man Backs Water-Boarding


• The Greek's Week Ahead - Alone on an Island, "Fed Will NOT Cut!"


• Economist: The Geopolitical Week Ahead


• Iran Daily: Tales from the Dark Side

Your support of our advertisers sustains our effort, so please take a minute to help fuel our bold independent endeavor. Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

Morning Coffee: Count Me in for $10 Billion!

(Stocks in article: NYSE: UBS, NYSE: MCD, NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, NYSE: C, NYSE: MER, NYSE: MTN, Nasdaq: AAPL, Nasdaq: HAYZ, Nasdaq: MOGN, XETRA: EII.DE, Paris: GLEG5.PA, NYSE: SHI, NYSE: MHP, NYSE: MCO)


Equities are tentative but positive as they continue to anticipate Fed expansinary action. Today's most important market-moving events are discussed below, and include UBS, the Fed, Jesse Jackson's misdirected march, and China's real interests exposed.

1. UBS Says, Count Me in for $10 Bln. - Not to be outdone by its banking brethren, UBS (NYSE: UBS) today announced it would use several channels to raise capital and secure its Tier 1 capital status. The market viewed it positive that UBS was able to mitigate risks, despite diluting current shareholder interests through deals with two foreign investors and the promise of selling treasury shares it had planned to cancel. The total capital being raised will exceed the headline figure of $10 billion quite substantially, and UBS looks set to take a loss for the year. However, this does provide more clarity and disclose risks to a concerned marketplace, and this should be appreciated.


2. Anticipating the Fed - We have not seen one pundit, however skeptical, with the (insert word here) to publicly consider the possibility of Fed inaction. The Greek reminds you of the number of times you have read and heard about herd mentality. While I believe Fed action would be helpful, I view it unlikely and please read my thoughts on the subject here. Only The Greek holds this bold view. One report listed below discusses the Fed's preferred inflation gauge, and a recent concerning measure from it. Based on recent economic data, which has been mixed and recently positive, and ongoing inflation concerns, The Greek is looking for Fed inaction this time around to be accompanied by a cut at the discount window and wording reassurance that the Fed has your back if need be.


3. Civil Rights Leaders March on Wall Street - Rev. Jesse Jackson and other civil rights leaders are marching on Wall Street today, and six other cities across the country. They are arguing for corporate America to atone for its mistakes that are to blame for the foreclosure epidemic among the nation's poor. Nice thought, but I view the President and related agency action, as well as banking efforts to renegotiate loans, as positive moves. The Greek believes Jesse ought to move his protest a few blocks over the Water Street, where Standard & Poor's (NYSE: MHP) is located, and protest the rating agencies that in my view did not properly measure the risk in mortgage-backed securities and allowed them to issue and trade under erred assessment. We rely on companies like S&P and Moody's (NYSE: MCO) to do this for us, and while measuring risk ourselves, we expect more from them.


4. China - A good bit of data came out of China over the last few days. The country again is tightening lending restraints, increasing the reserve requirement on banks for the umpteenth time. Also, China is further restricting foreign investment to keep things in check. China is trying to contain inflation, but recent wholesale inflation figures showed a rise of 4.6%. In other news, China's third most important supplier of crude became an even more important provider to the energy hungry behemoth. The problem here is that China's needs precluded United Nations concerns, and the country in question is Iran. Sinopec Group (NYSE: SHI) agreed to a significant natural gas supply deal that will lead it to invest $2 billion in Iran (a vested interest) to develop the Yadavaran Oil Field and to buy 10 million tons of liquefied natural gas a year for 25 years. The obstacles are mounting to U.S. confrontation of Iran, and WWIII is looking less like a slip of the president's tongue and more like real possibility. Actions speak louder than words, and China has shown its cards to the wise poker players in this game.
   

Market-Moving News

• Financial Times: UBS (NYSE: UBS) Taking $10 Bln. Hit


• The Greek's Week Ahead - Alone on an Island, "Fed Will NOT Cut!"


• CNN Money: Asia Moves Lower


• CNN Money: Europe Sinks


• MarketWatch: Analysts Look for Quarter Point Cut


• Bloomberg: Fed's Inflation Gauge Indicates Group Handcuffed


• NY1: Civil Rights Leaders March on Wall Street About Foreclosures


• CNBC: Qatar Fund Sees U.S. Banking Opportunity


• Platts: Oil Awaits Inventory Data, Fed


• CNBC: Take Note, Chinese Interests Intensify in Iran


• DailyFX: Boris on the Fed


• Greek: Santa Claus Rally Prep


• CNBC: Santa Rally Could be Bumpy Ride


• CNBC: Consumers In Gloomy Mood


• Financial Times: China Limits Foreign Investment


• Bloomberg: China Raises Reserve Requirements AGAIN


• AP/Yahoo!: China Wholesale Inflation Hot


• Yahoo! Earnings Calendar


• Bloomberg: Societe Generale (Paris: GLEG5.PA) Taking $4.3 Bln. Hit to Save SIV


• Bloomberg: McDonald's (NYSE: MCD) November Sales Up 8.2%


• AP/Yahoo!: Vail Resorts (NYSE: MTN) Narrows Q1 Loss


• SeekingAlpha: Apple (Nasdaq: AAPL) Right to Sit on Cash


• AP/Yahoo!: Hayes Lemmerz (Nasdaq: HAYZ) Affirms Outlook


• CNN Money: Eisai (XETRA: EII.DE) to Buy MGI Pharma (Nasdaq: MOGN)


• BBC: Putin Sees Medvedev As Successor


• Jerusalem Post: Iran Sends Spying Protest Letter to Washington


• BBC: EU and Africa Seal New Pact


• Economist: The Geopolitical Week Ahead


• Iran Daily: Tales from the Dark Side

Your support of our advertisers sustains our effort, so please take a minute to help fuel our bold independent endeavor. Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

The Greek's Week Ahead - Alone on an Island, "The Fed Will NOT Cut!"

The Greek's Week Ahead has been engineered to prepare you for the events that could impact your portfolio this week.

Wall Street Greek is alone on an island. That would not be such a bad thing though, if it was one of my treasured summer paradises of the Aegean. I am of course speaking in the figurative sense, regarding my expectation for the Federal Open Market Committee meeting decision, which is due on December 11th. Pundit after pundit, economist and sector strategist alike, are all discussing a Fed cut as if it were a foregone conclusion, despite the Fed's own words to the contrary.

Ah, but you will point to Donald Kohn's recent address that seems to draw most, like a Siren's song, to the view that a cut is certain. It was of course his speech that set the market off running and speculating. I am very disappointed in the majority of experts who have set their expectations based on the speeches of Kohn and Bernanke. I warn those reckless sailors, beware the rocky shores she draws you toward!

I have to ask, have you listened to the whole speech, or are you taking some underpaid newspaper writer's word for it? (read a guy just like me) Well, I think that if you watched the speech or read the transcript, then you would have heard Donald qualify his statements, saying that his views were not necessarily those of the Fed on the whole. It was not just that though that convinced me to vote against the majority, it was his body language as he said it. Also, if you really listened and watched Bernanke's speech, you would have captured in memory his telling facial expressions as he discussed the Fed's need to be flexible. To me it was clear he was still in a position of neutrality that day, and the data released since has not been supportive of Fed action. Last week's jobs data seemed especially defiant.

Of first and foremost concern, the Treasury Secretary and President took some weight off the Fed chief's shoulders with their important announcement last week. If the collateral that supports mortgage backed securities and SIVs receives reinforcement from government policy, then credit markets (and equity) should find support as well.

Oh, and if you (read every overpaid pundit who thinks the Fed will cut rates, some of which are still expecting a 50 point move) missed the Fed's innuendo and body language, then go back and read the policy statement from the last meeting. Within it let me remind you, the Fed told us the risks were balanced on both sides of the equation, and the group clearly positioned itself as neutral. If you don't recall that, I'm sure you could not forget the market's dive since. The market you see, she is efficient, and despite the media and pundit calls for the next Fed cut, she was betting otherwise. I love that girl, because she never lies.

So, here I stand on this deserted island, like Tom Hanks in Castaway. Talking to myself and eating lunch with a volleyball, but what am I saying? That's what matters. The market has gained back some ground of late, and I expect she will give that all back in somewhat drastic fashion when the headless chickens starting running around in shock. "How could she surprise us like this," they will exclaim. But, you and I will know better.

Your Market-Moving Event Schedule:

On Monday, Reverand Jesse Jackson and other civil rights leaders plan to hold rallies across the country, including one on Wall Street. The protestors are calling on corporate America to take action, or more than they have, to stop home foreclosures. While Jackson puts on a good show, corporate America, especially those firms involved (read Hovnanian (NYSE: HOV), Countrywide (NYSE: CFC), Citigroup (NYSE: C)), and those realizing the results of lighter consumer spending like, (Darden (NYSE: DRI) and Sears (Nasdaq: SHLD)), already comprehend the importance here.

Some might suggest Jesse take his protest a few blocks over, down to Water Street, to the offices of one rating agency that had a lot to do with the questionable assessment of risk on the now illiquid securities. That same agency and its peers are now seemingly preparing to downgrade securities that should not have been so highly rated in the first place, and this action following prior absence of diligence, could also prove detrimental to the cause of stability. The Greek, or Hugo Chavez, would ask the President to make a phone call and stop the whole mess, but I'm not sure he can. I'm referring to the debacle of last week regarding the assessment of Iran by our nation's intelligence agencies. Maybe that was just payback though for dealing George Tenet such an improper exit for his loyalty. You know, the CIA doesn't fear anybody, not even George Bush. If any of you readers have Jesse Jackson's ear, tell him to head over to Water after he's through on Wall Street.

The prettiest Presidente gets sworn in as Argentina's new leader, Cristina Fernandez de Kirchner. Never has Argentina had such a magical leader, well not since the famed "hand of God" incident in the World Cup. Maybe she has the answer to thwart Chavez's South American plans. Perhaps if Columbia does not work out for us as a good diversion for Chavez, then Cristina could.

While the economic calendar is relatively bare, October Pending Home sales are scheduled to be reported at 10:00 a.m. They actually rose 0.2% in September after having fallen 6.5% in August. Monday's earnings schedule is light and includes H&R Block (NYSE: HRB), FuelCell Energy (Nasdaq: FCEL), Vail Resorts (NYSE: MTN), Alfacel (Nasdaq: ACEL), Diamond Foods (Nasdaq: DMND), Enzo Biochem (NYSE: ENZ), Hayse Lemmerz Int'l (Nasdaq: HAYZ), IDT Corp. (NYSE: IDT), Imperial Sugar (Nasdaq: IPSU), Investors Real Estate (Nasdaq: IRETS), Navisite (Nasdaq: NAVI), Nevada Gold & Casinos (AMEX: UWN), Pall Corp. (NYSE: PLL), Peregrine Pharmaceuticals (Nasdaq: PPHM), SAIC Inc. (NYSE: SAI), Tutogen Medical (AMEX: TTG), Urstadt Biddle Properties (NYSE: UBA) and Zila (Nasdaq: ZILA).

I would say that things could get a little more interesting on Tuesday, when the FOMC makes its announcement at 2:15 p.m. A 25 basis point move would basically seal the deal in my view and allow the market to tread higher, but I just do not see it as the most likely scenario. You know my call, no action on the Fed funds rate, but I expect a small cut on the discount rate. I expect the market to react poorly, but this will set up an opportunity for a decent Santa Claus rally or January effect in due time. Tax loss selling will soon lose its steam, if it hasn't already.

At 7:45 a.m., the ICSC-UBS will report weekly same-store sales, and we will get an idea of how strong the follow-through was in the week following Black Friday. Last week's reading showed 3.1% growth year-over-year. At 10:00 a.m., October Wholesale Trade will be reported. Barron's lists consensus expectations for wholesale inventories to rise 0.5%. Inventories grew 0.1% and 0.8% in August and September, respectively.

AT&T (NYSE: T) and Merck (NYSE: MRK) are holding analyst day events, while Boeing (NYSE: BA) is set to report on deliveries of its 787 aircraft. Tuesday's earnings slate includes ABM Industries (NYSE: ABM), PLATO Learning (Nasdaq: TUTR), Sharper Image (Nasdaq: SHRP), Kroger (NYSE: KR), Avanir (Nasdaq: AVNR), Biodel (Nasdaq: BIOD), CHC Helicopter (NYSE: FLI), Mechel OAO (NYSE: MTL), Multimedia Games (Nasdaq: MGAM), NCI Building Systems (NYSE: NCS), Resource America (Nasdaq: REXI), Taseko Mines (AMEX: TGB), The Cooper Cos. (NYSE: COO) and VistaCare (Nasdaq: VSTA).

Wednesday will kick off with the regular weekly Purchase Applications Report from the Mortgage Bankers Association. At 8:30, October International Trade is expected to show the deficit widened to $57.3 billion from $56.5 billion in September. November Import Prices are also scheduled for release, and Barron's notes the economists' consensus for a 2.0% increase, versus a 1.8% increase in October. Rising oil prices should have played a role.

At 10:00, the Census Bureau will report its Quarterly Services Survey. This quarter's survey will be focused on information and technology-related service industries accounting for roughly 15% of GDP. At 10:30, the EIA will publish its weekly Petroleum Status Report, but I believe the most important factor impacting oil this week should be the repercussions of the NIE Report. Thus, I am looking for oil to continue on its downtrend again this week. However, since the report and the President's press conference that followed, Israel's leader has stated that Iran has indeed restarted its program. We read last week that Israel was set to share intelligence with the U.S. on the subject.

Wednesday's earnings reports include ADC (Nasdaq: ADCT), American Pacific (Nasdaq: APFC), Amtech Systems (Nasdaq: ASYS), CKE Restaurants (NYSE: CKR), Convera (Nasdaq: CNVR), CPI International (Nasdaq: CPII), Integrated Electrical (Nasdaq: IESC), Magellan Health Services (Nasdaq: MGLN), Martek Biosciences (Nasdaq: MATK), Vital Signs (Nasdaq: VITL) and Harry Winston Diamond (Toronto: HW.TO).

Thursday looks to offer a busy morning. The Producer Price Index for November is expected to show a 1.5% increase, compared to 0.1% in October. Reuters places price expectations less food and energy at a 0.2% increase. Retail sales for November will also be announced, and last week individual retailers offered up mixed but mostly weak chain store sales results. Reuters shows expectations for a 0.5% increase, versus 0.2% in October. Weekly Initial Jobless Claims will round out the early reports, and will match against last week's claims of 338,000.

At 10:00, Business Inventories for October are seen increasing 0.3%, compared to a 0.4% rise in September. The EIA Natural Gas Report will follow that up, and considering the cold spell in the Northeast, the result might look bullish. However, strategists will look toward the 10-day and long-term forecasts, which seem to both point toward warmer weather.

Thursday's earnings news will emanate from BRT Realty Trust (NYSE: BRT), Comarco (Nasdaq: CMRO), Costco (Nasdaq: COST), eOn Communications (Nasdaq: EONC), Jos A. Bank (Nasdaq: JOSB), Lehman Brothers (NYSE: LEH), MDS (NYSE: MDZ), Pennantpark Investment (Nasdaq: PNNT), Quiksilver (NYSE: ZQK), SoftBrands (NYSE: SBN) and Tier Technologies (Nasdaq: TIER).

Quadruple Witching could spur volatility on Friday, while the Consumer Price Index headlines all news. November's CPI is seen increasing 0.6%, versus 0.2% in October, and 0.2% (0.2%) excluding food and energy. Industrial production for November is expected to rise 0.1%, aftering falling 0.5% in October. Capacity Utilization is expected to match October with a November reading of 81.7%.

Friday's earnings reporters include Arrowhead Research (Nasdaq: ARWR), Electronic Clearing House (Nasdaq: ECHO), Rentech Inc. (AMEX: RTK), Value Line (Nasdaq: VALU) and Wimm-Bill-Dann Foods (NYSE: WBD).

Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

Morning Report: The Set Up

(Stocks in this article: NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, NYSE: MT, Nasdaq: NEWS, Nasdaq: MVSN, Nasdaq: GMST, NYSE: NSM, Nasdaq: PALM, Nasdaq: PZZA, Nasdaq: MPEL, Nasdaq: COMV, NYSE: STP, Nasdaq: SPWR)

We got a mild, bullish jobs report this morning, and while it offers perfect news to top off the bullish week, it's also the perfect set up for a Fed induced disappointment next week. Only The Greek is forecasting inaction to result from the December 11 FOMC Announcement. The Street and media are all in league looking for a 25 point move, to as much as a 50 point cut seen by the headless chickens. Bernanke was well aware of Paulson's plan before you were notified my friends, and this is why he has been walking tall, and even shed the usual tremor in his voice recently. The Fed is NOT going to act next week. It's moved 75 basis points already, is waiting to see the impact, is concerned about inflation and could add a discount rate cut to Paulson's move in order to cure the illness in the credit markets.

Remember, my forecast for the Fed action does not coincide with what I view as necessary from the Fed. While I see the group playing the neutral wait and see game, I also expect them to be confronted next year by hot energy and food induced inflation, higher unemployment, lighter consumer spending, recession and a war in the Middle East. There are plenty of reasons for concern, but I also can't blame the Fed for its current position, as these forecasts of mine are not certainties. I'm not in league with consensus, and the Fed adores consensus, as do most investors and institutional players. Going out on a limb based on conviction is only something independent out-of-the-box thinkers are willing to risk, because they can't fire themselves you see.

Greekism: No economist on the Street is going to say what I just did, because his boss is listening and his boss's boss does not want his firm to be an outlier and miss out on a piece of today's pie for the potential of owning tomorrow's bakery.

1. Employment Situation Report - At 94,000, November's reported nonfarm payroll increase exceeded the 65K consensus view, and eased concern about the economy. Unemployment even held at 4.7%. So is all well then? Nada. Job losses should increase as last quarter's weak corporate results meet this quarter's poor expectations. GDP growth is expected to ease dramatically from Q3's revised higher strength. Average hourly earnings rose 0.5%, ahead of the consensus 0.3% view. This leaves inflation concerns solidly in place. This report is actually bearish, as a result. If employment is seemingly holding, while inflation remains a thorn and a concern, then the case for Fed cut is damaged, if it existed at all outside of headless chicken commentary and media reflections. Remember The Greek after this call proves out, because while it won't be the first time, it's significant.


2. RBC Cash Index - This measure of consumer confidence came in at 65.9 for December, compared to 64.0 in November. Despite its rise, the figure continues to describe American lack of confidence.


3. U. Michigan Consumer Sentiment - Expectations are for a reading of 76, compared to November's 76.1 (revised from 75). We would not look for significant improvement in sentiment, despite the potential for some glee derived from the holiday spirit. Yes, there is definitely something to the warmth of the holiday season, especially while people are still employed, so confidence should not dip significantly this month either.


4. Consumer Credit - Topping off the week's economic news at 3:00 p.m., Consumer Credit is seen increasing by $9.0 billion in October. That's a hot number I totally agree with. September's increase was $3.7 billion. Market concern should soon turn to other credit instruments, and Congress has already directed some of its scrutiny in this direction. Congress is looking into credit card practices of raising rates on distressed borrowers, which only succeeds in pushing them into deeper distress. The Greek says, it's about time the government stops these lenders from exploiting America's weak and poor! Many of you have likely never been raped by a credit card company and cannot relate, but the same company that can be your best friend when you are in good standing will turn on you like a frenzied shark the minute you bleed. The Greek hears your plea exploited America, and we back Congress' review of this broad reaching topic.
   

Market-Moving News

• Bureau of Labor Statistics: Employment Situation Report (Nonfarm Payrolls +94K vs. consensus +65K, Unemployment 4.7%, Ave. Hrly Earn +0.5%)


• Bloomberg: Favorable Jobs Report


• RBC: Cash Index Rises to 65.9 from 64.0 in November


• ECONOMIC REPORT 10:00: U. Michigan Consumer Sentiment December (Consensus: 76.0)


• CNN Money: Asia Rally Fizzles


• Financial Times: European Shares Continue Rise


• Bloomberg: Legal Repercussions of Bush's Plan


• CNBC: PIMCO Manager Says Plan Short-Sighted


• USA Today: James Murdoch Promoted at News Corp. (Nasdaq: NEWS)


• CNN Money: Senate Passes Fix for Alt. Min. Tax


• ECONOMIC REPORT 3:00: Consumer Credit (Consensus: +$9.0 Bln.)


• AP/Yahoo!: Japan Q3 GDP Revised Down


• Platts: Crude Stable


• Bloomberg: Yen Looks to End Week Lower as Stocks Rally


• CNN Money: Signs of Slowing Retail


• Yahoo! Earnings Calendar


• AP/Yahoo!: Macrovision (Nasdaq: MVSN) to Buy Gemstar-TV Guide (Nasdaq: GMST)


• CNBC: National Semi (NYSE: NSM) Profit Falls


• CNBC: Palm (Nasdaq: PALM) Warns of Q2 Loss


• AP/Yahoo!: ArcelorMittal (NYSE: MT) to Bid for China Oriental


• AP/Yahoo!: Papa John's (Nasdaq: PZZA) Reaffirms Outlook


• TheStreet: Melco (Nasdaq: MPEL) Needs Macau Momentum


• Forbes: Cevian Seeks Reform at Munich Re


• AP/Yahoo!: Comverge (Nasdaq: COMV) Prices IPO at $29


• SeekingAlpha: Jeffries Outlook Positive on Solar Stocks (NYSE: STP, Nasdaq: SPWR)


• BBC: NATO Confirms Kosovo Commitment


• The Greek's Week Ahead


• Economist: The Geopolitical Week Ahead


• Iran Daily: Tales from the Dark Side

Your support of our advertisers sustains our effort, so please take a minute to help fuel our bold independent endeavor. Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

Morning Report: Lone Ranger & Tonto Ride Again (Bush & Paulson)

(Stocks in this article: NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, NYSE: SDS, Nasdaq: COST, NYSE: WMT, Nasdaq: MNST, NYSE: MCO, NYSE: TOL, NYSE: LTD, NYSE: AKH, Nasdaq: FRED, NYSE: LLY, LSE: RBS.L, NYSE: T, Nasdaq: SOLF, NYSE: TGT, Nasdaq: GSIC, Nasdaq: EBAY, Nasdaq: AMZN, Nasdaq: NILE)

The market again has a lot to digest Thursday, with key information regarding the mortgage market, employment and retail sales arriving simultaneously. Earlier this morning, the Bank of England and European Central Bank announced target rate decisions that have important repercussions for the dollar. Finally, oil is trading on the heels of yesterday's inventory report, while the EIA today publishes natural gas data at 10:30.

1. Lone Ranger & Tonto Ride Again (Bush/Paulson's Mortgage Aid Plan) - As advertised, Treasury Secretary Paulson's plan will freeze introductory teaser rates on subprime mortgages, but better than advertised, the period of freeze will extend for five years. Qualification will be limited to those who entered into loans between the start of 2005 and July 30 of this year, and only to those borrowers who have yet to miss a payment. Now some of you will balk at this plan as a bailout, but realize that without confidence restoration to the financial derivatives market, your pension plan investments generally would have stood to bear the loss. Since this is a solution that does not burden you through increased taxes, and since the government is not bearing the cost, your only case can be made for the deserved hardship of others. Do you really wish your fellow Americans, however, ill-informed a decision they made, to go homeless? This is the time of year when it is easiest for me to reach your heart. No harm comes to you (kind of), and your fellow Americans in troubled subprime loans get the aid they need to maintain them as good consuming citizens who drive the American economy. I live within my means, just as many of you do, but I also mind my own business and live and let live, as you should as well in my view. This topic irks a great many Americans, because they see it as others getting a free ride. The banks bear this cost, and those who invested in derivative securities with expectations of receiving a better payout. Now, you may argue that the mutual fund you own that owns these securities will see the value decline, and I answer with this. Some return is better than the loss of the entire investment my friends. Kudos to the oft-criticized here Bush and Paulson. They finally figured it out.


2. More Employment Data - Weekly Initial Jobless Claims eased off last week's spike, but still measured 338K, a number I view as indicative of an increasing trend. I expect unemployment to continue to show rise in tomorrow's jobs report. A very important report not often noticed accompanied this regular one. The Monster Employment Index measures online job demand. November's report measured 183, five points lower than October, marking the first such November decrease since the Index's inception. Online job availability was higher compared to the prior year figure, but remember, the online job search category on the whole continues to gain share from print advertising. The monthly decrease was widespread, as 18 of 20 industries measured showed decline. Monster.com (Nasdaq: MNST) notes a decline in retail/sales and leisure/hospitality, and I view this as indicative of a trend The Greek has been looking toward. As consumer confidence and spending decline, I am pounding the table on my warning about the coming consolidation in retail/restaurant/consumer sector and pending commercial construction recession and property value decline.


3. Retail November Chain-Store Sales - Individual retailers begin reporting chain store sales for November today, with initial reports from Wal-Mart (NYSE: WMT) and Costco (Nasdaq: COST) offering positive news. Seems the earlier Thanksgiving this year versus last, and the sort of wake up call to consumers that the holidays had arrived allowed that final period after Thanksgiving to spur enough spending strength to maybe save the month. This coincides with recent scribblings here on the subject. The holiday's offer retail a chance to bounce, but I continue to see this as a short-term phenomenon that will turn off after the holidays. However, all the news has not been good and the majority of retailers have offered weaker results than expected. Target (NYSE: TGT) lowered its forecast as well. Still, it's the holidays and employment is still pretty good. The Greek continues to favor online shopping sites and related firms, and see our research on the subject here.


4. ECB, BOE Announcements, Dollar Impact - The European Central Bank and the Bank of England both announced their respective rate decisions this morning. As expected here, the BOE cut rates, while the ECB kept rates steady. Europe is contending with a difficult balance of inflation and economic growth. It's hands are somewhat tied, as it sees heating inflation and an economic outlook that looks tougher as time goes on. Recent examples we offer our the news from Greece today, which reported consumer inflation at 3.9%. At the same time, the critical German economy and business confidence look to soften in '08. Energy and food prices seem to be impacting European inflation in a more pronounced manner than in America. However, this might have a lot to do with the greater availability of capital in the U.S., which of course is showing signs of great risk assessment error. Perhaps our inflation would be more drastic now otherwise. This seems to say that our inflation will adjust higher as we mitigate credit issues, and as the credit environment tightens in America. I guess capital is free flowing when it's not yours! In the U.K., the situation is more like the American environment, with housing and credit markets also tanking. All this news is good for the dollar, and should allow the stabilization I've been calling for to really take hold now.

Market-Moving News

• AP/Yahoo!: Bush to Unveil Mortgage Aid Plan


• CNBC: Retail Chain Store Sales - Costco (Nasdaq: COST) Sales Spike, Others Reporting
• AP/Yahoo!: Retail Sales Mixed, Seem Mostly Poor


• Asia Rallies Outside of China


• Financial Times: Europe Gains at Open


• Monster.com: Monster Employment Index


• DOL: Weekly Initial Jobless Claims 338K Vs. Consensus 335K


• Financial Times: ECB Holds Rates Steady


• Financial Times: Bank of England Cuts Rates


• DailyFX: Dollar Strengthened, but Some View ADP Number Fishy


• CNN Money: Tech Spending To Slow in '08


• Platts: Oil Dipping in Early Activity


• CNBC: Housing Prices Could Drop 30% Before It's Over


• ECONOMIC REPORT 10:00: MBA Q3 Delinquency Survey


• AP/Yahoo!: Greek Inflation Rises Sharply to 3.9%


• CNN Money: House Set to Vote on Bill to Boost Fuel Efficiency


• Bloomberg: Moody's (NYSE: MCO) Says Corporate High-Yield Defaults Could Quadruple


• Yahoo! Earnings Calendar


• AP/Yahoo!: Toll Brothers (NYSE: TOL) to Report Loss on Charges


• MarketWatch: Wal-Mart (NYSE: WMT) Store Sales Rise 1.5%


• AP/Yahoo!: Coke CEO Isdell to Hand Over Control


• Financial Times: Royal Bank of Scotland (LSE: RBS.L) Loss Less Than Expected


• AP/Yahoo!: Limited (NYSE: LTD) November Sales Fall 7%


• Forbes: Air France-KLM (NYSE: AKH) Offers to Buy Alitalia


• Bloomberg: Eli Lilly (NYSE: LLY) Sees EPS Growth in '08


• USA Today: AT&T (NYSE: T) Flings Cell Phone Network Wide Open


• AP/Yahoo!: Fred's (Nasdaq: FRED) Lowers Q4 Forecast


• USA Today: Chrysler Sees Wider Losses


• SeekingAlpha: No Room for SolarFun (Nasdaq: SOLF)


• BBC: Russian Naval Exercises


• Weekly Standard: NIE Author Wrote Something Very Different in July


• The Greek's Week Ahead


• Economist: The Geopolitical Week Ahead


• Iran Daily: Tales from the Dark Side

Your support of our advertisers sustains our effort, so please take a minute to help fuel our bold independent venture. Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

Morning Report: Jobs Data & Iran Attacks!

(Stocks in this article: NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, NYSE: LM, NYSE: GS, NYSE: DB, NYSE: BSC, NYSE: MER, Nasdaq: ORCL, NYSE: GE, NYSE: FNM, NYSE: C, NYSE: WMT, Nasdaq: ALTR, Nasdaq: XLNX, NYSE: TXN, NYSE: DSW, Nasdaq: PNRA, Nasdaq: JDSA, NYSE: MAT, NYSE: MHP, NYSE: MCO)

Jobs data overload starts today, and the remainder of the week will also prove critical to near-term market trend and likely impact the Fed decision of next week.

1. Jobs Reports - Two days ahead of the "Mother of All Economic Reports," that being the Labor Department's Employment Situation Report set for release this Friday, we were made privy to fresh employment insight this morning. Challenger, Gray & Christmas reported planned job-cuts for November increased 15.9%, to 73,140. Still, the figure represents a 4.7% decrease from the prior year number. The year is also on trend to post the fifth straight year of declining layoffs. Ever heard the saying, "the calm before the storm?" Layoffs were led by the financial, auto and energy industries, and things should get worse in the financial sector before we're finished. Recall, I'm looking for the next leg to impact retail/restaurant and then commercial construction. In a second bit of toasty news, ADP Employment Services reported job additions in the private sector rose 189,000, again driven by small to medium sized service business expansion. But folks, we can only have so many UPS Stores (NYSE: UPS), and as employment softens, overall spending should hit the margin constrained small businessman before larger operations. With lending getting tighter, capital constraints are another factor about to squeeze the small businessman. I would be very careful about reading this rosy November report into our very near future. That kind of rear-view mirror logic will get you in trouble.


2. OPEC Stays Put, Petrol Status Report on Tap - As expected and noted here on the Greek, OPEC ministers did not like the pace and direction of oil prices heading into their decision today. They seemed to have forgotten that speculation about there decision played a key role in the price decline. It's almost as if the delegates gamed the market on this one. They made you all believe they were going to again hike production to talk the price down. Now they can continue raking in the dough, while gas hungry America and Europe starve in order to drive around town.


3. Rest of Today's Heavy Economic Slate - At 10:00, look for the ISM Non-Manufacturing Survey for November to measure 54.8, versus 55.8 in October. Pending Home Sales are also set for release; September showed a 0.2% month-to-month increase. October Factory Orders are seen unchanged, compared to a 0.2% increase in September. Indeed, durable goods orders were reported weak (-0.4%) just last week.


4. Many Contemplate Fed's Next Move - CNBC's Liesman is on record with expectations for a 50 basis point fed funds target cut next week, and we are going to hold him to that here. He qualified his prediction with a smart concern about the impact of Friday's Jobs Report. I'm more in league with the line of thinking that the Fed will move on the discount rate to try to entice bank usage of the tool. Don't get me wrong, I like the new and improved, and noticeably more fit Liesman, but I think he's getting cocky here. This looks more like what he thinks the Fed should do than what the Fed seems to have told us it will do, despite comments from Kohn and Yellen. Mishkin and Bernanke are ready to do as much as a 100 point cut in case of emergency, but I think we'll see nothing to 25 points next week. Maybe when the market panics in the days that follow inaction, maybe then we'll see Mishkin's theory play out. Recall, the guy has written a paper on the usefulness of sharp and short-lasting Fed action in troublesome times. Keep that in the back of your head should Moody's (NYSE: MCO) downgrade $100 billion of debt securities, as rumored, and other SIVs follow the route of Cheyne.


5. Credit Crisis Red Flags - Speaking of troublesome times... Seems Orange County could use an upgrade in its HR department, specifically the hiring division. Seems the county's hired risk managers have proven less than stellar once again, as some 20% of one of its funds is invested in SIV debt, and it looks to me like some 14% of total capital is in SIVs. News is getting around quick about who holds SIVs, and we are seeing runs on capital at many state run money centers. This is a serious problem that portends to tragically back slap (I would like to use another word here) the American retirement saver and his trusty wealth effect. I'm talking about the confidence investors gain when they receive their monthly pension fund or 401K report, and previously their home equity status. Who do you think bears the risk related to SIVs? It's you. Your retirement savings could be at risk if you invested your money in previously reported to you as safe vehicles, which happen to hold SIVs. I think you can understand why a government bailout is necessary, and why somebody needs to get their arms around the necks of Moody's (NYSE: MCO) and Standard & Poor's (NYSE: MHP) and stop them from downgrading debt now that they should have never rated so highly in the first place. In my opinion, this incompetence cannot go without penalty, whether it be from the government or the private sector.


6. Greek's Reflections on New Iran Revelation - So what! In 2003, Iran was frightened because we were destroying the renegades in their neighborhood, and so they temporarily stopped their bomb program. Who would bet against an underground program's existence now? I would certainly not. I think a good analogy to Iran, and a comical one at that is found in Hollywood. Rent Mars Attacks! That's who you are dealing with America, the Martians who offer a hand in order to get a hold of your arm and disintegrate you. Gone are the days when a phone call to the CIA Chief could have altered this kind of report before it was published. Good luck finding support in Congress now for a strike on Iran. In fact, a strike could lead to the impeachment of the President in light of this report; well, at least the Democrats will try, I'm sure of that. But, with all but a few months left in the term (when we find a way to bomb in spring), the likelihood of impeachment seems low. My view is that this kind of report is damaging to the national interest and national security. I wish it was generated but not published, as it could now aid an effort to place our President before the world's court should he strike Iran. We'll find a way though. We'll provoke Iran into shooting at a ship or boarding a small vessel, and bombs away! And I'm for it. I say blitz on first down, not fourth. Buddy Ryan politics when you know your enemy is your enemy.
   

Market-Moving News

• CNN Money: Asia Advances


• CNN Money: Europe Higher


• Financial Times: FTSE 100 Rebounds


• ADP Employment Reports Strong Growth of 189K November Jobs


• CNBC: Challenger, Gray & Christmas Job-Cut Report (Increase of 15.9%)


• Platts: Crude Rises As OPEC Stands Pat


• Bureau of Labor Statistics: Q3 Productivity & Costs Revisions Favorable


• ECONOMIC REPORT 10:00: Factory Orders October (Consensus 0.0%)


• ECONOMIC REPORT 10:00: ISM Non-Manufacturing November (Consensus 54.8)


• ECONOMIC REPORT 10:00: Pending Home Sales October


• EIA 10:30: Petroleum Status Report


• Bloomberg: Fed Might Cut the Discount Window to Spur Liquidity


• CNBC: Mortgage Applications Benefit from Rate Decline


• CNBC Video: Liesman Says Fed Cuts by 50 Points


• Financial Times: Legg Mason (NYSE: LM) Chief Sees Unprecedented SIV Danger


• Bloomberg: Orange County in Trouble Again


• Bloomberg: Florida Fund Troubles


• DailyFX: ECB and BOE Hold Contrasting Biases


• AP/Yahoo!: China to Tighten Monetary Policy in '08


• AP/Yahoo!: Chinese Auto Exports Soar


• Yahoo! Earnings Calendar


• AP/Yahoo!: Fannie Mae (NYSE: FNM) Cutting Dividend 30%


• SeekingAlpha: CIBC Says High LTV Prime Loans Vulnerable, Exposure at Citigroup (NYSE: C)


• CNBC: I-Banks Subpoenaed Over Subprime Mess (NYSE: MER, BSC, DB)


• TheStreet Video: Cramer on Bove's I-Bank Downgrades (NYSE: GS)


• AP/Yahoo!: Wal-Mart (NYSE: WMT) Raises Stake in Japanese Retailer


• TheStreet: Consumer Woes Hit Chips (Nasdaq: ALTR, XLNX, NYSE: TXN)


• AP/Yahoo!: DSW (NYSE: DSW) Reports Well


• AP/Yahoo!: Panera Bread (Nasdaq: PNRA) Same-Store Sales Rise 3.2%


• CNN Money: GE (NYSE: GE) Recalls Microwaves


• AP/Yahoo!: Jones Soda (Nasdaq: JDSA) CEO Gone By Year-End


• CNBC: Oracle (Nasdaq: ORCL) Owned Plans NetSuite IPO


• CNBC: One-Third of Tested Toys Contained Lead (NYSE: MAT)


• The Greek's Week Ahead


• Economist: Iran Less Scary Than We Thought


• Economist: The Geopolitical Week Ahead


• Iran Daily: Tales from the Dark Side

Your support of our advertisers sustains our effort, so please take a minute to help fuel our bold independent venture. Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

SEI Investments (Nasdaq: SEIC) Deserves Attention

(Stocks in this article: Nasdaq: SEIC, Nasdaq: TROW, NYSE: AMP, NYSE: PNC, Nasdaq: NTRS, NYSE: LM, NYSE: WDR)

SEI Investments (Nasdaq: SEIC), one of my long-term favorites in the financial sector, has fallen alongside its brethren and given value seekers a second chance at opportune entry this year. Still, the stock regained some lost ground last week, and since I suspect it will retest recent lower levels, I would place it on my list of stocks to buy on sale in short time.

I expect SEIC could again lose some near-term support due to a recent analyst downgrade and its own noted SIV related exposure. In SEIC’s recent 10Q filing and accompanying conference call, it noted that it entered into capital support agreements with two mutual funds advised by SEI and subadvised by Columbia Management. The funds hold senior notes issued by Cheyne Finance LLC, a structured investment vehicle or SIV.

S&P recently advised that it would place on credit watch AAA-rated mutual funds that hold Cheyne securities, unless the funds find capital support equal to 50% of the at risk holdings. Thus, in order to preserve the AAA rating on one of its funds, and thus support the interests of its clients (read keep their business), SEI committed $129 million of capital support for the event of need or realized loss. Also, in the event that the marking-to-market of the securities drives the funds to “break the buck” or drop to specified NAV thresholds below a dollar, SEI will provide the difference up to an aggregate of $129 million. This capital will be expensed in the relative period of security sale or asset revaluation.

The company has extended this agreement to cover all of the SIV securities held in its advised portfolios, despite no current requirement to do so. This total SIV interest seems to amount to about $946,652,000, by my estimation. Of all of these, SEI says only the Cheyne securities are not meeting their contract terms. It’s important to note that SEI does not own these securities as principle, so in the event of a broader SIV disaster that places the whole group in greater jeopardy, this loss would likely be incurred by the mutual funds in question, and thus their holders (not SEIC directly). While this worst case scenario would not hit SEI’s book directly outside of the lost fees on lower assets managed, it could, however, lead to some redemptions of invested capital. Considering that this worst case scenario example would be something endemic to the system, I would not expect significant damage to SEI’s business reputation to result.

Clearly, this is not good news though, given the delinquent status of the Cheyne securities, but the risk is measured and unrelated to SEI’s ongoing operations. The company is clearly making a good faith effort, and it should go some ways to building client loyalty. Also, the specified amount of support is not an estimate of actual loss that might be incurred, and it seems to me that SEI’s subadvisor will seek to dispose of the securities, but not in the rushed manner of a forced sale. An example offered by the company placed an estimate of loss at $7.2 million pretax, based on recent security values. Depending on future market factors, this could clearly vary.

And what do you like then about this company Greek?

Over the past ten years, through 2006, this stock has offered its shareholders an average annual total return of 33%. From 1997 to 2006, return on assets has improved ten percentage points, to 27.3%. Over the last five years, earnings have grown at an average annual pace of 17.9%. Standard & Poor’s gives SEI Investments (Nasdaq: SEIC) a “Quality Ranking” of A+, meaning it views the stock as among market leaders in providing growth and stability of long-term earnings and dividends.

The company’s not immune to the recent general stock market pain, since much of its income is tied to the value of assets under administration. Since those values are likely not benefiting from turmoil in equity and fixed income markets, the stock has other reason to retrace some of its recent climb. Still, I say look to this weakness to add this stock to holdings soon.

SEI's Business

The 10K will tell you that the company is a provider of asset management services, investment processing and investment operations solutions. What’s that mean? Well, the way I see it is, the company provides the technology that allows managers of trusts and other portfolios to keep track of things and operate efficiently. At the same time, SEI offers those responsible for specific capital pools, like pension funds and enterprise investment capital, to put that capital to its best use. SEI does this by offering asset allocation and investment vehicle direction, and acts as a manager of managers.

To put it simply, the company has developed a scalable and competitive technology offering and investment service. As SEI grows its client base, and it’s good at doing that also, it leverages revenue over a relatively static spend in technology development. Now, when I say static, I do not mean SEI’s management team is sitting on its rears; a good deal of capital is directed to R&D, in order to keep on top of evolving client needs. The company wants to keep its client base happy, while at the same time expanding that base.

An example of the company’s success in marketing its offering, and providing evidence of its viability, assets under management and administration have grown to $201.7 billion and $422.6 billion (Sept. 2007), respectively, from $120.4 billion and $288 billion in 2004.

Company	Ticker	Price-to-Man'd/Adm'd Assets
SEI Investments	Nasdaq: SEIC	1.4%
Ameriprise Financial	NYSE: AMP	2.7
T. Rowe Price	Nasdaq: TROW	4.0
PNC Financial	NYSE: PNC	1.7
Northern Trust	Nasdaq: NTRS	0.4
Legg Mason	NYSE: LM	1.0
Waddell and Reed Fin’l	NYSE: WDR	4.7

(Data as of November 29)

Within the peer group I looked at, some of the firms simply manage assets, while others also provide other services, so perfect comparison is not possible. However, SEIC still compares well on a relative valuation basis in my view. The shares trade at 19X analysts’ 2008 EPS estimate consensus of $1.56, and while sporting a 15% analysts' long-term growth forecast. The shares’ resulting P/E/G ratio of 1.3 is attractive in my view. However, as I said, the recent analyst’s downgrade and confusion about this SIV risk has discounted the stock and may offer further near-term opportunity to pick up SEIC on sale.

Your support of our advertisers sustains our effort, so please take a minute to help fuel our bold independent venture. Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

Morning Report: Global Gobaldiguk!

(Stocks in this article: NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, NYSE: VMW, NYSE: MRK, NYSE: FNM, NYSE: HMC, NYSE: TM, NYSE: GM, NYSE: F, Nasdaq: YHOO, Nasdaq: EBAY, NYSE: RTP, NYSE: NOK, NYSE: WMT)

If your most important customer stopped spending as much as he use to because of his own financial distress, how would your business be impacted? Thus, I continue to pound the table on this global gobaldiguk I hear too many pundits reaching for. Yes, the global economy softened the blow to U.S. multinationals, but in the end, even the multinationals butter there bread here at home. And so does the world! America remains the most important customer of the world economy. No matter how progressed Europe and Asia have become, or how much potential they hold, the current global situation remains one not dependent, but reliant on American economic health.

• European Distress - European finance ministers mostly agree with the IMF that the euro-zone will see sub-2% economic growth in 2008. While you would expect this to pressure the ECB to cut rates, eurobankers are currently more concerned about inflation in the region. With economic softness at hand, this handcuff Europe wears now is good for the dollar, since rising rates (to combat inflation) in Europe alongside declining rates here at home would further stress our currency. Regarding inflation, the signs are all too clear and all too common. After a recent scare on consumer prices, producer prices were reported today up 3.3% in Europe, ahead of consensus. The result also marked the fastest growth in a year's time. The culprits are well-known to us, food and energy. European bankers are on guard now, so the future direction of rates in the region will have much to do with economic health and prices. Oil slippage could lead European hawks into control of the situation, depending on timing as compared to economic softening.



• ICSC-UBS Weekly Same-Store Sales - Weekly same-store sales jumped 3.1%. Both periods exclude Black Friday, which I am fairly certain of, but please comment if I'm wrong. Depending on whether the ICSC uses the general final week of November, or uses exact dates, would play a role in driving the week's strength. Exact dates would mark the measured period as inclusive of November 25th to December 1st. It would seem to favor 2006, since it included the Saturday after Black Friday. Barring weather differences, I would have to attribute this strength to a tight consumer waking up to the holiday season having not spent much ahead of the unofficial start to the shopping period. As I presented on earlier occasion, it's the holidays and things have not gotten bad enough yet to prevent gift buying significantly, in my opinion. However, the retail environment is saturated in light of the stressed consumer situation in my view, and therefore competitively fighting for each retail dollar. Thus, discounting is more widespread, more aggressive and longer-lasting. Still, the main factor seems to be a late start to shopping. This data indicates to me that November's retail sales report will be weak. However, December's should present an upside surprise in my view. The market will not look ahead to that though, so I expect retailers to be again impacted by November's data, which will be released on December 13th. Individual retailers will report for the most part this Thursday.



• Tracking Oil - What's that song about "nothing else matters?" It's all about OPEC and inventory right now, and both news items break tomorrow. So, today oil trades on speculation, mostly that inventory might be in a beneficial trend (therefore bearish oil price trend), while OPEC might hold back production increases with oil price softening. These are offsetting factors, but maybe OPEC doesn't matter either over the longer term if demand is softening and inventory seems to be benefiting.



• Detroit's Distress - November Motor Vehicle Sales slightly exceeded consensus, but were far from healthy. General Motors (NYSE: GM) posted a big decrease, but it was related to its decision to cut fleet sales to rental companies and others. Ford (NYSE: F) and GM have cut production plans for '08 as a result. Fuel efficient vehicles are selling better than others, and this was likely behind Honda's (NYSE: HMC) sales rise of 4.7%. Toyota (NYSE: TM) also posted a slight increase.

Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

Morning Report: Shady Characters

(Stocks in this article: Nasdaq: QQQQ, Nasdaq: ATVI, NYSE: SPY, NYSE: DIA, NYSE: MET, NYSE: MCO, Nasdaq: AMGN, NYSE: PAY, NYSE: DE)

Equities are cautious today, already looking ahead to the heavy economic data schedule of the week ahead, including the many employment reports.

1. Paulson's Plan Unveiled - Hank grabs the mic in Washington around 10:30 this morning. The Treasury man is expected to comment on his most recent efforts to mitigate mortgage market issues. Hank's plan reportedly has to do with temporarily freezing rates on specific qualified ARMS loans. This should only delay the inevitable for those who still will not be able to afford their mortgages when rates do eventually reset. However, it may bide some time and allow some to refinance out of tough loans while also giving the mortgage derivatives market a chance to unwind.


2. Bank of Japan Warns, Asian Equities Slip - Japan's top banker, incidentally a guy who makes a heck of a lot more money than The Greek, announced that U.S. economic woes could spread to global markets. Sounds a lot like the poorer man's advice from earlier this year. Asian equities didn't take the news well this morning and mostly declined.


3. Shady Weekend Geopolitics - In case you fell into holiday bliss, you might have missed two shady votes that took place in two of the most interesting countries of this decade and last. In Venezuela, it seems the U.S. policy of ignorance toward the loud-mouthed Chavez might just pay off. Venezuelans lined up over the weekend to disallow their Presidente' the right to lifetime leadership. Meanwhile in a dark country much better controlled, KGB-man Putin continued to strangle his unsuspecting populous as his party won parliamentary elections. Putin seemed to send a message to some of the Soviet break-away states, stating that the Russian people decided not to follow the "destructive path" of other ex-Soviet states. It seems clear Putin intends to slowly turn support in states like Georgia and the Ukraine back toward his favor. I found his statement analogous to a demon's whispers in a man's ear. The OSCE is proclaiming election fraud, but would you believe a body made up of foreigners if they declared your election fixed? Well, I guess the answer is actually yes right... if we're talking about one particular year. But, most Americans would not believe this to be true, and Russians are likewise going to back their strong, however, cunning leader.


4. Oil Supports Cracking - Qatari OPEC Minister Attiyah said he does not expect OPEC to increase production as a result of its highly anticipated Wednesday meeting. With oil dropping again today, The Greek does not expect it either.


5. Economic Data - The first bit of economic data hits the wires at 10:00 a.m., with the reporting of the November ISM Manufacturing Index. Last week's Beige Book seems to portend weakness here, but the NAPM - Chicago came in well ahead of expectations at 52.9. Bloomberg's consensus of economists are looking for an ISM reading of 50.4 for November, compared to 50.9 in October. Remember, 50 marks the break point between contraction and expansion of the manufacturing sector. Motor vehicle sales will be reported for November at 4 p.m., with expectations for 12.1 million vehicles, compared to the same figure in October.


6. Yellen Will Be Yelling! - San Francisco Fed President Janet Yellen probably can't dent the impact of last week's powerful speakers when she makes a scheduled address on Monday.


7. Airwaves for Sale - Barron's published an important article about a notable event that is to take place Monday (see the Tech Trader column). Some very useful wireless spectrum is going up for auction, and applications are due Monday. According to Barron's, old VHF and UHF airwaves could prove extremely valuable for wireless broadband providers, and interest is expected from the likes of AT&T (NYSE: T), Google (Nasdaq: GOOG) and Comcast (Nasdaq: CMCSA) to name a few.
   

Market-Moving News

• Bloomberg: Paulson's Plan


• The Greek's Week Ahead - The Secret


• BBC: Monitors Denounce Russian Election


• BBC: Chavez Dictatorship Hopes Killed


• CNN Money: Major Asian Markets Slip


• MarketWatch: European Medea Stocks Move Higher


• Platts: Crude Futures Slide


• Platts: Qatar's OPEC Minister Does Not Expect OPEC Action


• Bloomberg: Moody's (NYSE: MCO) Could Downgrade $105 Bln. of SIVs


• ECONOMIC REPORT 10:00: ISM Manufacturing November (Consensus 50.4)


• ECONOMIC REPORT 4:00: Motor Vehicle Sales November (Consensus 12.1 Mln.)


• Greek: Gas is Expensive, So Let's Shop Online


• CNN Money: Bank of Japan Warns on Global Economy


• DailyFX: Dollar's Destiny Depends on NFPs


• Yahoo! Earnings Calendar


• TheStreet: MetLife (NYSE: MET) Cuts '08 Guidance


• AP/Yahoo!: Vivendi to Take Large Activision (Nasdaq: ATVI) Stake


• TheStreet: Data Dents Amgen (Nasdaq: AMGN)


• Reuters: VeriFone Holdings (NYSE: PAY) Restates


• TheStreet: Cramer Says Stay Mad for Life


• Financial Times: Beijing Backs New Sanctions On Iran


• Financial Times: Russian Elections Unfair


• Economist: The Geopolitical Week Ahead


• Iran Daily: Tales from the Dark Side

Your support of our advertisers sustains our effort, so please take a minute to help fuel our bold independent venture. Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

The Greek's Week Ahead - The Secret

The Greek's Week Ahead has been engineered to prepare you for the events that could impact your portfolio this week.

In Friday's "Morning Report" I attempted to discern exactly who was to blame for recent market volatility. Volatility is often the result of a lack of clarity, and so I sought to determine exactly who had confused things so badly. The three parties I subjectively decided should be brought in for questioning included the usual suspects, the Fed, the media and that sneaky market, including the whole gang of its participants.

Recall, I pardoned the market on Friday, since it is considered efficient in assimilating information. I gave the media a break also, referring to its impact as just a skewing factor. In retrospect, I believe I may have wrongly accused the Fed. As I thought about it over the weekend, I recalled an old business school exercise, which for lack of perfect recall I've renamed "The Secret." Imagine a circle of people (please practice this at a dinner party some time). If one person within the circle whispers something, some statement of fact that only he knows, to the person to his immediate right, and then each following person passes the message on until it reaches the last party, I think you'll find a surprising result.

It's funny how a simple statement of fact can evolve into something a little different. When that last person compares his fact to that of the first, the two generally will not quite match, especially the first time you try it before everyone is on guard. In fact, the two could be drastically different.

This is why I propose the blame may not solely fall on the Fed. At the October FOMC policy meeting, the Fed clearly stated its intention to settle into a neutral position regarding its target rate. This was clear, unequivocally clear to me anyhow. However, within the hour of the news release market pundits already doubted the Fed's sincerity. The media also found tidbits of information within the announcement to feed the public other possibilities to ponder beyond the main message. As time passed, Fed representatives themselves spoke publicly, delivering much more information than "we're neutral." Market participants also partook in active speculation publicly, and also impacted the flow of news and opinion.

So what I'm saying is that the story changed somewhere from October to now. Meanwhile, the real story may not have changed at all. The Fed may actually still be neutral. Yes, despite Fed funds rate indicators, economists' consensus and even Vice-Chair Kohn's comments, which I must note were qualified as being of his opinion solely, we still may be neutral. But the media didn't mention that Kohn qualification in all the hoopla did they? You would have to actually go and listen to the speech to get that. I listened to Bernanke as well, and I found him sounding like a man who was still on the fence. I'm sorry to spoil your cake.

There's nothing new in Bernanke's statement of "nimbleness and flexibility." We've been reading this from Mishkin, especially, as regularly as the sunrise. Yes, credit markets have regressed and the financial sector has written off the kitchen sink, but some Fed policy makers are expecting their last 75 points of action plus the Treasury's pending proposals to help in a substantive way soon.

In other words, the secret is out folks, but it's changed. Depending on some key data points due for release this week, I still believe there's a decent chance of Fed inaction on December 11th. With this in mind, and if the market continues bullish into the announcement, I think we could be in for a major collapse rivaling another 11th related trading period of the past. However, a lot will happen between then and now, and I'll keep close tabs on it for you.

Now let's take a look at the week ahead...

On Monday, Treasury Secretary Henry Paulson is scheduled to comment on his most recent efforts to mitigate mortgage market issues. This secret is out as well, and it has to do with freezing rates on specific qualified ARMS loans temporarily, which should only delay the inevitable for those who still will not be able to afford their mortgage when rates reset. However, it may bide some time and allow for refinancing out of tough loans while also giving the mortgage derivatives market a chance to unwind or be sold to vested interests or the giant hypothetical superfund. This not bad news should start the market right where it left off on Friday, rising; this of course barring any new significant financial sector blowup. San Francisco Fed President Janet Yellen probably can't dent the impact of last week's powerful speakers when she makes a scheduled address on Monday.

The first bit of economic data hits the wires at 10:00 a.m., with the reporting of the November ISM Manufacturing Index. Last week's Beige Book seems to portend weakness here, but the NAPM - Chicago came in well ahead of expectations at 52.9. Bloomberg's consensus of economists are looking for an ISM reading of 50.4 for November, compared to 50.9 in October. Remember, 50 marks the break point between contraction and expansion of the manufacturing sector. Motor vehicle sales will be reported for November at 4 p.m., with expectations for 12.1 million vehicles, compared to the same figure in October.

Barron's published an important article about a notable event that is to take place Monday (see the Tech Trader column). Some very useful wireless spectrum is going up for auction, and applications are due Monday. According to Barron's, old VHF and UHF airwaves could prove extremely valuable for wireless broadband providers, and interest is expected from the likes of AT&T (NYSE: T), Google (Nasdaq: GOOG) and Comcast (Nasdaq: CMCSA) to name a few.

MetLife (NYSE: MET) is holding its investor day, while the earnings schedule includes the likes of CMGI (Nasdaq: CMGI), Cost Plus (Nasdaq: CPWM), Gladstone Capital (Nasdaq: GLAD), Guess (NYSE: GES), Isle of Capri Casinos (Nasdaq: ISLE), Mitcham Industries (Nasdaq: MIND), Phillips Van-Heusen (NYSE: PVH) and Tutogen Medical (NYSE: TTG). Deere (NYSE: DE) is scheduled to split its shares 2:1 on Monday.

Tuesday's slate is relatively bare, but we'll be looking for the regular ICSC-UBS Weekly Same-Store Sales Report. Last week's data, which included Black Friday, showed a 2.5% year-to-year improvement. The Bank of Canada could cut rates in order to help export sales, according to Brown Brothers Harriman, as quoted in Barron's.

Merck (NYSE: MRK) will offer its outlook for 2008, while the earnings schedule includes Aerovironment (Nasdaq: AVAV), America's Car-mart (Nasdaq: CRMT), Angelica (NYSE: AGL), Chico's FAS (NYSE: CHS), Collective Brands (NYSE: PSS), Copart (Nasdaq: CPRT), Cossette Communications (NYSE: KOS), Financial Federal (NYSE: FIF), Landauer (NYSE: LDR), Layne Christensen (Nasdaq: LAYN), Photronics (Nasdaq: PLAB), Quanex (NYSE: NX), Sanderson Farms (Nasdaq: SAFM), Versant (Nasdaq: VSNT) and Wind River Systems (Nasdaq: WIND).

The tide may turn on Wednesday, as three controversial reports might offer negative news to the market. The first news should arrive from OPEC's long anticipated meeting, from which many were expecting a production hike. However, oil prices dipped to below $90 last week, possibly prompting the body wait on a follow-up to its November production boost. The second potentially threatening news is scheduled from Challenger, Gray & Christmas' November Job-Cut Report. We do not have a forecast for the job-cut data, but September and October's reports measured 71,739 and 63,114, respectively. Finally, the ADP Employment Report for November is due. Seen as the prelude to Friday's Employment Situation Report, this could move the market. While no forecast is available, September and October reached 58,000 and 106,000, respectively. Without guessing the result, I expect the market is more likely to react to negative news than it is to believe in a positive reading.

Wednesday will prove a very busy day with several other economic data bits due. The Mortgage Bankers Association issues its regular Purchase Applications Report bright and early. At 8:30 a.m. EST, third quarter nonfarm productivity is scheduled for revision, with the consensus expecting productivity to be revised higher to 5.7% improvement from the 4.9% previously noted. Unit labor costs are expected to slip 1.1% (-0.2%). This data should not prove too important after the GDP revision last week. October Factory Orders are seen unchanged, compared to a 0.2% increase in September. Indeed, durable goods orders were reported weak (-0.4%) just last week.

At 10:00, look for the ISM Nonmanufacturing Survey for November to measure 54.8, versus 55.8 in October. Pending Home Sales are also set for release; September showed a 0.2% month-to-month increase. Least we forget, the EIA Petroleum Status Report will meet its regular 10:30 deadline and is well-matched to the OPEC news of this same day.

Bristol-Myers Squibb (NYSE: BMY) and AIG (NYSE: AIG) have investor day's set up for Wednesday, while Sony (NYSE: SNE) has a news conference arranged. Genentech (NYSE: DNA) is awaiting FDA approval for Avastin to treat breast cancer. The earnings schedule includes ActiveIdentity (Nasdaq: ACTI), Alloy (Nasdaq: ALOY), Blyth (NYSE: BTH), Casella Waste Systems (Nasdaq: CWST), Casey's General Stores (Nasdaq: CASY), Comtech Telecommunicatons (Nasdaq: CMTL), DSW Inc. (NYSE: DSW), Dynamex (Nasdaq: DDMX), Finisar (Nasdaq: FNSR), G-III Apparel (Nasdaq: GIII), Greif Brothers (NYSE: GEF), Innovative Solutions (Nasdaq: ISSC), Novell (Nasdaq: NOVL), Powell Industries (Nasdaq: POWL) and Synovus Life Technologies (Nasdaq: SYNO).

Thursday gets busy with a packed schedule. The Monster Employment Index will add to the data overload regarding the employment picture this week. Then, Weekly Initial Jobless Claims are seen at 335K, after rocketing higher last week.

The Bank of England and the European Central Bank are both slated to announce interest rate decisions, and a growing number of folk are starting to look to a BOE rate cut based on similar concerns to the U.S. market. Europe is contending with rising inflation alongside economic concerns, and thus stuck in a quandary.

Chain store sales are due for November, and this news will be very important of course, but since it is fragmented among all the individual companies, it could prove confusing. The regular EIA Natural Gas Report is due at 10:30. With temperatures getting chilly in the Northeast, nat gas prices could rise into this report, and then react to it negatively depending on the forward 10-day forecast.

Ely Lilly (NYSE: LLY) and FirstEnergy (NYSE: FE) hold analyst days, while the earnings schedule includes Toll Brothers (NYSE: TOL), American Software (Nasdaq: AMSWA), Analogic (Nasdaq: ALOG), Bank of Nova Scotia (NYSE: BNS), Canadian Imperial Bank of Commerce (NYSE: CM), Cantel Medical (NYSE: CMN), Cascade Corp. (NYSE: CAE), Covidien (NYSE: COV), Esterline Tech (NYSE: ESL), Fleetwood Enterprises (NYSE: FLE), Gander Mountain (Nasdaq: GMTN), Gildan Activewear (NYSE: GIL), Herley Industries (Nasdaq: HRLY), Hooker Furniture (Nasdaq: HOFT), Korn Ferry (NYSE: KFY), Krispy Kreme (NYSE: KKD), Liquidity Services (Nasdaq: LQDT), Movado (NYSE: MOV), National Semiconductor (NYSE: NSM), NeoMagic (Nasdaq: NMGC), Optium (Nasdaq: OPTM), Smith & Wesson (Nasdaq: SWHC), Source Interlink (Nasdaq: SORC), Synopsys (Nasdaq: SNPS), Toro (NYSE: TTC), UTi Worldwide (Nasdaq: UTIW) and Verifone Holdings (NYSE: PAY).

On Friday, all will anticipate the "granddaddy of all economic reports," the Employment Situation Report. At 8:30, nonfarm payrolls are seen increasing 65,000 in November, while unemployment rises to 4.8%. Average hourly earnings are expected to rise 0.3%. That volatile and recently unpredictable nonfarm payroll number is the market-mover of this group. It's highly unlikely unemployment would rise more than the tenth of a percentage point estimated.

But that's not all folks! We have a trio of consumer reports to deal with as well. The RBC Cash Index at 9:00 a.m. will offer the first look at consumer confidence, before the widely followed Michigan Consumer Sentiment for December is reported. Expectations are for a reading of 76, compared to November's 76.1 (revised from 75). Topping off the week's economic news, Consumer Credit is seen increasing by $9.0 billion in October. That's a hot number I totally agree with. September's increase was $3.7 billion.

Friday's earnings slate includes Generex Biotechnology (Nasdaq: GNBT), Hi-Tech Pharmacal (Nasdaq: HITK), ICO Inc. (Nasdaq: ICOC), Kellwood Co. (NYSE: KWD), OYO Geospace (Nasdaq: OYOG) and Sirona Dental Systems (Nasdaq: SIRO).

Your support of our advertisers sustains our effort, so please take a minute to help fuel our bold independent endeavor. Receive Wall Street Greek FREE via email by subscribing here. (disclosure)

The Candidates for President

Have you registered yet? Are you willing to sacrifice four years to the consequences of the decisions of others? Wall Street Greek has compiled the introduction videos of the candidates for you below.