Premarket Report: Fed Up!

(Stocks in this article: NYSE: NYX, NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, Nasdaq: QCOM, NYSE: CHK, NYSE: AMD, NYSE: BX, NYSE: F, NYSE: GM, NYSE: TM, NYSE: M, NYSE: TIF, NYSE: JWN, NYSE: SKS)

The Fed's credibility is back in question. They say one thing (read neutral bias), then appear on podiums contradicting themselves and each other (read appearances of Kohn, Kroszner), and finally end up looking utterly confused (read Bernanke's mic grab in December). You could say, hey Greek, it's a good thing! They're not handcuffed by stubborn pride; they're willing to accept fault and change direction on a dime. OR, you could say, these guys have no idea what's going on and react to market chants for help and presidential phone calls as quickly as they act on their own analysis, however paralyzed it leaves them...

So, today, once again the market will react around 2:00 p.m. to whatever the FOMC Policy Meeting minutes indicate. The notes will probably show some disagreement, and who knows, maybe this time they'll say something like, "no, this time we really mean it, we are going to neutral." Or, maybe they'll say the decision this time around was even closer than a "close call..." As you can tell, I'm Fed up!

Iowa

We know you want to hear it, so here goes... We've gone on record nearly a year ago predicting Mitt Romney would be the Republican nominee, and that was when he was buried in third place. We have been saying that Guiliani is not electable (though as a NYer who witnessed 911, I like Rudy, the man) because he is too Bush-like to garner Democratic votes despite some NY liberalism that has somehow rubbed off on him; and that's why he will not get enough Republican support to even take the primary. As much as I love him, I wouldn't vote for him either. Huckabee has some appeal to us now, but we just see Romney as "presidential." He's got that charisma that's been missing from the White House for too long. We think he'll only get more likable when separated from the pitfalls of Republican infighting. We're confident he'll be the leader the country needs.

We'll go on record now calling Hillary the Democratic nominee. And we'll also tell you why she will fail to become president. She's abrasive. Sorry folks. This is the biggest popularity contest in the world, and Hillary will turn ugly when she faces her Republican rival one-on-one. While leading her party in the early polls, she has not had to address her counterparts very much. She will become more aggressive as we near November, and the Clinton polish will rub off. We personally view Dodd as the best option of the Democrats, and Romney or Huckabee as the top Republican, with Romney being most likely to win. So, you basically have our call on who will be president, Mitt Romney. As far as Bloomberg goes, I can't see him winning the country. Is this another prescient call by The Greek? Well, we're on record.

Economic Data Analysis

ICSC-UBS Same-Store Sales

The weekly same-store sales report out of the ICSC showed another mediocre rise of 2.3%, year-over-year. Remember, the week being measured included the last few days before Christmas and after, arguably the most important period of the year. What this says for December retail spending and for the state of the consumer, we're not sure you want to hear.

Macy's (NYSE: M) started off industry consolidation, we believe directly related to this consumer softness, by declaring it would close nine stores. We expect that now that the holidays have passed, and seasonal needs are finished, we will see significant layoffs. Around earnings time for these firms, or somewhat before it, we should start to receive warnings and hear news of cost reductions including store closures. The retail environment is saturated, and does not match the current consumer environment, in our view. Now, the trick is to identify who will be the major losers, and we'll get right on that for you. It should not include the higher end stores like Nordstrom (NYSE: JWN), Saks (NYSE: SKS) and Tiffany's (NYSE: TIF).

ISM & Construction Spending

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 last 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%.

Energy Fires Up for '08

Violence in Nigeria and a report from Iran that natural gas flow has slowed into Turkey have energy fired up to start the new trading year. It ain't helping oil bears that a harsh cold front is bearing down on the Northeastern U.S. Oil is up near $2, flirting with $98 and teasing that $100 mark that will likely be front page news the day after it happens. Inventory data to be reported on Thursday will be the key. If it does not contradict these bullish factors, oil should break $100 the day of the report. Otherwise, look to the following week's report to do it, in our view. Reason being, this cold weather should either act as the driving factor moving oil this week or next.

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