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The Wall Street Greek blog is the sexy & syndicated financial securities markets publication of former Senior Equity Analyst Markos N. Kaminis. Our stock market blog reaches reputable publishers & private networks and is an unbiased, independent Wall Street research resource on the economy, stocks, gold & currency, energy & oil, real estate and more. Wall Street & Greece should be as honest, dependable and passionate as The Greek.

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Friday, February 29, 2008

Premarket: Important Inflation Gauge on Tap

(This report is updated all morning long as data becomes available.)

(Stocks in this article: NYSE: AIG, Nasdaq: DELL, NYSE: CDE, NYSE: SUG, Paris: VIV.PA, AMEX: SPY, AMEX: DIA, Nasdaq: QQQQ, AMEX: SDS, AMEX: DOG, AMEX: QLD)

While you slept... Asian shares sank further, WTI crude surpassed $103 and gold shot past $976. However, since the wee hours, crude and gold have backtracked. Unfortunately, stocks do not look to be benefiting, as real consumer outlays registered unchanged (+0.4% before adjusting for inflation). The PCE Deflator progressed 2.2% in January, year-over-year, above that important (but not really) Fed preferred range.

The dollar continues to sink, and Ben Bernanke offered up some new concerns Thursday afternoon when he said a few American banks could fail. "Thanks Benjamin," the masses uttered in chorus as they rushed to their local branch to save their own Benjamins. By the way Ben, nobody believes you when you quote Bush, almost simultaneously in fact, in saying the economy should continue to grow. I hate yes-men!

Friday's Playbook:

January Personal Income and Outlays were reported this morning at 8:30 EST. Bloomberg's consensus of economists had forecast both data points would show 0.2% growth. The market was apprehensive of both figures, and rightly so. Personal income came in +0.3%, and we found ourselves in disagreement with Rick Santelli, who saw the growth inspiring. We prefer to see moderate income growth, offering a non-threatening wage inflation scenario.

Personal consumption of course helps investors gauge how well the consumer is holding up. In January, weekly same-store sales data recorded by the International Council of Shopping Centers was relatively weak, so the same information should have been expected from personal outlays. On the surface of this morning's report, outlays looked good, plus 0.4%, but as CNBC's Leisman pointed out, adjusted for inflation spending was unchanged.

Inflation Gauge

Perhaps the most important data from the report arrived in the PCE Deflator, the pricing gauge viewed most important by the Federal Reserve. The Fed targets a growth rate between 1.5-2%, but would likely tolerate a higher rate if necessary in times of economic strife, according to a Bernanke authored white paper. The market probably doesn't remember that fact though, so watch out because today's gauge showed core prices rose 2.2% year-over-year. "That's hot," quoting Paris Hilton.

NAPM - Chicago

After sad news from both Philly and New York area manufacturing, the National Association of Purchasing Managers - Chicago, was expected to show the Midwest teetering on the fence that divides contraction and expansion. Bloomberg's consensus projected a measure of 50.0 for February. The Midwest has held up relatively well to this point, excluding Detroit, but we correctly suspected (earlier this morning) the region would start to chime in with depressing news soon enough. NAPM - Chicago followed through on our expectations, posting a reading of 44.5, which indicates the region is sinking quickly into economic contraction.

Michigan Consumer Sentiment

The University of Michigan's Consumer February Sentiment Index was anticipated to reach only 70.0 in its final measure for the month. Earlier this week, the Conference Board's reading of consumer attitudes missed the mark by far, so the Michigan figure was looking hopeless as well. The market has bounced from its January lows, so there was some possibility of sentiment stability, but we were not advising bets on it before the report. It seems sentiment was impacted by recent bond insurer concerns more than it benefited from stock market bounce. In fact, the Michigan figure amounted to 70.8, marking a 16-year low.

With commodity prices crazy volatile lately, the Farm Prices Report at 3:00 p.m. Friday should not be overlooked either.

Market-Moving News

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Thursday, February 28, 2008

The Gray Area of Global Economic Decoupling

(Stocks in article: NYSE: WMT, AMEX: SPY, AMEX: DIA, Nasdaq: QQQQ, Nasdaq: XMSR, NYSE: FRE, NYSE: CVC, NYSE: S, Nasdaq: SHLD, NYSE: SFD, Nasdaq: YHOO, Nasdaq: GOOG, NYSE: TMA, NYSE: DT, LSE: XTA.L)

With Bernanke back atop The Hill, and concerning jobless claims figures posted this AM, the broader market is lower in Thursday morning trade. We take position below on the topic of economic decoupling and offer advice for American policy makers.


Weekly Jobless Claims

In the week ended February 23rd, initial jobless claims jumped up 19,000, week-to-week, to 373K. Economists were looking for 350K on average, so the news raised the eyebrow of the market and supported views that recession is in process.

Employment is a lagging indicator, as firms first sure up inventory and take action to serve margins through other cost reduction, and recently price increase as well. As other possibilities grow scarce, hiring freezes are put into play and then creative layoffs occur such as early retirement packages. Finally, companies shed less efficient operations and layoff larger portions of the workforce. Of course, all these things actually sure up businesses for more efficient future operation. The excesses of the past are burned off.

The report offered some underlying detail you might find interesting. Alaska, Michigan, Rhode Island, Idaho and Pennsylvania continued to lead all states in insured unemployed. The four-week moving average did not spike due to offsetting weekly figures.

Fourth Quarter GDP Revision

Gross domestic product went unchanged in its first revision, measured at a 0.6% real growth rate. And the market breathed a sigh of relief. But, let's zoom in and consider the details of the report from the Bureau of Economic Analysis. The BEA noted that the decreased rate of growth from Q3's mark of 4.9% was greatly due to reduced inventory investment, a lower level of export growth, personal consumption expenditures (PCE) and government spending, partly offset by lower imports.

In times like these, government spending increase would be supportive, but our government is already overburdened by huge deficit. It's interesting that despite dollar weakness, exports played a negative role this past quarter. Housing continued to play a significant role in limiting growth, as real residential fixed investment decreased 25.2%, compared to a 20.5% decrease in Q3. Decreases in inventory levels coincide with recent durable goods order trends. As unemployment rises, we start to see the stresses born by businesses resulting in a sort of pressure valve release.

Real exports of goods and services increased 4.8%, but this compared to a rise of 19.1% in Q3. While energy price change always plays a role in confusing data, we would like to make important note here. We often hear pundits taking one side or another on the topic of economic decoupling. One side of the argument concludes America still plays critical role in global economics, and of course this is true. The other side argues that the rising middle classes of India, China and others have reached critical threshold, so that these economies have decoupled from past dependence on America and Europe.

In life, nothing is black or white though. Both these statements are true, and of course, with time America's economic significance to this earth will be minimized. It's inevitable. As emerging markets develop, the world matures. America must regress toward a global mean, while the remainder of the developing world moves upward toward the American standard. The important question to ask now is which is more important. Will the global economy slow enough to release inflation pressure, or will America face ongoing price rise due to foreign consumption while it suffers through deep recession as a result.

The Greek thinks America's resolution to this problem is for American companies to take the global lead. American companies must use their first-mover advantage now, for instance, growing Wal-Mart (NYSE: WMT) in India faster than Indian start ups. While I disagree with Hillary Clinton's terminology and idea to take a "time out," I do believe it is critical that America flex its muscle now while it can to gain fair trading ground globally. This bargaining strength will not last forever, and we must employ it now or be marginalized later.

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Wednesday, February 27, 2008

Pre-Market: Stagflation Slap in the Face

(Stocks in article: NYSE: HOV, NYSE: TOL, AMEX: SPY, AMEX: DIA, Nasdaq: QQQQ, Nasdaq: GOOG, NYSE: DY, NYSE: TOL, NYSE: DWA, NYSE: NT, Nasdaq: SBLK, NYSE: SPN, NYSE: BYD, Nasdaq: DLTR, NYSE: IHP, NYSE: NBL, NYSE: OC, Nasdaq: CHTR, NYSE: FNM, Nasdaq: MSFT)

With bond insurer resolution in progress, the market has enjoyed a short relief rally over the past two days, but that looks to get a stagflation slap in the face in the near future. Oil prices closed at a new record high of $100.88 per barrel on the New York Mercantile Exchange Tuesday and traded higher overnight in overseas activity. Gold also looks clearly headed to break the $1,000 per ounce mark, as it rose to an all-time high in Asian trading this morning. Gold for immediate delivery was trading above $963 an ounce last we checked.

It's clear Ben Bernanke faces an especially difficult term as Fed Chairman. In the next chapter of this horror flick of his, inflation risk should temper the enthusiasm that eventually fuels the rally that precedes economic recovery. And if it doesn't, then the first 50 point rate hike by the Fed Chief outta scare the bejeavers out of it. Keep that in mind when your early cyclicals are up 20% and your profits are still on the table. Ben addresses the House Financial Services Committee today up on the hill, and the newspaper reading Congressmen are very likely to ask him about stagflation and inflation, two subjects the stock market would rather ignore for now.

Economic & Other Analysis:

January's Durable Goods Orders were reported today at 8:30 a.m. Bloomberg's consensus was looking for a 3.5% decrease month-to-month. December's orders surprised on the high side, rising 5.2%. That's a good question (I thought I heard you ask why). It's likely that ordering tightened up ahead of December as recession expectations intensified, and this may have left purchasers short supply too far ahead of the onset of recession. In this world of just-in-time inventory management, ordering trends are likely to shift on a dime when compared to long ago periods when bulky inventories needed to be worked down and built up. Orders came in down 5.3%, short of expected. Dow futures immediately turned lower on the news.

At 7:00 a.m., the Mortgage Bankers' Association's report of mortgage activity offered what we forecast last night. Long rates have risen remarkably, and the yield curve is steepening. Mortgage activity has been surprisingly intense in months past, aided by Fed cuts, but housing still stinks and now rates are not supportive any longer. Get the picture yet? Bad news was clearly in store on this front, in our opinion. The actual report offered execution on our prediction, as mortgage applications dropped off a cliff, down 19.2% from the prior week. Mortgage refinance activity fell 30.4%. Voila!

New Home Sales were reported for the month of January at 10:00 a.m. Bloomberg's consensus of economists forecast the annual pace slipping ever so slightly to 600K. The actual pace of 588K offered yet another let down, just when some hopeful pundits had been calling for springtime rebound, and I'm talking about Sam Zell.
Perhaps stealing the show, Toll Brothers (NYSE: TOL) reported earnings on Wednesday morning. Thomson Financial has gauged consensus expectations for a loss of $0.50 in the company's fiscal first quarter. TOL actually produced a loss of $0.61 on writedowns and lagging sales.

Robert Toll has proven a better barometer than most industry CEOs, as he's been absolutely morbid through most of the company's conference calls over the past year. In contrast, we remember the Hovnanians (NYSE: HOV) of the world predicting recovery as prematurely as last winter. Robert did not let down those who prefer the dark side, saying the company has seen few "glimmers of hope." On a personal aside, The Greek met Toll at the company's headquarters in the Philadelphia area about nine years ago, and the company has been our favorite industry participant for over a decade now due to its unique operating strategy and market niche.

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Tuesday, February 26, 2008

Stock Market's Wall of Worry


Inflation and stagflation concerns have officially taken over from worries about bond insurers. They say bull markets climb a wall of worry, but the size of this wall is still becoming clear to us, and this market might need to take a break, catch its breath and work up some confidence before giving it a go.

Economic Data & Analysis

Producer Price Index - January 2008

PPI rose 1.0% on a monthly basis, and 0.4% when excluding food and energy. Both figures exceeded consensus expectations for increases of 0.3% and 0.2%, respectively. Prices for finished goods jumped 7.4% over the year ago period. However, this included energy price increase measuring 22.6% during that span. Food prices rose 8.3% on the producer level during the same period. Excluding food and energy, prices rose 2.3% on a year-to-year basis, still somewhat worrisome.

This news has reinforced inflation concerns today. Recent inflationary headlines have brought into vogue a topic we first discussed early last year. The secular drivers of current price increase are of significant difference than random seasonal drivers of the past. These are stickier increases in the core economic factors of energy and food. This is why stagflation risk is a real issue worthy of consideration now.

Gauging Consumers

Two bits of data reached the market today to help us keep a close read on consumers. The Conference Board offered its monthly Consumer Confidence Index, and it slipped sharply to 75.0 from a level of 87.3 in January. The consensus was looking for 81.3, according to Bloomberg. This important decline greatly reflects stock market ills despite the slight bounce off January lows, and it likely also reflects the onset of recession and concern about bond insurers, in our view.

The Weekly Same-Store Sales Report from the International Council of Shopping Centers - UBS offered a more timely and also more positive viewpoint. Reportedly, same-store sales increased 2.3% year-to-year, continuing an ongoing trend showing a rising rate of growth through recent weeks. The population is still largely employed, and perhaps already spending tax refunds. It's also possible discounted pricing is driving the slight change in sales patterns.

Target (NYSE: TGT) reported quarterly earnings results today, showing Q4 same-store sales growth of 0.2%. Still, Target offered a forecast for 2-3% same-store sales growth for FY 09 (Jan.). The company based this bold prediction on its view that it could surmount weak second half 2007 results. That's a gutsy prediction that assumes deterioration will cease by mid-year. TGT has likely already talked down analysts' EPS estimates in private discussions, but we believe there is a certain degree of hope applied here anyway, and that creates downside risk tied to earnings misses.

The fiscal stimulus package should offer a boost for consumer sensitive results and shares through fiscal Q2, but after that, the future really depends on the ability of the economy to recover in a burdensome rate environment. Despite Bernanke's cuts, inflation concern has long-term rates on the rise. The yield curve is looking steeper than it has in years.

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Monday, February 25, 2008

The Greek's Week Ahead - Stagflation or ETF Capital Flow Perversion?

Despite a rocky ride last week, stocks ended up pretty much where they started the period. The activity was symbolic of the overriding confusion that pervades the market today. Investors are faced with a conundrum. While they attempt to gauge the economic condition, forecast its future and anticipate stock market action, they also have to contend with a rare phenomenon. You see, in times of economic deterioration, price pressure typically eases as a natural consequence. However, while the broad indices including the Dow Jones Industrials, S&P 500 and Nasdaq are well off their October 2007 highs, commodity prices are breaking records. That’s unheard of!

Actually, it’s not, but it’s rare. Stagflation is the term for it, and it reared its ugly head from the murky depths last week. The Philadelphia Federal Reserve Index, which measures Philly area manufacturing, posted a negative 24.0 reading. This matched the weak figure seen in the New York manufacturing sector not long before. The news was not so troubling in isolation, or at least not surprising, but it became disconcerting when the Philly Fed reported its manufacturers continue to see input price increases and also continue to raise their own prices, despite product demand softness.

Investors have a choice between two devils though. If manufacturers do not pass through price increase, their margins get squeezed and they must consider more significant cost consolidation in the form of plant closures and layoffs. Perhaps signifying that they have borne all they could, prices are now rising on the consumer level. Manufacturers are already right alongside housing in terms of the rate they have been shedding jobs. Price increases are manifesting in the food industry and across manufacturing now. Last week’s reporting of the Consumer Price Index only confirmed what we have seen anecdotally, as prices increased more than expected in January.

So what’s so scary about this Greek?

Well, the Federal Reserve is in the process of cutting interest rates with a goal to inspire economic expansion. By lowering rates, the cost of borrowing decreases and things are supposed to get easier for everyone. Of course, after the subprime debacle, lenders have otherwise tightened lending standards. Still, rate cuts lower the cost of capital for corporations and are a positive for their share values, usually.

What’s different this time, or what’s thought to be different, is globalization has reached a critical threshold, and economic decoupling has set forth. Now, developed markets are still tightly tied to America, and that’s why the U.K. and Europe are seeing similar slowdowns to ours. However, in the large emerging markets of India, China and others, domestic market demand has gained traction. Even as the United States slows, these important consuming populations, driven by an emerging middle class, continue draining global commodity resources.

Capital Finds Profit

While The Greek believes this unique change is playing a role, we also expect capital flows are exacerbating that impact. Capital finds profits you see, and with the availability of new exchange traded funds (ETFs), more investors can now participate in commodity investment. As a requirement, many of these funds must own the underlying commodity, and investor demand in ETFs drives substantially higher and synthetic demand for the commodities. The Greek believes an important cure for this potential driver of stagflation or hyperinflation will have to be increased regulation of ETFs. Otherwise, the return of high interest rates driven by inflation could stymie the global economy and even eventually lead to wars over basic resource supplies.

The Week Ahead

The coming week will offer key housing, consumer and producer data to swallow.


Existing home sales are set for Monday report and new home sales for Wednesday. Recent market reaction to housing data has been one indicative of overriding bearish sentiment. Investors have come to expect poor results, and do not generally penalize home builders or the broader market for weak information any longer. This sets the stage for upside surprise eventually, but it’s still early for that in our view. Bloomberg's survey of economists pegs existing home sales for January at an annual pace of 4.84 million, compared to 4.89 million in December.

The Fed goes on parade this week, and Governors Mishkin and Kroszner will serve as Co-Grand Marshals. The two will take separate podiums on Monday. The day's most noteworthy earnings reports include Healthcare Realty Trust (NYSE: HR), LDK Solar (NYSE: LDK), Lowe’s (NYSE: LOW), Nordstrom (NYSE: JWN) and Sotheby’s (NYSE: BID).

The remainder of the earnings schedule includes FirstEnergy (NYSE: FE), Henry Schein (Nasdaq: HSIC), Human Genome Sciences (Nasdaq: HGSI), ONEOK Inc. (NYSE: OKE), Shiloh Industries (Nasdaq: SHLO), Silver Wheaton (NYSE: SLW), Zebra Technologies (Nasdaq: ZBRA) and more.


The Fed parade continues on Tuesday, when Fed Vice Chairman Donald Kohn grabs a microphone. Remember it was Kohn who set the pace when Bernanke seemed lost in neutrality.

The Producer Price Index for the month of January will hit the wires on Tuesday, but this news should reflect what we have already seen from regional Fed districts. Also, last week’s CPI report was more important, in our opinion, as it showed the prices borne at the consumer level. Still, January's PPI is expected to show an increase of 0.3%, and to post a rise of 0.2% when excluding food and energy price change.

The International Council of Shopping Centers will post its weekly same-store sales figure on Tuesday morning. Growth accelerated a bit in the prior week's report, up to 1.9% year-over-year.

Consumer confidence will be measured on Tuesday through the Conference Board’s survey of February. The consensus is looking for a measure of 81.3 this time around, versus 87.9 in January. As confidence and consumer spending ease, we've been expecting tough times to befall retailers, and they have. Sharper Image (Nasdaq: SHRP) has filed for bankruptcy, following up store closures and layoffs at Macy's (NYSE: M) and Talbots (NYSE: TLB). A slew of retailers are set to report this week, including Macy's on Tuesday.

Some of the other earnings reports you will want to prepare for include DISH Network (Nasdaq: DISH), Domino’s (NYSE: DPZ), Foster Wheeler (Nasdaq: FWLT), H.J. Heinz (NYSE: HNZ), Home Depot (NYSE: HD), Papa John’s (Nasdaq: PZZA), RadioShack (NYSE: RSH), Target (NYSE: TGT), American Dental Partners (Nasdaq: ADPI), Asset Acceptance Capital (Nasdaq: AACC), Astec Industries (Nasdaq: ASTE), Autodesk (Nasdaq: ADSK), AutoZone (NYSE: AZO), CV Therapeutics (Nasdaq: CVTX), Dycom (NYSE: DY), El Paso (NYSE: EP), Frontier Oil (NYSE: FTO), Health Care REIT (NYSE: HCN), Helios & Matheson (Nasdaq: HMNA), Herbalife (NYSE: HLF), K-Swiss (Nasdaq: KSWS), Lionbridge Tech (Nasdaq: LIOX), Masimo (Nasdaq: MASI), Medarex (Nasdaq: MEDX), Office Depot (NYSE: ODP), Overseas Shipholding (NYSE: OSG), Reliant Energy (NYSE: RRI), Sanderson Farms (Nasdaq: SAFM), Sempra Energy (NYSE: SRE), Sonic Solutions (Nasdaq: SNIC), Star Bulk Carriers (Nasdaq: SBLK), Superior Energy (NYSE: SPN), Tenet Healthcare (NYSE: THC), TETRA Technologies (NYSE: TTI) and more.


The Fed parade climaxes Wednesday and Thursday when Chairman Bernanke addresses the House Financial Services Committee and the Senate Banking Committee in successive order. Durable Goods Orders for January are set for Wednesday release, and are expected to show a significant drop-off of ordering activity. Bloomberg's consensus is looking for a 3.5% decrease in orders month-to-month. New home sales for January are seen setting a slightly lower mark, to an annual pace of 600K. This compares to 604K in December.

Wednesday also of course brings the regular reports on mortgage activity and petroleum inventory. Both matter this time around. With long rates rising and spreads widening, recently decent mortgage activity could now find a brick wall. Oil prices have risen despite large inventory building. Rumblings out of OPEC about a possible March production cut may be aiding that a bit, and certainly the Turkish incursion into Northern Iraq and refinery explosion in the U.S. helped support prices last week. As this past news gets older, we have to wonder how oil prices can hold up. T. Boone Pickens, for one, also sees oil prices softening from here. Or, is inflation the key catalyst now, and if Iran continues to defy the U.N., perhaps the floor is not too far a trip.

Wednesday's earnings slate includes Aqua America (NYSE: WTR), Boyd Gaming (NYSE: BYD), Dollar Tree (Nasdaq: DLTR), Eagle Bulk Shipping (Nasdaq: EGLE), General Maritime (NYSE: GMR), Limited (NYSE: LTD), Noble Energy (NYSE: NBL), Salesforce.com (NYSE: CRM), Toll Brothers (NYSE: TOL), Charter Communications (Nasdaq: CHTR), Checkpoint Systems (NYSE: CKP), Cogent Communications (Nasdaq: CCOI), Dress Barn (Nasdaq: DBRN), Edison Int'l (NYSE: EIX), Flowserve (NYSE: FLS), IHOP (NYSE: IHP), LifeCell (Nasdaq: LIFC), MasTec (NYSE: MTZ), McDermott Int'l (NYSE: MDR), Millennium Cell (Nasdaq: MCEL), Mylan Labs (NYSE: MYL), Nortel (NYSE: NT), Owens Corning (NYSE: OC), Public Storage (NYSE: PSA), RR Donnelley (NYSE: RRD), Southwest Gas (NYSE: SWX), Synovis Life Technologies (Nasdaq: SYNO), Teekay Corp. (NYSE: TK) and others.


GDP for the fourth quarter will be re-reported, adjusted after the advance report showed just 0.6% growth. A significant revision higher or lower would be important to the stock market.
The consensus is looking for a slight increase to 0.7%. Weekly initial jobless claims have been trending higher, and the four-week moving average jumped more than 10K last week. Bloomberg's consensus is looking for a small increase in the weekly figure to 350K.

The natural gas report should arrive just on time Thursday at 10:30. Natural gas, which had been lagging oil as stocks filled, has had a noticeable increase of late. At $9.32/MMBtu, a spike is forming.

Thursday's earnings include AIG (NYSE: AIG), BEA Systems (Nasdaq: BEAS), Del Monte (NYSE: DLM), Dell (Nasdaq: DELL), Freddie Mac (NYSE: FRE), Gap (NYSE: GPS), Sears (Nasdaq: SHLD), Smithfield Foods (NYSE: SFD), Sprint Nextel (NYSE: S), Viacom (NYSE: VIA), XM Satellite Radio (Nasdaq: XMSR), Avici Systems (Nasdaq: AVCI), Barr Pharmaceuticals (NYSE: BRL), Bidz.com (Nasdaq: BIDZ), Cablevision (NYSE: CVC), Cal Dive Int'l (NYSE: DVR), Cell Genesys (Nasdaq: CEGE), Cepheid (Nasdaq: CPHD), Cooper Tire (NYSE: CTB), Deckers Outdoor (Nasdaq: DECK), Deutsche Telekom (NYSE: DT), FTI Consulting (NYSE: FCN), Gmarket (Nasdaq: GMKT), Hansen Natural (Nasdaq: HANS), Hospira (NYSE: HSP), King Pharmaceuticals (NYSE: KG), Kohl's (NYSE: KSS), Leap Wireless (Nasdaq: LEAP), Live Nation (NYSE: LYV), Mentor Graphics (Nasdaq: MENT), Revlon (NYSE: REV), Rowan Cos. (NYSE: RDC), Scientific Games (Nasdaq: SGMS), Sycamore Networks (Nasdaq: SCMR), United Rentals (NYSE: URI), UTStarcom (Nasdaq: UTSI), West Marine (Nasdaq: WMAR) and others.


Just when you thought the Fed was out of gun power, Atlanta Fed President Lockhart addresses subprime mortgages. Consumer confidence will be measured for the second time this week through Friday’s reporting of February confidence by the University of Michigan. Bloomberg's consensus sees confidence inching higher to 70.0, from 69.6 in January.

Perhaps the most important report of the week, Personal Income and Outlays for January will be posted on Friday morning. The market will be concerned about both figures, with income hoped to be moderate and indicating a non-threatening wage inflation scenario. Personal consumption of course will help investors gauge how well the consumer is holding up. In January, weekly same-store sales data recorded by the International Council of Shopping Centers was relatively weak, so the same news should be found in personal outlays. Perhaps the most important piece of information from the report will arrive in the PCE Deflator, the pricing gauge viewed most important by the Federal Reserve. The Fed targets a rate between 1-2%, but will likely tolerate a higher rate if necessary in times of economic strife, according to member white papers. The market probably doesn't remember that fact though, so watch out.

After sad news from both Philly and New York area manufacturing, the National Association of Purchasing Managers - Chicago, is expected to show the Midwest teetering on the fence of contraction and expansion. Bloomberg's consensus is projecting a measure of 50.0 for February. With commodity prices rising across the spectrum, the Farm Prices Report at 3:00 p.m. Friday should not be overlooked.

Friday's earnings include Petrobras (NYSE: PZE), Service Corp. (NYSE: SCI), Coeur d'Alene Mines (NYSE: CDE), Mine Safety Appliances (NYSE: MSA), Royal Bank of Canada (NYSE: RY), Southern Union (NYSE: SUG), The Progressive Corp. (NYSE: PGR), Westar Energy (NYSE: WR) and more.

We hope we have provided another valuable weekly market-moving event planner, and suggest checking in with us during for our daily previews.

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Saturday, February 23, 2008

Wall Street Week in Video Review - Feb 18

Please enjoy the collage of videos we've gathered for you. You can easily fast forward through to watch what interests you, and don't miss the Iranian comedian!

As always, the views expressed in the videos do not necessarily agree with the views of Wall Street Greek. Receive Wall Street Greek FREE via email by subscribing here.

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Friday, February 22, 2008

Petroleum Finds Geopolitical Supports

As the commodity markets laugh off the recession driver and push record levels, petroleum and other fuel sources are getting an extra incentive to rise today.

(Stocks in article: AMEX: VDE, AMEX: EDX, AMEX: SPY, AMEX: DIA, Nasdaq: QQQQ, AMEX: SDS, AMEX: DOG, AMEX: QLD, NYSE: GAS, NYSE: HUN, NYSE: RTP, NYSE: LYG, Nasdaq: NSANY, Nasdaq: SIRI, Nasdaq: XMSR, NYSE: NYT, Nasdaq: MSFT)

Yesterday, crude backed off of highs, as weekly petroleum inventory posted a build of 4.2 million barrels, compared to consensus expectations for an increase of 2.9 million, according to the Dow Jones Newswire. Wall Street Greek continues to expect economic recession in America and significant slowing of growth in Europe to eventually take hold of petroleum and other commodities. However, for now, capital flow rules the day.

Geopolitical Tensions Mount

"You picked a fine time to leave me Lucille..." The importance of Turkey to the EU and America is growing even more clear. Today, CNBC reported a U.S. senior official offered strong words of support for the Nabucco gas pipeline, which is slated to bring natural gas from the Caspian to Europe. The pipeline, which is planned to run through Turkey, is hoped to ease European reliance on Russia. Russia has been very busy over the past year or more in setting the European plate for its competing South Stream pipeline effort.

Here's the problem. We're playing around in Russia's backyard, and Russia plays dirty. Having experience and contacts in the Republic of Georgia, The Greek is well aware of the extent Russia is willing to go to get its way. Georgia's new government learned a tough lesson after adopting an anti-Russia stance. It soon found its largest export market closed to many products; its energy pipelines sabotaged in the midst of winter; and Russian pricing pressure regarding energy supply, again in winter. We almost forgot to mention Russia's expanded espionage effort in Georgia, and its recent attempt to overthrow the new government.

Turkey and Azerbaijan are not prepared to protect the pipeline to the extent that would be necessary. You can expect sabotage disguised as political upheaval to rule the lifeline of the planned pipeline. It's a shame that Kurds will likely bear the blame for Russian dirty tricks.

Turkey Negotiates from Position of Strength

Turkish troops crossed the Iraqi boarder today, but details of the military campaign are confused. Turkish officials have admitted to the deployment of two brigades, or 10,000 troops, while Iraqi and Kurd representatives seem to imply the Turks are overstating the incursion for propaganda purpose. It seems illogical for Turkey to mount a broad campaign now, in the middle of winter, through mountainous terrain. Propaganda is likely the motive devised to protect a smaller Turkish operation in Iraqi Kurdish territory.

Judging by its bold actions of the past, Turkey seems to understand its important position. It could gain entry into the EU, and perhaps without major concession as a result. Recent Greek and Bulgarian agreements with Russia in regard to South Stream perhaps offer some basis to believe it might not be so easy for Turkey. But the Germans, through experience, do not trust Russia supplying such a large portion of the region's energy. So, pressure or other incentive could drive the Greeks and Cypriots to give up some ground.

Greece is currently entangled in a quarrel with Skopje over its relatively recently adopted national name, The Republic of Macedonia, and its flag and constitution, which seem to lay claim to the Greek province of Macedonia. Perhaps Greece could be swayed in favor of Turkish entry if broader Europe were to support it in this matter. However, Greece is not likely to give up ground on the Cypriot issue, and the ongoing military presence of Turkey in Northern Cyprus. Nicosia remains Europe's last divided city, and sadly illustrates the contrast of political oppression against the fruit of freedom and capitalism that Cyprus represents.

Besides, Skopje is not alone in its coveting of Greek territory. Turkey has laid claim in the past to Greek islands that lie within the typical area that encompass national territorial waters. This of course does not apply to waters covering shorter distances that lie between national territories. However, Turkey stands on illogical ground when it suits it. It's very possible The Greek's ancestrial home would now be involved in conflict if not for the United Nations and the rule of law.

France, which is fueled mostly by nuclear energy, should continue to push Turkey for reform. France derives over 75% of its energy from nuclear. However, as energy sources prove even more scarce over time, broader Europe will have to make the decision that makes most strategic and economic sense.

We know our discussion here will drive interest in debate. Please use the comment box below the article on the site to do so. In this week's "Greek's Week Ahead" we anticipate covering the recent commodity price rise that exists despite economic recession. Please look for the article this weekend.

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Thursday, February 21, 2008

Wall Street Worries

(Stocks in this article: AMEX: SPY, AMEX: DIA, AMEX: SDS, AMEX: DOG, Nasdaq: QQQQ, AMEX: QLD, NYSE: MBI, NYSE: JCP, Nasdaq: RIMM, NYSE: RUK, NYSE: CPS, Nasdaq: MSFT, Nasdaq: YHOO, Nasdaq: GOOG, NYSE: MGM, Paris: GLEZ4.PA)

Today's economic data only offered more reason for Wall Street to worry.

Economic Data & Analysis

Jobless Claims

Weekly initial unemployment claims were reported for the week ended February 16, and while exceeding consensus expectations by only 1,000, the data still offered good reason for concern. First the good news: While recording 349K new benefits claimers this past week, the situation improved from the week before by 9K. The bad news: However, this came on a revised higher prior week count. Claims during the week of February 9 have been adjusted 10K higher to 358K. Even worse news: The four-week moving average increased 10,750, to 360,500 claims filers. It looks safe to say unemployment will move back over 5.0% again soon.

Leading Economic Indicators (Jan.)

Additional unfortunate news reached the market this morning in the form of the fourth consecutive monthly deterioration of the Leading Indicators Index. The measure decreased 0.1% this time around, driven mostly by stock prices and housing permits. The most disconcerting part of this report was found in the fact that the index has fallen 2.0% (4.0% annual pace) over the last six months, marking the largest such drop since early 2001. We do not need to remind you about the poor economic situation that existed that year...

Philadelphia Fed Survey (Feb.)

When it rains, it pours... The consensus was looking for negative 12; January measured negative 20.9. February's Philadelphia Fed Index almost knocked CNBC's Rick Santelli off his feet, as it came in at a negative 24. Indeed, we have seen deterioration in both New York and Philadelphia area manufacturing, and the Midwest looks about ready to join the sad sector. Of course, Detroit is already there and some. What's very unfortunate here is that the Philly Fed found that while manufacturers reported weakness, they also continue to report increases in their input prices, and the prices of the goods they sell as well. So, when people argue that stagflation is not a possibility for 2008, point them toward this report.

The general view, hope, and even our expectation, is that economic softening will impact prices, but if that so-called savior, global economic expansion keeps demand for commodities high, we're in for a rough ride. When prices ease naturally during recession, it allows for some support to counterbalance tough times. Without that support, the depth of recession and its impact can be far worse.

The outlook in such an environment is not good for stocks, and that's certain. The problem, other than the price impact on domestic spending, is that the cost of capital is raised for corporate America; this would offset the impact of Fed rate cuts. So, a good portion of the relief we hope for from Fed action would thus prove illusory. This is why the market is worrying today.

Starting shortly, you will only find today's personally selected top headlines at the site, within our side-bar section, "Market-Moving News." (disclosure)

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Wednesday, February 20, 2008

Economic Fishtail ™

(Stocks in this article: Nasdaq: GRMN, NYSE: DAL, NYSE: NWA, NYSE: CAL, Nasdaq: UAUA, NYSE: MBI, NYSE: ABK, Nasdaq: SHRP, Nasdaq: DLAKY, Nasdaq: COMS, NYSE: HPQ, Nasdaq: MSFT, Nasdaq: YHOO, NYSE: IND, NYSE: ING, AMEX: SPY, AMEX: DIA, Nasdaq: QQQQ, AMEX: SDS, AMEX: DOG, AMEX: QLD)

Let the pigeons loose! Rather, let the chickens loose, as there they go again, running around all over popular media screaming "Inflation! Inflation!" However, there's good reason to believe Fred Mishkin's sharp rate-action theory could drive an "economic fishtail™".

Economic Data & Analysis

Consumer Price Index

The Bureau of Labor Statistics today reported the CPI Index for January. Showing a month-to-month increase of 0.4%, and 0.3% excluding food and energy, both measures exceeded consensus expectations by a tenth. Media and market pundits seemed to have awoken a bit anxious this morning, as they overreacted to the hot inflation figures. Inflation should be tempered in the future by the slowing economy, which by the way, looks to be in in recession. January's figures on CPI predate this effect. The headless chickens were thus again free to rule television, after apparently escaping the hallways of my high school alma mater.

Not that there's anything wrong with that...

The data was disconcerting, just not panic room level disconcerting. Food and energy continued to increase, both rising 0.7% from December. Food and beverages posted their sharpest rise since last February in fact. Foods producers are finally pushing rising input prices through to consumers, something that should have been expected here, given recent decent earnings reports from some of the individual producers themselves. In other words, they've stopped bearing the price and margin pressure alone. This is the result of the secular nature of current price rise, versus previous seasonal drivers.

Global demand has helped to keep petroleum prices lofty, and the same goes for foods, so the concern here is that inflation might not moderate enough, and that the economy could eventually exit recession to find a threatening pricing environment for stocks. The Fed would most certainly quickly lift rates to temper inflation, and investors might get quite queezy from the whipsaw ride. The situation and the Fed's handling of it could eventual resemble the fishtailing of a panicked driver in icy conditions. If the Fed overreacts to economic slowing, it could driver a sort of hyper acceleration of inflation, for which it would then need to overcompensate in the other direction. Fred Mishkin's genius could actually drive a frightening economic fishtail ™. Remember where you first heard that term, right here at your favorite Greek.

Market-Moving News

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Tuesday, February 19, 2008

Straddle Anyone? Playing Bond Insurers


U.S. stocks picked up the baton from Europe and Asia today, as investors returned from the three day layoff energized. With no new catastrophic acronym introduced into the investor lexicon today, the market seems to say, "No news is good news!" The market is growing more battle ready with each passing day, shaking off bad news with increasingly more authority. This is a good sign and reason to believe in technical base-points.

Bond Insurer Countdown

Still, a minefield lay before us this week with the bond insurer issues yet unresolved. We would much rather see MBIA (NYSE: MBI) and Ambac (NYSE: ABK) emerge from current distress with their municipal bond businesses still intact. If these companies are forced to split out the business, and lose their AAA credit ratings (keeping it in the muni-bond portion), they will be severely disabled. What they need is to give up just enough ownership interest, or otherwise create capital, to preserve the rating and get the regulators off their backs. If you have not already seen it, please review our discussion of the topic in "The Greek's Week Ahead."

MBIA resurrected its old CEO, Joseph Brown, to lead it through the fire. Joseph is taking a $4.4 million personal stake in MBIA at a price of $12.15 a share. This seems to offer him incentive to do the right thing for MBIA's stakeholders, but he's also gaining a potential bonus of $2 million and added bonus of $5 million in a year's time, so it's not so clear that he's bearing a cost. Clearly though, he has incentive to create value, but seems to bear less risk than apparent on the surface.

MBIA has taken a strong position against the legal right of the State of New York to force a split of the company's business. The important question to be answered is how confident MBIA's raters are in its ability to meet obligations. MBIA went out and raised $2.5 billion over the last three months and has declared itself more than adequately financed. What matters though, is what S&P, Moody's and Fitch think. The clear resolution to the problem is to get the corporate management teams, rating agencies and regulators in one room at the same time to discuss exactly what capital amount is needed to resolve the issue. There must be no opportunity for miscommunication or confusion, and that risk seems to exist now with two separate lines open to the rating agencies, one from the companies and one from the regulators. Once capital requirements are clear and uniformly understood, MBIA and Ambac can set forth on attaining it, or not.

Ambac looks as if it's been more easily swayed, and seems to be considering the split scenario. Both firms' shares are lower this morning. It's possible we would see no quick direction taken toward resolution in MBI's case. If regulators seek to force the issue and MBI finds legal loophole to argue the case, we believe MBI shares would react to the downside initially. But, the same might be said for ABK's shares, if the company agrees to a split. Remember though, shareholders should gain two separate interests in two separate firms, and those two pieces might equal the current value of the whole, or allow for value creation. The important question to be answered is would a split make capital acquisition easier or harder for these firms.

A Trade to Play It

While volatility is priced into the stocks' options to a degree, a good way to play this situation seems to be by taking long positions on both calls and puts (at the same strike, or same distance from spot price), thus betting on greater volatility than is priced into the options. The technical term for this is a straddle. Simply put, you lose if MBI and ABK shares sit still this week, and that seems unlikely. The hope is to gain more on one side of the bet than the cost of both options. Profit depends on volatility, and enough of it to overcome cost. Also, time is your enemy, as usual.

You could bias your gamble, based on your expectations of which way the situation will go, by simply investing disproportionately in calls or puts. The bet then becomes sort of a semi-hedged one, carrying directional risk as well as that tied to lack of volatility and time decay. The stocks seem to have good catalyst for volatility thanks to Eliot Spitzer's deadline (he said 3-5 days about 4 days ago). Whether he was referring to business days or just days does not change the bet much. How much conviction he has in the deadline, and how close the rating agencies may be to action is very important. NY State Insurance Superintendent Dinallo seemed to indicate some flexibility on timeline.

Economic Data & Analysis

State Street Investor Confidence Index

February's take on investor confidence measured 73.0, compared to January's 68.8. It seems Ben Bernanke's significant action and the government's fiscal stimulus effort have encouraged investors. Stock prices told us that already though by rising off of January's lows.

Oil on the Rise

Despite OPEC's decision to keep production steady, a refinery explosion and threats from Hugo Chavez (though later rescinded) have kept momentum on the bullish side of the table. Recent news that America's President wants to speed the rate of strategic oil reserve filling, Iranian and Venezuelan hopes to cut production in March and mysterious undersea Internet cable disruption (to Iran) have certainly not been overlooked by oil bulls either. Perhaps most important, European economic growth continued in Q4 and the global economy looks more resilient than recently assessed. Find today's important headlines below...

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Monday, February 18, 2008

The Greek's Week Ahead - Bond Insurers' 11th Hour

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

Grandpa Buffet came to the rescue last week with an offer to save bond insurers, or so it seemed. The response from the insurers themselves implied good old Warren was actually acting rather selfishly. By mid-week, the focus turned to Bernanke Downer and his mixed message depicting more tough times ahead, but without recession. Alan Abelson pegged Bernanke's motive and mindset perfectly in Barron's this week when he reminded us of Ben's obligation to the man who signed him on, good old GW. Bernanke and especially Hank Paulson acted mainly as presidential cheerleaders for most of last year while the underpinnings of the economy came loose. Finally, before the week was over, we were back to worrying about the bond insurers.

Despite the rough close to trading, broad indices mostly gained ground last week. The Dow Jones Industrials and the S&P 500 Index both climbed 1.4%, and the Nasdaq inched up 0.7%. While short interest trended lower, equity mutual funds continued to record outflows of capital. Money funds averaged weekly inflows of $42 billion over the four weeks ended February 13, while equity funds posted average outflows of $12.3 billion. Municipal funds saw net inflows of $919 million on average.

Foreign markets rose last week, with the European barometer, the DJ STOXX Index rising 0.6%. Norway led the region, as it increased 5.1%. In Asia, the DJ Asian Titans 50 increased 2.1% on the week, and Singapore led the region's risers as it moved 4.8% higher. India increased 3.0%, while Hong Kong rose 2.5%. However, Shanghai B shares fell 1.9% on the week. Oil prices recorded a noteworthy increase as well, as light sweet crude climbed to $95.5 a barrel.

Dramatic Week Awaits

The week ahead will be an abbreviated one due to the President’s Day holiday. However brief the week may be, it will not be short on drama. It’s very likely bond insurance providers and other interested parties will work through the long weekend as they seek to find resolution to their dire predicament.

New York Governor, Eliot Spitzer, and New York State Insurance Department Superintendent, Eric Dinallo, tightened the clamps on the bond insurance industry last week. Due to their concern that the credit rating agencies might soon downgrade Ambac Financial Group (NYSE: ABK) and MBIA, Inc. (NYSE: MBI), the two most important bond insurers, Spitzer issued an ultimatum. He’s given the insurers 3-5 days to take appropriate action in order to preserve their AAA credit ratings. At that point, if they have not done so, the state is prepared to force the division of the firms’ municipal bond operations from the remainder of the companies’ businesses, which include their troubled subprime mortgage related operations.

Loss of the AAA rating would disable the insurers’ ability to conduct ongoing operations. However, if the municipal insurance business is separated from the parent companies, municipal bond investments would not be at risk. As Dinallo states, the muni-insurance businesses could operate in “rehabilitation” while ironically still maintaining their triple-A status. They would continue to serve their obligations in runoff fashion. Eric Dinallo indicated in a CNBC interview that the insurers have many options, and he seemed to imply there remains a strong likelihood they could continue to operate as they do now with help from the private sector.

So, over the weekend the companies will very likely be working to secure new capital investment from current owners like Warburg Pincus (investor in Ambac), or from new equity interests. New investment could arrive from parties who either stand to benefit from securing their own risk or from gaining equity interests at bargain pricing. Institutional investors holding the municipal bonds or otherwise insured credits stand to benefit from aiding the insurers themselves. If the AAA rating is lost, as the underlying securities are likewise revalued, institutional investors face the potential of further asset write-downs themselves. In other words, The Greek would go out on a limb and say investment in ABK and MBI could prove wise a year from now. Investors must realize, however, that any incremental investment dilutes current shareholders’ stakes, and for the gamble to work out, these companies must remain operating as is.

The Week's Market-Moving Event Schedule

This week offers a relatively light load of economic data, but a busy earnings schedule. Light does not mean inconsequential, however, and some very important data will reach the market.


While the U.S. market will be closed in honor of President's Day, and Canada for Family Day, most of the world is open for trade. As you may recall, international market turmoil ruled the day the last time the American markets were closed, which was January's holiday honoring Martin Luther King. This led to an emergency rate cut by the American Fed Chief ahead of the U.S. open on that Tuesday.

We later discovered the catalyst of the chaos may have been Societe' Generale rogue trader, Jerome Kerviel. Wall Street will be more than a little edgy this Monday as well if no mitigating resolution has been found to cure what ails the bond insurers. Concerns are raised by the fact that many would-be saviors are already capital constrained due to the subprime debacle. Ironically, these same firms stand to benefit if AAA credit ratings can be preserved at the insurance firms. Still, there are other potential sources, including sovereign wealth funds and vulture investors.

There are still a handful of earnings reports on the docket Monday, including Constellation Energy Partners LLC (PCX: CEP), Flagstone Reinsurance Holdings (NYSE: FSR), Hellenic Exchanges (Athens: EXAE.AT), PharMerica (NYSE: PMC), Stewart Information Services (NYSE: STC), Trico Marine Services (Nasdaq: TRMA) and many other international firms.


On Tuesday, the State Street Investor Confidence Index should not surprise many with a low February reading, after a measure of 68.8 in January. After all, on the Friday just passed, the University of Michigan Consumer Sentiment Survey measured at its lowest level in 16 years.

In other news, the Housing Market Index will also be reported on Tuesday. God bless… Its last reading in January was a sad 19.0. Minneapolis Fed President Gary Stern will occupy a podium and may catch the newswire's attention. Finally, Presidential primaries will be held in Washington and Wisconsin, while the Democrats caucus in Hawaii.

Tuesday earnings schedule is headlined by Barclays Bank PLC (NYSE: BCS), Crocs, Inc. (Nasdaq: CROX), Hewlett-Packard (NYSE: HPQ), Marvel Entertainment (NYSE: MVL), Wal-Mart (NYSE: WMT) and Whole Foods Market (Nasdaq: WFMI).

Others reporting on Tuesday include Aaron Rents (NYSE: RNT), 21st Century Holding (Nasdaq: TCHC), ACI Worldwide (Nasdaq: ACIW), American Commercial Lines (Nasdaq: ACLI), AmSurg (Nasdaq: AMSG), Arthrocare (Nasdaq: ARTC), Axsys Technologies (Nasdaq: AXYS), Calumet Specialty Products (Nasdaq: CLMT), CEC Entertainment (NYSE: CEC), Champion Enterprises (NYSE: CHB), Chiquita Brands (NYSE: CQB), DealerTrak (Nasdaq: TRAK), Equity One (NYSE: EQY), Fossil (Nasdaq: FOSL), Genuine Parts (NYSE: GPC), HCC Insurance (NYSE: HCC), Holly (NYSE: HOC), Integrys Energy (NYSE: TEG), iRobot (Nasdaq: IRBT), Kaiser Aluminum (Nasdaq: KALU), Kindred Healthcare (NYSE: KND), Martha Stewart (NYSE: MSO), Medco Health (NYSE: MHS), Medtronic (NYSE: MDT), Montpelier Re (NYSE: MRH), Noah Education (NYSE: NED), OfficeMax (NYSE: OMX), Oil States Int'l (NYSE: OSI), PrePaid Legal (NYSE: PPD), The St. Joe Co. (NYSE: JOE), TradeStation Group (Nasdaq: TRAD) and many more.


On Wednesday, all eyes will be on the January reading of the Consumer Price Index. The Federal Reserve pays close attention to this report in order to keep tabs on inflation. Despite Fed expectations for beneficiary near-term impact to prices arising from economic softness, import prices posted an increase of 0.6% in January, excluding a 5.5% rise in petroleum costs. In other words, don’t get your hopes up. Bloomberg's consensus of economists is expecting a month-to-month rise of 0.3%, while looking for an increase of 0.2% when excluding food and energy prices. You will not want to miss the weekly ICSC-UBS Same-Store Sales Report, pushed back a day due to holiday. Last week's rate of growth was enthusing, as it showed a sales rise of 1.8%, year-over-year.

Petroleum Status is typically pushed back a day during weeks that include a Monday holiday, so this week's report could come on Thursday. Speaking of petroleum, it seems OPEC has been spoiled by rich crude prices. The group was rumored to be considering production cuts despite European GDP growth of 2.3% and surprisingly strong demand from Japan. Informally, shipping information indicates OPEC may already be cutting supply. However, on Saturday OPEC decided to keep production steady, while geopolitical trouble-makers Iran and Venezuela suggested a production cut for March. Regarding Iran, IAEA Director, Mohamed ElBaradei is expected to report on Iran's nuclear activity on Wednesday.

January Housing Starts will be reported on Wednesday morning, after missing the mark in December. Bloomberg's survey shows consensus looking for an annual pace of 1.01 million starts this time around. Finally, the Federal Open Market Committee January meeting minutes will be released, and considering the depressing testimony of Fed Chief Bernanke on Thursday, this report should prove mute. St. Louis Fed President William Poole may steal the show, as he speaks on the topic of "Inflation Dynamics." Hey, that sounds a heck of a lot similar to our article regarding inflation.

Wednesday's earnings include interesting reports from Aegean Marine Petroleum (NYSE: ANW), Garmin Ltd. (Nasdaq: GRMN), Paragon Shipping (Nasdaq: PRGN), Psychiatric Solutions (Nasdaq: PSYS), Suntech Power (NYSE: STP), Transocean (NYSE: RIG), Tween Brands (NYSE: TWB). Others on the slate include Agnico-Eagle Mines (NYSE: AEM), Allied Capital (NYSE: ALD), Analog Devices (NYSE: ADI), Brandywine Realty Trust (NYSE: BDN), Career Education (Nasdaq: CECO), Given Imaging (Nasdaq: GIVN), Inverness Medical Innovations (NYSE: IMA), Jack in the Box (NYSE: JBX), JAKKS Pacific (Nasdaq: JAKK), Koppers Holdings (NYSE: KOP), Lithia Motors (NYSE: LAD), NetEase.com (Nasdaq: NTES), Rogers Corp. (NYSE: ROG), Sina Corp. (Nasdaq: SINA), Terex Corp. (NYSE: TEX), TJX Companies (NYSE: TJX), Trinity Industries (NYSE: TRN), Watson Pharmaceuticals (NYSE: WPI) and many more.


Thursday brings the Philadelphia Fed Survey, which shows the status of the region’s manufacturing sector. The New York area report on Friday posted a negative 5.75, indicating a contraction of the business environment for the first time since 2005. Just about every aspect of the report showed deterioration, including expectations for future employment. The only rise within the report was in prices paid, and that’s certainly not good. The Philly Fed Survey fell into the red in January, at a negative 20.9, and Bloomberg's consensus sees February's reading at -12.0.

Weekly Initial Jobless Claims remain an important blip on the regular radar as we attempt to forecast the onset of recession. The consensus is looking for 348K new benefit claim filings for the week ended February 16. Finally, Leading Economic Indicators for January are likely to follow December’s negative measure, in our view.

Hillary Clinton and Barack Obama are scheduled to debate in the important state of Texas on Thursday. The debate is critical to Obama, as we expect Clinton has strong support in Texas.

Thursday's earnings schedule includes a pan full of gold miners. Look for reports from Barrick Gold (NYSE: ABX), Goldcorp (NYSE: GG), Hecla Mining (NYSE: HL), Kinross Gold (NYSE: KGC), Lihir Gold Ltd. (Nasdaq: LIHR), Newmont Mining (NYSE: NEM) and Pan American Silver (Nasdaq: PAAS).

Other notable reporters include MGM Mirage (NYSE: MGM), Ruth’s Chris Steakhouse (Nasdaq: RUTH), VCA Antech (Nasdaq: WOOF), Allianz SE (NYSE: AZ), Ansys (Nasdaq: ANSS), Cabelas (NYSE: CAB), Chesapeake Energy (NYSE: CHK), Eaton Vance (NYSE: EV), Express Scripts (Nasdaq: ESRX), Forest Oil (NYSE: FST), Friedman Billings Ramsey (NYSE: FBR), Gilat Satellite Networks (Nasdaq: GILT), Intuit (Nasdaq: INTU), JC Penney (NYSE: JCP), Morningstar (Nasdaq: MORN), Odyssey Re (NYSE: ORH), Olympic Steel (Nasdaq: ZEUS), Pool Corp. (Nasdaq: POOL), Quest Diagnostics (NYSE: DGX), Roper Industries (NYSE: ROP), Societe Generale (Paris: GLE.PA), The Midland Co. (Nasdaq: MLAN), Williams Cos. (NYSE: WMB), Zale Corp. (NYSE: ZLC) and many more.


Friday is devoid of economic reports. The earnings schedule includes Nicor (NYSE: GAS, PG&E (NYSE: PCG), St. Mary Land & Exploration (NYSE: SM), Aircastle (NYSE: AYR), Cobra Electronics (Nasdaq: COBR), Endo Pharmaceuticals (Nasdaq: ENDP), Huntsman (NYSE: HUN), Life Time Fitness (NYSE: LTM), Lincoln Electric (Nasdaq: LECO), Rogers Communications (NYSE: RCI), Standard Register (NYSE: SR) and others.

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