Bail Out Buzz Wears Thin

The market's drunken enthusiasm post the bail out of the GSEs appears to be wearing thin this AM. Even so, I think things are setting up for market rise, and if not for some concerning signals regarding Iran, "The Greek" might be screaming buy stocks at this point. Unfortunately, Iran is a critical factor that I see gaining probability points in scenario analysis.

Article interests AMEX: DIA, AMEX: SPY, AMEX: SDS, AMEX: DOG, AMEX: QLD, Nasdaq: QQQQ, NYSE: NYX, NYSE: RHI, NYSE: KFY.

Despite the confidence added to the mortgage market, as evident in the immediate drop in mortgage rates following the GSE bail out, stocks are modestly giving ground this morning. That's not the kind of movement we would expect from an enduring catalyst.

The buzz might have been blown by some tough news this morning. The ICSC-UBS Weekly Same-Store Sales data showed a week-to-week decline of 0.1%, and the year-over-year change drifted lower to 1.9%. Last week, the figure posted a 2.3% rise, and it has noticeably lost pace over the last few weeks. The pace of Redbook Survey sales growth also eased, as Redbook noted weak sales growth of 1.8%, down from 2.3% last week.

Remember, we're looking for weekly sales to lose steam now that "back to school" shopping is fizzling and stimulus checks are only a distant memory. We've a barren wasteland to traverse until we reach Christmas now, so retail data should become sickly. The same goes for the news flow out of retail companies, but there are macro drivers working in favor of damaged shares overall, and we'll be going over these in the near future in another article. Retail is not damaged goods anymore, as evidenced by the rise of the sector over the last three months at least. There's room to give back some profits as we journey through the dead zone until Thanksgiving.

Manpower (NYSE: MAN) added insult to injury by posting a global report noting that hiring around the world is looking anemic. Some 25 of 33 countries surveyed show expectations for much lower hiring levels through Q4 this year, and yes, the United States was one of those labor markets. However, the macro news flow was not all bad, as the IMF offered endorsement of the war-battered Paulson's GSE maneuver. That puts the IMF in the corner of the Treasury chief, along with Warren Buffet.

More Good News

All the news was not bad, as McDonald's (NYSE: MCD) posted August same-store sales up 8.5%. Now that's a big Mac! Also, did you know that Michael Dell purchased some $100 million of his own company's shares (Nasdaq: DELL) last week, after the EPS report set the stock moving lower? That's an endorsement worth noting. We authored a piece on Dell ahead of its report, and that promised follow up is in the pipeline.

There was decent news out of OPEC this morning as well, as chatter seems to indicate the cartel might keep production levels steady, allowing crude prices to correct further. We'll hear more on this later today. Clearly if rumors prove true, this has ongoing positive benefits for auto drivers and home heaters. Hurricane Ike, however, looks to speak louder this week, post the OPEC news. We would consider taking a long (short-term) stake in oil after any favorable news from OPEC that could drive oil lower. Ike appears to be eyeing the Louisiana/Texas border region, you know, the one smack full of oil and gas platforms and refineries.

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