Wall Street Greek: Wall Street Week

By Markos N. Kaminis - Economy & Markets:

Visit the front pages of Wall Street Greek and Market Moving News to see our current coverage of economic reports and financial markets.

Obama mania swept over the nation last week, as Martin Luther King, Jr. Day was followed by the inauguration of America's first African-American president. The energy thrown off by the inauguration and related events seemed to revive the nation, at least for the day. The incoming administration's diligent preparation was evident almost immediately, as the new chief touched off his term with a whirlwind first day.

(Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, NYSE: SDS, NYSE: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK)

If you didn't get the "change" message through the never-ending presidential campaign, you got it now! On day one, Obama froze the pay of his staff and also all executive orders submitted during the Bush Administration's midnight hour. Guantanamo Bay is closing; withdrawal from Iraq seems likely over the next 16 months; Secretary of State Clinton brought back old faithfuls in George Mitchell and Richard Holbrooke to help run the show in the hot spots of the Middle East and Afghanistan/Pakistan, respectively; and economic stimulus is on the way by President's Day.

The biggest change perhaps came from Obama's reaching across the table, not only to the GOP, but also across the world. In his inaugural speech, it seemed to me his words, "we will extend a hand if you are willing to unclench your fist" was directly intended for Iran and perhaps Russia.

On Friday, Obama met with his domestic adversaries, the Republicans. There's a sort of tussle brewing over the new Administration's economic stimulus plan. Obama wants to put about $825 billion more to work towards America's industrial future, our infrastructure, foreclosure salvation and to help low-income Americans. However, word is that the Republicans are seeking more of the same broad reaching tax cuts we saw last year, and less spending.

The week just passed was light on economic data, but it exposed new lows for the housing market. The National Association of Home Builders noted that builders' confidence reached a record low in January. The NAHB's Housing Market Index dropped to 8, from the previous low of 9 recorded last month. A day later, the government reported Housing Starts for December collapsed to a record level not seen ever, and record keeping began in 1959. Starts fell 16% from a revised November level, to an annual pace of 550K in December. Building Permits, an indicator of pending activity, also touched down on a record low, at 549K.

Weekly Initial Unemployment Claims jumped up to 589K, from 527K (revised) a week before. We forecast this here, as the stimulant of holiday shopping is now passed. Without this stimulant, retailers are left in a dead-zone now, and so layoffs, store closings and even bankruptcy are a real likelihood for many of these businesses through 2009. The International Council of Shopping Centers reported its weekly same-store sales data as usual. In the week ended January 17, sales fell 1.8% from the prior year period. However, markdowns gave sales a 1.1% boost over the week just prior.

This week holds some interesting economic reports and a full schedule of earnings reports. On the economic slate, Leading Indicators for December will give economists a last chance to tweak their Q4 GDP forecast. The GDP report is scheduled for Friday, and the outlook is dire. Take a breath and have a seat now, because economists forecast Real GDP for Q4 contracted by 5.4%. See more on the coming week in our pending "Week Ahead" piece.