Wall Street Greek: Buffet Warns on Public Debt Risk

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Buffet Warns on Public Debt Risk

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Did Warren Buffet forget how much power his words can have and that he holds stocks himself? He warned today in a New York Times commentary that we are in uncharted waters, and that the "gusher of federal money" directed toward stimulating the economy now poses threat to both it and the dollar... He left out the part about the danger of influential financial market gurus speaking out publicly about risk to an often unsophisticated investment community that moves on news like this! (Whew! Take a breath) To his defense, Mr. Buffet tried to water down his comments, but major media is only going to broadcast the storm warning... While I agree with him and others on this subject, and have voiced my own concerns along with other writers here, I prefer not hearing it from America's Grandpa (since people listen to him on a completely different scale than yours truly). God bless him though, as we love and admire him here just the same.

The Day's Economic Data

With a dearth of market-moving data to report, we have only the two regular weekly publications to note this morning.

Mortgage Activity Report

Mortgage activity has been tightly tied to movements in fixed long rates as housing has languished. However, in recent months we have noticed Purchase Activity providing steady but slow gain. In this regard, the Mortgage Bankers Association echoed our words today in its weekly publication.

Contracted 30-year fixed-rate mortgages fell to 5.15%, from 5.38% in the prior week. Following recent trend, the Market Composite Index gained 5.6% on Refinance Index improvement of 6.9%. The Purchase Index gained some steam on its recent slow improvement, increasing 3.9% in the week ending on August 14th.

Showing consistency to recent trend, this report can only be supportive. Unfortunately, it has not proven consequential of late, and the rising wall of worry related to inflation and currency concern has become imposing.

EIA Petroleum Status Report

The regular oil inventory data is due later this morning. Last week's data showed crude oil inventory gained by 2.5 million barrels in the week ending on August 7. Gasoline inventories decreased by 1.0 million barrels, which is consistent with the summer driving season, especially one in which fewer people can afford extravagant excursions. Oil inventory levels remain above the upper boundary of the average range for this time of the year. Based on demand concerns, downward pressure continues in the near-term on oil as a result. HOWEVER, pressure on the US dollar, upon which the global commodity is priced, lifts oil in dollar terms. So, it becomes more expensive for Americans as a result, on both an absolute and relative scale.

Corporate EPS Schedule

Look for data from AFC Enterprises (Nasdaq: AFCE), Aker ASA (Nasdaq: AKER), BJ's Wholesale Club (NYSE: BJ), Citi Trends (Nasdaq: CTRN), Deere & Co. (NYSE: DE), Eaton Vance (NYSE: EV), Flexsteel Industries (Nasdaq: FLXS), Flowers Foods (NYSE: FLO), Gymboree (Nasdaq: GYMB), Harman International (NYSE: HAR), Hot Topic (Nasdaq: HOTT), JDSU (Nasdaq: JDSU), Limited Brands (NYSE: LTD), Mechel OAO (NYSE: MTL), Perry Ellis (Nasdaq: PERY), PetSmart (Nasdaq: PETM), Phillips Van-Heusen (NYSE: PVH), Semtech (Nasdaq: SMTC), Synopsis (Nasdaq: SNPS), Tween Brands (NYSE: TWB), Yingli Green Energy (NYSE: YGE) and more.

PS: UBS Just Outed You

And oh by the way, if you had a secret account with UBS (NYSE: UBS), where you had hoped to escape paying taxes in the US and elsewhere, well you have just been outed. Hope you have the money to pay your due share of taxes now...