Today's Market: Home Prices, G-20, Korea, GM, F, LEN, GOOG, CAT

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Today's Market Moving News

This Tuesday brought a colorful palate of appetizers to sooth a news junkie's hunger. Today saw the auto industry scrambling to pick up the pieces that the Obama Administration broke and scattered yesterday. The day also brought some anticipated negative news flow from economic data, but also one uplifting bit of retail sales data. Finally, things are getting dangerous everywhere, including both the streets of London and the Sea of Japan. Enjoy our summary, offering a tasting of it all below.

Economic Reports

S&P Case Shiller Home Price Index

Two months too late, but a news breaker nonetheless today... Home prices fell again in January, as reported by the Case Shiller metric. The group compiles quarterly data on national price trends, and offers monthly reports on 10-city and 20-city composites. 13 of the 20 metro areas measured in January showed record level annual rates of price decline. More specifically, the 10-metro area composite noted 19.4% price decline, while the 20-city metric posted a 19% price drop. Still, a 30 thousand foot look-see of the graph of decline seems to offer insight into a leveling of price just beginning. In other words, prices seem to be declining at a slower rate, while still declining, and that is going to eventually lead to price stabilization and rise. Because this metric is two months behind, we can't be sure what is occurring now, but we wouldn't bet on anything different just yet. More current data is available from other reports, and so we'll keep you informed.

ICSC Weekly Same-Store Sales Report

Sunny day! We told you the weather matters! As the flowers bloom and the days warm, retail sales seem sure to find seasonal benefit. That's not to mention the coming of the Easter holiday. For the week ended March 28 (Sat.), same-store sales rose 1.1% versus the week just prior, and fell just 0.2% year-to-year. We would be remiss not to remind that unemployment continues to increase, so we fight a significant headwind on the longer term trend, which is naturally seasonally adjusted.

Conference Board's Consumer Confidence Measure

Consumer confidence still stinks, but it inched slightly higher this month. The Conference Board's take on this important barometer showed the index moved up to 26.0, from 25.3 in February. Before you throw a party, let me remind you that we still sit at historic lows on most measures of confidence. Improvement here is a necessity for sustainable consumer spending. Also, the economists' consensus for this month's report was 28.0, a bit above the reported figure.

The "Present Situation Index" fell slightly, but was more than offset by an increase in the "Expectations Index." Both these measures are undoubtedly important, but expectations clearly carry more weight for investors. When both metrics are on a steady rise, we'll have an environment of improving confidence worth buying into. Still, as long as people think the current situation is horrible, they can always reset their "expectations" if things drag on badly.

NAPM-Chicago Purchasing Managers Index

We've noted several times that data out of the Philadelphia and New York regions was mixed this month, but NAPM's Chicago area measure swayed the balance to the bad. The Business Barometer Index fell to 31.4 in March, from 34.2 in February. The consensus expectation was for a read of 35, which would have been indicative of slight improvement. Let's face it, the manufacturing sector is still consolidating (below 50), and these minor changes in the rate of decline remain insignificant. However, rate of change matters almost as much as directional change, in my humble opinion, so it is worth paying attention to. Today's data is a negative for the market, but not going to prove a driver of broader shares. It's informing us that the pathetic environment we've now grown use to is persisting.

Even so, the Midwest is greatly sensitive to auto and auto-tied businesses, and with General Motors (NYSE: GM) and Chrysler now teetering ever more closely to bankruptcy, concern is surely rising at auto suppliers and dealers. You can expect this sentiment measure to stay sour until and if clarity reaches the GM situation. And even then, it'll have to be a clarity that includes an outlook for auto supplier and dealer support.

International Market News & Commodities

G-20 Gets Ugly

Today in London, the previously docile crowd started turning ugly. In fact, the Bank of England was evacuated due to a bomb threat. This protest at the G-20 is only a small sample of an expanding feeling of frustration and anger among the poor and struggling worldwide. By the way, this is a group whose numbers are increasing with every new weekly jobless tally. Global unrest is a serious problem the world's governments face as the weather warms and unemployed folks get up off the couch to go set fire to some rich guy's BMW. This has already begun, and was plainly seen when the home of the former chief of RBS was attacked last week. AIG (NYSE: AIG) CEO Edward Liddy would not offer the names of his executive staff receiving bonuses for the sake of their safety. Most of those folks wisely returned the bonuses after New York District Attorney Cuomo said he would not publish the names of executives who did so.

Governments are shaking with concern as well. President Obama's firing of GM's CEO yesterday and France's warning this morning that it might walk out of the G-20 were both geared to appeasing their citizenry. Unrest is a real possibility this summer all over the world, even here in the USA. We sit on a powder keg.

Korea's War Threat

We may stand at the brink of war, and most of us do not even realize it. Japan's notice to Korea that it would shoot down any threatening rocket launch over its territory was met by a dangerous Korean response. North Korea threatened war if Japan does so. Such a war has the potential of massive fallout and expansion. North Korea has developed nuclear weapon capable fuel, and the country has at least the capability of setting off a very messy nuclear weapon. With a paranoid, homicidal maniac leading the show, Korea represents a powder keg, and so threats like this can never be overlooked. Within a day, the North and South could be engaged in a massacre of a battle, and Japanese casualties would draw support of the United States. From that point, there is no limit to imagination.

Corporate News Drivers

GM and Ford Scramble

President Obama's actions yesterday may have been the right steps to take, but they left a mess behind that General Motors (NYSE: GM) desperately sought to clean up this morning. Opportunistic Ford (NYSE: F) recognized the opportunity and preempted GM, with its own action of the same characteristic.

Early this morning, Ford (F) announced it would cover the car payments (up to $700/mos.) of any new car buyer who later loses his job. Ford's news, however, came on the heels of the concerning developments at GM and Chrysler. If anybody needed to reassure car buyers this morning, it was General Motors. Ford is like a shark that smells fresh blood and is going in for the kill.

General Motors offered similar incentives; let's face it, they had to. Losing market share only compounds the pressure on GM, as it tries to manage costs. GM also held a press conference meant to reassure car buyers and investors, an attempt to keep money from leaving both the car lot and the equity ranks. We are working on an article focused on this topic, so please look for that at the site later.

Lennar Loss Widens

Lennar (NYSE: LEN) shares are down about 15% today, after the company reported a wide loss. LEN's fiscal first quarter loss expanded 77%, impacted by land and inventory write-off as it adjusts to a significantly impaired pricing environment. Even so, Lennar posted stronger revenues than were expected, by about $63 million, but those sales were lifted by aggressive incentive offering. Still, LEN has no debt on its credit line and cash of $1.1 billion, so it would appear poised to be a rising survivor when recovery begins. However, it bears some risk through numerous joint ventures, and it is actively working toward mitigating that. With those concerns in mind, and the fact that its backlog is near half what it was a year ago (and the aforementioned price data), we can understand why LEN and other homebuilders are lower today. K.B. Home (NYSE: KBH) is off by 5%.

Google Launching Venture Fund

Google (Nasdaq: GOOG) announced it would launch a $100 million venture fund with a purpose to acquire early-stage start up companies. The fund will be wholly owned by Google, though managed as a separate entity. Google Ventures' investment portfolio will not be limited to Internet focused firms.

French Caterpillar Employees Seize Control

Workers at a Caterpillar (NYSE: CAT) plant in France detained managers, as they sought better terms on severance packages. The report goes that the managers were not allowed to leave their offices, and representatives of the union called the tactic innocent "pressure." This marked the fourth such incident in France, including several other companies (3M being one of them (NYSE: MMM). Seems folks are getting tired of being pushed around, and the rules of the game are really changing...

EPS Schedule

Janney Montgomery Scott hosts a water industry confab in New York. The EPS Schedule highlights news from Aluminum Corp. of China (ACH), American Caresource (ANCI), American Defense Systems (EAG), Apollo Group (APOL), Astea Int'l (ATEA), Banks.com (BNX), Borders Group (BGP), China Direct (CDII), China National Offshore (CEO), China Sky One Medical (CSKI), Corriente Resources (ETQ), Craft Brewers Alliance (HOOK), Cyclacel Pharmaceuticals (CYCC), deCODE Genetics (DCGN), Document Security Systems (DMC), Edap TMS (EDAP), Exfo Electro-Optical (EXFO), FirstCity Financial (FCFC), FSI Int'l (FSII), Fusion Telecomm (FSN), G-III Apparel (GIII), Gentium (GENT), GigaMedia (GIGM), Goldleaf Financial Solutions (GFSI), H.B. Fuller Co. (FUL), Hana Biosciences (HNAB), Heely's (HLYS), Huaneng Power (HNP), Hythiam (HYTM), Imperial Industries (IPII), Kowabunga (KOW), Lennar (LEN), Lifeway Foods (LWAY), Medis Technologies (MDTL), MIVA, Inc. (MIVA), NN Inc. (NNBR), Northern Dynasty Minerals (NAK), Novavax (NVAX), Petro Resources (PRC), Physicians Formula (FACE), Pressure BioSciences (PBIO), Russ Berrie (RUS), Saba Software (SABA), Saga Communications (SGA), Sealy (ZZ), Sonic Automotive (SAH), Spire (SPIR), Steelcase (SCS), Stonemor Partners (STON), Sypris Solutions (SYPR), TAM S.A. (TAM), Targeted Genetics (TGEN), Team (TISI), Technology Research (TRCI), Telkonet (TKO), TLC Vision (TLCV), ULURU (ULU), WidePoint (WYY) and Willdan Group (WLDN).


Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK).

This Week: Rally Gets a Credibility Check

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(Related Tickers: GM, SYK, DNA, CALM, SCS, MWW, RAD, NVO, SHLM, RIMM, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, F, TM, HMC, MON)

The Week Ahead

This week appears pivotal in testing this rally's conviction. After rising more than 20% this month, investors finally expressed buyers' remorse last Friday, and with the Labor Department's Employment Report due this week, bad memories of months past have resurfaced.

As far as unemployment expectations go, economists are unanimous - it will rise again this month. All the evidence points toward that same conclusion, given the steady growth in the level of insured unemployed seen in the weekly jobless claims data. New claims have not given ground either, so the unemployment rate seems poised to jump sharply again for March. Finally, while earnings season is still a week away, whispers are growing louder on the street of an impending massive and broad reaching miss in store. Still, remember, the news of solid banking figures for this quarter is what got this party started, the "Three Kings Rally," as I've dubbed it.

The demons of the past quelled buyers' fire on Friday, when the Personal Income and Outlays data offered a price index on the rise. Demons of the present threaten unemployment will remain troublesome. Meanwhile, the G-20 convenes in London, in the midst of global protests and a recently heightened state of terror alert for the U.K. (not specific to the meeting). The Europeans are cracking under the pressure of varied national conditions, and the Chinese are pushing for a greater role in world affairs.

While all this is occurring, North Korea prepares a rocket launch that Japan assures will be shot out of the sky. In Afghanistan, al-Qaeda must be feeling the heat, with new U.S. troops on the way and a desperate Pakistani government willing to oblige in exchange for some help in keeping its own government in place. AQ has already lashed out, reportedly bombing a mosque that sat on a new supply route agreed upon by the Pakistani government and United States.

Yes, it seems there will be a significant test of this short bull's conviction this week (having risen over 20%, it classifies as a bull market). We suspect the bulls will cave, at least after March 31st passes and portfolio positions are booked for investor reporting. Nobody wants to look like they've been in cash through this March rally, and so "reverse window dressing" has very likely taken place (I have to credit Kopin Tan of Barron's for bringing this to my attention).

Monday

Speaking of credibility, The Arab League and its usefulness is under intense pressure from the populace of many of it member states. The Israeli punishment of Gaza met with lip service from the League, and so the average man on the Middle Eastern street is wondering what the group does then anyway.

Feeling the heat of America's frustration, President Obama had good reason to bring pain and a message to General Motors (NYSE: GM) on Monday. With the company still begging for dollars, somebody's head had to roll, and it was CEO Rick Wagoner who took the blow. The Administration was reportedly not satisfied with the degree of change at GM and Chrysler, nor with their plans moving forward. Ever mindful of a growing frustration among the citizens of this blue collar country, the Administration had to act with force.

Farm Prices are due for report at 3:00 PM, offering insight into changes in crop and protein price change. Monday's earnings schedule highlights news from Arotech Corp. (ARTX), Cal-Maine Foods (CALM), China Petroleum and Chemical (SNP), Community Bankers Trust (BTC), Dover Saddlery (DOVR), Entera Energy Trust (ENT), Entertainment Distribution (EDCI), Formula Systems (FORTY), Full House Resorts (FLL), General American Investors (GAM), Hong Kong HighPower (HPJ), Industrie Natuzzi (NTZ), Infologix (IFLG), Jinpan (JST), Layne Christensen (LAYN), Metabasis Therapeutics (MBRX), Oxford Industries (OXM), Perma-Fix Environmental (PESI), Pharmathene (PIP), SORL Auto Parts (SORL), Telestone Technologies (TSTC), TOR Minerals (TORM), Votorantim Celulose (VCP), WebMediaBrands (WEBM) and Zi Corp. (ZICA).

Tuesday

Tuesday offers a complete contrast to Monday's short schedule, with a very busy day full of market moving events. The pre-market chatter should be consumed with the S&P Case Shiller Home Price data, and another expected drop. Last month, the report showed both December and fourth quarter prices set records for change on the downside. December prices fell 19.2% on an annual basis. The problem with this report is that it comes two months too late. We'll only get January's data on Tuesday, and we're entering April now. A world of change can take place in that much time.

Of course, we'll also receive the weekly same-store sales data from the International Council of Shopping Centers in the early morning. Last week's report showed a 1.4% year-to-year decline. It seems the spring-like euphoria didn't last long, but Easter lies ahead.

Despite Monday's news, Tuesday presents the real deadline for the government to decide whether GM and Chrysler have presented a viable case for more aid. This looks to be rendered resolved by Tuesday though.

Neel Kashkari gets grilled again on Tuesday, as he testifies before the Senate Finance Committee on the state of TARP. This is a regularly scheduled six-month grilling, so rest easy. At 9:45, the National Association of Purchasing Managers (NAPM) - Chicago produces its Business Barometer Index for March. Bloomberg's consensus of economists forecasts the metric might climb to 35.0, from 34.2 in February. Data out of Philly and New York was mixed, so Chicago seems likely to be depressing, or at least sad anyway.

Coming off an all-time record low, the Conference Board's Consumer Confidence Index is set for 10:00 a.m. release Tuesday. Economists are looking for a modest rise from the trough, to 28.0 (25.0 in February). Speaking of Chicago, Philadelphia Fed President Plosser addresses the University of Chicago's Booth School of Business at 1:00 p.m. The topic of the day will be regulatory reform.

The U.K. starts pulling its troops from Iraq on Tuesday, but the escalating tension surrounding North Korea's rocket launch is garnering an increasing amount of attention. We're approaching the advised launch date, as the Japanese scramble interceptors.

Following Monday's Farm Report, the U.S. Department of Agriculture issues its spring planting report on Tuesday. Genentech (NYSE: DNA) gets news on Avastin from the FDA, and Stryker's (NYSE: SYK) spinal putty receives its review as well on Tuesday.

Janney Montgomery Scott hosts a water industry confab in New York. The EPS Schedule highlights news from Aluminum Corp. of China (ACH), American Caresource (ANCI), American Defense Systems (EAG), Apollo Group (APOL), Astea Int'l (ATEA), Banks.com (BNX), Borders Group (BGP), China Direct (CDII), China National Offshore (CEO), China Sky One Medical (CSKI), Corriente Resources (ETQ), Craft Brewers Alliance (HOOK), Cyclacel Pharmaceuticals (CYCC), deCODE Genetics (DCGN), Document Security Systems (DMC), Edap TMS (EDAP), Exfo Electro-Optical (EXFO), FirstCity Financial (FCFC), FSI Int'l (FSII), Fusion Telecomm (FSN), G-III Apparel (GIII), Gentium (GENT), GigaMedia (GIGM), Goldleaf Financial Solutions (GFSI), H.B. Fuller Co. (FUL), Hana Biosciences (HNAB), Heely's (HLYS), Huaneng Power (HNP), Hythiam (HYTM), Imperial Industries (IPII), Kowabunga (KOW), Lennar (LEN), Lifeway Foods (LWAY), Medis Technologies (MDTL), MIVA, Inc. (MIVA), NN Inc. (NNBR), Northern Dynasty Minerals (NAK), Novavax (NVAX), Petro Resources (PRC), Physicians Formula (FACE), Pressure BioSciences (PBIO), Russ Berrie (RUS), Saba Software (SABA), Saga Communications (SGA), Sealy (ZZ), Sonic Automotive (SAH), Spire (SPIR), Steelcase (SCS), Stonemor Partners (STON), Sypris Solutions (SYPR), TAM S.A. (TAM), Targeted Genetics (TGEN), Team (TISI), Technology Research (TRCI), Telkonet (TKO), TLC Vision (TLCV), ULURU (ULU), WidePoint (WYY) and Willdan Group (WLDN).

Wednesday

The recession is over! April Fools... It's April Fool's Day! Get somebody...

The parade of monthly employment reports headlines another busy day on Wednesday. First to the wire is Challenger, Gray & Christmas and its Announced Corporate Layoffs Report. There's been no let up of new claims filers, and the small business sector is now fully wrapped up in consolidation along with larger businesses. February's data showed layoffs amounted to 186,350, a big number, but short of the prior month's tally. We think you can expect something similar this month, as unemployment is a lagging indicator and should be late to change direction.

ADP's Private Employment Report is set for release at 8:15 AM EDT. This precursor to Friday's DOL data offered a harsh forecast last month when it noted 697K monthly job losses on net. This data served to scare the heck out of equity traders and force shares lower ahead of the DOL data last month; the government's report later produced a less tragic result and a relief rally ensued. Investors might remember that recent past and limit the impact of this month's data.

Also in the pre-market, the Mortgage Bankers Association reports on weekly mortgage activity. Last week displayed the early impact of the Fed's new plan to acquire long-rate securities, including MBS. Rates moved sharply lower last week on fixed 30-year mortgages, and mortgage activity spiked reaction. Refinances of course led the charge, with the housing market still plagued by deflation and an uncertain environment. Expect activity to keep improving as of the latest check.

After the open, ISM will produce its Manufacturing Index. Indications seem to be that a bottom is forming in this weather beaten sector. We received mix results this month from the Philadelphia and New York regions, and Chicago's results came due earlier this week. However, while a change in the pace of decline may be in process, activity is still contracting significantly. Economists forecast the index will measure 36.0 for March, versus 35.8 in February. A reading below 50 signifies economic contraction.

We receive two housing metrics on Wednesday, a sector seeing seasonal benefit and potentially a real bottom. However, an article in Barron's this weekend noted significant seasonal adjustment influence in some of the recent housing metrics, and others as well. The truth will be told eventually, but at some point a real bottom will be reached and we'll have to recognize that as well, as difficult as that is becoming.

Construction Spending may still have declined sharply in February, since it includes the nonresidential segment. New Home Sales have seemingly found bottom, albeit a very low one. After all, you can't go lower than zero, and we were getting awfully close near the 300K annual pace point. Still, January's construction spending decline of 3.3% was significantly influenced by nonresidential spending, and judging by the vacancies I see by my naked eye during my short walk to the subway (not to mention the store closings flooding the wires), expect more of the same in the months ahead. Economists forecast spending will ease 1.5% for February.

Pending Home Sales data will eventually show early signs of recovery in the real estate market, but before now and then, it's possible that seasonal influence or unnatural driver (like temporary government provided catalyst) might lead the market to believe it has begun earnest prematurely. As seen by the recent rise in housing stocks, valuations are super-conducive to any spark, so trading opportunities (both long and short) will avail for sharp traders. Eventually sincere traction will take hold though as well. I can't believe I am now reminding investors that stocks can go up and economies can grow. An economists' consensus forecast for this leading measure of the existing home sales marketplace is absent. Last month, we saw a 7.7% month-to-month decline for January, to a level of 80.4.

Automakers will report Motor Vehicle Sales for the month of March on Wednesday. Economists estimate the annual pace of sales will steady at the anemic rate of 6.4 million in March. Considering the fact that the Obama Administration is poised to allow GM and Chrysler to go bankrupt, sales seem likely to suffer for the two going forward; this despite the President's reassurance that the government will stand by GM's warranties. Chrysler is contemplating a merger with Fiat; the other option is bankruptcy in 30 days, so other buyers might come forward, considering the attractive asset pricing and a profit sensitive Cerberus Capital at the helm.

Look for the EIA Petroleum Status Report at 10:30. Last week's data showed a sharp build in oil supply, and oil prices are now reflecting remorse for their recent rise. Japan's Tankan Survey of corporate sentiment is due on Wednesday as well, and expect it to reflect dire-level low confidence. President Obama will meet with his Russian counterpart, Dmitry Medvedev in London. I'm sure there'll be less soul searching than occurred between Bush and Putin the first time they met...

Wednesday's earnings schedule highlights news from Alseres Pharmaceuticals (ALSE), Chaparral Energy (CPR), Multiband (MBND), Pet DRx (VETS), UniFirst (UNF) and Worthington Industries (WOR). It seems nobody wants to report earnings on April Fool's Day.

Thursday

Two more jobs reports meet us on Thursday morning. The Monster Worldwide Employment Index (NYSE: MWW) is due bright and early. Last month, this measure of online job demand actually improved to 122 for February, from 118 in January. Weekly Jobless Claims has continued harsh, though the pace of deterioration seems to have stalled, albeit at frightful heights. Last week's tally recorded 652K new claims filers, and Bloomberg's consensus forecasts another 655K this week. As accustomed to this data as we've become, this week's count will surely intensify concern ahead of the unemployment rate data release scheduled for Friday.

Overseas, the meeting of the G-20 kicks off with a promise to be heavy on empty rhetoric. Every nation the world over warns of protectionism while each succumbs to national pressures, and applies protectionist measures nonetheless. Governments are toppling and elected officials will often forsake sane economics for the near-term satisfaction of their constituents... unfortunately. There will also be plenty of discussion around the topics of regulation and stimulus, and the roles of emerging market nations seem likely to garner attention as well. The ECB is meeting on Thursday and will announce monetary policy. After taking a pause a few months back, the picky group seems to have its head on straight again. Look for a rate cut this time around, and some are forecasting one of 50 BPS magnitude (to 1.0% for the target rate).

Factory Orders for the month of February are due at 10:00 a.m. Economists forecast a rise of 1.5% this time around, after a decline of 1.9% was recorded for January. Given the recent notation of strong durables goods orders growth, this forecast makes sense. The EIA will post its Natural Gas Report at the usual 10:30 reporting time.

Novo Nordisk's (NVO) diabetes drug, Liraglutide, is under review by the FDA, and so market-moving news might be kicked up for the stock. The earnings schedule highlights reports from Monsanto (MON), Rite Aid (RAD), A. Schulman (SHLM), Acuity Brands (AYI), Aehr Test Systems (AEHR), Allscripts-Misys Healthcare (MDRX), AngioDynamics (ANGO), CarMax (KMX), Cascade (CAE), DemandTec (DMAN), Global Payments (GPN), Lawson Software (LWSN), Lindsay Corp. (LNN), Micron Tech (MU), MSC Industrial (MSM), MSCI (MXB), Origin Agritech (SEED), Research in Motion (RIMM) and RF Monolithics (RFMI).

Friday

Once every month, the market focuses complete attention on a single report, perhaps the most important and followed data on the economic stream. This particular Friday is the hot one on the calendar, with the Employment Situation Report reaching wire by 8:30. Economists are on record looking for the unemployment rate to jump to 8.5%, from 8.1% in February. 8.5% seems in the bag, and 8.6% even more likely.

The pace of job loss has been near Biblical in its level of importance, and there's no let up in sight. Nonfarm Payrolls are seen shedding 650K jobs on net, nearly matching February's 651K. The range of estimates, however, spans from 525K to 711K, so there is room for error. Indeed, we believe that this time around, 50K short or above the consensus will have profound impact on stocks in either direction, so stay tuned. What's left of your money is at stake...

At 10:00 AM, look for ISM's Nonmanufacturing Report, the group's tally of the vast service sector. This portion of the American economy now dominates our national productivity, and so this data is not negligible to markets. Still, in the wake of the employment data, it will inevitably be lost in a sea of traders' cries. Economists are looking for a March read of 42.0 for this index, compared to 41.6 in February.

By noontime, we may need the soothing voice of one Ben Bernanke, as he addresses the Richmond Fed. The Fed Chair will cover the credit markets. The problem here is that he'll be in Richmond, which is the realm of Jeffrey Lacker, the Fed's black sheep (so to speak). Lacker has often been on record voting against the consensus at the Fed, and most recently he argued against the Fed's power grab.

Overseas, Indian markets are closed on Friday. The earnings schedule back in the States highlights news from AZZ Inc. (AZZ). I couldn't have planned for a better way to close the week or this article... God bless.


Please see our disclosures at the Wall Street Greek website and author bio pages found there.

Who Would Downgrade Grandpa - Berkshire Hathaway News (NYSE: BRK-A, NYSE: BRK-B)

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(Relative Stocks: BRK-A, BRK-B, MCO, MHP)

Who Would Downgrade Grandpa?!

One rating agency already has, and Standard & Poor's said Wednesday that it would have to as well if things got any worse. So if the greatest investor of all-time took such a hit through this bloody mess of a bear, does it make your losses more bearable? We're sure his annual letter would serve that purpose, as Buffet warmly reminds us that America has faced greater challenges than this, and overcome them... those being the Great Depression and World War II.

Berkshire Hathaway (NYSE: BRK-A, NYSE: BRK-B)

Who would dare downgrade Warren Buffet, or his operating vehicle, Berkshire Hathaway (NYSE: BRK.B, NYSE: BRK.A)? How about that same brazen bunch of rating agencies now actively cutting the sovereign ratings of tough ex-Soviet states like Lithuania OR EU kingpins like Greece! How about that wildly unpopular trio.

Late Tuesday evening, Standard & Poor's, a subsidiary of McGraw-Hill (NYSE: MHP), warned that Buffet's Berkshire Hathaway could lose its "AAA" credit rating within a year if its capital levels or equity share value decline much further. S&P lowered its "outlook" on Berkshire to "negative" from "stable." S&P didn't break ground on this Buffet busting change though, as it followed Fitch's more aggressive March 12 rating cut to "AA-plus" from "AAA." Moody's (NYSE: MCO) still holds a "Aaa" rating with a "stable" outlook. God bless their soul.

We're guessing Warren gets the benefit of the doubt where regular folks might get cut down by the knees. He deserves it though doesn't he? After all, he is the greatest investor of all-time for Graham's sake! Either mercy or guilt seemed evident by the words of the Fitch analyst as he justified his cut, noting the "inconsistency" of Berkshire's capital levels with the normal stability seen at the standard "AAA" rated firm. The S&P analyst also seemed apologetic for the move.

You know what I say, judge not lest you be judged. We're still waiting to see if the rating agencies ever get any real punishment for their failing to properly measure risk, and playing such a significant role in wealth destruction on the grandest of scales.

Of course, Berkshire just posted a horrible year, but it still feels like taking the man's cane and whacking him behind the knees with it. I mean look at his picture. Here you have a nice guy who worked his tail off his entire life and did a great job at it. Do you know how many people lose their humanity as their wallets expand? I've seen a few in my time, and that's for sure. But NOT Warren though.

You can't downgrade America's grandpa!!! Come on man!!! That's just not right...

But What Had Happened Was...
Berkshire (BRK), heavily tied to the housing market, posted 96% lower profits in Q4. The results were significantly impacted by unrealized losses in derivative securities, necessarily marked-to-market. Buffet is not throwing in the towel on those securities though. Still, he felt so responsible to his shareholders for this latest report and year that he dedicated five pages of his annual letter explaining the investments and his decisions. The full-year was reportedly his worst on record, not hard to believe. We've broken many record lows over the past few months.

In Conclusion

We just want to say that as long as "The Greek" is running the show here, if we think Grandpa isn't up to repaying a debt, we still won't downgrade him. As a matter of fact, if there ever was a bet worth doubling down on, it's Warren. What I would do is... I would buy him a stogie, pat him on the back and say don't sweat it buddy. We would head over to the racetrack or baseball field and talk about the Brooklyn Dodgers all afternoon. Gosh, that would be a priceless day wouldn't it... God bless you grandpa, you're still an inspiration to me.

Thursday's EPS Schedule

Thursday's earnings schedule includes Best Buy (NYSE: BBY), ConAgra Foods (NYSE: CAG), Dr. Pepper Snapple Group (NYSE: DPS), Gamestop (NYSE: GME), Lululemon (Nasdaq: LULU), Scholastic (Nasdaq: SCHL), Texas Industries (NYSE: TXI), The Wet Seal (Nasdaq: WTSLA), Accenture (NYSE: ACN), ARYxTherapeutics (Nasdaq: ARYX), Atrinsic (Nasdaq: NWMO), Birner Dental (Nasdaq: BDMS), China Housing and Land Development (Nasdaq: CHLN), China Life Insurance (NYSE: LFC), China TransInfo Tech (Nasdaq: CTFO), Companhia de Saneamiento (NYSE: SBS), Conn's Inc. (Nasdaq: CONN), Cornerstone Therapeutics (Nasdaq: CRTX), Dr. Pepper Snapple (NYSE: DPS), Embraer-Empresa Brasileira de A (NYSE: ERJ), Energy Focus (Nasdaq: EFOI), Flexible Solutions (AMEX: FSI), Fred's (Nasdaq: FRED), FreeSeas (Nasdaq: FREE), GameStop (NYSE: GME), Global Crossing (Nasdaq: GLBC), HearUSA (AMEX: EAR), Intelli-Check (AMEX: IDN), InTEST (Nasdaq: INTT), Lululemon (Nasdaq: LULU), Nanophase Technology (Nasdaq: NANX), New York Mortgage Trust (Nasdaq: NYMT), P&F Industries (Nasdaq: PFIN), Response Genetics (Nasdaq: RGDX), Rosetta Genomics (Nasdaq: ROSG), Scholastic (Nasdaq: SCHL), Smart Modular Technologies (Nasdaq: SMOD), Spectrum Control (Nasdaq: SPEC), Synnex (NYSE: SNX), Synta Pharmaceuticals (Nasdaq: SNTA), Texas Industries (NYSE: TXI), The Wet Seal (Nasdaq: WTSLA), TIBCO Software (Nasdaq: TIBX), UTI Worldwide (Nasdaq: UTIW) and Xyratex (Nasdaq: XRTX).


Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK).

Economic Reports Reinforce: Durable Goods Orders, Mortgage Activity, New Home Sales

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

Economic Reports Reinforce Rally

The nascent market rally received some reinforcing economic data today, but after an early surge higher on the news, shares backtracked cautiously. By the close, however, investor sentiment turned encouraging, and a rally saved the day.

(Relative Stocks: BAC, FDX, BA, DIA, SPY, QQQQ, DOG, SDS, QLD, XLF)

Mortgage Activity Surges

Just like we alluded to in our "Week Ahead" copy, mortgage activity responded to lower interests rates, that were in turn driven downward by the Fed's quantitative easing announcement.

For the week ended March 20, 2009, the Mortgage Bankers Associations Market Composite Index (barometer of mortgage application volume) jumped 32.2% on a seasonally adjusted basis when compared to the week just prior. Both components of the composite played positive roles, but as you might expect refinancing activity is much more sensitive to short-term changes in rates. It takes a while to buy a house after all, at least since Countrywide (NYSE: BAC) went under and the devil was sent back to hell...

Mortgage applications for new purchases of homes inched higher just the same, rising 4.2% (seasonally adjusted). Refinancing activity, however, soared on the change in rates, jumping 41.5% week-to-week. Would you expect anything less, considering that contracted 30-year fixed mortgage rates drilled lower to 4.63%, from 4.89% just a week earlier? That's rhetorical Sherlock! The MBA reported the contracted interest rate set a low not seen in decades, and it is just the medicine the real estate market and economy need, not to mention the credit markets.

We're very pleased here with the recent steps the federal government has taken to heal the real estate sector. We expect housing to benefit slowly though, as it faces the headwind of rising unemployment. Still, we expect stabilization and recovery as the government does all it can to make housing as affordable as possible, encourage lending and mitigate foreclosure activity as well.

New Home Sales Rise

While February's new home sales probably didn't benefit as much from government effort as they did from the easy comparable in January, New Home Sales rose just the same. However, if the Detroit Lions win five games next year, we probably will not label that a success, and nor should we get too excited by February's New Home Sales pace of 337K, versus the revised 322K reported in January. We can celebrate a touch in the fact that February's result surpassed the economists' consensus view for 315K. Economists talk to strategists you see, and strategists talk to analysts and portfolio managers. Institutional investor sentiment should therefore find some positive driver in surpassed expectations. Retail investors get excited by the headlines and stock momentum, and thus we see broad rally (dare I say bull market).

Looking more closely at the results, and if you need some sobering up, let me remind you that this February's annual pace of new home sales is still 41.1% below the February 2008 mark. Homebuilder sentiment could not be much worse right now, nor could production be lower, if we go by the last measurements anyway. We're guessing homebuilders have been somewhat aroused by the Fed's latest quantitative idea.

Also sobering, each individual region of the nation saw less sales in February except the South, which carried the month. The closer we look, the less excited we are in fact. The number of homes available for sale dropped further, to 330K, from 340K in January. New Home Sales are now such a minuscule portion of the total that we cannot really take much solace from the impact of less production on existing inventory. Also, the current extremely low rate of sales is not normal, yet is an important component of the inventory equation, so keep that in mind. Nonetheless, the inventory of homes for sale stood at 12.2 months, based on the current sales pace, and compares against 12.9 months in January and 9.7 months last February. Seems inventory may have actually peaked in this segment of the market in January.

Finally, the median price of a new home is now $200,900. While this figure is not directly impacted by foreclosures (obviously, since a home has to be owned to be foreclosed upon), it is indirectly impacted since real estate valuation regularly uses relative comparisons to homes in a given marketplace, which likely includes its share of foreclosures.

Durable Goods Orders Surprises

We got a fantastic surprise from the Durable Goods Orders report for February, closing out three neutral to very positive bits of economic news today. February orders increased 3.4%, compared to a 7.3% drop in January and expectations for a 2.0% decline this month. The simple fact that orders increased was good news enough, considering the previous six months posted declines.

We know what you are thinking, there might have been some freak driver in the defense or transportation component. Well, defense orders did rise significantly, increasing 35.3% in the month, but removing defense still shows an order increase of 1.7%. That's still good news, and better than expected. It's especially noteworthy because defense spending is very likely going to be impacted by Obama Administration plans - thus the strength seen in February is not sustainable. Excluding transportation, new orders still increased 3.9%, which is also good news considering the pain the airline industry is feeling these days. Today, FedEx (NYSE: FDX) was reported questionable on its completion of a Boeing (NYSE: BA) order.

Conclusion

In closing, I would like to express my belief that we may be seeing stabilization materializing in this data. That does not necessarily mean we have reason to celebrate though, as the negative feedback loop still looms threatening. That is, increasing unemployment, tighter lending standards and general fear pose threat to economic recovery. This is why proper fiscal stimulus and other government efforts are so critical to determining the length of this recession. As an investor, you'll very likely miss the market bottom (if you haven't already) if you wait for a turn in employment trends. As I alluded to in an article some prescient moment over the past month, we may have already set "THE" market bottom.

I found today's closing rally enthusing as well, and potentially indicative of a change in investor sentiment. I enjoy the cautious (and also exuberant) language of many economists, strategists, business writers and media, because all those folks were buying like madmen when I was warning on housing and the financial sector. As much as I kind of like stocks now (shhh), I still hold grave concern for our future based on my expectations regarding Iran and other geopolitical trends. And, I see the potential for a fizzle as near as this Friday, but I won't tell you why until tomorrow or Friday morning... so stay tuned.


Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK, NYSE: TOL, NYSE: HOV, NYSE: BZH, NYSE: BAC, NYSE: FRE, NYSE: FNM, NYSE: LEN, NYSE: PHM, NYSE: NVR, NYSE: GFA, NYSE: MDC, NYSE: CTX, NYSE: KBH, NYSE: RYL, NYSE: MTH, NYSE: XIN, NYSE: BHS, NYSE: SPF, NYSE: MHO, NYSE: OHB, NYSE: WCI, AMEX: VNQ, Nasdaq: VGSIX, Nasdaq: AVTR.

Today: House Testimony of Geithner & Bernanke Marquees

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


Today's business news summary highlights the most important news of the day. Secretary Geithner and Chairman Bernanke survived their grilling at the hands of the House Financial Services Committee. It made for must see TV, and certainly boosted interest in financial networks today. We also had a few interesting economic reports, international releases and corporate news drivers to fill our appetite and yours. Enjoy...

(Stocks: AIG, DB, WSM, DIA, DOG, SPY, SDS, QQQQ, QLD, M, TGT)

House Testimony of Geithner and Bernanke

The testimony of Treasury Secretary Geithner and Federal Reserve Chairman Bernanke before the House Financial Services Committee lived up to its billing, and then some. You see there was a new aspect added to the regular Congressional grandstanding and government agent persecution. This time around, there was Timothy Geithner, by whose testimony we could assuredly assume is more than a little peeved by his public flogging.

Geithner came out firing with a gnarly opening statement. His teeth were clenched, his scorn apparent. He would have none of it! He defended the appointed CEO of AIG (NYSE: AIG), Edward Lilly, and he would not persecute his forerunner Hank Paulson when fed the bullets to do him in as well. Bernanke complied on that one, as he noted Paulson did not follow through with toxic asset clean up, as Bernanke likely wished he did.

The studious seemingly subservant (read wise) Bernanke was his usual bulletproof. We are sure here that Benjamin was inwardly chuckling at the regular asinine and sometimes ignorant questioning. Today he even responded smartly to the inquiry, "Why won't one of you just answer yes or no!" with the response "The question was poorly posed." The calmness with which Bernanke approaches these events and answers questions, now that he's been seasoned, exposes his own self-confidence in his intellectual superiority over the group of misfits. This understanding has allowed him to take increasingly greater portions of power for his Fed, with which, by the way, he has been fully entrusted by Congress (excluding Ron Paul and his Internet army).

The market was neither reassured by nor disheartened with the testimonies, and for good reason. Not much came of it, and after last week's rally it seemed the meeting only offered risk. The Dow Jones Industrials, S&P 500 and Nasdaq all came out of the meeting relatively unchanged.

AIG Bonuses Coming Home

After a pseudo-threat by New York District Attorney Cuomo, where he stated that he would only publish the names of the AIG (NYSE: AIG) executives who did not return their bonuses, 15 of 20 of them decided the money wasn't worth the hassle. Who can blame the poor chaps, with death threats made upon their families and homes. Protesters have been extremely effective at reminding the brazen bosses just whose money it is they have stolen. I just hope they don't try to go on welfare now too. God bless America!

Economic Report Analysis

State Street Investor Confidence Index

Coming into this report, we expected recent market rise would inspire increased investor confidence. However, the measure for March showed a slight slippage to 70.0, from 72.9 in February. Recall that February's measure reflected a sharp jump from a depressed level in January. This measure tallies investor confidence by considering portfolio risk taking.

ICSC Weekly Same-Store Sales

We suspect weekly same-store sales will improve with the sprouting of flowers and lower long rates. However, over the week ended March 21st sales fell 0.4% from the prior week and 1.4% when compared to the prior year period. The rate of decline is going to be volatile through the month of March, when weather is unpredictable. Don't forget, we are comparing against another volatile period in last March, so we have two tricky figures to take into account. The monthly measure might better reflect any seasonal euphoria. Still, I boldly predict a warming trend for North America through the next few months, and that along with the receipt of tax refunds should give seasonal boost to the week-to-week measure. Smart store consolidation might provide a second impetus for same-store sales, which measures stores open at least a year. Imagine what happens to this barometer when operators cut out poor performing locations from the measurement. Still, we do not want to ignore the overwhelming impact of rising unemployment and the tough treading it provides for the greater industry.

Overseas News Drivers

China Proposes One World Currency

What!?! That's what I said when I saw this headline. Relax Revelation revelers! It's not over yet! While the reintroduction of this idea raises my unibrow, I realize the probability of it occurring, over the next ten years at least, is slim to none. Too many of the world's greatest powers use the dollar and hold great stockpiles of it. But wait... China fits that mold... So what gives then? We'll explore this topic in a follow up article. For now, it's safe to say that one world currency concept is fantasy, but only until something really bad happens to America. Even then, other powers would see their own currencies strengthen, and would be less likely to want to dilute them by mixing with the other class (as he raises his nose).

Bank of Japan Statements

The Bank of Japan published its February meeting minutes, but published a much more interesting note along with it. The second article made public Japan's expectations for 2009 and beyond.

The Bank of Japan, dealing with already rock bottom key rates and having learned the hard way how effective quantitative easing can be, is basically doing many of the things our Federal Reserve has undertaken. The boldness of action may not be as Americanized (we do everything in a big way here), but the likelihood of intensification is increasingly possible as the world adopts the American government's standard.

Within the minutes reflecting the meeting discussion, BOJ members expressed views for economic recovery as early as this year. However, confidence in those beliefs were limited, as "uncertainty" was clearly expressed.

The BOJ published a second strategy report that replaces its standing Medium-Term Strategic Framework for Fiscal 2005-2009. The report, entitled "The Bank of Japan's Strategic Priorities for Fiscal 2009-2011," outlines just that. For lack of resources and time today, we leave it to you to peruse via this link.

U.K. Inflation Hot

The broad CPI inflation measure rose in February, confounding government officials and surprising analysts. Headline CPI rose to 3.2% in February, while analysts had been looking for 2.6% to 3.0%. The rate of price change stood well-above the government's target of 2.0%, forcing a letter of explanation. Blame mostly went to currency impact, and government hopes lie tied to lower oil and commodity prices feeding through to end products. That's not dissimilar to American expectations, though look to our article on inflation later this week to provide a different viewpoint.

Corporate News Drivers

Credit Suisse & Deutsche Bank (NYSE: DB)

Catching the fever from the rise in U.S. banks, Credit Suisse (NYSE: CS) and Deutsche Bank (NYSE: DB) looked through their own books closely enough to produce positive outlook statements. The saying goes, a day late and a dollar short... CS shares fell 9% and DB sank 4%, but the broader financial sector also fell today (NYSE: XLF dropped 5%). Maybe these two sly Europeans were holding on to their bullets for this particular day, perhaps hoping it might keep their shares aloft... In any event, it did not help differentiate them, since broader issues are driving the entire sector over recent trading days.

Williams-Sonoma

Surprise surprise! Household goods retailer Williams-Sonoma (NYSE: WSM) reported its profits fell 90% versus the prior year comparable. Surprise surprise, WSM shares actually climbed approximately 6% today, before settling in up about 1.6%! Here's why...

Despite 27% shorter sales of home decor, before nonrecurring items, the store reported EPS of $0.31. That compared against analyst expectations for $0.16. After the charges, WSM earned $0.12, which was inconsequential to analysts who look at operating (ongoing) results. Without having heard the conference call, I assume Williams-Sonoma benefited to a greater extent than expected from swift store closings and layoffs. Same-store sales were pathetic, though expected that way, falling 22%.

The stock is down about 58% or so over the past 52 weeks, so today's glory is better looked at as recovered lost ground. Shareholders are likely thrilled their company, whose business is so tied to housing, is still profitable and providing a dividend yield of about 4.5% or so. That's reason enough to celebrate these days.

EPS Schedule

The day's EPS schedule highlights news from Macy's (NYSE: M), Target (NYSE: TGT), Deutsche Bank (NYSE: DB), Ares Maritime Transport (Nasdaq: RAMS), American Bio Medica (Nasdaq: ABMC), American Medical Alert (Nasdaq: AMAC), Carnival Corp. (NYSE: CCL), China Telecom (NYSE: CHA), ChipMOS Technologies (Nasdaq: IMOS), Comforce (AMEX: CFS), Commercial Metals (NYSE: CMC), Communication Systems (Nasdaq: JCS), Companhia de Saneamento Basico (NYSE: SBS), Compton Petroleum (NYSE: CMZ), Great Basin Gold (AMEX: GBG), Jabil Circuit (NYSE: JBL), Langer (Nasdaq: GAIT), McCormick & Co. (NYSE: MKC), MDRNA, Inc. (Nasdaq: MRNA), Proliance (AMEX: PLI), Proxim Wireless (Nasdaq: PRXM), Robbins & Myers (NYSE: RBN), Taseko Mines (AMEX: TGB), Universal Power Group (AMEX: UPG) and Williams-Sonoma (NYSE: WSM).


Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK).

Week Ahead: Damage Control

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

The Week Ahead

This week is all about damage control, especially related to the big bad AIG bonus blunder. Treasury Secretary Geithner will attempt to divert attention from that whole mess by releasing the details of his toxic financial asset program at the start of the week. However, on Tuesday, both Geithner and Bernanke are scheduled to testify before the bloodthirsty House Financial Services Committee. The President hopes to limit public perception damage by appearing on prime time television that same evening. We're guessing he intends to clear up the impending massacre of Geithner before the media feeding frenzy begins. Talk about pulling out all stops, President Obama will have made three unconventional television appearances within the course of a week, and that's not to mention his NCAA Tournament bracket selection show...

The President is doing all he can to keep his new Treasury Secretary propped up through a barrage of criticism that began almost from the moment of his selection for the role. For the life of me, I can't see why anyone would accept any Administration position now that deals with financial or economic matters.

Monday

Damage control begins on Monday morning, as Timothy Geithner takes a stab at resurrecting his own image with the details of his toxic asset plan. The embattled Treasury Secretary, feeling the heat most recently for his approval of AIG (NYSE: AIG) bonuses, will seek a better reception than his first nondescript disclosure on toxic assets. Recall that on that day the market tanked. What happens this week will have a lot to do with how well Obama's team administers damage control.

Geithner is expected to announce the creation of yet another new government entity, the Public-Private Investment Program. The Treasury is expected to seek to incorporate the private sector in its effort to buy up as much as $1 trillion of toxic assets from banks. As you'll recall from the old TARP false marketing, this should unclog the system and free banks up to lend, assuming demand exists or resumes soon.

After last week's reported jump in February Housing Starts, we get Existing Home Sales data first thing Monday morning (10:00 AM). However, the existing segment of the housing market is like the Titanic (in more ways than one), and likewise difficult to turn. It would take significant action or important catalyst to drive change, probably the likes of which the Federal Reserve and Treasury Department have just undertaken. Existing Home Sales are expected to have run at an annual pace of 4.5 million in February, which would place the rate of sales just off January's pace of 4.49 million.

The Nasdaq OMX Internet Index will effect changes on Monday, replacing 1-800-Flowers.com (Nasdaq: FLWS), Orbitz (NYSE: OWW) and RealNetworks (Nasdaq: RNWK) with names like Rackspace Hosting (NYSE: RAX). Meanwhile, Tata Motors (NYSE: TTM) will introduce its Nano model, the world's cheapest car. The Barron's 400 Index undergoes semi-annual rebalancing with 182 new companies in place starting Monday.

Monday's earnings schedule includes reports from Finish Line (Nasdaq: FINL), Lennar (NYSE: LEN), Tiffany (NYSE: TIF), Walgreen (NYSE: WAG), Air Transport Services Group (Nasdaq: ATSG), Focus Media (Nasdaq: FMCN), Hastings Entertainment (Nasdaq: HAST), Irwin Financial (NYSE: IFC), Novacea (Nasdaq: TSPT), On Track Innovations (Nasdaq: OTIV), Origin Agritech (Nasdaq: SEED), Perdigao S.A. (NYSE: PDA), Phillips Van-Heusen (NYSE: PVH), Rubios Restaurants (Nasdaq: RUBO) and Sonic (Nasdaq: SONC).

Tuesday

The House Financial Services Committee will have its claws sharpened for the testimony of Treasury Secretary Geithner and Federal Reserve Chairman Bernanke on Tuesday. The two will face questioning about their AIG bonus bumble. This is "must see TV" if ever there was... The drama that is especially present when House members get a chance to script their future campaign commercials is embarrassing for me to watch. It would be embarrassing enough just listening to the asinine questions posed by the too many know-nothings in this group, but the grandstanding that occurs for media attention tops off the distasteful experience. HOWEVER, we love Dennis Kucinich these days, because the regular crusader finally has undeniably just causes to fight for. In that regard, I will always savor his labeling of the rating agency activity "criminal," but the slap on the wrist the group got is equally criminal...

The President will take to the airwaves AGAIN on Tuesday night at 8:00 PM EDT. Talk about damage control overkill... Leno, 60 Minutes and now this??? Come on man, this is the presidency, not Hollywood! However, not too long ago, we authored an article entitled, "We Need a Hero," and without a doubt, the President is doing his best now to uplift the nation. Still, he has to repair the "Bad News Obama" image he created by constantly reminding Americans of his inheritance of this horrible mess. It took the stock market dropping 20+% under his short tenure to alert his advisors to this need, unfortunately.

This new Obama, the good cop version, filling in basketball brackets and doing late night comedy, seems like an overreaction no? Who the heck is running this PR show? Oh yeah, it's that over-caffinated dude... We need balanced, positive leadership, not poll-tethered viewpoints and media strategy!!! Even so, I like this version of the president better than the apocalyptic one, and his 60 Minutes appearance on Sunday night was simply fantastic in my humble opinion. Finally, despite my criticism, I hope to see the President throw out the first ball on April 5th when the World Champion Philadelphia Phillies take the field!

Overseas news looks to play an important role on Tuesday. Banking executives from the U.S., Europe and Japan are set to convene to discuss the future of banking, bonuses and other important regulatory concerns (mainly bonuses and where they can still get them cheap). The Bank of Japan will also release its February meeting minutes. Finally, speaking from Prague, Chicago Fed President Evans will participate in a panel discussion on the topic of "Central Banking in Times of Crisis - Active Player or Passive Observer."

The ICSC-Goldman Sachs Weekly Same-Store Sales Report produced a 1.4% year-over-year sales decline last week (NYSE: GS). The sales decline was attributed to cold and wet weather, and compared against the prior week's 0.9% drop. We expect that stock market rise and the onset of spring might induce a sort of near-term euphoria for consumers, leading both recently unemployed and the majority of you still employed (but scared to death) to do some shopping in the weeks ahead. The State Street (NYSE: STT) Investor Confidence Index might also improve from February's 72.9 mark, given recent stock market rise. The index measures investor risk taking, and attributes it to their confidence.

The day's EPS schedule highlights news from Macy's (NYSE: M), Target (NYSE: TGT), Deutsche Bank (NYSE: DB), Ares Maritime Transport (Nasdaq: RAMS), American Medical Alert (Nasdaq: AMAC), Carnival Corp. (NYSE: CCL), ChipMOS Technologies (Nasdaq: IMOS), Comforce (AMEX: CFS), Commercial Metals (NYSE: CMC), Companhia de Saneamento Basico (NYSE: SBS), Compton Petroleum (NYSE: CMZ), Great Basin Gold (AMEX: GBG), Jabil Circuit (NYSE: JBL), McCormick & Co. (NYSE: MKC), MDRNA, Inc. (Nasdaq: MRNA), Proliance (AMEX: PLI), Proxim Wireless (Nasdaq: PRXM), Robbins & Myers (NYSE: RBN), Taseko Mines (AMEX: TGB) and Williams-Sonoma (NYSE: WSM).

Wednesday

The weekly Mortgage Bankers Association Purchase Applications Report looks to get a little more interesting in the months ahead, what with the Fed buying up treasury and mortgage-backed securities. Activity has been sensitive to even the slightest change in long-rates, and those rates got a favorable change last week thanks to Bernanke's bold move. If I have not made it clear yet, I admire Mr. Bernanke and his actions. He is like a lone fireman, left in an inferno while he seeks to save its inhabitants; he is unwilling to waver... Heroic.

The Fed's Pianalto and Yellen are both set to take part in luncheon meetings, but recent action that has focused attention on Bernanke and Geithner should render these discussions mute.

Durable Goods Orders will be reported at 8:30 AM. After poor reports from both the Philly and Empire State Manufacturing Surveys, the consensus for February Durable Goods Orders is set for a decrease of 2.0%. Before you accept that as not so bad, realize that this latest decline follows mid-single-digit declines in both previous months, and that this is a month-to-month measure. It's simply difficult to keep piling on cumulative declines in an economy like ours, though not impossible.

At 10:00 AM, look for the New Home Sales Report for February. The sentiment among homebuilders probably could not be much worse than it was last month (Housing Market Index stood at 9 in March and February). For this reason, there should be little rejoicing if the annual rate of sales improves as economists foresee. Bloomberg's consensus of economists forecasts the February sales pace improved to 315K, from 309K in January. While we may not have reached bottom yet, the light seems visible ahead thanks to several recent government efforts.

The EIA Petroleum Status Report is due at 10:30 as usual. In the week ended March 13, oil inventory grew by 2.0 million barrels. Still, oil prices rose last week on the belief that the Federal Reserve's quantitative easing would either spur the economy as intended or set inflation in motion as unintended. We suspect some buyers' remorse might drive a pullback in oil this week.

Automatic Data Processing (Nasdaq: ADP) meets with analysts on Wednesday. Several Chinese firms report results, including PetroChina (NYSE: PTR), China Life (NYSE: LFC), and Industrial and Commercial Bank of China. Also look for news from CKE Restaurants (NYSE: CKR), DSW, Inc. (NYSE: DSW), Fortress Int'l Group (Nasdaq: FIGI), Paychex (Nasdaq: PAYX), Red Hat (NYSE: RHT), ADA-ES (Nasdaq: ADES), American Bio Medica (Nasdaq: ABMC), Antares Pharma (AMEX: AIS), Bioject Medical (Nasdaq: BJCT), Citi Trends (Nasdaq: CTRN), CPI Aerostructures (AMEX: CVU), dELiA*s (Nasdaq: DLIA), Gammon Gold (NYSE: GRS), Green Plains Renewable Energy (Nasdaq: GPRE), Hydrogenics (Nasdaq: HYGS), inTEST (Nasdaq: INTT), SAIC, Inc. (NYSE: SAI), Signet Jewelers (NYSE: SIG), SolarFun Power Holdings (Nasdaq: SOLF), The Orchid Enterprises (Nasdaq: ORCD) and WuXi PharmaTech (NYSE: WX).

Thursday

Atlanta Fed President Lockhart starts the news flow with a discussion from overseas that most of us will wake up to on Thursday. Then, at 8:30 AM, the final revision of fourth quarter GDP is expected to show further deterioration to -6.6%, from -6.2% at last check. The change in the related price index is expected to stick at 0.5% on a quarterly basis. Quarterly Corporate Profits are reported at the same time as GDP, so look for this data at 8:30 as well.

Weekly Jobless Claims stuck high last week, measuring 646K, and the forecast never wavers far from the prior week's data. In fact, Bloomberg's survey of economists forecasts new claims of 650K this week.

Treasury Secretary Geithner testifies again on Thursday before the House Financial Services Committee, this time on financial regulation reform. Geithner is under intense pressure that would wear on anyone. The scrutiny began as soon as he was chosen by Obama to head the Treasury, and there's been no let up, despite the favored change from Hank Paulson's leadership. The Greek is glad to see Obama sticking behind Geithner, who has been prematurely judged.

Federal Reserve Presidents Fisher, Lacker and Stern are all also scheduled to speak on Thursday afternoon as well. The Natural Gas Report is scheduled for its regular time of 10:30. Last week's draw from inventory was lighter than the week just prior.

Johnson & Johnson's (NYSE: JNJ) patent for the drug Topamax, which is used to treat migraines and epilepsy, expires Thursday. Mylan Laboratories (NYSE: MYL) is expected to launch a generic version of the medicine to compete for market share. Also, Lexmark (NYSE: LXK) is scheduled to meet with analysts.

Thursday's earnings schedule includes Best Buy (NYSE: BBY), ConAgra Foods (NYSE: CAG), Dr. Pepper Snapple Group (NYSE: DPS), Gamestop (NYSE: GME), Lululemon (Nasdaq: LULU), Scholastic (Nasdaq: SCHL), Texas Industries (NYSE: TXI), The Wet Seal (Nasdaq: WTSLA), Accenture (NYSE: ACN), ARYxTherapeutics (Nasdaq: ARYX), Birner Dental (Nasdaq: BDMS), China TransInfo Tech (Nasdaq: CTFO), Conn's Inc. (Nasdaq: CONN), Cornerstone Therapeutics (Nasdaq: CRTX), Embraer-Empresa Brasileira de A (NYSE: ERJ), Fred's (Nasdaq: FRED), Intelli-Check (AMEX: IDN), Nanophase Technology (Nasdaq: NANX), New York Mortgage Trust (Nasdaq: NYMT), P&F Industries (Nasdaq: PFIN), Response Genetics (Nasdaq: RGDX), Rosetta Genomics (Nasdaq: ROSG), Smart Modular Technologies (Nasdaq: SMOD), Spectrum Control (Nasdaq: SPEC), Synnex (NYSE: SNX), Synta Pharmaceuticals (Nasdaq: SNTA), TIBCO Software (Nasdaq: TIBX), TRI-S Security (Nasdaq: TRIS), UTI Worldwide (Nasdaq: UTIW) and Xyratex (Nasdaq: XRTX).

Friday

Before the market opens, Personal Income and Outlays will be reported for the month of February. Bloomberg's consensus sees Income decreasing 0.2% month-to-month, after posting a rise of 0.4% in January. Spending is forecast to have risen by 0.3%, versus a 0.6% increase in January. Core PCE Price Inflation is expected to increase 0.2%, versus a 0.1% rise in January. The Core PCE Index is the Fed's most favored inflation gauge. It is expected to produce a change this time around that the market would seem likely to dislike due to recently revived inflation concern. In case you can't read between the lines, this may prove a catalyst for Friday decline in the broader marketplace.

Reuters/University of Michigan Consumer Sentiment is expected to improve in the last reading for March, to 56.7, from 56.6 last time out. Finally, the Inter-American Development Bank will convene its annual meeting on Friday.

Reporting EPS, look for news from Sinopec (NYSE: SHI), Aracruz Celulose (NYSE: ARA), Biofuel Energy (Nasdaq: BIOF), Hellenic Telecommunications (NYSE: OTE), K.B. Home (NYSE: KBH), KHD Humboldt Wedag International (NYSE: KHD), MI Developments (NYSE: MIM), Netlist (Nasdaq: NLST), Sadia (NYSE: SDA), VCG Holding (Nasdaq: VCGH) and Xinyuan Real Estate (NYSE: XIN).


Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK).

Daily News: DC's AIG Uproar, Hugo Chavez and More

By Markos N. Kaminis - Washington Analyst:

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

Washington is on my mind, and the rest of the world's as well. Between the whole AIG debacle, Obama appearing on Leno, Chris Dodd and Tim Geithner pointing fingers, and the bill taxing AIG executives 90% on their bonus payouts progressing to the Senate, how could it not be!

Washington Buzz

Washington earthquake is more like it! The outrage that followed the brazen issuing of bonuses to AIG (NYSE: AIG) executives set DC on fire this week. So much so, that we're going to publish a dedicated piece to this subject in the near-term. For now though, we'll cover what's happening today.

Since the bonus penalty passed the House yesterday, the Senate must now consider the bill. A few voices have cried out on the constitutional conflict that seems inherent to this "after the fact" legislation. Concerns over moral hazard, unintended consequences to corporate America and the possibility of human resource brain drain have been arisen as well. So, we do not expect the overwhelming level of support in the Senate as recorded by the House of Representatives yesterday. Still, we expect the bill will pass into law.

Media Darling Obama

President Obama has clearly transcended a message and his long-term political strategy; that being as America's hands-on president. The guy is releasing videos, appearing on talk shows and is generally in your face daily. Four years from now, this will secure his legacy in the minds of Americans far and wide as a hard working blue collar president. This is a brilliant PR strategy, and the earnest effort behind it all is helping America feel good about its vote. So far, I'm mostly on board, but I cannot offer support to the embryonic stem cell change and a few other ultra liberal efforts. My faith will not allow it. I admire what he is trying to do to prevent a new Middle East war. He's gone over and beyond, really thinking outside the box to find solution to the Iranian threat. You gotta love that!!! I suspect a few cubicle robots are malfunctioning though, with all this out-of-the-box thinking.

Bernanke's Address to Community Bankers

It was boring! Let's admit it. He keeps rehashing the same old speech and tweaking it a bit for the individual audiences. But the guy is busy and things do not change fast enough for major speech revisions...

The only differences today were tied to the audience. After reminding us of the Fed and Treasury actions thus far, and his goals going forward (I'm tired of restating this stuff; go ahead and read it yourself or find some other means of self-mutilation to keep you busy), he addressed the challenges and opportunities community bankers face today.

The challenges of course include those old faithfuls tied to any cyclical downturn, including lower loan demand, lighter deposit savings and increased bad debt and reserving needs. Besides that, banks are faced with higher scrutiny from regulators upon regulators, bad press from a frenzied media and community anger and frustration. The banks as a result of all these things must tighten their own lending standards and stick to prudent decision making...what a drag...

However, the community banks are benefiting from the run of money out of the commercial bank space and the removal of non-bank competitors. So, there is a long-term opportunity for their businesses to grow into the void.

TALF Stumbles Out of the Gate

The Fed's Term Asset-Backed Securities Loan Facility kicked off on Thursday, but demand was limited to $4.7 billion of funding to buy new securities backed by credit cards, small business, student and auto loans. The Federal Reserve started this fund out at $200 billion, and believes it could grow to $1 trillion. There's been some rumbling about the impact of the government's "after the fact" regulating of AIG (NYSE: AIG). We've also seen banks like J.P. Morgan Chase (NYSE: JPM) and others seeking to pay back TARP funds to avoid government meddling. Ford (NYSE: F) said no thanks to government money as well, as the Fed and others have effectively taken away the "moral hazard." Nobody wants to be saved by the government now, and that's wonderful. With regard to TALF, the economic environment is likely driving the light demand more than anything else one might speculate about. Risky bets are rising as job security and unemployment deteriorate, and that naturally keeps investment down, even for so-called AAA debt!

Overseas News

Hurricane Hugo

Hugo Chavez looks determined to run Venezuela into the ground and reduce his nation to the poverty level seen in Cuba in the process. We think it's only a matter of time before dissidents rise up, and Hugo hurries off. His latest disaster is the nationalization of the local operations of Spanish bank, Grupo Santander (SAN.MC). So far Chavez has not run into foreign contention in his socialization progress, as fair enough compensation has been paid for assets. Still, ExxonMobil (NYSE: XOM) and ConocoPhillips (NYSE: COP) have given up on the country's energy reserves. This latest bank claim, however, may push Venezuela toward scuffle with Spain. Chavez has a personal issue with the Spanish King, and so he offered $600K less than Santander's asking price for Banco de Venezuela. This story will be worth watching...

Corporate News Drivers

Xerox (NYSE: XRX)

Xerox is feeling the heat, as business customers have frozen spending. The famed copy machine maker notes high-teen revenue decline in January and February of this year, and it slashed its first quarter EPS guidance 85% as a result. Not long after, two rating agencies cut the outlook on the company to negative. Needless to say, it's been a bad day for shareholders, as XRX is off 19% at this hour. Xerox (NYSE: XRX) is meeting its troubles head on though, taking several cost cutting measures including layoffs.

Bayer

Bayer got good news from the doctor today, err the FDA anyway, and the stock is up as a result. Bayer (XETRA: BAY.DE) and partner Johnson & Johnson (NYSE: JNJ) received FDA approval for their anti-clotting pill. Bayer expects peak sales of $2.7 billion from this first new clotting drug, the first in 55 years. Rivaroxaban, as it's called, has gained approval for hip and knee surgeries initially, opening the door for future procedure approvals.

Today's EPS Schedule

The light earnings schedule includes news from Companhia Paranaese De Energia (NYSE: ELP), Doral Financial (NYSE: DRL), Kirland's (Nasdaq: KIRK) and NeurogesX (Nasdaq: NGSX).


Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK).

The Next Big Thing, Church

By Markos N. Kaminis - Life Topics:

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

In these extraordinary times of economic trial, there's one Main Street space that boasts full occupancy. While retailers like Macy’s (NYSE: M) close stores and send check-out counter girls packing; as manufacturers like GM (NYSE: GM) and Ford (NYSE: F) slash costs and in GM’s case beg taxpayers for a hand-out; and as AIG (NYSE: AIG) smothers hope for the survival of the spirit of human compassion, one hot spot is packing them in and lifting spirits at the same time. Churches are full or filling... God may ironically be "The Next Big Thing!"

Yes, it's true. Haven't you noticed your friends aren't available for Sunday brunch lately? That secret society you suspect they all joined and left you out of may well be your local institution of worship. While most keep the extent of their faith under their collar these days, I think you would be surprised to see how many folks are filling the pews. The same people who pass you in the street in the kind of hurry that seems surely due to some important lunch meeting, may in fact be on their way to noontime mass.

How do I know? Well, The Greek's been known to explore the offices of religions of all sorts (almost all anyway). I'm telling you, people of all types still believe in a higher power, no matter what the latest nonsensical poll tells you. I see wealthy successful men bowing to their Lord before they pass into the faceless ranks of the faithful, where all are equal. These seats are filling up faster than the Yankees new ballpark, though they're free of charge in the house that the Lord built. The new house that Ruth built is another story...

The cathedrals are packed with CEOs (there apparently are a few good-hearted selfless ones left), Congressmen (not just conservatives either), supermodels (especially the spiritual-currency-savvy ones), actors, singers (but not false idols) and celebrities of all sorts, and just about every type of person you can think of.

The place is so busy though, that the sick and poverty stricken too often feel out of place in the one spot that is actually meant to be most welcoming to them, and so they wait outside while the rest of us find God. Wouldn't it be nice if somebody gathered those sick and poor folks and brought them inside the hallowed walls? Why leave the poor out in the cold waiting for a dollar, when so much warmth and wealth is just beyond the threshold of that spiritual hall.

Thank God that the commercial world cannot corrupt true faith, though it admittedly has its hands dirty in some doomed organizations of heretics, liars and snakes. I ask for wisdom from the ranks of you as I stretch beyond a point that might make you uncomfortable for a moment. I beg you not to judge your God based on the weaknesses of men. Don't you realize that the bad guy downstairs seeks to do in those men, who lead and guide, with even more fervor than he does the rest of us? Can't he take more souls away from the light by defiling God's messengers? Call it a weapon of mass destruction if you like, because it certainly does destroy masses.

While good priests are helpful (and plentiful), your presence in church or your faith should not hinge on the piousness of your priest or the perfection you wish he possessed. These are men, believe it or not, and they are fallible just like you and me. Your priest is merely your guide, counselor, teacher and medium. You're in charge of your own soul in the end, just as any priest will tell you.

So why are people reaching for God then? Well, isn't it obvious? I was lucky to enjoy the presence of famed economist and Professor Charles Calomiris recently, and he spelled it all out in one simple word, "crisis." He said, in "Big Fat Greek Wedding" like fashion, "crisis" is from the Greek word, "krisis." It means: A crucial or decisive point or situation; a turning point. He said, a crisis is a decision time, when we sift, separate and judge… Well that's going on right now isn't it? Haven't Bernanke and Paulson's critics said that we have chosen which banks survive (J.P. Morgan Chase (NYSE: JPM) and which banks fail (National City - whose assets are now owned by PNC Financial (NYSE: PNC))?

Calomiris called the Bible a "crisis chronicle." He said it was packed with political, personal and societal crises, and he used the biblical stories of Job and Ruth as relative examples of the economic and spiritual trials many of us are facing now. In the near future, I hope to publish the renowned professor's speech in full here on these pages, so stay tuned. It was a profound address by a brilliant man.

So as we all face our own personal crisis, we seem to instinctively turn to God. Maybe crisis, then, is God's way of waking people up or giving us a chance to reconsider our ways. Some people blame God for their individual crisis, but it may be that crisis is God's tool, gifted to us for the purpose of our salvation. It seems to me a lot of real good results from hard times and crises, and this time around is no different. We've taken a good look at ourselves as a nation, and we don't like what we see. That leads us toward restoration of both economy and soul.


Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK).

2009 Real Estate Forecast

By Michael Douville - Real Estate Market Analyst:

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

Fear sells! Sensational headlines of misfortune and gloom are crowding the media. Nothing grabs attention better than an impending catastrophe. Having experienced the terrible downturns associated with the oil crisis and the inflationary time of 1974-1975; the inflation busting period of 1979-1982 with interest rates as high as 23%; the S&L crisis of 1989-1992; the slowdown of 2000-2002; and now the bursting of the 2005 Real Estate Bubble, I know these periods had one thing in common... they all ENDED!

(Article interests: NYSE: SRS, NYSE: URE, NYSE: IGR, NYSE: XIN, Nasdaq: RYHRX, Nasdaq: TRREX, NYSE: TOL, NYSE: HOV, NYSE: BZH, NYSE: BAC, NYSE: FRE, NYSE: FNM, NYSE: LEN, NYSE: PHM, NYSE: NVR, NYSE: GFA, NYSE: MDC, NYSE: CTX, NYSE: KBH, NYSE: RYL, NYSE: MTH, NYSE: XIN, NYSE: BHS, NYSE: SPF, NYSE: MHO, NYSE: OHB, NYSE: WCI, NYSE: NYX, AMEX: DIA, AMEX: SPY, AMEX: SDS, AMEX: DOG, AMEX: QLD, AMEX: VNQ, Nasdaq: QQQQ, Nasdaq: VGSIX, Nasdaq: AVTR).

This current recession started in December of 2007 and it WILL run its course, ending within the next 14 months, in my view. Those who were over-leveraged and used the equity in their homes as an ATM will experience hardship. Those who were caught up in the exciting euphoria of the real estate mania and speculated on gains from ever higher and higher prices will feel severe pain. Those who were unlucky to have purchased their first home during the bubble years have my sympathy; the experience will not be pleasant. Still, all things must come to an end, and this recession will also.

Let me make three predictions:

1. By the end of the third quarter of 2009, the price decline, as measured by the Case-Shiller index, will have stopped and prices will be poised for a rebound of as much as 35% by the end of 2010.
2. Although there are still foreclosures due to be marketed, the efforts of the government will be successful, and by the end of 2009, the waves of foreclosures will be concluding.
3. Due to the lack of new residential and rental construction, there will be a rental shortage and rents will start to significantly increase by the end of 2010.

However, some predictions are easier than others to forecast. For instance: on the 18th hole of a PGA Tournament, Tiger Woods will sink a clutch three foot putt; and if Steve Nash of the Phoenix Suns is fouled in the last seconds of a basketball playoff game, he WILL make the free throw. These two are at the top of their game, and some of the best in professional sports; they have consistently and predictably accomplished what they have trained their entire lives to do. Federal Reserve Chairman Ben Bernanke with help from the Treasury will do the same. The economic problems have been identified, and the entire resources of the United States government are being used to re-flate and re-capitalize the markets. If declining assets are the problem then fixing declining assets becomes the solution. In the foreclosure rich real estate markets of California, Las Vegas, Miami, and Phoenix, the "Affordability Barrier" has been broken and buyers are flooding in. The National Association of Realtors affordability index soared in January to 166.8, the highest reading since inception in 1970.

Southern California is thought by many to account for almost half of all the foreclosures in the nation. The Inland Empire area of Riverside/San Bernadino was one of the hardest hit by overbuilding and excessive speculator demand resulting in tremendous oversupply. Asset managers have aggressively lowered prices in this Metropolitan Statistical Area as well as the MSA's of Las Vegas, Miami, and Phoenix, which in turn has lowered the Case-Schiller house price index. The pundits in mainline national media have exaggerated the decline by accentuating the negative; this has allowed journalists, not home buyers or investors, to influence investment decisions.

Missing from the national news is the fact that lower interest rates across all types of home financing have vastly increased home affordability, the cornerstone of housing. FHA/VA loan limits have been increased to allow much higher loan amounts and include many, many more eligible homes. VA is allowed to finance US Veterans with little or nothing down, and FHA will allow loans with as little as 3% down payment, which can even be gifted by a family member. Both agencies allow for the mitigation of past credit problems with some leniency in underwriting requirements. FNME and FREDDIE MAC are providing financing incentives with as little as 3% down payment and 6 points toward buyers closing costs on their foreclosures. Investors are being offered an aggressive 90% LTV and 3% toward closing costs as an incentive to purchase REOs in inventory. These programs of financing coupled with aggressive pricing of assets have had the desired results; inventory is being cleared.

In January, the Metropolitan Statistical Area of San Bernadino/Riverside has had a sales increase of 149.4% over January of last year. Palm Springs has experienced a jump of 51%, and statewide, California has seen a 100.8% increase in sales. The Phoenix MSA has increased 64.2%, from 2876 closings in January 2008 to 4722 closings in January of 2009. In Phoenix, there are currently an explosive 9615 properties pending closing, placing the sales pace at over 114,000 sales possible for 2009. That would mark a tremendous increase over the 59,000 closed in 2008. The same pattern of sales is being repeated in Las Vegas: single family sales are up 24%, for the 10th monthly increase. Miami's gains were measured improved as well. Single family sales were up 47% and condos up 29%. Excess inventory is being absorbed.

"The construction of new homes has dropped to under a 400,000 unit pace, well below the million needed to accommodate US population increases and household formations."

The construction of new homes has dropped to under a 400,000 unit pace, well below the million needed to accommodate US population increases and household formations. Furthermore, the US Government and all its agencies are focused on preventing more foreclosures. The result will be a balancing of the supply-demand equation and the STABILIZATION of the real estate market across the United States.

Construction of residential rental communities are also severely limited by the lack of financing and the risk aversion of developers. Currently there exists a surplus of rentals with vacancy factors here in Phoenix approaching 19.5% for apartments. However, there is a downward trend of available rentals since the peak of 9838 available rentals in December 9, 2008 - to a drop of almost 1000 units, to 8680 as of March 5, 2009. Normal equilibrium is around 7500 units available.

Available residential units listed for sale in Phoenix peaked at 47,787 on October 26, 2007. The inventory slowly declined until October of 2008, when absorption started in earnest. Currently, Phoenix inventory has dropped to 39,800, a level not seen since March 16, 2007 when inventory was 39,645. Even with the addition of new listings coming to market, the recent absorption rate has measured roughly 300-500 net decrease each week. Also, even though there is a diminished population growth expectation, there exists demand for 35,000 additional new units in the Phoenix MSA. At the current pace of new construction, there will be a significant shortfall, again positively impacting absorption of existing inventory. Currently in Phoenix, there are 9615 residential properties in pending status. At that rate, there is less than a 4.5 month supply.

In Conclusion

Just as many factors contributed to the real estate crisis, many factors are contributing to the solution. With extremely diminished new construction activity, demand is finally catching up to supply. The efforts to modify loans and reduce foreclosures is having the desired effect of helping distressed homeowners remain in their homes, further reducing supply. Asset managers have discounted prices to levels where REO listings are generating multiple offers within weeks if not days, which is reminiscent of the 2005 mania.

"The discounts available today will disappear and home prices have a strong possibility of a 35% gain by the end of 2010."

Further discounting to generate sales is not needed. The Case-Schiller index should stabilize in the next few months and start to rise toward year end. Financing limits have been raised by FHA, VA, FNME, and Freddie Mac to include thousands of additional sales. Without additional rental construction, a rental shortage will develop within 22 months with the accompanying increase in rents. As the current supply is absorbed, there will be a lag until new home developments are on line. This will cause the supply-demand equations to again shift, this time higher, with prices reverting from below historical value to above the mean historical value. The discounts available today will disappear and home prices have a strong possibility of a 35% gain by the end of 2010. Beyond 2010, the effects of $9.6 Trillion Dollars may re-flate assets and spark inflation. Real estate as an asset class does extremely well in an inflationary environment. SO, IT'S ALL GOOD!


Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK).

This Week: SAINT Patrick's Day

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.

Happy Saint Patrick's Day to ya! You'll be surprised to learn though that St. Patty did not invent beer... nor did he wander the streets all day long enebriated... nor did he violate laws that prohibit pubic urination... also he did not get into brawls with others for the slightest of reasons.

No, Saint Patrick was actually a saint, meaning he lived an exemplary and pious life, and performed great wonders by the will of God and the power of the Holy Spirit. Ever heard of such things? Can you imagine such fantasy? (Sarcasm!)

Greek! You mean the parade was not created to celebrate being Irish or pseudo-Irish? You're saying it's about a man who did great things like force Paganism out from a nation? If I wasn't talking to myself, I would respond, "well yes!"

I ask you to please at least consider reading his story before you down your first green beverage of the day. You might even visit a church between rounds and offer the Saint a prayer of appreciation.

We here in Manhattan have a wonderful parade full of Irish (and Scottish) bands blowing horns and creating a wondrous scene. "The Greek" admits to partaking in a beer or two or three in years past, but let's not forget that for pious Christians, we are still in the period of the Great Lent. Undoubtedly, five of you will now cancel your email subscriptions though another five of you will commend me for reminding folks of the "good story" behind a blessed saint and the modern day tarnishing of his memory by a society full of self-interest.

This Week

Monday

We covered Monday's schedule in a separate article found here.

Tuesday

Erin Go Bragh! Happy Saint Patrick's Day to ya!

Expect one of those days when C-SPAN steals the show, at least until the news coverage of St. Patrick's punks gone wild comes on. The House Financial Services Committee will hold a hearing on the regulation of systemic risk. Recall that the first time around the inquisition table, these committees had a field day with the "criminal" activity (quoting Dennis Kucinich, my new favorite perennial presidential candidate), of the rating agencies et al.

Monday's Housing Market Index showed builder sentiment remained dreadful in March, and on Tuesday morning we'll receive Housing Starts. Starts data has reflected the harsh economic environment of deteriorating labor, depressed builders, tightened lending and saturated inventory. Both December and January saw the pace of starts decline sharply (mid-teens rate). Bloomberg's consensus of economists surveyed forecasts a reasonable ease from that pace for February, to 450K starts, versus 466 in January. Building Permits are seen at 500K.

The latest pricing data will become available Tuesday at 8:30 when February's Producer Price Index (PPI) is reported. Despite all the deflationary data we've seen from other sources, commodity price dive has not fully worked its way through the system. As you might imagine, producers of goods at various levels are slower to adjust pricing lower than they are to adjust upward. Besides, a big bunch of economists and COOs expect commodity prices to recover mightily soon enough.

Bloomberg's consensus is looking for a month-over-month increase of 0.4% on headline PPI, and a 0.1% Core PPI rise. "Core" data adjusts out volatile food and energy prices. On a year-to-year basis, economists are looking for a 0.1% Headline price increase and a 3.8% Core price rise. Now that energy prices have stabilized (sort of), there's much less fluctuation in the monthly numbers.

It's Tuesday, and that means ICSC weekly same-store sales data is due. We actually saw sales rise last week on a month-to-month comparison (+0.2%). The year-to-year change measured down 0.9%. (Here he goes again) Of course, if you have been reading "The Greek's Week Ahead," you expected the sales gain. After all, we set the table for within that article. We told you to expect it, because of the unseasonably warm weather that week, and also on the foot traffic we noticed in our neck of the woods (loaded with "hubbies carrying little pink bags" from every lady's favorite shops).

Tuesday's earnings schedule includes news from A.D.A.M. Inc. (Nasdaq: ADAM), AAR Corp. (NYSE: AIR), Adobe Systems (Nasdaq: ADBE), Anthracite Capital (NYSE: AHR), Astro-Med (Nasdaq: ALOT), Canadian Solar (Nasdaq: CSIQ), Clean Diesel Technologies (Nasdaq: CDTI), Environmental Power (Nasdaq: EPG), FactSet (NYSE: FDS), Federal Agricultural Mortgage (NYSE: AGM), Guess (NYSE: GES), Henan Zhongpin Food (Nasdaq: HOGS), ICOP Digital (Nasdaq: ICOP), Intelli-Check (AMEX: IDN), MCF Corp. (Nasdaq: MERR), MGM Mirage (NYSE: MGM), National Bank of Greece (NYSE: NBG), New Gold Inc. (AMEX: NGD), Nortech Systems (Nasdaq: NSYS), OMNOVA Solutions (NYSE: OMN), Pomeroy IT Solutions (Nasdaq: PMRY), Retaliz (Nasdaq: RTLX), Schiff Nutrition (NYSE: WNI), SteelCloud (Nasdaq: SCLD), Stillwater Mining (NYSE: SWC), Tecumseh Products (Nasdaq: TECUA), Ultrapetrol (Nasdaq: ULTR), Vaalco Energy (NYSE: EGY), WPCS Int'l (Nasdaq: WPCS) and X-Rite (Nasdaq: XRIT).

Wednesday

All eyes on the Fed? For what? What more can they do? At 2:15, Bernanke's Fed will announce its monetary policy decision, but the activity seems likely to be a nonstarter. However, give this guy enough time, and we're sure he'll surprise us with some ingenious new tool or means of economic stimulation. The word is the Fed might announce a plan to purchase government and agency securities as a means of further trimming mortgage rates. The Bank of Japan also has its monetary policy decision planned for Wednesday, but rates have been near zero there for a long time now. Maybe they'll cut by a hundred-thousandth of a point or something... In merry old England, Prime Minister Gordon Brown hosts an economic recovery conference for business leaders. In Northern Ireland, perhaps St. Patrick will serve up another miracle.

Following up the PPI, the Consumer Price Index (CPI) is due on Wednesday morning at 8:30. Similarly to PPI, prices are still rising at the consumer level. The Headline CPI is forecast to have grown 0.3% during the February period, matching January's increase. Core CPI is expected to increase 0.1% in February, versus the 0.2% increase found in January. Also at 8:30, look for the Q4 Current Account Deficit to measure $136.7 billion, give or take a billion.

Wednesday brings its regular data from the EIA and MBA. Oil inventories are due at 10:30, and last week's report showed an increase 749,000 barrels to supply. With OPEC's rumored cut exposed now as a bluff (like we said it would be a few times over the past week) all oil pit eyes are purely focused on this data and on signs of economic turn. OPEC will still do its best to move the market, perhaps with some nominal action that may carry headline appeal. The group is holding a seminar in Vienna Wednesday on the future of energy, and this might serve as opportunity to blow more smoke. The Mortgage Bankers Association reports on weekly application activity in the pre-market. Last week, rates backtracked and mortgage activity promptly improved.

Public Service Enterprise (NYSE: PEG) and Assurant (NYSE: AIZ) are both holding analyst meetings Wednesday. The day's earnings slate includes Actuant Corp. (NYSE: ATU), Charming Shoppes (Nasdaq: CHRS), ChinaEdu (Nasdaq: CEDU), Cintas (Nasdaq: CTAS), CLARCOR (NYSE: CLC), Darden Restaurants (NYSE: DRI), General Mills (NYSE: GIS), Herman Miller (Nasdaq: MLHR), IHS (NYSE: IHS), Linktone (Nasdaq: LTON), Luby's (NYSE: LUB), Newtek Business Services (Nasdaq: NEWT), Nike (NYSE: NKE), Oracle (Nasdaq: ORCL), Paragon Shipping (Nasdaq: PRGN), Presstek Inc. (Nasdaq: PRST), Shamir Optical (Nasdaq: SHMR), Somanetics (Nasdaq: SMTS), Towerstream (Nasdaq: TWER) and Wimm-Bill-Dann Foods (NYSE: WBD).

Thursday

In the pre-market, look for the Weekly Initial Jobless Claims data to range near prior week levels, at least according to economists' expectations. Forecasters are looking for new claims to amount to 654K, which would exactly match last week's level. Based on the common proximity of the forecast each week to the prior week level, I do not believe many economists are employing very scientific modeling for this data (as outlined in the past - Guinness commercial "BRILLIANT!" here). Any weekly measure covers such a short span that it could be tough to handicap. However, a proper bead on corporate reports combined with a model measuring small business rates of attrition etc. etc. might do the trick; but would it be worth the effort...

February's Leading Economic Indicators are set for 10:00 a.m. release. Economists expect the LEI to break from its recent trend of increase (December, January), and to decline by 0.6% in February. The economy has hit the skids, but the LEI seeks to mark forward looking signs. Still, the past two months of improvement were illusory by the view of some eyes, as the driver was government substance abuse (I'm just having fun is all - I appreciate stimulus). The growth in money supply, thanks to the Fed, Treasury and Congressional action, was the key catalyst in months past. While the government action has been swift and heavy, there's no telling for sure how "special" this current economic strife really is or when stimulus will gain traction.

The Philly Fed Survey is seen bouncing slightly in March to -38.0, from -41.3 in February. As is, LEI has been approaching levels seen during the "Saddam Sell-Off" of the early '90s. Earlier in the week, we saw the New York region's version of this data deteriorate further. Don't get your hopes up for the Philly data...

C-SPAN time again! When they turn your cable off, you'll be happy to discover you still have C-SPAN, a channel you never considered watching before... You'll find the call in questions offer better comedy than Leno's writers can muster, and you'll discover administration representatives more ridiculous than any SNL skit. Reality is the best comedy...

On Thursday, the Senate Banking Committee takes on the topic of bank supervision (expect an expansion of "banking" to include all financial institutions. Don't blame me though! It's all AIG's (NYSE: AIG) fault. EIA's Natural Gas Report is due at 10:30.

Thursday's earnings slate includes FedEx (NYSE: FDX), 3Com (Nasdaq: COMS), GNC Corp. (NYSE: GNC), Alloy (Nasdaq: ALOY), Barnes & Noble (NYSE: BKS), Blockbuster (NYSE: BBI), Books-A-Million (Nasdaq: BAMM), Brown & Co. (NYSE: BNE), Casual Male Retail Group (Nasdaq: CMRG), China Sunergy (Nasdaq: CSUN), Cost Plus (Nasdaq: CPWM), CRA Int'l (Nasdaq: CRAI), Discover Financial Services (NYSE: DFS), Electroglas (Nasdaq: EGLS), Elixir Gaming (AMEX: EGT), ICX Technologies (Nasdaq: ICXT), Neogen (Nasdaq: NEOG), Neurogen (Nasdaq: NRGN), New York & Co. (NYSE: NWY), NTN Buzztime (AMEX: NTN), Palm (Nasdaq: PALM), Perry Ellis (Nasdaq: PERY), Photomedex (Nasdaq: PHMD), Progress Software (Nasdaq: PRGS), Prudential (NYSE: PUK), Ross Stores (Nasdaq: ROST), Select Comfort (Nasdaq: SCSS), Shoe Carnival (Nasdaq: SCVL), Stein Mart (Nasdaq: SMRT), The Cato Corp. (NYSE: CTR), The Children's Place (Nasdaq: PLCE), The Exploration Co. (Nasdaq: TXCO), The Marcus Corp. (NYSE: MCS), Ticketmaster (Nasdaq: TKTM), Tsakos Energy Navigation (NYSE: TNP), Ulta Salon (Nasdaq: ULTA) and Winnebago (NYSE: WGO).

Friday

Federal Reserve Chairman Ben Bernanke addresses the Independent Community Bankers of America Convention in Phoenix, and Sheila Bair will be on hand to help out. BTW, we love her here. We even offered her name up for Treasury Secretary, but nobody heard us. You can catch the speeches at 12:00 p.m., and we expect that because of the dearth of scheduled news for Friday, this could be covered live by Bloomberg Radio.

Mexico's central bank is expected to cut rates by a quarter point. Japanese markets are closed for the start of spring. Potential investors must express interest in Satyam Computer by Friday. The earnings slate includes news from Ares Maritime Transport (Nasdaq: RAMS), Companhia Paranaese De Energia (NYSE: ELP) and Kirland's (Nasdaq: KIRK).


Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK).

Data Heavy Monday

By The Greek - 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.

This week's data is heavy at the start and empty on the close, but due to a technical upgrade at "The Greek" this article previews only Monday's events. The remainder of the week's schedule should be added to our pages before Tuesday's open. We ask your patience as we deal with a necessary disruption to publishing.

Monday

Down your coffee early on Monday, as you will not have a moment to spare before the first economic release reaches the wire. At 8:30 a.m., the New York Federal Reserve publishes its Empire State Manufacturing Survey. The numbers from all three regional indicators (NY, Philly and Chicago) have been sad of late, and New York area participants relayed a General Business Conditions Index reading of negative 34.7 in February; that was 12 plus points lower than January's mark. Bloomberg's consensus of economists sees a result of -32.0 for March, and we see little reason to expect any better than that.

The Treasury International Capital Report is set for 9:00 a.m. release. Considering Wen Jiabao's statement from just last week, within which he expressed concern for China's investment in U.S. debt, this report will garner extra attention on Monday. December's report showed a net inflow of $34.8 billion. We sure could use sustained demand for U.S. investment now more than ever.

At 9:15, look for Industrial Production to have declined by another 1.2% in February, according to the economists' consensus. This latest loss comes after the 1.8% dip in January. Considering the pace of layoffs through the month, it would be premature to expect a directional change in production any time soon. Likewise, Capacity Utilization is expected to have deteriorated to 71.1%, down from 72%.

The National Association of Home Builders publishes its Housing Market Index for March at 1:00 p.m. Home builders were about as depressed as possible last month, when they reported this measure of builders' confidence at a lowly 9, versus 8 in January.

In an important regulatory change, the SEC will now require issuers of private placement securities to begin filing them electronically with the government watch dog. Also, the U.S. will begin requiring "country of origin," labels on all meats sold in the States.

There are several bits of overseas news to prepare for. In Brussels, the World Biofuels Markets conference will kick off, while in Constantinople, the World Water Forum begins. Mexican markets are closed on Monday.

American traders can look for earnings reports from the likes of 4Kids Entertainment (NYSE: KDE), American Apparel (AMEX: APP), Applied Energetics (Nasdaq: AERG), Asbury Automotive Group (NYSE: ABG), Ballantyne of Omaha (AMEX: BTN), BioLase Technology (Nasdaq: BLTI), BMP Sunstone (Nasdaq: BJGP), Care Investment Trust (NYSE: CRE), Carmike Cinemas (Nasdaq: CKEC), Cell Therapeutics (Nasdaq: CTIC), Century Casinos (Nasdaq: CNTY), China Information Securiy (Nasdaq: CPBY), China Nepstar Chain Drugstore (NYSE: NPD), ChinaCast Education (Nasdaq: CAST), Connecticutt Water (Nasdaq: CTWS), Cumulus Media (Nasdaq: CMLS), Dana Holding (NYSE: DAN), DayStar Technologies (Nasdaq: DSTI), DeerField Capital (AMEX: DFR), eDiets.com (Nasdaq: DIET), Education Reality Trust (NYSE: EDR), Emeritus (NYSE: ESC), ENGlobal (NYSE: ENG), Facet Biotech (Nasdaq: FACT), Flanders (NYSE: FLDR), Flotek (NYSE: FTK), Force Protection (Nasdaq: FRPT), Fortress Investment Group (NYSE: FIG), FX Energy (Nasdaq: FXEN), Gray Television (NYSE: GTN), GSE Systems (AMEX: GVP), Heska (Nasdaq: HSKA), Hollywood Media (Nasdaq: HOLL), Houston Wire and Cable (Nasdaq: HWCC), IDT Corp. (NYSE: IDT), Independence Holdings (NYSE: IHC), Jamba Juice (Nasdaq: JMBA), KapStone Paper (Nasdaq: KPPC), Kohlberg Capital (Nasdaq: KCAP), Landry's Restaurant (NYSE: LNY), Medivation (Nasdaq: MDVN), Molecular Insight (Nasdaq: MIPI), National Dentex (Nasdaq: NADX), Newcastle Investment (NYSE: NCT), Optical Cable (Nasdaq: OCCF), ORBCOMM (Nasdaq: ORBC), Orchid Cellmark (Nasdaq: ORCH), Parkervision (Nasdaq: PRKR), Patriot Capital (Nasdaq: PCAP), Plug Power (Nasdaq: PLUG), Poniard Pharma (Nasdaq: PARD), Procera Networks (AMEX: PKT), Providence Service (Nasdaq: PRSC), RadNet (Nasdaq: RDNT), Repros Therapeutics (Nasdaq: RPRX), Rockwell Medical (Nasdaq: RMTI), Sauer-Danfoss (NYSE: SHS), SINA Corp. (Nasdaq: SINA), SkillSoft (Nasdaq: SKIL), Sonic Automotive (NYSE: SAH), STAAR Surgical (Nasdaq: STAA), Star Bulk Carriers (Nasdaq: SBLK), Sterling Construction (Nasdaq: STRL), Synergetics USA (Nasdaq: SURG), The PMI Group (NYSE: PMI), TIX Corp. (Nasdaq: TIXC), Top Image (Nasdaq: TISA), Toreador Resources (Nasdaq: TRGL), U.S. Home Systems (Nasdaq: USHS) and Warwick Valley Telephone (Nasdaq: WWVY).



Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK).

Three Wise Men

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.

Three Wise Men brought gifts of profitability, financial independence and share rise to the market last week. The CEOs of Citigroup, Bank of America and J.P. Morgan Chase injected the stock market with greatly needed confidence as a result of their long overdue news.

The initial spark that gave life to trading was the conspicuous leak of an internal memo at Citigroup (NYSE: C). Vikram Pandit, the CEO of the troubled bank, authored a note to employees pleasantly sharing news of the company’s "best quarter since Q3 2007." We should make note here that the aforementioned quarter was the bank's last profitable period. Likewise, Vik was relieved to share that the company was also profitable through the first two months of 2009. If ever there were a reason for hope, tangible good news from the financial sector would be it.

Now, shareholders have heard uplifting speeches before, and from reputable sources like Warren Buffet and Barack Obama. Warren has since slipped from his ranking as the richest man in the world, posting his worst year on record in 2008. Barack was only just recently pinned with the dubious label "bear market president," meaning the market declined 20% within the few months he’s led the poor nation. However, the great discovery arriving from six feet under, where the beaten down financial sector resides, was much more meaningful to investors. You see Warren spoke of history and trends, and the wisdom of long-term investing. A lot of good that does us in the short-term though! Barack speaks of hope and hard times, which investors find difficult to back with their dollars.

Citigroup actually has a bead on things... They've got their feet in the water, or rather their heads barely above it. Either way, believe it or not, investors believed Pandit, and sent both Citigroup shares and those of the broader market to a gap higher open on Tuesday. Well, the interest in Citi shares that ensued got other bankers previewing their own books. Before we knew it, Bank of America (NYSE: BAC) had followed suit and declared its own profitability.

Like men lost at sea on a raft, the desperate sailors began offering up any piece of meat they could find to the sharks that had been encircling them. Both the banks also declared they would not need any more government aid, as if that were a proclamation of excellence. Still, it made all the difference to investors. Before the week started, Citi traded below a dollar and BofA touched $3. At Friday's close, Citigroup hit $1.78 and BofA recovered to $5.76, which was fine indeed.

Not to be left out of the party, J.P. Morgan Chase (NYSE: JPM) CEO Jamie Dimon gave a speech worthy of Morgan himself. Dimon addressed a U.S. Chamber of Commerce event intended to boost confidence. For this reason, we wonder if the three bankers might have devised the grand scheme in advance.

All this excitement might not matter for long though. You see, every good story has a villain, and this one has Wen Jiabao, the Premier of China. On Friday, addressing media following the conclusion of the National People's Congress, the Prime Minister said he was concerned about the credibility of the United States and the security of his nation's holdings in U.S. issued treasury instruments. Just like that it seemed the only news that could uplift investors finally met the only news that could stop that rise. However, stocks boldly recovered after a midday drift, and investors seem determined to push them even higher. What the future holds is less than clear. Still, with St. Patrick's Day falling this week, at least we'll have the luck of the Irish going for us.


Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK).

Today's News: China's Concern for U.S. Treasuries

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.

What's the worst possible thing that could happen? If asked that question, I probably would have answered, China stops loaning us money. If GOD FORBID that ever happened and demand was not replaced by some other sovereign lender, interest rates for the long-term securities would rise in order to attract borrowers. This would prove extremely costly to the nation and our citizenry. Mitt Romney describes that scenario, rather presciently, as likely to prove destructive to vast stores of wealth and decimating to the American middle class. However, China needs us as much as we need them. We are interlocked as supplier/consumer, lender/borrower, polar opposites that keep all order. Still, one must wonder what would happen if there were a catalyst that tested America's reliability as a credit worthy borrower. China is diversifying its assets just in case.

China's Premier Raises Doubt for Treasuries!

At the close of this year's session of the National People's Congress in China, Chinese Premier Wen Jiabao held the event's traditional closing press conference. He unexpectedly raised concern when he answered a question traditionally left alone.

Premier Jiabao expressed concern about the United States, its largest debtor, and wondered aloud about the security of its large loan portfolio extended to the us in the form of U.S. Treasury Instruments. The scenario of U.S. credibility coming under question and its greatest financier considering other options, is one regularly brushed aside by most strategists. It's such a nightmarish scenario, we would rather not consider it. Even today, one talking head (sorry I did not get the name) said Wen's comments were fine and dandy, but he noted that China didn't really have many other options. I have to disagree, and will try to focus a later article to this very important topic.

This news, raising alarm for the future of American capital acquisition, has effectively killed this week's nascent bear market rally.

Economic Data Analysis

International Trade Report

The International Trade Report for January showed the trade deficit narrowed to $36 billion, from a revised 39.9 billion in December. As you can see via the chart here, both imports and exports declined, but the pace of import demand drift was simply greater. The ratio of the different rates was 1.5:1. The U.S. is a consumption state, and the change in this data during a period of broad recession illustrates that clearly. You can see the full report by clicking through to either Wall Street Greek or Market Moving News (above).

Import & Export Prices

February's Import and Export Price data reached the wire this morning in the pre-market. Import prices fell less than was expected, moving lower by 0.2%, versus an expected 0.8% drop. The decline compared against January's 1.1% tumble. Prices have fallen every month since July 2008, and prices last month were down a full 12.8% from the prior year mark. That set a record for 12-month import price decline, but the index was only launched in 1982.

The price action of imported goods were greatly driven by a bump up in petroleum prices in February. If we exclude the petroleum component, prices fell 0.6%, which matches against a comparable reading of -0.8% in January. Petroleum import prices actually rose 3.9% last month.

The drivers of import price decline were natural gas (seems like this should be similarly broken out, but it's not), chemicals (petrol-related good), metals, foods and beverages. Clearly, there was a broad energy and petroleum based impact that stretches beyond just oil prices.

Export prices fell just 0.1% month-to-month and 4.5% year-over-year. Agricultural prices fell 1.7%, but were partly offset by a 0.1% increase in non-ag prices. Export prices had increased 0.5% in January, but were steadily lower over the five months before that. Higher export prices were driven by a capital goods increase, which in turn was impacted by higher semiconductor pricing. Agricultural price decline has been great, as farm goods had previously seen bubbly pricing on the recent global growth and ethanol stimulants. Ag export prices have corrected 15.2% over the past year.

Reuters/University of Michigan Consumer Sentiment

This regular consumer sentiment metric posted a surprising, but not eye catching, uptick. The mid-March reading at 56.6, compared against the prior look at 56.3 and consensus expectations for 55.0. On the face of it, there's nothing to get too excited about, but directional change is something to get excited about. I'm referring to the uptick in the "expectations index," the forward looking component of this tool. It stopped evaporating toward hopelessness, and actually rose to 53.0. While the index is still not far off its record low, this month's rise seems clearly tied to the pace and effort of the Obama Administration, something the President addressed yesterday. Seems America appreciates it, and gosh I hope I have time to write about this soon.

International, Commodity and Currency Market News

G-20 Kicks Off

Remember all the world unity we saw just a short time back? Remember how together everybody was with regard to how to approach the global crisis, with swift and decisive action. Well, it seems that global unity, like a marriage, is having trouble coping with hard financial times.

When the G-20 convenes on Friday evening and through Saturday, the United States will push for the other 19 nations to ante up. Let's face it, the world isn't keeping up with us, especially those folks across the pond. Furthermore, we can't use that fancy watch and sports car their trying to throw into the pot instead of cash!

China's Wen, responding to foreign pressure to increase IMF support, said he would like to see his nation gain more influence commensurate with such giving. Wen also pointed out the contrast between the big words and light contributions of many nations. Japan is speaking up as well.

So how is Europe responding then? Well, the Europeans are vocal on "protectionism" and "regulation," where they would like to see the America they once admired reform a bit. But, we fear there's a bigger problem developing. I notice and note for you that the G-20 build up and recent failings of the union have exposed some cracks in the EU. We can clearly distinguish that it is a group composed of too many chiefs with too many agendas.

Swiss Secret is Out

Call me crazy, but this looks like a mistake to me! The Swiss have decided to play by the rules, adopting OECD standards on tax evasion. They will offer specific information to tax authorities in cases where convincing evidence is available. Clearly though, that is going to be somebody's opinion to form. The Swiss believe that not sharing information in this limited manner would effectively blacklist them at the OECD and maybe more organizations, and they expect that would threaten their banking system and economy. A great portion of the world's capital is hidden away in Swiss accounts for a reason though, anonymity. I would trade blacklisting to keep that, as it is the elite and exclusive stigma that attracts large depositors, and in some (read many) cases dirty money. I think the Swiss will see a loss of funds now, though many other once discrete banking options are lining up to play by the rules as well. From an idealist's and also honest man's perspective, and not a businessman's, I like the Swiss decision. I just think it's bad business is all, however ironic that may be.

Oil, OPEC and Non-OPEC

I refuse to give the OPEC-lip-service too much attention. OPEC regularly feigns action to keep oil prices lofty, plain and simply put. Poor suppliers have begun complaining about production cuts, and will only break the rules more often the more OPEC kingpins decide to restrict flow. So, I believe there is less truth behind the noise on the wire than there is bluff.

Corporate News Drivers

Blown American Axle

American Axle and Manufacturing Holdings (NYSE: AXL) reported some lousy news today (blew the axle). AXL's auditors did something auditors didn't use to do, back in the good old Enron and Worldcom days; they performed an honest audit. AXL's auditor included a "going concern" notice in their note, a.k.a. the kiss of death. However, considering that AXL's condition has been well understood for some time now, due to its dependence on General Motors (NYSE: GM), the stock was actually up 6.6% as I tapped the keys here today. Hold on though, 6.6% in AXL terms, means $0.05. Click here to see our article published today on American Axle.

Hybrid War

The auto sector kept busy today, as Toyota Motors (NYSE: TM) announced it would produce a cheaper hybrid vehicle to compete against Honda Motors' (NYSE: HMC) Insight model. Toyota's new car will have a smaller engine than the 1.5 liter Prius, and it will be available first in Japan in 2011. The price tag will be approximately $20,500. Toyota also expects to trim costs of production on the Prius, and to offer it for less as well. This is the impetus most folks need to try a hybrid, but better aesthetics would go a long way toward market penetration as well.

EPS Schedule

The day's earnings schedule includes A. C. Moore Arts & Crafts (Nasdaq: ACMR), AEP Industries (Nasdaq: AEPI), Allianz SE (NYSE: AZ), American Shared Hospital (AMEX: AMS), Bovie Medical (AMEX: BVX), Compass Diversified Holdings (Nasdaq: CODI), Core-Mark Holding (Nasdaq: CORE), CytRX (Nasdaq: CYTR), Discovery Laboratories (Nasdaq: DSCO), Eni SpA (NYSE: E), EV Energy Partners (Nasdaq: EVEP), Furmanite Corp. (NYSE: FRM), GeoMet (Nasdaq: GMET), Halozyme (Nasdaq: HALO), Hooper Holmes (AMEX: HH), Inhibitex (Nasdaq: INHX), Keryx Biopharmaceuticals (Nasdaq: KERX), NACCO Industries (NYSE: NC), NPS Pharmaceuticals (Nasdaq: NPSP), Nymox Pharmaceuticals (Nasdaq: NYMX), Piedmont Natural Gas (NYSE: PNY), Progenics Pharmaceuticals (Nasdaq: PGNX), Protection One (Nasdaq: PONE), Reis Inc. (Nasdaq: REIS), Sun Communities (NYSE: SUI), U.S. Gold (AMEX: UXG), Universal Insurance Holdings (AMEX: UVE) and Volt Information Sciences (NYSE: VOL).


Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK).

American Axle (NYSE: AXL) News - Going Away Concern

By The Greek - 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.

Blowing an axle is a hard core problem you never want to face, trust me. No, I never drove a big rig, but I love the truckers! Keep on honking boys as you pass 81st and 1st... I hear ya! Same goes for the barge pilots who cruise the East River daily... In case you're wondering, surveys show these two groups make up my largest fan base, right after Greek diner operators. Keep on honking fellas! Also, this ensures I'll always have a discrete way of escape en route to Canada.

To the point! American Axle and Manufacturing Holdings (NYSE: AXL) had some lousy news today (blew the axle...). AXL's auditors did something auditors didn't use to do back in the good old Enron and Worldcom days; they performed an honest audit. AXL's auditor included a "going concern" statement in the note, a.k.a. the kiss of death. However, considering that AXL's condition has been well understood for some time now, due to its dependence on General Motors (NYSE: GM - 3/4 of AXL's '08 sales) and Chrysler, the stock was actually up 6.6% as I tapped the keys here today. Hold on though, 6.6% in AXL terms means a nickel.

In case you were lost in Zimbabwe for the entirety of the past week, GM also received one of those nasty notes recently, and even though it was expected, it still grabbed mega media space. GM had to make up some bullsh_t press release about not needing a couple billion in March to try to restore investor sentiment (while hand-in-hand with Chrysler in approaching the government for another $22 billion). Oh, and by "investor," I mean the one fool who still owns the shares, and my condolences to all the employees with stock or options. I really do feel for you guys, and I hope you now you understand why I encouraged the UAW to work with management in keeping these companies afloat... and by "encourage," I mean take a pay cut and keep your job, house, car, wife and life... It takes trading some pride and a few of the good things in life, but it beats the other option doesn't it?

Sometimes folks get upset with me when I write like that, and I can understand why you might. Listen, I'm sorry for sounding harsh about serious life issues that matter to every auto industry reader. I'm speaking your language from eye level though, but you'll have to take my word on that. I'm just trying to tell you what I think is best in as light a way as possible. I really do feel for you, trust me on that one. I'll do what I can to help, so if you have some solid suggestions that only an industry insider might know, pass it along and we'll get some eyes on it. A lot of folks do not know about all the cost and trade advantages the foreign producers have, and they naively call for UAW action. When I do it, I do it because I see no other option right now.

Axle just posted a fourth quarter loss of $112.1 million. This struggle helps one understand the extent of damage a "big three" bankruptcy could do to broader America. Lear (NYSE: LEA), Visteon (OTC: VSTN.PK) and most of the other suppliers are in the same boat, and we have not even mentioned the dealership risks. The orderly restructurings (read pseudo-bankruptcies) that are now in progress might save the economy a knock-out blow. We're already against the ropes and seeing three of the opponent, so it wouldn't take much more before we hit the canvas. Still, this country is made up of "Rocky" types, and I just can't see us quitting and therefore losing this fight. Keep pushing forward fellas...


Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK).

Bernard Madoff Plea Statement of Guilt

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

Below is the actual text of Bernard Madoff's prepared plea allocution statement, delivered Thursday by his attorney in U.S. District Court in New York:

Your Honor, for many years up until my arrest on December 11, 2008, I operated a Ponzi scheme through the investment advisory side of my business, Bernard L. Madoff Securities LLC, which was located here in Manhattan, New York at 885 Third Avenue. I am actually grateful for this first opportunity to publicly speak about my crimes, for which I am so deeply sorry and ashamed. As I engaged in my fraud, I knew what I was doing was wrong, indeed criminal. When I began the Ponzi scheme I believed it would end shortly and I would be able to extricate myself and my clients from the scheme. However, this proved difficult, and ultimately impossible, and as the years went by I realized that my arrest and this day would inevitably come. I am painfully aware that I have deeply hurt many, many people, including the members of my family, my closest friends, business associates and the thousands of clients who gave me their money. I cannot adequately express how sorry I am for what I have done. I am here today to accept responsibility for my crimes by pleading guilty and, with this plea allocution, explain the means by which I carried out and concealed my fraud.

The essence of my scheme was that I represented to clients and prospective clients who wished to open investment advisory and individual trading accounts with me that I would invest their money in shares of common stock, options and other securities of large well-known corporations, and upon request, would return to them their profits and principal. Those representations were false because for many years up and until I was arrested on December 11, 2008, I never invested those funds in the securities, as I had promised. Instead, those funds were deposited in a bank account at Chase Manhattan Bank. When clients wished to receive the profits they believed they had earned with me or to redeem their principal, I used the money in the Chase Manhattan bank account that belonged to them or other clients to pay the requested funds. The victims of my scheme included individuals, charitable organizations, trusts, pension funds and hedge funds. Among other means, I obtained their funds through interstate wire transfers they sent from financial institutions located outside New York State to the bank account of my investment advisory business, located here in Manhattan, New York and through mailings delivered by the United States Postal Service and private interstate carriers to my firm here in Manhattan.

I want to emphasize today that while my investment advisory business — the vehicle of my wrongdoing — was part of my firm Bernard L. Madoff Securities, the other businesses my firm engaged in, proprietary trading and market making, were legitimate, profitable and successful in all respects. Those businesses were managed by my brother and two sons.

To the best of my recollection, my fraud began in the early 1990s. At that time, the country was in a recession and this posed a problem for investments in the securities markets. Nevertheless, I had received investment commitments from certain institutional clients and understood that those clients, like all professional investors, expected to see their investments out-perform the market. While I never promised a specific rate of return to any client, I felt compelled to satisfy my clients' expectations, at any cost. I therefore claimed that I employed an investment strategy I had developed, called a "split strike conversion strategy," to falsely give the appearance to clients that I had achieved the results I believed they expected.

Through the split-strike conversion strategy, I promised to clients and prospective clients that client funds would be invested in a basket of common stocks within the Standard & Poor's 100 Index, a collection of the 100 largest publicly traded companies in terms of their market capitalization. I promised that I would select a basket of stocks that would closely mimic the price movements of the Standard & Poor's 100 Index. I promised that I would opportunistically time these periods in United States Government-issued securities such as United States Treasury bills. In addition, I promised that as part of the split strike conversion strategy, I would hedge the investments I made in the basket of common stocks by using client funds to buy and sell option contracts related to those stocks, thereby limiting potential client losses caused by unpredictable changes in stock prices. In fact, I never made the investments I promised clients, who believed they were invested with me in the split strike conversion strategy.

To conceal my fraud, I misrepresented to clients, employees and others, that I purchased securities for clients in overseas markets. Indeed, when the United States Securities and Exchange Commission asked me to testify as part of an investigation they were conducting about my investment advisory business, I knowingly gave false testimony under oath to the staff of the SEC on May 19, 2006 that I executed trades of common stock on behalf of my investment advisory clients and that I purchased and sold the equities that were part of my investment strategy in European markets. In that session with the SEC, which took place here in Manhattan, New York, I also knowingly gave false testimony under oath that I had executed options contracts on behalf of my investment advisory clients and that my firm had custody of the assets managed on behalf of my investment advisory clients.

To further cover-up the fact that I had not executed trades on behalf of my investment advisory clients, I knowingly caused false trading confirmations and client account statements that reflected the bogus transactions and positions to be created and sent to clients purportedly involved in the split strike conversion strategy, as well as other individual clients I defrauded who believed they had invested in securities through me. The clients receiving trade confirmations and account statements had no way of knowing by reviewing these documents that those false confirmations and account statements would be and were sent to clients through the U.S. mails from my office here in Manhattan.

Another way that I concealed my fraud was through the filing of false and misleading certified audit reports and financial statements with the SEC. I knew that these audit reports and financial statements were false and that they would also be sent to clients. These reports, which were prepared here in the Southern District of New York, among things, falsely reflected my firm's liabilities as a result of my intentional failure to purchase securities on behalf of my advisory clients.

Similarly, when I recently caused my firm in 2006 to register as an investment advisor with the SEC, I subsequently filed with the SEC a document called a Form ADV Uniform Application for Investment Adviser Registration. On this form, I intentionally and falsely certified under penalty of perjury that Bernard L. Madoff Investment and Securities had custody of my advisory clients' securities. That was not true and I knew it when I completed and filed the form with the SEC, which I did from my office on the 17th floor of 855 Third Avenue, here in Manhattan.

In more recent years, I used yet another method to conceal my fraud. I wired money between the United States and the United Kingdom to make it appear as though there were actual securities transactions executed on behalf of my investment advisory clients. Specifically, I had money transferred from the U.S. bank account of my investment advisory business to the London bank account of Madoff Securities International Ltd., a United Kingdom corporation that was an affiliate of my business in New York. Madoff Securities International Ltd. was principally engaged in proprietary trading and was a legitimate, honestly run and operated business.

Nevertheless, to support my false claim that I purchased and sold securities for my investment advisory clients in European markets, I caused money from the bank account of my fraudulent advisory business, located here in Manhattan, to be wire transferred to the London bank account of Madoff Securities International Limited.

There were also times in recent years when I had money, which had originated in the New York Chase Manhattan bank account of my investment advisory business, transferred from the London bank account of Madoff Securities International Ltd. to the Bank of New York operating bank account of my firm's legitimate proprietary and market making business. That Bank of New York account was located in New York. I did this as a way of ensuring that the expenses associated with the operation of the fraudulent investment advisory business would not be paid from the operations of the legitimate proprietary trading and market making businesses.

In connection with the purported trades, I caused the fraudulent investment advisory side of my business to charge the investment advisory clients $0.04 per share as a commission. At times in the last few years, these commissions were transferred from Chase Manhattan bank account of the fraudulent investment advisory side of my firm to the account at the Bank of New York, which was the operating account for the legitimate side of Bernard L. Madoff Investment Securities — the proprietary trading and market making side of my firm. I did this to ensure that the expenses associated with the operation of my fraudulent investment advisory business would not be paid from the operations of the legitimate proprietary trading and market making businesses. It is my belief that the salaries and bonuses of the personnel involved in the operation of the legitimate side of Bernard L. Madoff Investment Securities were funded by the operations of the firm's successful proprietary trading and market making businesses.

Your Honor, I hope I have conveyed with some particularity in my own words, the crimes I committed and the means by which I committed them. Thank you.


Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK).

Earmarks and Vows

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.

Senate Passes Spending Bill

Despite $8 billion in earmarks, the Senate passed the spending bill that keeps the government operating through September. Ignoring the inevitable controversy it was sure to spawn, the President signed the legislation as well. John McCain stayed true to his message though, as he proposed an amendment that would have taken the earmarks away. His proposal was killed, as all but four Senators had their hands dirty with selfish spending requests.

Surprisingly (or not), it is President Obama who backed away from campaign promises to end wasteful spending (earmarks anyway). Instead, the Administration is disappointing Independents like me and even Democrats by spinning the President's signing of this bill as another Bush problem. The bill was the last in Bush's budget legacy. Even so, the opportunity was there to kill the earmarks if the President wanted to send a message loud and clear. You can only blame Bush for so long though fellas.

Since its passing, the President held a press conference to clear the air. He was somewhat effective in doing so too, until he said he would not completely abolish earmarks because some of them served good purpose. With regard to controlling Congressmen, you cannot police this group of constituency driven, vote hungry men (for lack of a better word). You cannot limit earmarks in a half-way manner. I'm sorry, and I voted for Obama, but this is "spinning" plain and simple. Let's call a spade a spade! Actions speak louder than words.

Geithner Vows to Get it Done

Timothy Geithner appeared on PBS' Charlie Rose, and said he would "do what is necessary" to restore the nation's economy. Geithner also reverberated a message first offered by Larry Summers and recently echoed by the President as well. It's the message of equal effort, and the push for it will be the focus of the United States at this weekend's Group of 20 gathering. However, this was an idea you first read about at Wall Street Greek way back in mid-February in our article, "Protectionism and Hypocrisy." It's not the first time we've led thought, and it will not be the last.

Geithner also alluded to his toxic asset plan, and noted his deliberate effort in its preparation was meant to ensure the best use of taxpayer funds. From what I garnered last evening at a presentation by Dr. Charles Calomiris, Geithner is deliberating on the subject with a group of academics, and it seems there's a chance a productive plan might result. A follow up question posed to Mr. Calomiris referred to the consulted academics as "a bunch" of them, which led to a comedic response from the renowned professor. He said, "Well, when you put it that way, it doesn't sound so good..." (paraphrasing).

Greenspan Denies Blame

It seems like Alan Greenspan is spending far too much of his retirement defending his actions during his tenure as the Federal Reserve Chairman. Today he published an Op Ed piece in the Wall Street Journal as a counter to recent claims by Professor John Taylor.

The remainder of this commentary can be seen at the article, also published today, "Greenspan Rebukes Taylor's Housing Bubble Blame."

Mortgage Activity

Solely tethered to mortgage rate action of late, mortgage activity bounced last week on a steep drop in 30-year fixed mortgage rates. You'll recall that in each of the past two weeks, mortgage activity had backtracked on the heels of long-rate rise. The MBA's Market Composite Index jumped 11.3% in the week ended March 6, after seasonal adjustment, as 30-year fixed mortgage rates declined 18 basis points to 4.96%. Purchase applications improved 7.1%, driven by a 10.4% increase in the Government Purchase Index (mostly FHA). Mortgage refinancing activity improved by 13.3% week-to-week.

Sorry folks, that's all for today due to busy evenings both yesterday and today...

EPS Schedule

Wednesday's earnings schedule highlights news from A/S Dampskibsselskabet Torm (Nasdaq: TRMD), AAON, Inc. (Nasdaq: AAON), Aeterna Zentaris (Nasdaq: AEZS), AFC Enterprises (Nasdaq: AFCE), Altair Nanotechnologies (Nasdaq: ALTI), Altus Pharmaceuticals (Nasdaq: ALTU), American Eagle Outfitters (NYSE: AEO), Aurizon Mines (AMEX: AZK), Bon-Ton Stores (Nasdaq: BONT), Brigham Exploration (Nasdaq: BEXP), Bronco Drilling (Nasdaq: BRNC), Clarient (Nasdaq: CLRT), CVR Energy (NYSE: CVI), D&E Communications (Nasdaq: DECC), Danaos (NYSE: DAC), Diamond Foods (Nasdaq: DMND), DUSA Pharmaceuticals (Nasdaq: DUSA), Elbit Systems (Nasdaq: ESLT), ExlService (Nasdaq: EXLS), General Communication (Nasdaq: GNCMA), Granite City Food & Brewery (Nasdaq: GCFB), Hi-Tech Pharmacal (Nasdaq: HITK), Hot Topic (Nasdaq: HOTT), Icagen (Nasdaq: ICGN), ICF Int'l (Nasdaq: ICFI), Innodata Isogen (Nasdaq: INOD), Insmed (Nasdaq: INSM), Inter Parfums (Nasdaq: IPAR), Jo-Ann Stores (NYSE: JAS), Kodiak Oil & Gas (AMEX: KOG), Korn Ferry (NYSE: KFY), LDK Solar (NYSE: LDK), LMI Aerospace (Nasdaq: LMIA), Lumber Liquidators (NYSE: LL), Main Street Capital (Nasdaq: MAIN), Majesco Entertainment (Nasdaq: COOL), Mannatech (Nasdaq: MTEX), Men's Wearhouse (NYSE: MW), Meruello Maddux (Nasdaq: MMPI), Metabolix (Nasdaq: MBLX), Middlesex Water (Nasdaq: MSEX), Mobile Telesystems (NYSE: MBT), Nabi Biopharmaceuticals (Nasdaq: NABI), National Semiconductor (NYSE: NSM), Navistar Int'l (NYSE: NAV), Neenah Paper (NYSE: NP), OceanFreight (Nasdaq: OCNF), OMNI Energy Services (Nasdaq: OMNI), OncoGenex Technologies (Nasdaq: OGXI), Optimer Pharmaceuticals (Nasdaq: OPTR), Pall Corp. (NYSE: PLL), Park-Ohio (Nasdaq: PKOH), PDI, Inc. (Nasdaq: PDII), Pennichuck (Nasdaq: PNNW), Permian Basin (NYSE: PBT), Quiksilver (NYSE: ZQK), Saga Communications (AMEX: SGA), SCOLR Pharma (AMEX: DDD), Speedway Motorsports (NYSE: TRK), Standard Parking (Nasdaq: STAN), Staples (Nasdaq: SPLS), Superconductor Technologies (Nasdaq: SCON), TBS Int'l (Nasdaq: TBSI), The Buckle (NYSE: BKE), The Descartes System (Nasdaq: DSGX), Ultrapar Holdings (NYSE: UGP), Uranerz Energy (AMEX: URZ), Vail Resorts (NYSE: MTN), WCA Waste (Nasdaq: WCAA), WSP Holdings (NYSE: WH), Xerium Technologies (NYSE: XRM) and XOMA Ltd. (Nasdaq: XOMA).


Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK).

Greenspan Rebukes Taylor's Housing Bubble Blame

By The Greek - 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.

It seems like Alan Greenspan is spending far too much of his retirement defending the actions of his gainful employment as the Federal Reserve Chairman. Today he published an Op Ed piece in the Wall Street Journal as a counter to recent claims by Professor John Taylor. Greenspan employed the page to rebuke all accusations of responsibility for the housing bubble. The once-genius but now often-bitten Greenspan introduced his article as a work geared for the better good of financial system reconfiguration... and not for the purpose of self-defense and legacy preservation. However, it soon became evident the man was clearing his name, and effectively mind you.

The famed Fed man presented a case of "decoupling" of the fed funds rate from long-term mortgage rates, thereby absolving himself and his short-rate fame of all blame. As I read along, I was not sure if I was interpreting a viable enough economic case or a pathetic effort at self-reassurance. I include the word "viable" in that last sentence, because I found it difficult to completely remove short rates from long rate determination, as it seemed Alan wanted me to do. You would expect Greenspan's expansionary work would have weighed on long rates, though other factors discussed herein muted the trend of those historical actions and reactions. In any event, before I was finished, I was well-schooled once again by the still genius Greenspan.

What Changed

Back in the good old days when tech stocks were worshiped and Silicon Valley was considered sacred ground, we thought it was productivity gains that kept inflation at bay and long-rates low. Greenspan, however, paints the new landscape of increased global savings that he says drove long-rates into the nothingness. He states that this factor dislocated mortgage rates from their normal levers, and thereby spawned the global real estate bubble, within which the United States ranked only near the middle of.

Mr. Greenspan first complimented his wise pal, Taylor, and then proceeded to tear his claim to fame, "The Taylor Rule" a new one, so to speak... Greenspan kept it gentleman-like though through his use of words like "unable" and "counterfactual," but make no mistake about it, there's a duel in process. For the affluent or economist crowd, this is better than a Youtube.com dance-off or rap-off, or whatever the kids call it this month. Over the years, Greenspan took a great deal of criticism dished by media and traders with humility and grace, but this shot by his academic counterpart more effectively struck at his intellect. However, while Alan is getting up there in age, he clearly demonstrated today that he still has his mind.

Greenspan even called on his boys for some back up, quoting a compliment of the highest by Milton Friedman that spoke of Alan's tenure. The since passed away, Friedman, was quoted offering the kind words, "There is no other period of comparable length in which the Federal Reserve System has performed so well. It is more than a difference of degree; it approaches a difference of kind."

After properly restoring himself to his platform of admiration, Greenspan returned to his noble message. He wrote that we should not relive the mistakes of the past by acting in reactionary manner and resorting to manic regulation and government operation of private sector matters. God bless him. Hold on, here comes Paul Volcker with a crowbar!

This blog post offers a constructive review of Alan Greenspan's article for the Wall Street Journal, "The Fed Didn't Cause the Housing Bubble." Please read it for yourself. We would love to hear your opinion as well.


Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK).

Message of Hope

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.

The tone of the news wire has been universally negative for a very long time now. Economic data flow has continuously broken historical records and investors' hearts. Meanwhile, talking heads, most notably the new President, have only further soured things with honest and sobering commentary. We've argued here about the counter-productivity of such brutal honesty.

A while back, in our article, "We Need a Hero," we begged America's Grandpa, a.k.a. Warren Buffet, to come to the aid of the markets with some sort of a supportive statement. Not a week later, Warren obliged by making a strong statement about the long-term viability of America and its stocks. Sometimes we wonder if folks are reading us, or if we just have a tap on the collective subconscious. Needless to say, Warren and every long investor lost some more money since that statement, but we thank him for his noble leadership just the same.

Our recent criticism of "Bad News Obama" seems to have also found root with the President, who appears to be singing a hopeful tune now. But today the unimaginable happened! Someone who the market really needed to hear from offered solid reason for hope. Vikram Pandit, the CEO of Citigroup (NYSE: C), said his company, whose shares were sub-$1 recently, was having its best quarter since 2007. We cautiously remind you that Citi was trading for over $30 a share back then. Citi's assets and business hopes are much smaller now, but even so, it sure was nice to hear a financial sector player say something (ANYTHING!) positive about his business.

Special Note:
Dr. Charles Calomiris will discuss "Hope, Prayer and the Economic Crisis" this evening at the Harvard Club in Manhattan. Meet Professor Calomiris and "The Greek" by joining us for the event and the after-gathering at Kellari Taverna next door.

Economic Analysis

Bernanke's Speech

Topic: Financial Reform to Address Systemic Risk

Federal Reserve Chairman Ben Bernanke addressed the Council on Foreign Relations this morning, though he kept his comments focused to domestic issues. As Bloomberg Radio's Tom Keene noted (Tom is my favorite radio show host of all-time, and yes this is brown-nosing but still true), the Council's meetings are no longer limited to "foreign relations" matters, though speakers try to connect issues to global interests.

As the billing suggests, the Chairman focused his discussion on several ideas he views preeminent for financial reform. These ideas have been born from his first hand dealings with the flawed system. They represent a step toward replacing the band aid he was forced to apply in the economic emergency room with a long-term solution toward financial system health.

The Chairman anchored his plan to four pillars. In his own words, "Today, I would like to talk about four key elements of such a strategy. First, we must address the problem of financial institutions that are deemed too big--or perhaps too interconnected--to fail. Second, we must strengthen what I will call the financial infrastructure--the systems, rules, and conventions that govern trading, payment, clearing, and settlement in financial markets--to ensure that it will perform well under stress. Third, we should review regulatory policies and accounting rules to ensure that they do not induce excessive procyclicality--that is, do not overly magnify the ups and downs in the financial system and the economy. Finally, we should consider whether the creation of an authority specifically charged with monitoring and addressing systemic risks would help protect the system from financial crises like the one we are currently experiencing." I view all these aspects of reform appropriate for consideration, and I even agree with the idea of creating a small team to assess inherent systemic risks.

It's interesting that the Chair notes "accounting rules" that could induce procyclicality, as the House Financial Services Committee will hold a hearing on the topic of mark-to-market accounting on Thursday. Chairman Bernanke's second point seems generated from his/our experiences with Bear Stearns and Lehman Brothers, where rumors and outright peer sabotage may have sped the demise of both firms.

One thing is certain, Chairman Bernanke has served as resident genius and consultant of desperate policy makers during this crisis, and has gone over and beyond his call of duty to help them manage the nation through it. He's become a better leader due to the endeavor, and he may have the perfect President now to guide, in that Obama is a man who trusts in Bernanke and his abilities enough to give him the reigns (or half of them with Larry Summers). We must take these things into account when assessing the record of this Federal Reserve Chief's term. He's been asked much, and has been a reliable source of hope and tangible solution. I think we are much better off with Bernanke, then we would be if Ron Paul had his way and the Federal Reserve were abolished! Don't you? I hope I do not regret these kind words in three years when inflation is worse than it was in the '70s. This is the future risk Bernanke should be dedicating a good portion of his time towards now. Click here to see Ben's prepared statements.

ICSC Weekly Same-Store Sales

Weekly same-store sales have been less bad of late, and this week's data showed some week-over-week improvement even. Weekly sales rose 0.2% over the immediately preceding period, though sales still fell 0.9% versus the prior year. Sentiment was much better last year though. Recall, at this time last year the market even enjoyed a short bear market rally, which by the way I predicted. Unfortunately, many folks who read through my work too quickly (or only looked at the headline) misinterpreted my call of "a" near-term market bottom for a call of "the" market bottom.

Guess what, even before this great day in the Citi started, I've been getting a little excited about a new bear market rally I see here, driven by valuation, exhaustion and seasonal energy. I've even been toying with the possibility of calling "the" market bottom this time around. If only there were not so many fallen economists and strategists lying around who tried to do the same thing.

Tying back to the weekly sales data, did you notice how energized folks were over the warm weekend? I took careful note of shopping activity, and even spoke with a few retailers who were recently fretting about this year's "early" Easter. A little burst of sunlight and all those bunnies came right out of their holes. They returned in the evening full of tiny pink bags from their favorite stores. Look for this particular sales metric from the ICSC to show strong weekly sales gains next week as a result.

Wholesale Trade

January's Wholesale Trade data came in lower, though not depleted enough. January's inventory levels fell 0.7%, versus the consensus outlook for a fall of 1.0%, according to Barron's (careful, as this may have been only one economist's forecast). Compared to last year, inventories were up a full percentage point. The scariest information garnered from the report is the significance of the difference between sales and inventory decline. Sales dropped 2.9% from December levels, and nose-dived by 15.4% from the prior year period.

Sales are not adjusted for price changes, and so reflect the true movement of units. As you might imagine, the sales-to-inventory ratio expanded to 1.3 in January, from 1.09 a year ago and 1.27 (r) in December. What's this all mean? It means wholesalers aren't moving stock, and therefore, will have to cut capacity, fire employees and reduce prices further (remember this data is from January though). For the layman it still means more bad news!

International News Drivers

Europe Rejects Summers' Call to Arms

The day before Bernanke says he takes global cooperation as necessary and even "self-evident," and in response to the well-planned global call to arms by Larry Summers, Europe rejected the call for more stimulus! Anybody who has traveled between the U.S. and Europe knows full well the variation in pace between the two regions. While the difference may vary from the extremes of Germany and Greece (I only use Greece because of my familiarity), Europe is generally much slower paced than the U.S., no matter what you are up to.

To the efficiency centric, timeline sensitive (often at the cost of quality) United States, Europe is just too slow. I often wonder how many American tourists suffer nervous breakdowns in Europe, as I've witnessed it myself with several traveling companions who happened to be less tolerant than I am. It's sometimes funny to watch, but can become disturbing. I can use my own adjustment as an example. I would often leave for vacation working late nights and all-nighters to prepare for the trip, even pulling back-to-back all-nighters while working from an Athens hotel. It was insane! However, by the time my return date arrived, I was ready to quit my job and remain in Greece to sell fruit from a pickup truck. Let me tell you, while I love American opportunity (esp. for small business), I do not miss the robotic corporate ignorance that often comes at the cost of quality and sanity in the cubicles of America. At the same time, I realize the flaws of European easy going as well.

So, you must be wondering what all this jabber has to do with the European rejection of new stimulus. Well, the Europeans want to wait and see how efforts already undertaken work towards economic restoration. It's a wait and see attitude, a measured pace. In the U.S., this is viewed as a flawed strategy that will cause Europe to linger in recession, but in Europe the mega-spending the U.S. has undertaken is viewed as reactionary nervous strides that might lead to dollar devaluation and runaway inflation. Who is right? Probably both actually. The truth is somewhere in the middle, as always.

Prices FALL in China

China's Consumer Price Index (CPI) showed a year-over-year price decline in February, the first such move in six years! China's CPI fell 1.6%, though some of the move may be relative to the fact that last February offered a tough "comp." Prices rose 8.7% in the 2008 period. At first glance, this looked like a media attempt to create news, since we all know oil prices are much lower now then they were a year ago. We could not locate the original report on China's National Bureau of Statistics website, but most of the rereporting makes no reference to energy prices. This is a "headline" CPI number though, and in the States that incorporates energy. Attribution is being paid to lower housing and commodity prices, especially food. The Chinese government still forecasts CPI growth of 4% this year, and there remains little concern for deflation. We have to agree, as domestic development in China is like a large ship, once begun, as it is now, it is very hard to stop. Global demand for exports will pick up soon enough as well.

Eastern European Farce?

There's been much fuss raised recently over the danger of Eastern European currency crises and economic catastrophe. There have been great outcries to broader Europe for help, and the EU has responded by promising to support its own members and by fueling the IMF and World Bank alongside other nations.

However, today, an Austrian bank drew attention like a lone tree on a hilltop draws lightning. Erste Group, which is already hampered in its argument before it begins due to its interests in Eastern Europe, sought to dispute the "erroneous" claims of recent articles in the Economist and Financial Times, not to mention recent credit rating agency downgrades and warnings. However, speaking from experience, if we are comparing the accuracy of the companies in question (rating agencies) to Erste Group, I have to give decent probability to Erste Group's claims being more accurate! Trust me on this one!

In any event, Erste says the level of debt burden and financing needs based on BIS data have been greatly overstated, because they include debt issued by the local subsidiaries of foreign owned banks issued in local markets. It seems to me the truth is again somewhere in the middle. It would be hard to fathom by simple logic that the rapidly expanding and questionably regulated nations of Eastern and Central Europe were not at great risk now due to excess investment, considering what has happened in the most developed nations of the world. We expect the IMF has done its homework before issuing aid to the Ukraine, Belarus, Hungary, Latvia and Serbia! Otherwise, we may have here the latest in a series of scandals that should be equally expected by now.

Corporate News Drivers

Citigroup's Message of Hope

There you go Vik! I think every corporation should have a Chief Market Psychologist. Seems like Vikram Pandit understands the need, but his stock's offering price might have created the necessary impetus a little late. An intimate internal memo authored by Citigroup's (NYSE: C) boss man somehow leaked.......... It conveniently stated that Citi was profitable through the first two months of this year, and was having its best quarter since Q3 2007. Given C's pace of price decline, there may not have been shares to trade by the time the first quarter's good news was to be formally reported. Therefore, this news leak was well-appreciated by Citi shareholders. C shares are up 34% at this hour, and the Financial Select Sector SPDR (NYSE: XLF) is up 12%. The broader market is up about 5% (AMEX: DIA, Nasdaq: QQQQ, AMEX: SPY), so everybody is happy. Thanks Vik.

EPS Schedule

Tuesday's EPS reports include news from A.M. Castle & Co. (NYSE: CAS), Advocat (Nasdaq: AVCA), Air Methods (Nasdaq: AIRM), Alexza Pharmaceuticals (Nasdaq: ALXA), Alpha Pro Tech (AMEX: APT), American Public Education (Nasdaq: APEI), Approach Resources (Nasdaq: AREX), AVI BioPharma (Nasdaq: AVII), Baytex EnergyTrust (NYSE: BTE), Blackrock Kelso Capital (Nasdaq: BKCC), Boots & Coots Int'l Well Control (AMEX: WEL), Boston Beer (NYSE: SAM), CAI Int'l (NYSE: CAP), Capital Senior Living (NYSE: CSU), Capital Trust (NYSE: CT), China Digital TV (NYSE: STV), Clayton Williams Energy (Nasdaq: CWEI), Collective Brands (NYSE: PSS), Comverge (Nasdaq: COMV), Dick's Sporting Goods (NYSE: DKS), DXP Enterprises (Nasdaq: DXPE), Eagle Rock Energy (Nasdaq: EROC), Emisphere Tech (Nasdaq: EMIS), Evans and Sutherland (Nasdaq: ESCC), Evolving Systems (Nasdaq: EVOL), Ferrellgas Partners (NYSE: FGP), FuelCell Energy (Nasdaq: FCEL), Gaiam (Nasdaq: GAIA), General Steel Holdings (NYSE: GSI), Global Options (Nasdaq: GLOI), Gulfport Energy (Nasdaq: GPOR), Hawk (AMEX: HWK), Hovnanian (NYSE: HOV), Hypercom (NYSE: HYC), Information Services (Nasdaq: III), IRIDEX (Nasdaq: IRIX), J. Crew (NYSE: JCG), JA Solar (Nasdaq: JASO), KMG Chemicals (Nasdaq: KMGB), LHC Group (Nasdaq: LHCG), Lime Energy (Nasdaq: LIME), MAKO Surgical (Nasdaq: MAKO), Marlin Business Services (Nasdaq: MRLN), MEMSIC (Nasdaq: MEMS), ModusLink Global (Nasdaq: MLNK), Nautilus (NYSE: NLS), NCI Building (NYSE: NCS), NN Inc. (Nasdaq: NNBR), Oil-Dri Corp. (NYSE: ODC), Quadramed (Nasdaq: QDHC), Reddy Ice (NYSE: FRZ), Salix Pharmaceuticals (Nasdaq: SLXP), Silver Standard Resources (Nasdaq: SSRI), Stage Stores (NYSE: SSI), Take-Two Interactive (Nasdaq: TTWO), The Exploration Co. (Nasdaq: TXCO), The Kroger Co. (NYSE: KR), Thermadyne Holdings (Nasdaq: THMD), Thomson (NYSE: TMS), Transact Technologies (Nasdaq: TACT), TriMas Corp. (NYSE: TRS), Trinity Biotech (Nasdaq: TRIB), Uranium Resources (Nasdaq: URRE), Vicor (Nasdaq: VICR) and Western Gas Partners (NYSE: WES).


Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK).

Week Ahead: Time to Reset the Economy

By The Greek - 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.

Perhaps like Madam Clinton meant to say to her Russian counterpart, maybe America might also "reset" its economy with a dummy button. Nothing else seems to be working, so why not! Perhaps the illusory scheme might prove an effective tool to fool American consumers and investors into buying and investing again. Gee, I can almost remember when buying and investing were America's two favorite past times.

But don't fret! "The Greek" was out and about this past weekend, and I took note at how intoxicating 20 degrees of unseasonable warmth can be in early March. It seemed to me like an entire city of cabin kept couples were set free to roam the streets all at once this weekend. The chubby hubbies were loaded up with bags from all the stores that managed to survive up until now. Also, bars and restaurants were full and the supermarket empty. You know, if you look at the glass half full, a great majority of you are still working full-time and are up to date on your mortgage payments.

Even "Bad News Obama" has changed his tune. If you watched his recent video address and took note of other appearances, he seems to be expanding from the monotone tragic song he's sung in minor key up until now. Maybe the new puppy will help also, as soon as he's house trained, dewormed and we're sure he's hypoallergenic... Womp womp...Bad News....

The Week Ahead

Monday

While there are no economic reports scheduled, the U.S. Senate will hold a hearing on the appointment of Ron Kirk as U.S. Trade Representative. The focus of the week will probably be on the Stimulus Bill and the wheeling and dealing between the parties, as this one is not going through without some Republican votes. Overseas, Australian markets are closed on Monday.

The day's earnings schedule includes Acadia Pharmaceuticals (Nasdaq: ACAD), Acorn Int'l (NYSE: ATV), AeroVironment (Nasdaq: AVAV), Airspan Networks (Nasdaq: AIRN), American Oriental Bioengineering (NYSE: AOB), American Vanguard (NYSE: AVD), Bitstream (Nasdaq: BITS), Cantel Medical (NYSE: CMN), Casey's General Stores (Nasdaq: CASY), China TechFaith Wireless (Nasdaq: CNTF), Comtech Telecommunications (Nasdaq: CMTL), Digital Ally (Nasdaq: DGLY), Gafisa S.A. (NYSE: GFA), HFF Inc. (NYSE: HF), Hill Int'l (NYSE: HIL), Interleukin Genetics (AMEX: ILI), Kratos Defense & Security (Nasdaq: KTOS), Limco-Piedmont (Nasdaq: LIMC), Morton's Restaurant Group (NYSE: MRT), Oncothyreon (Nasdaq: ONTY), Orbit Int'l (Nasdaq: ORBT), Pegasystems (Nasdaq: PEGA), Relm Wireless (AMEX: RWC), ResCare (Nasdaq: RSCR), Rodman & Renshaw (Nasdaq: RODM), Safety Insurance Group (Nasdaq: SAFT), Sasol Ltd. (NYSE: SSL), SMTC Corp. (Nasdaq: SMTX), Track Data (Nasdaq: TRAC) and Vivus Inc. (Nasdaq: VVUS).

Tuesday

The Senate may vote on the Stimulus Bill on Tuesday if things progress well enough. At 8:30 EDT, Federal Reserve Chairman Bernanke addresses the Council on Foreign Relations. Protectionism is the hot topic of the day, so you can expect it to be discussed here.

The weekly same-store sales data out of the ICSC has been deteriorating at a slower rate of late. I don't know if you noticed, but shoppers threw caution to the wind when temperatures rose twenty degrees over the weekend. Here in New York, the bars were full (not that I ventured into any) and the shopping married couples returned home with hubby's hands loaded. Look for an uptick in next week's data as a result. Last week saw year-to-year sales fall 0.8%.

At 10:00 a.m., the Wholesale Trade Report is due. Barron's indicates expectations for an inventory decline of 1.0% for January. Inventories declined by 1.4% in December. In an undeniably horrible environment, seeing inventory decline is a welcomed occurrence. What matters more to the market is if inventory decline is keeping pace with sales decline, so the inventory-to-sales ratio is noteworthy.


What you see in the chart here is a long-term trend of efficiency gain, as companies the world over used technology and analysis to improve operations processes. However, you can see that over the past few months, sales drops have proven sharper than the system could digest. The inventory-to-sales ratio measured 1.27 in December.

On Tuesday evening, don't miss Dr. Charles Calomiris at the Harvard Club in Manhattan, where he discusses "Hope, Prayer and the Economic Crisis." Click on the image here for details.

Tuesday's EPS reports include news from A.M. Castle & Co. (NYSE: CAS), Advocat (Nasdaq: AVCA), Air Methods (Nasdaq: AIRM), Alexza Pharmaceuticals (Nasdaq: ALXA), Alpha Pro Tech (AMEX: APT), American Public Education (Nasdaq: APEI), Approach Resources (Nasdaq: AREX), AVI BioPharma (Nasdaq: AVII), Baytex EnergyTrust (NYSE: BTE), Blackrock Kelso Capital (Nasdaq: BKCC), Boots & Coots Int'l Well Control (AMEX: WEL), Boston Beer (NYSE: SAM), CAI Int'l (NYSE: CAP), Capital Senior Living (NYSE: CSU), Capital Trust (NYSE: CT), China Digital TV (NYSE: STV), Clayton Williams Energy (Nasdaq: CWEI), Collective Brands (NYSE: PSS), Comverge (Nasdaq: COMV), Dick's Sporting Goods (NYSE: DKS), DXP Enterprises (Nasdaq: DXPE), Eagle Rock Energy (Nasdaq: EROC), Emisphere Tech (Nasdaq: EMIS), Evans and Sutherland (Nasdaq: ESCC), Evolving Systems (Nasdaq: EVOL), Ferrellgas Partners (NYSE: FGP), FuelCell Energy (Nasdaq: FCEL), Gaiam (Nasdaq: GAIA), General Steel Holdings (NYSE: GSI), Global Options (Nasdaq: GLOI), Gulfport Energy (Nasdaq: GPOR), Hawk (AMEX: HWK), Hovnanian (NYSE: HOV), Hypercom (NYSE: HYC), Information Services (Nasdaq: III), IRIDEX (Nasdaq: IRIX), J. Crew (NYSE: JCG), JA Solar (Nasdaq: JASO), KMG Chemicals (Nasdaq: KMGB), LHC Group (Nasdaq: LHCG), Lime Energy (Nasdaq: LIME), MAKO Surgical (Nasdaq: MAKO), Marlin Business Services (Nasdaq: MRLN), MEMSIC (Nasdaq: MEMS), ModusLink Global (Nasdaq: MLNK), Nautilus (NYSE: NLS), NCI Building (NYSE: NCS), NN Inc. (Nasdaq: NNBR), Oil-Dri Corp. (NYSE: ODC), Quadramed (Nasdaq: QDHC), Reddy Ice (NYSE: FRZ), Salix Pharmaceuticals (Nasdaq: SLXP), Silver Standard Resources (Nasdaq: SSRI), Stage Stores (NYSE: SSI), Take-Two Interactive (Nasdaq: TTWO), The Exploration Co. (Nasdaq: TXCO), The Kroger Co. (NYSE: KR), Thermadyne Holdings (Nasdaq: THMD), Thomson (NYSE: TMS), Transact Technologies (Nasdaq: TACT), TriMas Corp. (NYSE: TRS), Trinity Biotech (Nasdaq: TRIB), Uranium Resources (Nasdaq: URRE), Vicor (Nasdaq: VICR) and Western Gas Partners (NYSE: WES).

Wednesday

As is often the case, the data schedule picks up from Wednesday forward. In recent weeks, mortgage activity has backed up on a correlated rise in 30-year fixed rate mortgages. This week's data is due Wednesday morning in the premarket as always.

The Quarterly Services Survey for the fourth quarter of 2008 is set for 10:00 a.m. publishing time. The report focuses on IT related service industries, which play a key role in productivity. Much of the workforce that is going away now may not come back where technology can replace feet on the ground.

OPEC has been making news recently as further production hikes are rumored possible. We've already warned here that this is likely lip service intended to keep prices stable. It keeps the thought of possible production cuts at the fore of our mind and serves its purpose as a result. OPEC has acted in this manner in the recent past, and is generally reluctant to cut back on production. When it does, it has great difficulty ensuring its rogue members adhere. The EIA will produce the regular Petroleum Status Report, measuring inventory, at 10:30. This data is an important factor in price determination again now that oil seems to have stabilized.

All this spending combined with lighter tax receipts should drive the Federal Treasury Deficit to expand in February. Bloomberg's consensus sees a deficit of $205.7 billion comparing against $83.8 billion in January.

Wednesday's earnings schedule highlights news from A/S Dampskibsselskabet Torm (Nasdaq: TRMD), AAON, Inc. (Nasdaq: AAON), Aeterna Zentaris (Nasdaq: AEZS), AFC Enterprises (Nasdaq: AFCE), Altair Nanotechnologies (Nasdaq: ALTI), Altus Pharmaceuticals (Nasdaq: ALTU), American Eagle Outfitters (NYSE: AEO), Aurizon Mines (AMEX: AZK), Bon-Ton Stores (Nasdaq: BONT), Brigham Exploration (Nasdaq: BEXP), Bronco Drilling (Nasdaq: BRNC), Clarient (Nasdaq: CLRT), CVR Energy (NYSE: CVI), D&E Communications (Nasdaq: DECC), Danaos (NYSE: DAC), Diamond Foods (Nasdaq: DMND), DUSA Pharmaceuticals (Nasdaq: DUSA), Elbit Systems (Nasdaq: ESLT), ExlService (Nasdaq: EXLS), General Communication (Nasdaq: GNCMA), Granite City Food & Brewery (Nasdaq: GCFB), Hi-Tech Pharmacal (Nasdaq: HITK), Hot Topic (Nasdaq: HOTT), Icagen (Nasdaq: ICGN), ICF Int'l (Nasdaq: ICFI), Innodata Isogen (Nasdaq: INOD), Insmed (Nasdaq: INSM), Inter Parfums (Nasdaq: IPAR), Jo-Ann Stores (NYSE: JAS), Kodiak Oil & Gas (AMEX: KOG), Korn Ferry (NYSE: KFY), LDK Solar (NYSE: LDK), LMI Aerospace (Nasdaq: LMIA), Lumber Liquidators (NYSE: LL), Main Street Capital (Nasdaq: MAIN), Majesco Entertainment (Nasdaq: COOL), Mannatech (Nasdaq: MTEX), Men's Wearhouse (NYSE: MW), Meruello Maddux (Nasdaq: MMPI), Metabolix (Nasdaq: MBLX), Middlesex Water (Nasdaq: MSEX), Mobile Telesystems (NYSE: MBT), Nabi Biopharmaceuticals (Nasdaq: NABI), National Semiconductor (NYSE: NSM), Navistar Int'l (NYSE: NAV), Neenah Paper (NYSE: NP), OceanFreight (Nasdaq: OCNF), OMNI Energy Services (Nasdaq: OMNI), OncoGenex Technologies (Nasdaq: OGXI), Optimer Pharmaceuticals (Nasdaq: OPTR), Pall Corp. (NYSE: PLL), Park-Ohio (Nasdaq: PKOH), PDI, Inc. (Nasdaq: PDII), Pennichuck (Nasdaq: PNNW), Permian Basin (NYSE: PBT), Quiksilver (NYSE: ZQK), Saga Communications (AMEX: SGA), SCOLR Pharma (AMEX: DDD), Speedway Motorsports (NYSE: TRK), Standard Parking (Nasdaq: STAN), Staples (Nasdaq: SPLS), Superconductor Technologies (Nasdaq: SCON), TBS Int'l (Nasdaq: TBSI), The Buckle (NYSE: BKE), The Descartes System (Nasdaq: DSGX), Ultrapar Holdings (NYSE: UGP), Uranerz Energy (AMEX: URZ), Vail Resorts (NYSE: MTN), WCA Waste (Nasdaq: WCAA), WSP Holdings (NYSE: WH), Xerium Technologies (NYSE: XRM) and XOMA Ltd. (Nasdaq: XOMA).

Thursday

Thursday is often the busiest day of the financial week, and this one is no exception. The headline story might prove the Retail Sales data for the month of February. Chain store sales painted the picture well enough last week; a shift in spending to "discount," which includes market share leader Wal-Mart (NYSE: WMT), is having a profound impact on aggregate sales. Bloomberg's consensus of economists forecasts a sales decline of 0.5% in February. Excluding autos, sales are expected down 0.2% month-to-month.

The Weekly Initial Jobless Claims loss level improved last time around, but was still concerning at 639K. Last week's data was overshadowed by the ADP Report. This week's claims report sits as the lone labor market barometer this time around, and so it could prove worthy of higher market value. Bloomberg's group forecasts claims of 645K this week.

After getting the Wholesale Inventory data earlier in the week, Thursday offers the Business Inventory data for January. This inventory-to-sales ratio jumped to 1.44 in January, as inventory adjustment could not keep up with the steepness of lost demand. As far as inventories go, economists expect a 1.0% decline in January, versus the 1.3% drop in December.

The Federal Reserve publishes the flow-of-funds data for Q4 on Thursday. A day late and a dollar short, the House Financial Services Committee will hear testimony on mark-to-market accounting rules. Lot of good that does us now; in any event, the cat is already out of the bag, so even if regulators were to change the rules, you can't hide what has already been exposed.

At 10:30, look for the EIA's Natural Gas Report. Overseas, the European Parliament will vote on changes regarding the emissions of coal-fired power plants.

The day's EPS reports include Aeropostale (NYSE: ARO), American States Water (NYSE: AWR), Arabian American (Nasdaq: ARSD), Arena Pharma (Nasdaq: ARNA), Athersys (Nasdaq: ATHX), Autobytel.com (Nasdaq: ABTL), Beasley Broadcast Group (Nasdaq: BBGI), Bionovo (Nasdaq: BNVI), Cadence Pharma (Nasdaq: CADX), Caliper Life Sciences (Nasdaq: CALP), Cardiac Science (Nasdaq: CSCX), CECO Environmental (Nasdaq: CECE), Central Vermont Public (NYSE: CV), China Fire & Security (Nasdaq: CSFG), Chyron (Nasdaq: CHYR), Citizens (NYSE: CIA), Coleman Cable (Nasdaq: CCIX), Comforce (AMEX: CFS), Consolidated Communications (Nasdaq: CNSL), Digital Angel (Nasdaq: DIGA), Double Eagle Petroleum (Nasdaq: DBLE), E-House Holdings (NYSE: EJ), Elron Electronic (Nasdaq: ELRN), Endeavor Int'l (AMEX: END), Ener1 (Nasdaq: HEV), ENGlobal (NYSE: ENG), EPIX Pharma (Nasdaq: EPIX), FiberNet Telecom (Nasdaq: FTGX), FiberTower (Nasdaq: FTWR), Fisher Communications (Nasdaq: FSCI), Fushi Copperweld (Nasdaq: FSIN), GenVec (Nasdaq: GNVC), Global Partners (NYSE: GLP), Global Sources (Nasdaq: GSOL), Herley Industries (Nasdaq: HRLY), Hibbett Sports (Nasdaq: HIBB), HQ Sustainable Maritime (AMEX: HQS), IMAX (Nasdaq: IMAX), inContact (Nasdaq: SAAS), IncrediMail (Nasdaq: MAIL), Internap (Nasdaq: INAP), Interstate Hotels & Resorts (NYSE: IHR), Javelin Pharma (AMEX: JAV), Jones Soda (Nasdaq: JSDA), LIN TV (NYSE: TVL), LSB Industries (NYSE: LXU), Luxottica (NYSE: LUX), MSD, Inc. (NYSE: MDZ), Medifast (NYSE: MED), Meridian Resources (NYSE: TMR), Metalico (AMEX: MEA), Methode Electronics (NYSE: MEI), MTR Gaming (Nasdaq: MNTG), Nash Finch (Nasdaq: NAFC), Nevada Gold & Casinos (AMEX: UWN), NGAS Resources (Nasdaq: NGAS), NGP Capital Resources (Nasdaq: NGPC), NxStage Medical (Nasdaq: NXTM), Ocean Power Tech (Nasdaq: OPTT), Ocwen Fin'l (NYSE: OCN), Orthovita (Nasdaq: VITA), Pacific Sunwear (Nasdaq: PSUN), PowerSecure (Nasdaq: POWR), Primedia (NYSE: PRM), Princeton Review (Nasdaq: REVU), Provident Energy Trust (NYSE: PVX), QAD, Inc. (Nasdaq: QADI), RAM Energy (Nasdaq: RAME), Raven Industries (Nasdaq: RAVN), RenaSola (NYSE: SOL), Safeguard Scientific (NYSE: SFE), Salem Communications (Nasdaq: SALM), Shuffle Master (Nasdaq: SHFL), Simcere Pharma (NYSE: SCR), Smith & Wesson (Nasdaq: SWHC), Smithfield Foods (NYSE: SFD), STEC Inc. (Nasdaq: STEC), Stewart Enterprises (Nasdaq: STEI), Sunesis Pharma (Nasdaq: SNSS), Synta Pharma (Nasdaq: SNTA), TLC Vision (Nasdaq: TLCV), Transglobe Energy (Nasdaq: TGA), Trubion Pharma (Nasdaq: TRBN), Universal Display (Nasdaq: PANL), Vimpel Communications (NYSE: VIP), Wave Systems (Nasdaq: WAVX), Winland Electronics (AMEX: WEX), ZipRealty (Nasdaq: ZIPR) and Zumiez (Nasdaq: ZUMZ).

Friday

Friday will offer uncharacteristically heavy economic data this week. The Import Prices and International Trade data go hand in hand, and will be reported likewise at 8:30. Economists forecast import prices fell 0.8% on general commodity price decline. Prices fell 1.1% in January.

The Trade Deficit likely narrowed to $38.1 billion in February, compared against January's $39.9 billion mark. Global weakness is playing the key role here, as the world follows the U.S. into deep recession. I apologize for sounding like the Russian government with the wording of that statement. In case you have not noticed, Russia puts the blame for this global mess directly on the U.S. I wonder how things will be now that we have "reset" the relationship, and I wonder if Georgia feels like it's been made whole. "Reset" didn't give it Abkhazia nor North Ossetia back, and it still has Russian troops within its natural borders. We would like to see "reset" apply to Russia as much as it does to the U.S. and its allies. Shall we appease a wolf with a goodwill offering for the sake of a day, knowing full well he will return hungry again the next day?

Just before 10:00 a.m., look for Reuters/University of Michigan's Consumer Sentiment measure to have deteriorated slightly to 55.0, from 56.3 in February. The day's earnings schedule includes AEP Industries (Nasdaq: AEPI), Allianz SE (NYSE: AZ), Compass Diversified Holdings (Nasdaq: CODI), Eni SpA (NYSE: E), GeoMet (Nasdaq: GMET), Halozyme (Nasdaq: HALO), Hooper Holmes (AMEX: HH), Inhibitex (Nasdaq: INHX), Investors Real Estate (Nasdaq: IRET), NACCO Industries (NYSE: NC), NPS Pharmaceuticals (Nasdaq: NPSP), Piedmont Natural Gas (NYSE: PNY), Reis Inc. (Nasdaq: REIS) and Sun Communities (NYSE: SUI).


Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK).

Weekly Videos - Spring Ahead

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



Enjoy this week's video compilation. We've chose interesting videos covering politics, global affairs, business, financial markets and other interesting flicks for you to peruse. Please fast forward through to see the videos that interest you. If you cannot see a video player from your vantage point, simply click on the image below to watch the videos at our blog.


(Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK). Please see our disclosures at the Wall Street Greek website and author bio pages found there.

Unemployment Bliss?

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.

8.1% spells relief? What were you thinking when you saw that the unemployment rate jumped a half of a percentage point in February, surpassing economists' expectations by two-tenths of a point? Did you wipe your brow and say "Whew?" Of course not right... So then, you must be wondering why the stock market actually rose modestly on Friday. It's called a relief rally, and it's spelled: "We already sold everything all week long, and so when the world didn't end, there was nothing else left to sell on Friday..." Voila... rally, kind of sort of anyway. I mean it was a pretty pathetic rally, but it was better than chalking up another decline on a week that netted a loss of 6.2% on the Dow (AMEX: DIA, AMEX: DOG). The Industrials Index fell incredibly deep below 7000, to close out the week at 6,626.94.

The Employment Situation Report produced a net loss of 651,000 nonfarm payrolls (read jobs) in February. That's a high number of newly unemployed folks, and it includes a birth/death rate adjustment that the government makes on its estimates of population change and job creation. The pure number of folks who joined the unemployment line in February increased by 851,000, to 12.5 million people, and if you include the 787,000 troubled souls who started working part-time jobs because they have no other choice, the number gets even larger. These "involuntary part-time workers" total 8.6 million now, and including those individuals in the jobless measurement takes the less than full employment rate to 13.7%.

That's not good news, but the ADP Private Employment Report that preceded the government data by two days had already shown private nonfarm payroll losses at a whopping 697,000. Thus, it cleared an expectations path for the federal data to walk through on Friday. It's not like it was necessary though, given the dramatic weekly pace of new jobless claims throughout February. We had our share of fair warning.

Stocks started worrying about the jobs data on Monday, and actually recovered some ground on Wednesday when it was rumored China's Premier might increase his nation's stimulus efforts. Then on Thursday, Prime Minister Wen Jiabao promptly sucked the wind out of those sails when he made no mention of such an increase. On Thursday, Weekly Initial Jobless Claims were reported at 639,000, and the market got right back to worrying.

The last few horrid weeks have officially indoctrinated President Obama as a bear market president, since stocks have fallen 20% under his watch already. However, the President said he did not focus on day-to-day stock fluctuations, since that would be a flawed tool to set long-term planning by, according to the Prez. Okay Bad News (that's my new pet name for the President since he keeps reminding the nation of his inheritance of a catastrophic situation that will take so much sacrifice to recover from). Obama needs to learn one thing, and that is that a good coach never tells his players they're not going to win this game because they are not good enough yet. That's the one sure way of guaranteeing a loss, and in Obama's case, it's a good way to ensure keeping consumer and investor sentiment in the dumps. There are still plenty of folks employed, and we need those people to feel comfortable with the outlook.

So what's in store for next week then? Well, the new spending bill is clogged up in Congress, as divided Democrats need some Republican votes to get it through. Those votes will not come without $8 billion in earmarks, and those earmarks conflict with Obama's stark campaign words against such evil. It seems to me that we have an opportunity for a valuation driven rally at these levels. Still, whether a bear market rally ensues or stocks slide further this week may hinge greatly on whether the bill passes into law or not.


(Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK). Please see our disclosures at the Wall Street Greek website and author bio pages found there.

Punch Drunk Recession Love

By The Greek - 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.

Forgive me readers, for I have grinned. As I reread through my work today, I realized I'm a bit "recession punch drunk" (all rights reserved). You know you're in trouble with a blog post when you apologize for it in the first sentence. Anywho, I think you'll enjoy it, especially if you're drunk. As a matter of fact, get drunk first... and be sure to read through the entire piece. Thank me later.

Today's Employment Report clearly dictated trading, but it did so all week long up until today. As often occurs, we buy or sell on the rumor and reverse the trade on the news. At the point of publishing, the employment report would have had to have stated, "We have one month before an asteroid collides with the earth and annihilates the human race," for the market to have taken the news poorly today. Needless to say, that didn't happen and the market experienced a relief rally, sort of. We were up fractionally on the Dow, which is better than another decline. "Whew!" said the chicken on the chopping block as the butcher walked away to sharpen his blade.

Economic Reports Analysis

Employment Situation Report

The highly anticipated Employment Report for February was at least as catastrophic as expected, though the unemployment rate was two-tenths of a percentage point higher than foreseen. In any event, after ADP's data, this report would have had to have shown 700+ nonfarm payrolls lost to have moved the already sunken market even lower. Thus, we got a relief rally instead.

Unemployment jumped up to 8.1% in February, a giant half point leap from January's 7.6% rate. The layoffs are coming hot and heavy now, and no let up is in sight. The unemployment rate not only surpassed consensus expectations for a 7.9% marking, but topped even the high end of the range, which according to Bloomberg's survey of economists, stood at 8.0%.

Nonfarm Payrolls shed 651K jobs in February on net and adjusted for the phantom birth/death rate, which was especially shady during the Bush Administration's term. It's still a sneaky factor that Barron's Alan Abelson likes to pick on once a month, always bringing a smile to The Greek. Thanks Al for helping to make the nightmarish comical.

Consumer Credit Report

Consumer Credit data arrived at 3:00 PM ET. By the way, don't forget to turn your clocks forward this weekend folks. Credit has been contracting sharply as lending standards have tightened. Also, many folks are just plain no longer qualified for the same credit they were while employed and when their homes were worth 20-40% more. It was not so long ago that credit was defying logic and still growing, and your favorite blogger was warning of what was to come... Do you remember the times? Check these two articles out from June 2007. (2nd: Most Important Article You Ever Read) By the way, I still view Iran as the catalyst that does us in.

Still, credit actually grew in January, shocking economists far and wide. The consensus expected credit to contract by $4.8 billion, and it instead expanded by $1.8 billion. Is this perhaps a sign that the financial system is intact and that stimulus efforts are working? You'll read further down this article that several banks are seeking to return TARP funds. Are these signs of stability? It would seem so...

Senate Holds Up Spending Bill

The $410 billion spending bill is held up in the Senate without the full support of the Democratic party. The Dems are now seeking Republican support, and offering concessions in the form of $8 billion in earmarks. Yes, these are the kind of earmarks Obama has spoken out about, which might lead to the bill's eventual veto. So far, I've found Obama to be more of a malleable man than a Centrist. I think he can be swayed and influenced, and that is what brings him toward center. For this reason, I pray he really does have the best of advisers.

I think there's a decent chance Obama does not veto this bill as a result, but instead signs it earmarks and all, noting that the money is needed now and that he will not hold it up for $8 billion in spending he does not agree with. I have a question for you now... Would this be a political mistake on his part, because the Republicans will label him a liar in 2012. It'll be "read my lips" all over again.

Obama's Health Care Hopes

Despite other pressing needs, the President is pushing forward with his health care reform effort, God bless his soul. You see, The Greek doesn't have health care. Luckily I don't get sick or develop cavities either. I just have one concern that you conservatives are going to like (by the way, I'm an American and will not label myself a conservative or a liberal or anything else ever again). I'm sick of your tribal grouping! Evolve already human race!

My concern is that free health care will develop into what I see in Greece and especially Georgia (a poorer country), disinterested doctors unless they get a little extra payoff. The sick also find less than stellar hospital care, so everyone outside of France and the U.K. goes to Germany for serious problems.

The Germans are so unique a people, even their public restrooms are spotless. I can't imagine what a German thinks of us after attending a pro football game in the states. Heck, even I am uncomfortable at the stadium and I only have ancestry from Europe. But, how can the Germans have a social health care system that runs so well? So, if they can, why can't the U.S. program stay top notch despite being government run? Answer me this great anti-health care reform oracle.

Philly Fed President Plosser Speaks

Philadelphia Fed President Charles Plosser took part in a panel discussion at NYU at noon on Friday, but his prepared statement was made available this morning. The topic of his discussion was "Redesigning Financial System Regulation." Of course you are well aware of The Greek's criticism of the rating agencies, which I feel were the one most culpable party for this entire house of cards and resulting financial catastrophe. Therefore, I say yes, redesign the damn thing.

President Plosser starts his speech with a cautionary note, warning that we should not act in a reactionary manner we may some day regret. In the heat of battle, as we are all well aware, we might do things that are counterproductive for the long run. He used one of my favorite terms of all time in his statement, "dynamic," in describing the type of reforms and style we need to approach reform with. Loved that, and this guy is quickly becoming a favorite of mine on the Fed staff. That might also have something to do with the start of spring training for the Major League Baseball Champion Philadelphia Phillies yo!

President Plosser went on to discuss the "too big to fail" problem, as well as the idea of tweaking the Fed to make its future decision making options transparent to the marketplace. He wants to take away the incentive for corporate managers to take risk, specifically, he wants to remove the "moral hazard" concern from the equation. Finally, Mr. Plosser sets the table for us, giving us a vision of the future Fed, as he would like to see it. Though we know you like it when we do the reading for ya, this one is worth a read folks.

Corporate News Drivers

Coca-Cola Invests in China

While every nook of corporate America is slashing capital expenditures, lookie-see what Coca-Cola (NYSE: KO) just announced. Coke is investing $2 BILLION dollars in China, and that's over and above the money put forth to acquire China's largest juice maker. Looks like Coke really is it after all!

But who could doubt this is not a good investment... After all, this is China we're talking about. The largest country in the world, and still developing, would sure seem like top priority for companies like Coca-Cola. The mature markets of the developed world do not offer nearly as much growth opportunity for the established and successful products and brands of Coca-Cola. China - this is where cash cows go to solve mid-life crises.

Wells Fargo Slashes Dividend

Wells Fargo (NYSE: WFC) cut its dividend 85%, to a nickel. Guess why... Well you see, Wells, like other firms duped into participating in the TARP program when maybe they didn't really need it, wants out of TARP now. Why does everybody want out of TARP all of a sudden? Gee, I wonder if it has anything to do with the new rule about limiting bonuses when your company is on the government payroll... My how hard some corporate execs will work to save their millions, at the expense of shareholders mind you (their getting a nickel a share now in dividend). Hey, we may have finally found the right incentive to save the financial sector!

To the defense of the executive class, many of whom read the blog (and we love you dearly), TARP is a costly form of financing that should only be tapped by the desperate, and by those whose peers spread rumors all about the marketplace to force them into bankruptcy. Too bad we will never know the true reason why WFC is doing this, and it's all C-SPAN's fault for televising the Congressional hearings and castrations of other executives on the take. Now the only way to know what's going on is to commission one of those drones we're using to take out Afghan Chieftains, and to divert it to the elite golf courses of North Carolina and California. Instead of delivering silent death, we can fire indictments down upon them!

Some of the other banks pulling similar measures include J.P. Morgan Chase (NYSE: JPM) and PNC Financial (NYSE: PNC), two significant beneficiaries of government "bailout" programs.

H&R Block Posts Profit

They say there are two things you can count on in life (and in recession), death and taxes (especially if you are a couple making over $250K). H&R Block (NYSE: HRB), therefore, is a staple stock, and made for the day. In case you thought it was a fallacy, HRB reported quarterly results today that topped analysts expectations. Guess what though, tax filings were down! Seems unemployed folks have more time to figure out how to do their own taxes. We should also note that filing gets a whole lot simpler when you DON'T MAKE MONEY! Also, all the black market activity we poor people do to survive is better-than-deductible, if you know what I mean... Who needs tickets?

I'm lucky though, because along with no health care, I don't have taxes to bother with either. Yeah, I live on a small island in the middle of the East River. It's not even listed or named on any map, so I claimed it by squatting for 21 years! My plan is to eventually build a casino called Swamp Palace. I know what you're thinking, "that Greek is clever." You get the play on words right? Trump...Swamp...Trump... They don't let you into business school for NOT being smart... For now though, the good news is the fishing is decent, but the bad news is that global warming will put my living room four feet under sea level in twenty years. You know what I say though, live for the day! No taxes baby! (This is a test to see if anybody is really reading)

K.B. Home CEO Indicted

I admit to placing this story here so that I could get cheap publicity by including this link. That said, K.B. Home's (NYSE: KBH) old CEO got shackled to a 16" cement block today. Not really... He was indicted though for backdating options, and all the lying and cheating that goes along with doing that sort of thing. The good news is that if convicted on all counts, and assuming he receives the maximum sentence for each, he should be out around the time the housing industry recovers, some 415 years from now.

EPS Schedule

Friday's EPS schedule includes AnnTaylor Stores (NYSE: ANN), Centerstate Banks of Florida (Nasdaq: CSFL), Cytori Therapeutics (Nasdaq: CYTX), Endocare (Nasdaq: ENDO), HealthTronics (Nasdaq: HTRN), H&R Block (NYSE: HRB), Hudson Technologies (Nasdaq: HDSN), Logility (Nasdaq: LGTY), MetroGAS (NYSE: MGS), National Healthcare (AMEX: NHC), Northern Financial (Nasdaq: NSFC), Perficient (Nasdaq: PRFT), Petrobras (NYSE: PBR), Pinnacle Entertainment (NYSE: PNK), Regent Communications (Nasdaq: RGCI), Rex Energy (Nasdaq: REXX), Tasty Baking (Nasdaq: TSTY), Urstadt Biddle Properties, Inc (NYSE: UBA), and Veolia Environnement (NYSE: VE).

Greek Trivia: As I placed Veolia Environnement upon the pages of The Greek, it brought a very fond memory to mind. My brother and I developed a code word, "Frank Viola," for very specific emergency situations. You'll recall Frank Viola was a Cy Young Award winning pitcher for the stinkin Mets and some other ball clubs. To this day, "Frank Viola" has a very special meaning for my brother and I, and that is "get ready to hightail it out of here." We developed the term after an incident in Athens, as young travelers on our first trip abroad together. After descending from Mount Lykavittos, which amusingly enough means Mountain of Wolves, we were invited by a nice gentleman (read wolf) into his bar to rest our tired feet. Crossing the threshold from the brightest of light into pure darkness, several cameras dangling from here and there (giving us away as naive young tourists), he ordered us a couple of beers without even asking, which we assumed were gifts from our new buddy. Not a few minutes later and he suddenly disappeared, replaced by two middle-aged prostitutes who asked very intimate questions about our personal wealth back in the States. As we understood the trap we stood within, my brother and I decided we had better be leaving. There was just one problem... seems the bartender wanted us to pay about $30 for two beers we never even asked for. As I threw a ten-spot over the bar at him and yelled, "Run Mike run!" we realized we might need to plan ahead for any future trouble. And thus the code words, "Frank Viola" were born. If you're wondering why Frank Viola of all the possibilities, well, the truth is we didn't really have a good reason for it, unless Mike remembers it. Still, he was a crafty left-hander noted for his changeup, whose nickname was "sweet music." Most importantly, to this day, I will never forget how my brother and I discovered our favorite beer, Amstel. Important note, it's Amstel, not Amstel Light.


(Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK). Please see our disclosures at the Wall Street Greek website and author bio pages found there.

Retail Sales Out of Fashion

By The Greek - 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.

Retail Chain Store Sales

Retailers reported individual chain store sales for the month of February Thursday. The International Council of Shopping Centers reported that sales fell 0.1%, better than the 1.6% decline in January. The news varied of course, but carried a shared theme of market size contraction. We've been speaking of this for so long now that we have shied away from repeating it recently. Unfortunately that leaves new readers of The Greek unaware of our past predictions and our proficiency (while conceding imperfection).

The retail marketplace is now exposed as a saturated one, and in this contracting environment, the weakest players are dropping by the way side. This in turn will drive commercial rents lower, and flood the commercial marketplace with even more vacancies. Much of this has already unfolded, but more layoffs, store closings and bankruptcies are in store. If you would like to contract me to figure out what to buy and what to sell in the sector (or any sector), I'm available for such work, and my equity research performance speaks for the value itself.

Today's results showed the discounters continue to survive and lead this market as they steal share from department store, specialty and empty-mall-based operators. In tough times, price matters more, and so shoppers migrate naturally to the discount shops. One such discount shop has become such an important part of the American economy, that if we remove it from the ICSC data, same-store actually fell 4.3% in February. Wal-Mart (NYSE: WMT) reported its February sales today, and they shined, rising 5.1%. The chain is doing so well, stock rising 20+% in 2008, and growing sales all the while, that the company hiked its dividend Thursday.

Wal-Mart's little brother, Target (NYSE: TGT), seems to be evolving into its rival. The company started expanding its grocery section months back, and is talking about committing a little bit more to that effort now. Target sales fell 4.1% in February.

Another group that did well was the pharmacies, but keep in mind that "well" is a relative term these days. The reason behind the group's resiliency can be found in what they offer for sale. These stores sell what people need every day, consumer staples. You gotta have your toothpaste, your contact lens solution, your toilet paper (what did he say!), YOUR HEMORRHOID CREME!!! cause you are human! You are alive... and you have foot fungus!

You have to have those things, and you buy them with the left over change in the cookie jar. And so, Rite Aid (NYSE: RAD), Walgreen (NYSE: WAG) and CVS Caremark (NYSE: CVS) have an advantage over many other shopkeepers during tough times. Still, sales fell 0.9% for Rite Aid and 1.9% at Walgreen, mostly due to other things these stores sell outside of staple goods. The funny thing is that these companies started selling "other" things to leverage the draw aspect of the stores. Pharmacies draw customers into their stores for needed items, and while they have them there, they attempt to boost the total ticket with spontaneous purchase goods like candies, chips, and at some stores, almost anything under the sun. Now, these "other" items are weighing on performance, because who is going to buy a radio from Rite Aid during a deep recession... That's NOT a question!

Luxury Loses

The rich don't always get richer. As a matter of fact, when a Democrat is elected into the presidency, and the Congress is controlled by Democrats as well, that's not a cause for party on the Upper East Side! Then, on top of everything else, stock market decline exposes every Ponzi scheme from 70th and Park down to 60th and Lex. That's a LOT of Ponzi because it includes Bernie. So, nobody should be surprised to see Saks' (NYSE: SKS) February sales fell 26% and Nordstrom's (NYSE: JWN) dropped 15%.

You haven't read this anywhere else (maybe)... This is the reason why. When volume drops at even the slightest rate at a store like Tiffany's (NYSE: TIF), where each item has an attached price tag that matters, sales dive significantly. It's because the price tags are so rich that these stores are taking such big hits now, not because the rich have lost all their money. That's a myth, at least until the Swiss accounts are unveiled!

EPS Report Schedule

ExxonMobil (NYSE: XOM) had its analysts' meeting, while the EPS list included 21st Century Holding (Nasdaq: TCHC), 3D Systems (Nasdaq: TDSC), Airspan Networks (Nasdaq: AIRN), Alaska Communications (Nasdaq: ALSK), Alliance Healthcare (Nasdaq: AIQ), Alon USA Energy (NYSE: ALJ), AmBev (NYSE: ABV), Analogic (Nasdaq: ALOG), Angiotech (Nasdaq: ANPI), Anika Therapeutics (Nasdaq: ANIK), ArcSight (Nasdaq: ARST), ArQule (Nasdaq: ARQL), Artesian Resources (Nasdaq: ARTNA), B&G Foods (NYSE: BGF), Babcock & Brown (NYSE: FLY), Bio-Reference Labs (Nasdaq: BRLI), Cedar Shopping Centers (NYSE: CDR), China Security (NYSE: CSR), Ciena (Nasdaq: CIEN), Clean Energy Fuels (Nasdaq: CLNE), Clearwire (Nasdaq: CLWR), Cornell (NYSE: CRN), Crown Media (Nasdaq: CRWN), Depomed (Nasdaq: DEPO), DexCom (Nasdaq: DXCM), Dialysis Corp. (Nasdaq: DCAI), Dynamic Materials (Nasdaq: BOOM), Emergent Biosolutions (NYSE: EBS), Finisar (Nasdaq: FNSR), Fuel Systems Solutions (Nasdaq: FSYS), Fuel Tech (Nasdaq: FTEK), Genesco (NYSE: GCO), Gerber Scientific (NYSE: GRB), GTSI Corp. (Nasdaq: GTSI), Gulf Island Fabrication (Nasdaq: GIFI), Gushan Environmental (NYSE: GU), Harvest Natural Resources (NYSE: HNR), Home Inns and Hotels (Nasdaq: HMIN), I.D. Systems (Nasdaq: IDSY), Icahn Enterprises (NYSE: IEP), Insulet Corp. (Nasdaq: PODD), Intrepid Potash (NYSE: IPI), K-Swiss (Nasdaq: KSWS), Kopin (Nasdaq: KOPN), Lakes Entertainment (Nasdaq: LACO), Lincoln Educational (Nasdaq: LINC), Marvell Technology (Nasdaq: MRVL), Mastech (NYSE: MHH), McCormick & Schmick's (Nasdaq: MSSR), National Cinemedia (Nasdaq: NCMI), Navisite (Nasdaq: NAVI), Noven Pharma (Nasdaq: NOVN), Orion Marine (Nasdaq: OMGI), Pinnacle Airlines (Nasdaq: PNCL), RAE Systems (NYSE: RAE), RHI Entertainment (Nasdaq: RHIE), Safeguard Scientific (NYSE: SFE), Smith Micro (Nasdaq: SMSI), Steinway Musical (NYSE: LVB), The Cooper Cos. (NYSE: COO), Trans World Entertainment (Nasdaq: TWMC), U.S. Physical Therapy (Nasdaq: USPH), Union Drilling (Nasdaq: UDRL), Urban Outfitters (Nasdaq: URBN), West Marine (Nasdaq: WMAR), Wind River Systems (Nasdaq: WIND), Youbet.com (Nasdaq: UBET) and more.


(Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK). Please see our disclosures at the Wall Street Greek website and author bio pages found there.

Today's Economic Reports

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.

This article covers more than just analysis of the day's economic reports, but also includes a discussion of the monetary actions of the ECB and BOE, and it covers the market-moving impact of the Chinese Prime Minister's statement today. In fact, we view Wen Jiabao's statement, or rather lack of statement regarding an expected stimulus increase, as the one most important driver of global equity and commodity markets today.

Economic Data Analysis

Weekly Jobless Claims

After yesterday's news from ADP (697K Nonfarm Payrolls Lost in February) and last week's jobless claims (revised to 670K), today's report threatened to further damage market sentiment. Thank the Lord, the weekly tally of new benefits filers came in lower than expected. For the week ended February 28, weekly initial jobless claims filers summed to 639,000, short of the economists' consensus of 650K (by Bloomberg survey). Still, the four-week moving average inched higher by 2,000, to 641,750. As long as the 4-week figure is rising, we should remain diligent and focused on economic survival and recovery.

Starting this afternoon, all popular media chatter focused solely on Friday's Employment Situation Report and the federal government's accounting of job losses for the month of February. You'll be distressed to learn that economists have reportedly raised their forecast for the unemployment rate over the last day based on recent data, to 8%, from 7.9% (according to Bloomberg Radio). Bloomberg's survey still shows the consensus at 7.9%. Whatever the case, there seems a good chance we'll break 700K on the Nonfarm Payroll loss and hit 8% on unemployment.

Monster Employment Index

Monster Worldwide's (NYSE: MWW) Employment Index (MEI) is a barometer of online job demand. The online job search marketplace has been taking market share from print at a good pace over the last decade of Internet expansion. This share gain allowed the MEI to withstand early economic weakness, but it has since also shown signs of pain.

This month's measure edged up to 122, from 118 in January, which was consistent with a seasonal pattern. The gain was broad-reaching across most measured geographical regions. Weakness remains, however, and that was well-illustrated by the index's position 26% lower than the level reached a year ago.

Factory Orders

January's factory orders came in less bad than was expected. You can take this two ways. The optimist will look at the month's decline of 1.9% and marvel at how much better a performance it was than economists had foreseen (-3.5%). It was also better than December's drop (-3.9%). However, the pessimist would note the absolute direction was one of contraction, and the degree of contraction was not negligible. For some the sun sets, while for others it will soon rise.

Productivity & Costs

After getting the fourth quarter GDP revision, every economist and her mother knew there would be significant revision to Productivity and Costs data as well. The Greek knew it too, while my mother was much more interested in winning the Mega Millions Jackpot. In case you're wondering, I admit that it's sentences like this that get me favorite child status, which translates into greater access to seconds at Thanksgiving dinner...

Well, Productivity and Costs were revised dramatically today, but in different directions. Productivity was adjusted lower, as expected, to -0.4%, from the initial +3.2%. The measure, like GDP, of course incorporates "output," which was revised sharply lower as order demand fell off a cliff, plants were closed and work shifts were cut in the final quarter of the year.

Still, market gurus I listened to this morning were dumbfounded by the rise in Unit Labor Costs, as it was revised to an increase of 5.7%, from +1.8% initially reported. Unit Labor Costs is exactly what it sounds like, the cost of producing one unit of goods. When you produce less units but do not reduce workforce rationally in turn, then the cost of producing a unit of product increases. This seems to be the case this time around, but don't you worry. Just give those companies a chance and they'll fix this imbalance right up... and unemployment will skyrocket (read is skyrocketing).

We should note that Durable Goods output was especially weak in Q4. You can connect the dots here, as the auto industry is a key driver behind the sour economic numbers of Q4, and soon Q1 too. Besides this, durables related to the housing industry have taken a few blows over the past year or more, as has anything that costs more than a Dollar Tree (Nasdaq: DLTR) or Wal-Mart (NYSE: WMT) item...

Mortgage Defaults

The Mortgage Bankers Association reported that fourth quarter mortgage delinquencies hit an all-time high of 11.18%. I use the term delinquencies broadly by incorporating both mortgages that are behind by a single payment and those already in the foreclosure process in delinquency. However, of that group, about 8% were not yet in foreclosure proceedings.

A series of factors came to play to generate this record delinquency rate. Besides all the mortgage brokerage fraud and subprime ARMS loans entered into by unqualified individuals on the prodding of greedy brokers, we now have rising unemployment ushering in a second round of distress. Besides this, the court system is blocked up with cases and many bankers have held back on foreclosures while new programs are debated and discussed that might resolve some problems. That said, home price stabilization is not expected before mid-year if not until the end of the year, as fiscal stimulus and home price adjustment begin to offset negative cyclical factors. It will take a shift in the employment trend, and investor confidence, to secure the housing market.

International News Drivers

China's PM Lets Down the Global Marketplace

Yesterday, we warned that the excitement surrounding the topic of new Chinese fiscal stimulus might be overdone, since it was not based on any solid information. Today, our warning played true, as the Chinese Prime Minister Wen Jiabao produced his State of the Union Address completely absent new stimulus. This was likely the most significant market moving factor of the day, for both stocks and commodities, especially oil, which fell 4-5% on the near-term contracts.

ECB & BOE Cut Rates

Both the European Central Bank and the Bank of England cut rates by 50 basis points today, bringing accord back to the global banking system. Recall, the ECB refrained from action in February, and took some well-founded criticism from one astute Cypriot central banker, Athanasios Orphanides.

Jean-Claude Trichet noted that recent drops in European and Emerging European economies are clearly the only threat of reason, and that inflation is unlikely to prove dangerous in 2009 and 2010. Therefore, the ECB cut rates by 50 basis points, to 1.5% on the main fixed refinancing rate. This is the latest action in a 275 total basis point reduction since October of 2008.

The ECB forecasts deep economic contraction for 2009, to a level between negative 3.2% to negative 2.2%. The bankers see economic growth occurring during the course of 2010, with the full year GDP rate somewhere between -0.7% and +0.7%. As for inflation, it is seen dropping to below 1% this year, possibly even into deflationary territory according to Mr. Trichet's press conference. In 2010, inflation is seen increasing to as high as 1.4%. The ECB is clearly on board now with the global plan to spur economic growth with little concern for inflation.

There were a few voices today warning about coming runaway inflation as soon as 2010, but according to resident genius, Ben Bernanke, inflation is not a concern due to the short-term nature of much of his money creation, and his ability to swiftly reverse it. I kind of liked my favorite presidential candidate's thoughts on this subject recently, when he talked of the risk of debt creation and currency dilution to the point where the world says, I'm not lending to the U.S. any longer (read China). He talks about massive destruction of wealth and decimation of the American middle class that would result, and he's right. But what everyone is missing is the catalyst that might take us there... I've got it, but I'm not sharing yet.

The Bank of England also cut rates by 50 basis points, taking itself to the place central bankers couldn't have dreamt possible not so long ago, near zero. As a result, the BOE will employ some American ingenuity in the form of creative expansionary actions as introduced by the Federal Reserve.


(Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK). Please see our disclosures at the Wall Street Greek website and author bio pages found there.

Daily Take: China Stimulus Offsets Jobs Data

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.

Horrible jobs data was conveniently neutralized today by a leak that China's PM might announce a substantial increase to his nation's economic stimulus tomorrow during his State of the Union Address. Below you'll find our analysis of these topics and the news releases we felt to be the most market consequential today.

Economic Report Analysis

ADP Private Employment Report

As a precursor to the government's Employment Situation Report due Friday, ADP noted private payrolls dropped by a stunning 697,000 in February. This is horrible news heading into the government data that has economists forecasting unemployment will rise to 7.9% and nonfarm payrolls will drop by 648K. You will be interested to discover that the most dire of the forecasts has 800K jobs lost in February and unemployment at 8.1%.

ADP had some more bad news to note this morning. The harbinger of our pending demise said January's nonfarm payroll losses had been understated, and revised those to 614K, from 522K.

Challenger Gray & Christmas Announced Corporate Layoffs

The day's second bit of employment data actually came first this morning. We're guessing Challenger smartly produces the report early in the AM due to the competition it faces for headline space with ADP. It is true that this report is often overshadowed by the private employment report, but it is not to be overlooked...

Challenger's reporting of announced corporate layoffs places February's firings at 186,350, a level only bearable when compared against January's worse environment. A total of 241,749 pink slips were issued through that month. The employment data will build toward crescendo on Friday, but we still have two key reports tomorrow, the Monster Employment Index (produced by Monster Worldwide (NYSE: MWW) and Weekly Jobless Claims.

ISM Non-Manufacturing Report

ISM posted its monthly measurement of the service sector today. The capitulation of the broad service sector went a long way toward turning this recession into a special one. Early on, when the trouble was restricted to construction, we warned that it would spread to this critical segment of the economy. Now that it has, the great concern is risk posed by the reverse feedback loop. As unemployment increases, folks spend less, leading to more layoffs, etc. Fiscal stimulus and most of the government programs initiated over the past few months are specifically targeted toward stopping economic contraction in its tracks before feedback enters the equation too substantially. Failure to do so would certainly condemn us to an even more protracted recession.

ISM measured its index at 41.6, versus expectations for a reading of 41.0, but don't excited because a reading below 50 still characterizes economic contraction. Besides, this month's measure was still short of January's reading of 42.9. Also, the New Orders Index deteriorated nearly a percentage point, to 40.7, and was described as doing so at a faster pace.

Weekly Mortgage Applications

As mortgage rates rose again this week, so too did mortgage application activity decline. Rates on 30-year fixed rate mortgages moved up to 5.14% in the week ended February 27, up from 5.07% the week before (which was also up from the week before). Needless to say, purchase activity is anemic to begin with, and a rise in rates simply vaporizes whatever demand exists. Overall application activity declined 13%, led by a 15% drop in refinancing activity and 5.6% decline in purchases (these are changes in indexes). The Purchase Index is not far off its January and all-time low.

Fed's Beige Book

The Federal Reserve's Beige Book of regional economic indicators is due for 2:00 p.m. release. Don't get your hopes up...

International Market News

British Prime Minister Gordon Brown Addresses U.S. Legislators

British PM Brown addresses a joint session of Congress today, after Congress recently passed a fiscal stimulus package that included provisions favoring American companies. The smart U.K. Administration recognized a need to reach out beyond the U.S. president, who Brown met with yesterday. Representatives from heavy manufacturing states face intense pressure from constituents to act on their behalf and protect American jobs. We expect that whatever Brown says today about the dangers of protectionism and need to trust in free markets will go by the way side. In the end, elected officials will protect the folks who vote for them every few years, because at the root the decision is the lawmakers' job security and public image. Selfish concerns usually govern the decisions of men, so even if the avoidance of protectionism is the best route for the better health of global and domestic markets, risk averse legislators will still choose it to protect their own rear ends.

New Round of China Stimulus

A day ahead of his State of the Union Address, Prime Minister Wen Jiabao of China is expected to discuss new stimulus and other plans to restore economic robustness. China has already committed to a 4 trillion yuan ($585 billion) stimulus plan, but Bloomberg reports that former statistics bureau head Li Deshui leaked the news ahead of Wen's address.

This is market favorable news, because any catalyst to spur China's domestic growth would increase demand for global exports to the giant nation with an expanding middle class. We see this as the most important catalyst of stock price movement today. That said, rumors are running rampant now, and so a let down is possible tomorrow if the stimulus increase is less than hoped for. Some folks are whispering that the total commitment could be doubled. I'm not sure if that's crazy talk, but it is dangerous word play for certain.

India Declares Surprise Rate Cut

India's central bank, the Reserve Bank of India (RBI), surprised market watchers this morning with an unscheduled action. The RBI cut rates by 50 basis points, stating that recent reports of economic deterioration in the developed markets of the U.S., Europe and Japan posed risk to Indian exports and investment. The RBI noted that the degree of economic contraction in these critical markets was worse than anticipated, and required it to take action. The bank also noted that its WPI inflation metric was easing as expected, giving it more freedom to take expansionary action.

Australia Strings Along

Australia's economy contracted in the fourth quarter by 0.5%, after actually growing 0.1% in Q3. Australia, while faring better than most other economies, is still seeing lower exports, corporate profits and housing investment. The Royal Bank of Australia could face pressure to cut rates further, despite holding them steady yesterday.

Corporate Event Drivers

Toll Brothers Tolled

High end home builder Toll Brothers (NYSE: TOL) reported earnings today, posting a 51% lower revenue figure in the process. To its credit, Toll slashed expenses and managed to narrow its loss to $0.06 before charges. The charge-inclusive loss was worse than analysts expected though, but TOL shares are up at this hour. Investors were likely enthused by Toll's cash creation and solid solvency position. The company has historically benefited from cyclical downturns by picking up valuable land positions from distressed sellers, and it will likely do the same this time around, in my opinion. Whether the stock is a buy, sell or hold is a complicated question to answer, and we'll try in a follow up article today.

Costco Burdened

Discount retailers are supposed to fare better in a tough economy, and to its credit, Costco (Nasdaq: COST) proved to have higher constitution than most of its rivals. However, it gave in to economic pressures in its January quarter. Burdened by lower same-store sales from its international stores, the company missed analysts' consensus for its FY Q4 today. COST looked for diamonds in the rough data, noting expectations its suppliers would be cutting costs as materials costs have declined. Still, the economic environment is getting worse, and that overwhelming factor proved the greatest reason for this quarter's weakness. We'll have more to say on Costco today also, we hope.

Today's EPS Schedule

The EPS schedule includes news from Alesco Financial (NYSE: AFN), Allion Healthcare (Nasdaq: ALLI), Allis-Chalmers Energy (NYSE: ALY), Altra Holdings (Nasdaq: AIMC), American Commercial Lines (Nasdaq: ACLI), American Railcar (Nasdaq: ARII), American Insurance (NYSE: ASI), Atlantic Tele-Network (Nasdaq: ATNI), Ballard Power (Nasdaq: BLDP), Big Lots (NYSE: BIG), BJ's Wholesale Club (NYSE: BJ), Brown Shoe Co. (NYSE: BWS), Casella Waste (Nasdaq: CWST), Chelsea Therapeutics (Nasdaq: CHTP), Churchill Downs (Nasdaq: CHDN), Clarient (Nasdaq: CLRT), Coldwater Creek (Nasdaq: CWTR), CombiMatrix (Nasdaq: CBMX), CombinatoRx (Nasdaq: CRXX), Copart (Nasdaq: CPRT), Cox Radio (NYSE: CXR), CRM Holdings (Nasdaq: CRMH), Cross Country Healthcare (Nasdaq: CCRN), Darling Int'l (NYSE: DAR), Diedrich Coffee, Inc. (Nasdaq: DDRX), Dynamex (Nasdaq: DDMX), Edgewater (Nasdaq: EDGW), EMS Technologies (Nasdaq: ELMG), Exelixis (Nasdaq: EXEL), Foot Locker (NYSE: FL), FPIC Insurance (Nasdaq: FPIC), France Telecom (NYSE: FTE), Frozen Food Express (Nasdaq: FFEX), Genesis Lease (NYSE: GLS), Giant Interactive (NYSE: GA), Global Ship Lease (NYSE: GSL), GP Strategies (NYSE: GPX), H&E Equipment (Nasdaq: HEES), Hutchinson Telecommunications (NYSE: HTX), InSite Vision (NYSE: ISV), Joy Global (Nasdaq: JOYG), Kadant (NYSE: KAI), Legacy Reserves (Nasdaq: LGCY), Liz Claiborne (NYSE: LIZ), LTX Corp. (Nasdaq: LTXC), Maidenform (NYSE: MFB), Martek (Nasdaq: MATK), Martin Midstream (Nasdaq: MMLP), Mindray Medical (NYSE: MR), Natural Gas Services (NYSE: NGS), Northgate Minerals (AMEX: NXG), Penwest Pharma (Nasdaq: PPCO), PetSmart (Nasdaq: PETM), Power Medical (Nasdaq: PMII), Rehabcare (NYSE: RHB), S1 Corp. (Nasdaq: SONE), Select Comfort (Nasdaq: SCSS), Semtech (Nasdaq: SMTC), Sigma Designs (Nasdaq: SIGM), Spartech (NYSE: SEH), Toll Brothers (NYSE: TOL), Trintech (Nasdaq: TTPA), URS Corp. (NYSE: URS), US Concrete (Nasdaq: RMIX), Weight Watchers (NYSE: WTW) and Yamana Gold (NYSE: AUY).


(Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK). Please see our disclosures at the Wall Street Greek website and author bio pages found there.

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(Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK). Please see our disclosures at the Wall Street Greek website and author bio pages found there.

Nothing Else Matters This Week

By The Greek - 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.

This week is all about the Employment Situation Report release on Friday. Nothing else matters! The market will anticipate it from the week's start to finish, and the report itself does not seem likely to surprise positively considering all the anecdotal evidence and weekly jobless data. No, instead it seems we are headed for unemployment catastrophe! Prepare for 8+% unemployment, and mid-teen real unemployment when considering part-time workers who wish they had a full-time job and bloggers hanging on to a dream.

The Week Ahead

Monday

Due to extraordinary circumstances, we covered Monday in a separate article this week. Please see Monday's schedule of events via THIS LINK.

Tuesday

Tuesday will offer a few more indicators of consumer spending. Motor Vehicle Sales will be reported on Tuesday. The annual pace of February's sales is expected to dwindle away to 6.2 million. The anemic rate seen this time around is even less than January's pace of 6.8 million.

The International Council of Shopping Centers will report sales for the most recent week in the AM as usual. Last week's data highlighted year-over-year sales decline of 0.8%. Dare we say there's some good news to be found in the softening rate of decline in year-to-year sales? Still, we can't see sales decline stopping completely, at least not while the economy is still shedding jobs. However, at some point, natural economic growth should overcome this special cyclical weakness that is powered by extraordinary credit unwind. Plenty more retailers could go bankrupt before that happens just the same.

We expect Pending Home Sales will show deterioration when January's data is released on Tuesday. The then pending status of fiscal stimulus, including home purchase stimulant, should have kept signed contracts quelled in January while would-be buyers waited (all five of them!). Bloomberg's consensus of economists sees the index dropping to 85.1, from a level of 87.7 in December.

Christina Romer, the Chairperson for the Council of Economic Advisors, will address the National Association for Business Economics in the early AM. Also that morning, Atlanta Fed President Dennis Lockhart will speak on the topic of the economy. Down in DC town, the Senate Banking Committee will hold a hearing on how to improve consumer protection from financial abuses. Some of you might smartly remark, just keep people from themselves... However, for those of you on the front line of poverty and struggle, you are well aware of the pitfalls that litter the path of the unfortunate.

Secretary of State Clinton will visit Dodge on Tuesday, as she takes a trip to Jerusalem before heading off to the West Bank Wednesday. This trip takes her from Egypt, to Palestine, to Brussels and Geneva, to speak with the Russians. This is clearly a "brush the surface" kind of first visit, as was her Asian tour. The new Administration seems to want to clearly articulate the message, "there's a new sheriff in town."

As I think about her marathon efforts though, I wonder if she is not compiling too many miles all at once. Wouldn't less broad reaching trips surrounded by more inspection and analysis of meetings, followed by counteraction, prove more productive? Perhaps this is the plan for forthcoming journeys, and I will not attempt to analyze this sophisticated office from my couch. Still, how much is being digested, and how much value is added by this whirlwind touring? Is the President receiving daily updates. Otherwise, if Clinton and Obama are sitting down to talk about all these issues at once... how much value add can be garnered on individual international issues when attempting to down a feast of information stretching from Indonesia to Jerusalem all at once? I think the Administration is full of adrenaline and energy, and perhaps biting off more than it can chew in one sitting with these trip, but I admire their intense interest in restoring the image of the USA.

Look for the Bank of Canada to cut rates further on Tuesday, while the recently active Australian central bank considers a breather.

The earnings schedule highlights news from 51Job (Nasdaq: JOBS), Abraxis Biosciences (Nasdaq: ABII), ADC Telecommunications (Nasdaq: ADCT), Allos Therapeutics (Nasdaq: ALTH), America Service Group (Nasdaq: ASGR), America's Car-Mart (Nasdaq: CRMT), Arena Resources (NYSE: ARD), AutoZone (NYSE: AZO), Bank of Montreal (NYSE: BMO), Bank of Nova Scotia (NYSE: BNS), BioScrip (Nasdaq: BIOS), Blount Int'l (NYSE: BLT), Bruker Corp. (Nasdaq: BRKR), Cache (Nasdaq: CACH), Carrizo Oil & Gas (Nasdaq: CRZO), Celsion (Nasdaq: CLSN), Chico's FAS (NYSE: CHS), CRH plc (NYSE: CRH), Culp Inc. (NYSE: CFI), Delta Petroleum (Nasdaq: DPTR), Energy Recovery (Nasdaq: ERII), Ferro (NYSE: FOE), Financial Federal (NYSE: FIF), Golfsmith Int'l (Nasdaq: GOLF), Greatbatch (NYSE: GB), HickoryTech (Nasdaq: HTCO), Home Diagnostics (Nasdaq: HDIX), Inspire Pharmaceuticals (Nasdaq: ISPH), Isle of Capris (Nasdaq: ISLE), Jackson Hewitt (NYSE: JTX), JER Investors (NYSE: JRT), John Bean Tech (NYSE: JBT), Kenneth Cole (NYSE: KCP), LeMaitre Vascular (Nasdaq: LMAT), Luna Innovations (Nasdaq: LUNA), Masimo Corp. (Nasdaq: MASI), MBIA (NYSE: MBI), Monotype Imaging (Nasdaq: TYPE), Move, Inc. (Nasdaq: MOVE), Netezza (NYSE: NZ), NMT Medical (Nasdaq: NMTI), Philippine Long Distance (NYSE: PHI), PLATO Learning (Nasdaq: TUTR), PRG-Schultz (Nasdaq: PRGX), Resource Capital (NYSE: RSO), SciClone Pharmaceuticals (Nasdaq: SCLN), Seaspan (NYSE: SSW), Sun Healthcare (Nasdaq: SUNH), Superior Well Services (Nasdaq: SWSI), Systemax (NYSE: SYX), Tech Data (Nasdaq: TECD), Thomas Group (Nasdaq: TGIS), Town Sports Int'l (Nasdaq: CLUB), Trina Solar (NYSE: TSL), USA Mobility (Nasdaq: USMO), Vector Group (NYSE: VGR), VeriFone (NYSE: PAY), Virgin Mobile (NYSE: VM), Xilinx (Nasdaq: XLNX) and more.

Wednesday

The employment data parade begins on Wednesday, concluding with Friday's all important government report. Wednesday brings Challenger's Planned Job Cuts data and ADP's Private Employment Report. Challenger measures the number of announced corporate layoffs in February, and there's been no let up... Expect more nightmarish news from all directions. The tone of trading through the entire week will be obsessed with the expectation for dire employment data starting on Wednesday.

If you can't wait for the Federal report, ADP's data is considered the best predictor of all the precursors of nonfarm payrolls. However, you will be damned if you do and if you don't this month. A bit of positive employment news would not be believable, and a bout of bad news would only serve as confirmation. ADP's data is probably not going to prove significant at this point, considering the adequate information available from anecdotal sources and the weekly jobless claims data. We are sorry to say that do not have a consensus estimate for either of these two employment data points.

ISM produces the follow up to its Manufacturing Index on Wednesday, the Nonmanufacturing Index (clearly named by someone void of creativity). So, we cringe when we write the word "nonmanufacturing," as despite it's quirky comic value, it still disappoints the creative mind. Bloomberg's consensus of economists could care less, and is looking for a measure of 41.0 for February, versus the reading of 42.9 in January. For better or worse, the reading will still very likely reflect some degree of economic contraction (below 50.0). You know the market will not need to see expansion to be enthused, but progression toward it, but we do not expect that miracle this time around.

Dallas Fed President Richard Fisher is scheduled to discuss the economic outlook before a group in Texas. Meanwhile, the very active Atlanta Fed President Dennis Lochart is scheduled to discuss the economic outlook before a group in Florida. The regular Mortgage Bankers' Association Purchase Applications Report will tally the week's mortgage activity. Recently, a slight increase in interest rates had a profound effect on application activity. The Fed releases its Beige Book of regional economic indicators at 2:00 PM ET.

You will want to catch British Prime Minister Gordon Brown's address of the U.S. Congress on Wednesday. This will certainly make for interesting fodder for folks like me. The EIA Petroleum Status Report is due at 10:30. Last week's data posted an oil inventory build of 0.7 million barrels. Motor gasoline inventories decreased by 3.4 million barrels.

The EPS schedule includes news from Alesco Financial (NYSE: AFN), Allion Healthcare (Nasdaq: ALLI), Allis-Chalmers Energy (NYSE: ALY), Altra Holdings (Nasdaq: AIMC), American Commercial Lines (Nasdaq: ACLI), American Railcar (Nasdaq: ARII), American Insurance (NYSE: ASI), Atlantic Tele-Network (Nasdaq: ATNI), Ballard Power (Nasdaq: BLDP), Big Lots (NYSE: BIG), BJ's Wholesale Club (NYSE: BJ), Brown Shoe Co. (NYSE: BWS), Casella Waste (Nasdaq: CWST), Chelsea Therapeutics (Nasdaq: CHTP), Churchill Downs (Nasdaq: CHDN), Clarient (Nasdaq: CLRT), Coldwater Creek (Nasdaq: CWTR), CombiMatrix (Nasdaq: CBMX), CombinatoRx (Nasdaq: CRXX), Copart (Nasdaq: CPRT), Cox Radio (NYSE: CXR), CRM Holdings (Nasdaq: CRMH), Cross Country Healthcare (Nasdaq: CCRN), Darling Int'l (NYSE: DAR), Diedrich Coffee, Inc. (Nasdaq: DDRX), Dynamex (Nasdaq: DDMX), Edgewater (Nasdaq: EDGW), EMS Technologies (Nasdaq: ELMG), Exelixis (Nasdaq: EXEL), Foot Locker (NYSE: FL), FPIC Insurance (Nasdaq: FPIC), France Telecom (NYSE: FTE), Frozen Food Express (Nasdaq: FFEX), Genesis Lease (NYSE: GLS), Giant Interactive (NYSE: GA), Global Ship Lease (NYSE: GSL), GP Strategies (NYSE: GPX), H&E Equipment (Nasdaq: HEES), Hutchinson Telecommunications (NYSE: HTX), InSite Vision (NYSE: ISV), Joy Global (Nasdaq: JOYG), Kadant (NYSE: KAI), Legacy Reserves (Nasdaq: LGCY), Liz Claiborne (NYSE: LIZ), LTX Corp. (Nasdaq: LTXC), Maidenform (NYSE: MFB), Martek (Nasdaq: MATK), Martin Midstream (Nasdaq: MMLP), Mindray Medical (NYSE: MR), Natural Gas Services (NYSE: NGS), Northgate Minerals (AMEX: NXG), Penwest Pharma (Nasdaq: PPCO), PetSmart (Nasdaq: PETM), Power Medical (Nasdaq: PMII), Rehabcare (NYSE: RHB), S1 Corp. (Nasdaq: SONE), Select Comfort (Nasdaq: SCSS), Semtech (Nasdaq: SMTC), Sigma Designs (Nasdaq: SIGM), Spartech (NYSE: SEH), Toll Brothers (NYSE: TOL), Trintech (Nasdaq: TTPA), URS Corp. (NYSE: URS), US Concrete (Nasdaq: RMIX), Weight Watchers (NYSE: WTW) and Yamana Gold (NYSE: AUY).

Thursday

Another day, another couple of jobs reports. Look for the Monster Employment Index and Weekly Jobless Claims on Thursday morning. New benefits filers moved to a frightening height last week, reaching 667K. Bloomberg's consensus of economists forecasts a still harrowing level of 650K this week. At that level, the four-week moving average would rise further. Monster's metric for online job demand threatens deterioration from January's level of 118.

Individual retailers report Chain Store Sales for the month of February on Thursday. While the ICSC weekly sales data have been less than catastrophic recently, we expect retailers to post ongoing sharp declines in sales as Wal-Mart (NYSE: WMT) and other discounters take market share.

The ECB and the Bank of England are both seen cutting interest rates by 50 basis points. The ECB took a breather after its February meeting, but the data since has been dreadful. Jean-Claude Trichet could face an angry mob by torchlight if he fails to act again this time. That's a near impossibility though. A fellow economists out of Cyprus went public with his criticism of Mr. Trichet this week, and the Union begins to crackle.

Fourth Quarter Productivity and Costs will be reported in the premarket. This report offers the revision of the initial data, which produced higher productivity than might have been expected. With GDP having been revised lower though, we can expect a downward revision of productivity. Unit Labor Costs should rise on the revision as a result of the same factor. Bloomberg's consensus of economists forecasts Productivity will show a +1.5% gain (revised from 3.2%). Unit Labor Costs are expected 3.4% higher, versus the 1.8% initial increase.

Factory Orders are set for 10:00 a.m. release. January's orders are expected to have declined 3.5%, versus a 3.9% decrease in December. We think you understand why well enough... The RBC Cash Index, a measure of consumer confidence by household, hit a record low of 1.6 in February (13.3 in January). It was the first time the metric entered into single digits. The EIA reports Natural Gas Inventories at 10:30, as always.

ExxonMobil (NYSE: XOM) has its analysts' meeting scheduled, while the EPS list includes 21st Century Holding (Nasdaq: TCHC), 3D Systems (Nasdaq: TDSC), Airspan Networks (Nasdaq: AIRN), Alaska Communications (Nasdaq: ALSK), Alliance Healthcare (Nasdaq: AIQ), Alon USA Energy (NYSE: ALJ), AmBev (NYSE: ABV), Analogic (Nasdaq: ALOG), Angiotech (Nasdaq: ANPI), Anika Therapeutics (Nasdaq: ANIK), ArcSight (Nasdaq: ARST), ArQule (Nasdaq: ARQL), Artesian Resources (Nasdaq: ARTNA), B&G Foods (NYSE: BGF), Babcock & Brown (NYSE: FLY), Bio-Reference Labs (Nasdaq: BRLI), Cedar Shopping Centers (NYSE: CDR), China Security (NYSE: CSR), Ciena (Nasdaq: CIEN), Clean Energy Fuels (Nasdaq: CLNE), Clearwire (Nasdaq: CLWR), Cornell (NYSE: CRN), Crown Media (Nasdaq: CRWN), Depomed (Nasdaq: DEPO), DexCom (Nasdaq: DXCM), Dialysis Corp. (Nasdaq: DCAI), Dynamic Materials (Nasdaq: BOOM), Emergent Biosolutions (NYSE: EBS), Finisar (Nasdaq: FNSR), Fuel Systems Solutions (Nasdaq: FSYS), Fuel Tech (Nasdaq: FTEK), Genesco (NYSE: GCO), Gerber Scientific (NYSE: GRB), GTSI Corp. (Nasdaq: GTSI), Gulf Island Fabrication (Nasdaq: GIFI), Gushan Environmental (NYSE: GU), Harvest Natural Resources (NYSE: HNR), Home Inns and Hotels (Nasdaq: HMIN), I.D. Systems (Nasdaq: IDSY), Icahn Enterprises (NYSE: IEP), Insulet Corp. (Nasdaq: PODD), Intrepid Potash (NYSE: IPI), K-Swiss (Nasdaq: KSWS), Kopin (Nasdaq: KOPN), Lakes Entertainment (Nasdaq: LACO), Lincoln Educational (Nasdaq: LINC), Marvell Technology (Nasdaq: MRVL), Mastech (NYSE: MHH), McCormick & Schmick's (Nasdaq: MSSR), National Cinemedia (Nasdaq: NCMI), Navisite (Nasdaq: NAVI), Noven Pharma (Nasdaq: NOVN), Orion Marine (Nasdaq: OMGI), Pinnacle Airlines (Nasdaq: PNCL), RAE Systems (NYSE: RAE), RHI Entertainment (Nasdaq: RHIE), Safeguard Scientific (NYSE: SFE), Smith Micro (Nasdaq: SMSI), Steinway Musical (NYSE: LVB), The Cooper Cos. (NYSE: COO), Trans World Entertainment (Nasdaq: TWMC), U.S. Physical Therapy (Nasdaq: USPH), Union Drilling (Nasdaq: UDRL), Urban Outfitters (Nasdaq: URBN), West Marine (Nasdaq: WMAR), Wind River Systems (Nasdaq: WIND), Youbet.com (Nasdaq: UBET) and more.

Friday

The Bureau of Labor Statistics reports the Employment Situation Report at 8:30 a.m. Unemployment is forecast to reach 7.9%, while the employment force is expected to have shed 648K jobs in February. No matter how well anticipated this news is, it seems impossible to offer relief rally. The reason why is well articulated in one word, "disheartening."

Philadelphia Fed President Charles Plosser takes part in a panel discussion at NYU on Friday. Maybe I'll stalk him and talk up the Phillies... Finally, the Consumer Credit Report for January is due at 3:00 PM. Credit is contracting sharply as lending standards have tightened. Also, many folks are just plain no longer qualified for the same credit they were while unemployed and when their homes were worth 20-40% more. It was not so long ago that credit was defying logic and still growing, and your favorite blogger was warning of what was to come... Do you remember the times?

Friday's EPS schedule includes AnnTaylor Stores (NYSE: ANN), HealthTronics (Nasdaq: HTRN), Hudson Technologies (Nasdaq: HDSN), Logility (Nasdaq: LGTY), Perficient (Nasdaq: PRFT), Petrobras (NYSE: PBR), Regent Communications (Nasdaq: RGCI), Rex Energy (Nasdaq: REXX), Tasty Baking (Nasdaq: TSTY) and Veolia Environnement (NYSE: VE).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK)

The Day Ahead - Snow Day

By The Greek - 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.

Due to pressing work specific to Sundays, we were limited in our production of the week ahead article. It is forthcoming, but we wanted to prepare you for the day ahead.

Twelve inches of snow are expected in New York City Monday, as a freak storm reminds the Northeast that winter is not quite through yet. This is the kind of storm that immobilizes the financial capital of the world. However, NYC is a special city with a subterranean transit system that keeps it moving when other places are greatly delayed. That said, most companies allow employs a few extra hours arrival time, and they usually need at least that much time to get in from outlying regions.

Monday

A very interesting economic week kicks off with an important monthly report. The Personal Income and Spending Report is due for January. After dropping by a full percentage point in December, spending is seen growing by 0.4% in January. The market is starving for positive data, so if not for the pending catastrophic employment report on Friday, we might have foreseen a rally off of this report.

Personal income is expected to have fallen by 0.2% in January, after a similar slip in December. While this is not good news, it's to be expected considering the pay cuts that are occurring at non-union shops like Toyota (NYSE: TM) and soon at union organized firms as well. Also, as firms offer higher paid employees retirement options, and lay off many others, they're able to cut their average pay alongside total costs.

The Core PCE Price Index, a good inflation metric, is expected to have risen by 0.1% and 1.8% on a month-to-month and year-to-year basis, respectively. The yearly rate was a bit lower in December, at 1.7%.

ISM issues its manufacturing index at 10:00 AM, and Bloomberg's survey of economists indicates it will continue to highlight economic contraction. The reading is expected to slip to 33.8 for February, from 35.6 in January. A reading below 50 indicates contraction, and this is to be expected now of course.

Construction Spending is expected lower by 1.5% in January, after a 1.4% fall in December. Many view the fiscal stimulus effort likely to inject housing with stability around mid-year. New incentives and low mortgage rates offer reason to start thinking about housing stabilization and later recovery.

A couple of Fed heads are set to speak on Monday. Richmond Fed President Jeffrey Lacker and Boston Fed Chief Eric Rosengren address the National Association for Business Economics (NABE) in the early afternoon.

In scheduled corporate events, Genentech (NYSE: DNA) will meet with investors. The EPS schedule highlights news from ABM Industries (NYSE: ABM), Allied Capital (NYSE: ALD), Allied Irish Banks (NYSE: AIB), Allied Motion Technologies (Nasdaq: AMOT), Alphatec (Nasdaq: ATEC), American Capital (Nasdaq: ACAS), American Int'l Group (NYSE: AIG), American Physicians (Nasdaq: AMPH), Ares Capital (Nasdaq: ARCC), Arts Way (Nasdaq: ARTW), Atlas America (Nasdaq: ATLS), Atlas Pipeline (NYSE: AHD), ATP Oil & Gas (Nasdaq: ATPG), Bancolombia (NYSE: CIB), BPZ Resources (NYSE: BPZ), Breitburn Energy (Nasdaq: BBEP), Brookdale Senior Living (NYSE: BKD), Carol's Restaurant (Nasdaq: TAST), Cellcom Israel (Nasdaq: CEL), Central European Distribution (Nasdaq: CEDC), China Medical (Nasdaq: CMED), Clear Channel Outdoor (NYSE: CCO), Companhia Brasileira de Distribuicao (NYSE: CBD), Conseco (NYSE: CNO), Crosstex Energy (Nasdaq: XTXI), Crosstex LP (Nasdaq: XTEX), DISH Network (Nasdaq: DISH), Dynamics Research (Nasdaq: DRCO), Dynavax (Nasdaq: DVAX), Eagle Bulk Shipping (Nasdaq: EGLE), Echostar (Nasdaq: SATS), Edison Int'l (NYSE: EIX), Einstein Noah Restaurant (Nasdaq: BAGL), First Industrial Realty (NYSE: FR), First United (Nasdaq: FUNC), Franklin Electric (Nasdaq: FELE), FTI Consulting (NYSE: FCN), Hospitality Properties (NYSE: HPT), HSBC Finance (NYSE: HTB), Immersion (Nasdaq: IMMR), Integra Bank (Nasdaq: IBNK), InterDigital (Nasdaq: IDCC), IPC, The Hospitalist Co. (Nasdaq: IPCM), iPCS (Nasdaq: IPCS), KKR Financial (NYSE: KFN), LeapFrog (NYSE: LF), Live Nation (NYSE: LYV), Maguire Properties (NYSE: MPG), MarkWest Energy (NYSE: MWE), MasTec (NYSE: MTZ), McDermott Int'l (NYSE: MDR), Nelnet (NYSE: NNI), Overseas Shipholding Group (NYSE: OSG), OSG America L.P. (NYSE: OSP), Par Pharmaceutical (NYSE: PRX), PDL BioPharma (Nasdaq: PDLI), Pengrowth Energy (NYSE: PGH), Pepco Holdings (NYSE: POM), Perfect World (Nasdaq: PWRD), Petroleum Development (Nasdaq: PETD), PHH Corp. (NYSE: PHH), Regency Energy (Nasdaq: RGNC), Reliant Energy (NYSE: RRI), Rosetta Resources (Nasdaq: ROSE), Sadia (NYSE: SDA), San Juan Basin Royalty (NYSE: SJT), Sun Hydraulics (Nasdaq: SNHY), Sunrise Senior Living (NYSE: SRZ), SuperGen (Nasdaq: SUPG), Sykes Enterprises (Nasdaq: SYKE), T-3 Energy (Nasdaq: TTES), TIVO (Nasdaq: TIVO), TNS Inc. (NYSE: TNS), Tower Group (Nasdaq: TWGP), TravelCenters of America (AMEX: TA), UTEK (AMEX: UTK), VisionChina Media (Nasdaq: VISN), VocalTec Communications (Nasdaq: VOCL), Warren Resources (Nasdaq: WRES), Wendy's (NYSE: WEN) and more.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK)

Weekly Videos of Interest

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Enjoy this week's video compilation. We've chose interesting videos covering politics, global affairs, business and financial markets and other interesting flicks for you to peruse. Please fast forward through to see the videos that interest you. If you cannot see a video player from your vantage point, simply click on the image below to watch the videos at our blog.


Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK, NYSE: GM, NYSE: C, NYSE: TM)