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Tuesday, June 30, 2009

This Week: Economic Fireworks

this week
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(Tickers: MWW, STT, GM, AA, GIS, STZ, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK)

this weekPrepare yourself for the 21 gun economic salute on tap for this holiday shortened business week. Independence Day falls on Saturday this year, so American financial markets will be closed this Friday. With the usual empty economic slate Monday, some twenty-one economic data points will reach the wire over the three days in between. Those data points include the "grand finale" Employment Situation Report on Thursday, so prepare for a blast.

This Week

Monday's activity was reported in a separate article found here: Bernard Madoff Sentencing

Tuesday

Just as dawn breaks, look for the International Council of Shopping Centers' Weekly Same-Store Sales data Tuesday morning. Last week's reporting showed no change in the week-to-week comparison, but a 0.9% drop from the prior year count. The feeling is that the excessive level of rain across the Northeast in June played a role in subduing sales that had seemed to otherwise stabilize.

S&P Case Shiller's two-month old Home Price Index will be released in the pre-market. The would have been useful if it was timely metric will look at housing prices two months ago. If you are curious as to when you can find June pricing data, you will have to wait until August for that. Competent competitors have risen up to fill the data void though, so stay tuned more current pricing data. Also, we're relatively certain the producers of this report will generate an estimated form for at least one month lagged data eventually.

The Midwest is buried in auto industry wreckage, and so the Chicago Purchasing Managers Index is expected to reflect that. Chicago PMI's Business Barometer Index, its composite measure of manufacturing activity, is forecast to read 40.0 for June, versus the 34.9 read in May. Keep in mind that a reading below 50.0 indicates economic contraction.

Two confidence measures reach the wire at 10:00 a.m. on Tuesday. The Conference Board's Consumer Confidence Index will be reported for the month of June, with consensus seeing a reading of 57.0, based on Bloomberg's survey. June's measure looks to extend a trend of improvement after readings of 54.9 in May and 40.8 in April.

State Street (NYSE: STT) publishes its Investor Confidence Index at 10:00 as well. There's no consensus estimate available here, nor will the metric move the market, but it's worth a look. State Street measures current levels of investor portfolio risk, not attitudes, so it fits as a nice tool for short-term investment strategy. At last check in May, the reading showed an increasing appetite for risk. We know June has changed things a bit, with investors considering more normalized scenarios and appropriate valuation. Providing you recent readings here would only confuse you now, as the metric has been reset. A reading below 100 indicates a decreasing appetite for risk, while above 100 shows an increasing taste for it.

Like clockwork, after the Fed's FOMC Policy Meeting, Reserve representatives take to the streets. Three Fed reps will address audiences on Tuesday afternoon. St. Louis Fed President Jim Bullard will address a luncheon gathering at the Philadelphia Federal Reserve. Scheduled for 4:10 PM ET, Kansas City Fed President Thomas Hoenig will address NYU's Stern School of Business, and at 9:00 PM ET, San Francisco Fed President Janet Yellen will speak to the Common Wealth Club of California in San Francisco.

The Agriculture Department is expected to issue its crop report indicating devoted acreage for specific crops. Barron's notes a likely gain of soybean crops against lower acreage devoted to corn and wheat.

General Motors (NYSE: GM) asks a bankruptcy court to review its asset sales plans after GM's unsecured creditors found no other viable alternatives. Tuesday's earnings slate includes news from Exfo Electro-Optical Engineering (Nasdaq: EXFO), FSI Int'l (Nasdaq: FSII), Investors Real Estate (Nasdaq: IRET), Park Electrochemical (NYSE: PKE), Schnitzer Steel Industries (Nasdaq: SCHN), Sealy Corp. (NYSE: ZZ), SYNNEX (NYSE: SNX) and Vimicro Int'l (Nasdaq: VIMC).

Wednesday

Nine reports are due on Wednesday alone, starting with several in the pre-market. The Mortgage Bankers Association will produce its regular weekly data on mortgage activity in the early going. Last week's report showed an improvement in activity on a modest decrease in contracted fixed rate mortgages.

The day produces three of the monthly employment reports. The Monster Employment Index hits the wire early Wednesday. Monster Worldwide (NYSE: MWW) tracks the demand and supply of online job postings, and as the medium has taken market share from print, the metric has grown in importance. Monster reported its MEI backtracked slightly in May, to 118, from 120 posted in April. We would not expect significant change for June, if not another decrease.

Challenger, Gray & Christmas is due to publish its Job-Cut Report detailing announced corporate layoffs at 7:30 AM. May's data produced improvement, as layoffs fell to 111,182, from the 132,590 cuts noted in April. However, June's data portends the inclusion of more auto industry and related dealership and supplier cuts following the GM bankruptcy.

At 8:15, look for ADP's Private Employment Report to highlight the change in private nonfarm payrolls (read jobs). This preview into the following day's government data has the potential to swing trading, especially given lighter pre-holiday volume. However, any portfolio manager who is not watching the economic scoreboard from the beach deserves a harpooning, so this volume issue may be overdone. May's data showed nonfarm payroll losses worsened to -532K, compared to -491 job cuts in April. The ADP data proved a poor predictor of the government data last month though, as payroll losses improved on the broader measure. Private employers were offset there by a growing public sector.

After the bell, ISM will publish its Manufacturing Index for June. May's data exposed a green shoot, as new orders showed expansionary activity. June, however, remains strained by rising unemployment and the intensifying burden that creates for the economy. Economists forecast a reading of 45.0 for June, versus the 42.8 seen in May.

Construction Spending is due for report at 10:00, with Bloomberg's consensus of economists forecasting a May activity decline of 0.5% (+0.8% in April). This seems counter intuitive, given the recent Housing Start green shoot (+17.2% in May), but construction activity looks to be weighed still by prior "start" weakness. Speaking of housing starts, the monthly Pending Home Sales report is up at 10:00 a.m. This leading indicator for the housing industry improved 6.7% in April, to 90.3, and further gains are expected for May. Indeed, housing and mortgage activity for purchases seem to have benefited from government stimulants, including the tax break for first time home buyers. We noted stubborn mortgage support in the starts segment over the past month, despite the rise in mortgage rates.

Intermittently during the day Wednesday, American automakers will publish their June Motor Vehicle Sales figures. Aggregate domestic sales improved to an annual pace of 7.3 million cars in May, versus the 6.9 million in April. Overall sales also improved, despite higher unemployment and rising gasoline prices. This likely reflects adjustment from the panic-level sales from when the market froze on concern tied to the bankruptcies of Chrysler and GM.

At 10:30, look for the EIA's Petroleum Status Report. Last week's data showed inventories of crude oil decreased by 3.8 million barrels, while gasoline increased by 3.9 million barrels. California might run out of money to pay its bills on Wednesday... guess no fireworks show in Cali?

The day's very light EPS schedule includes Constellation Brands (NYSE: STZ), General Mills (NYSE: GIS), DemandTec (Nasdaq: DMAN), Lindsay Corp. (NYSE: LNN), UniFirst (NYSE: UNF) and Unify Corp. (Nasdaq: UNFY).

Thursday

Take a break from your frozen cocktails and BBQ duties to catch the Employment Situation Report Thursday morning at 8:30. Economists forecast unemployment will move ever closer to double digits, rising to 9.6%, according to Bloomberg's survey. That would represent yet another increase, this time from May's reading of 9.4%. New benefits filers continue to pile on to the massive number of unemployed, and reaching 10%+ seems just a formality at this point. However, there have been some signs of hope here, with the green shoot of a continuing claim filers improvement a few weeks back. Also, new filers seems ready to edge below 600K, still an extremely troubling flow rate. Nonfarm Payrolls are forecast to drop by just 350K this time around, but it just looks like a short number to us, considering the weekly flow of unemployment in June. In May, the Labor Department reported nonfarm payrolls (read jobs) dropped by just 345K, with aid from the infamous birth/death rate adjustment; there's potential for an upward revision here, and reason for market unrest.

Weekly Initial Jobless Claims are seen at 619K in this latest check. That will compare against last week's shedding of 627K jobs. Detroit continues to lose weight, and we wonder how much longer it will take before Michigan deals with civil unrest. High unemployment tends to have some nasty side effects; just ask the Europeans. The state has been in recession from long before the rest of us, and GM's bankruptcy should not have helped sentiment in our Motown metropolis. Michael Jackson's passing seemed almost a symbolic representation of the once bustling town's lost glory.

May Factory Orders are due at 10:00 a.m., with the consensus looking for a monthly jump of 1.4%, compared to an April increase of 0.7%. Durable goods orders soared 1.8% in May and offer insight into a good figure here.

The EIA reports on Natural Gas stocks at 10:30. Much has been said of late regarding the imbalance between natural gas and crude oil pricing, and we will very likely dedicate a few upcoming reports on the energy space. Last week's notation of Nat Gas showed a net increase of 94 Bcf. Stocks were greatly above both the seasonal and five-year average levels, thus giving good cause to natural gas' doldrums.

The day before the holiday produces a handful of EPS reporters. Look for news from Acuity Brands (NYSE: AYI), Methode Electronics (NYSE: MEI), MSC Industrial Direct (NYSE: MSM) and MSCI, Inc. (NYSE: MXB).

Happy Fourth folks!!!

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Monday, June 29, 2009

Bernard Madoff Sentencing

Bernard Madoff SentencingUPDATE: Bernard Madoff Sentenced to the maximum 150 years in prison! See our further commentary below.

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

(Tickers: DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK, HRB, CTAS, APOL, API, BNHNA and UDW)

Bernard Madoff Sentencing

Bernard Madoff Sentencing

"In the greatest turn of irony, the most selfish criminal in modern times, Madoff, has selflessly taken all the blame."

Bernard Madoff was sentenced to 150 years in prison, the maximum sentence allowed by law. Bernie refused to give up any accomplices, so it is speculated that the judge therefore laid the full punishment upon him. This may open up Bernie to later give up someone else, in an effort to see the light of day again. In the greatest turn of irony, the most selfish criminal in modern times, Madoff, has selflessly taken all the blame. Madoff can seek appeal of his sentence in one year's time.

Initially Published:

Among other things, Monday offers the sentencing of Bernard Madoff. As Bernie faces the music, the economic slate is light and earnings schedule likewise slim. Markets in Europe recovered early losses in Asia, while US shares face a strange set of factors this week. Tuesday marks the end of the quarter, bringing with it portfolio reshuffling at institutions; this is what's known as "window dressing" on Wall Street. Meanwhile, the holiday week would be expected to present a light trading environment. However, we have a busy economic report slate in store, including Thursday's Employment Situation Report, so wild swings are very possible this week.

Bernard Madoff is looking at 150 years behind bars at his sentencing Monday. Bernie's lawyers will do their best to get him out in just 12. It's nearly a certainty that Bernie will die in prison though, even if it's by natural cause. Otherwise, Bernie faces potential repercussions in prison to his alleged swindling of Russian mafia figures, as reported by Harry Markopolos.

Supreme Court Decision

The Supreme Court will rule on the State of New York's authority to investigate national bank mortgage lending activity. There is precedent in previous tobacco & other rulings allowed for state-court suits. There's also a huge amount of pressure from the general populous to allow these suits.

FDA & Corporate Drivers

The FDA takes a look at the risk of liver damage caused by usage of acetaminophen. The day's EPS schedule highlights news from H&R Block (NYSE: HRB), Cintas (Nasdaq: CTAS), Apollo Group (Nasdaq: APOL), Advanced Photonix (AMEX: API), Benihana (Nasdaq: BNHNA) and US Data Works (AMEX: UDW).

Overseas Markets

Asia:
  1. MSCI Asia APEX 50: -0.46%

  2. Japan NIKKEI 225: -0.95%

  3. Hong Kong Hang Seng: -0.39%

  4. China CSI 300: +1.65%

  5. India BSE SENSEX 30: +0.14%

Europe:

  1. DJ Euro STOXX 50: +1.33%

  2. UK FTSE 100: +0.8%

  3. France CAC 40: +1.44%

  4. Germany DAX: +1.37%

(Prices as of hour of publishing, which may not be the close)

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Swine Flu Pandemic

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

It's official... H1N1, more commonly known as "Swine Flu" by everyone other than the pork industry, has been raised to "Pandemic Alert Phase 6" by the World Health Organization. While the world seems to have thus far blown off the Swine Flu Pandemic, we have a feeling H1N1 will return to the headlines soon enough. This article is dedicated to defining what the "pandemic" alert means, and concludes with a look at the potential economic impact of the swine flu pandemic.

(Tickers: BCRX, NVAX, SIGA, ROG.VX, GILD, AMGN, CELG, GENZ, BIIB, DNA, SFD, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK)

Swine Flu Pandemic


swine flu pandemicThe World Health Organization (WHO) and the Center for Disease Control (CDC) had been warning for weeks that the H1N1 Swine Flu Virus would likely be raised to the scientific level of "pandemic." Thus, the formal announcement on June 11 brought with it little panic across the world's financial markets. Furthermore, the virus' "flu like symptoms," or rather its low morbidity rate, have worn thin with the headline hungry world media. The press has Iran, Korea and Michael Jackson to talk about now.

Nonetheless, the bug experts rate this disease significant enough to make it the first of its kind in 41 years. According to the World Health Organization, "A pandemic sets national authorities in motion to implement preparedness plans, identify cases as efficiently as possible, and minimize serious illness and deaths with proper treatment. The goal is to reduce the impact of the pandemic on society."

swine flu pandemic h1n1 influenza information centerThe H1N1 influenza is a novel virus, new to our society, therefore, leaving the entirety of the world's population vulnerable to infection. While we are all susceptible to illness, the degrees may vary among cultures and peoples. Therefore, some countries may experience greater morbidity rates than the flu-like death rates that we have seen. Also, as the UN Secretary General and the WHO Director-General both noted, the level of health care is significantly lower in the developing world, where this disease is only just appearing. Health care facilities and medicines are fewer and less useful in the third world, and people generally wait longer before seeking aid when taken ill. Furthermore, the disease is likely more well-spread than being currently reported in emerging nations, simply due to the lower level of health care sophistication and supply (and government irregularities) within the developing world.

UN Secretary General Ban Ki-moon noted that while we have a pandemic to deal with, the mortality rate has been less than feared, and in fact, similar to seasonal flu. However, he wrongfully noted that the frequency of illness had been similar as well. We state this because Swine Flu is so new to society that it has yet to reach most of humanity; seasonal flu has been exposed to the entirety of the world already, some of which have specific immunities. Thus, we have concern that the highly virulent H1N1 flu could overwhelm the world's health care resources as concerned human beings flood facilities when taken ill. There will not be enough vaccine nor other medication once the new flu reaches critical mass. This is a concern we feel is being understated.

Global Economic Impact of Swine Flu Pandemic


There will be an impact on the global economy, whether the virus mutates or not. As any office rat knows, illness affects productivity. So when the second wave of this very active flu strikes the Northern Hemisphere during this coming influenza season (simultaneously with seasonal flu), economies just coming out of recession will have a sudden speed bump to deal with. Depending on the severity of this disease, the recession could therefore be prolonged. This could clearly occur even if the disease returns unchanged.

The World Health Organization states that the only thing predictable about a virus is its unpredictable nature. This disease could combine with another virus, given an increasing opportunity for this as it spreads throughout the world. With its prevalence, the likelihood of H1N1 infecting someone who is sick with another virus, say for instance H1N5 Avian Influenza, increases. Swine flu could then exchange capabilities with other viruses and become more lethal, or it might give another virus new means of communicability.

SARS killed 10% of those infected, and avian influenza has had a similar (or greater) morbidity rate, though the sample size is still too small to be reliable. If swine flu becomes similarly lethal, global economic catastrophe is a given.

SARS Economic Impact

The 2003 outbreak of SARS had a direct economic impact on the nominal GDP of East and Southeast Asia of approximately $18 billion, according to the Asian Development Bank. Given currency decline and stock market loss, to go with the lost tourism and consumer discretionary spending decline, some estimates range as high as $40 billion for the Asia Pacific Region. Air travel to Hong Kong plunged 75%, and retail spending fell 9%.

We remind you that SARS was well-contained, with most of the loss occurring in one quarter. In the short span within which Mexico was seen as the most dangerous place in the world, and the only place you could get swine flu, our southern neighbor was losing $85 million a day in Mexico City alone.

Now imagine how bad a global pandemic could really be. Population growth and development are the key components of economic expansion. What if the global population drops by 10%, and the survivors are too afraid to leave home, let alone go shopping... Both growth and development are impacted, so imagine what happens to most of industry as a result.

The World Health Organization places the worst case scenario monetary loss at $3 trillion. It places the life loss in such a case at 71 million. Wall Street Greek believes WHO is understating the worst case by far. Global economic depression seems likely to us in such a scenario, and we believe WHO is missing a few of the side effects that can occur in a world like that. Anarchy and chaos would overcome several unstable nations, and war would catch fire in long dormant hotspots. As for the real hotspots of the world, logic tells you what to expect... Order would be lost, and the devil would walk even more freely upon the earth than he does now. While demand for resources would naturally decline with population loss, production and supply of resources would as well. War for resources would also probably occur, and the ugliest characteristics of mankind would be exposed.

This is why it is wise for the world to err on the side of caution regarding such threats to humanity. Too many of us are becoming complacent with each threatened catastrophe that does not materialize into much. I fear that this complacency will eventually worsen the impact of the catastrophe that plays out.

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Friday, June 26, 2009

Economic Data: Personal Income & Outlays, Michigan Sentiment

economic data personal income outlays Michigan sentiment
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(Tickers: AZZ, GRB, KBH, LGTY, SJR, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK)

Economic Data


Today's economic data includes two important metrics, the Personal Income & Outlays Report and the Reuters/University of Michigan Consumer Sentiment reading. On the whole, the economic data released offered more reason for rise than fall, but high profile news bits out of China and the Bank of England quelled any rally fire that might have sparked to start the day.

Personal Income & Outlays


wall street economic data personal income outlays Michigan SentimentPersonal Income jumped more than expected in May, though driven by a predictable catalyst. Income soared 1.4%, against expectations for a 0.4% rise, and surpassing the revised 0.7% April increase. However, the driver behind the gains was not a sustainable one. The American Recovery and Reinvestment Act of 2009 was attributed for the increase by the Bureau of Economic Analysis, the reporters of the data. Excluding tax breaks and social government payments, Disposable Personal Income only rose 0.2% (versus 1.6% reported for DPI in May). The ongoing factor in this metric, private wage and salary disbursements, decreased in May, driven by declines in manufacturing and goods producing sectors.

Spending did not benefit as much as might be hoped given the income boost. Instead, the savings rate expanded. Personal Consumption Expenditures increased just 0.3%, matching economists' forecast, though compared against a fractional decrease in April. The reason for this mismatch in income and spending was savings. The Savings Rate gained to 6.9% in May, versus 5.6% in April. The savings rate is personal savings as a percentage of disposable personal income. It is anticipated by some that demand is being pent up, and savings might ease as the economy recovers, allowing for a later spending jolt.

The Core PCE Price Index, the Fed's favored inflation gauge, calmed in May, to a 0.1% rise that matched expectations. The soft increase compared favorably to April's 0.3% increase.

Michigan Consumer Sentiment


Reuters/University of Michigan Consumer Sentiment came in higher than expected, and recorded further gain from its last check. Recent investment euphoria has run dry, so we speculated the sentiment measure might moderate in its improvement rate. However, the latest reading showed sentiment at 70.8, above consensus expectation for 69.0 (69.7 by Bloomberg), and higher than the latest reading of 69.0.

Corporate News Drivers

Friday's EPS schedule includes news from AZZ Inc. (NYSE: AZZ), Gerber Scientific (NYSE: GRB), KB Home (NYSE: KBH), Logility (Nasdaq: LGTY) and Shaw Communications (NYSE: SJR).

Overseas Markets

China repeated its call for a super sovereign currency to replace the dollar standard. The Bank of England said financial institutions were still susceptible to further shocks. Asia rose on the day, while Europe languishes at last check.

Asia:
  1. MSCI Asia APEX 50: +1.5%

  2. Japan NIKKEI 225: +0.83%

  3. Hong Kong Hang Seng: +1.78%

  4. China CSI 300: +0.34%

  5. India BSE SENSEX 30: +2.92%

Europe:

  1. DJ Euro STOXX 50: -0.44%

  2. UK FTSE 100: -0.34%

  3. France CAC 40: -0.98%

  4. Germany DAX: -0.61%

(Prices as of hour of publishing, which may not be the close)

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Thursday, June 25, 2009

Economic News: Bernanke Faces the Music

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

The day's economic news flow will be headlined by the House testimony of one Ben Bernanke, as he is interrogated about his and Hank Paulson's alleged arm twisting of Bank of America CEO, Ken Lewis. Weekly Jobless Claims is also on tap, one week after a drop in continuing claims gave the market a jolt. Recall, we smartly suggested this was likely due to benefits checks running out for the long unemployed, more than it was due to folks finding work.

Economic News


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The market was enthused last week when continuing claims decreased significantly. However, "The Greek" first reported to you that the change was just as likely due to unemployment benefits running out for poor souls who could not find employment as it was due to folks finding work.

For the week ended June 20, Initial Weekly Jobless Claims tallied 627K, above the economists' consensus for 613K. This week's figure also represented an increase of the newly jobless from last week's revised 612K. That intriguing Continuing Claims count increased by 29,000 this time around, and the insured unemployment rate held at 5.0%.

GDP Last Call

The final reporting of first quarter GDP offered a surprising but modest revision to -5.5%, from 5.7% at last check. The Price Index held at +2.8% annualized, quarter-to-quarter. The quarterly change in Corporate Profits was revised up to +64.3%, from the previous estimate of 62.8% over Q4 2008. Though profits were down 21.8% when compared to the prior year quarter, which was still better than the 36.3% dive in Q4.

Bernanke Faces the Music


Must-see TV is back! You do not want to miss Ben Bernanke's testimony regarding his alleged bullying of Bank of America (NYSE: BAC) CEO Ken Lewis. If C-SPAN does not cover this, be sure to catch it on Bloomberg Radio or the usual suspects of major media. This hot one is going to be covered across the medium spectrum at 10:00 AM. Keeping with the Fed, it will report on its balance sheet and money supply at 4:30, though its policy statement will have already softened any blow this data could make.

GM Bankruptcy

General Motors (NYSE: GM) will be waiting on the final approval of the U.S. Bankruptcy Court in New York to grant permission for it to borrow $33 billion from the government and Canada, while it works its way out of bankruptcy. Also, Toyota Motors (NYSE: TM) gives a timely update on its new management.

Markets Overseas

German Chancellor Angela Merkel, perhaps the only EU national leader who might retain her position at next election, visits President Obama in DC.

Asia:
  1. MSCI Asia APEX 50: +1.72%

  2. Japan NIKKEI 225: +2.15%

  3. Hong Kong Hang Seng: +2.14%

  4. China CSI 300: -0.09%

  5. India BSE SENSEX 30: -0.53%

Europe:

  1. DJ Euro STOXX 50: -2.21%

  2. UK FTSE 100: -1.39%

  3. France CAC 40: -2.1%

  4. Germany DAX: -2.24%

(Prices as of hour of publishing, which may not be the close)

Corporate News Drivers

Thursday's EPS report list includes Accenture (NYSE: ACN), American Software (Nasdaq: AMSWA), Arcadia Resources (AMEX: KAD), Christopher & Banks (NYSE: CBK), ConAgra Foods (NYSE: CAG), Finish Line (Nasdaq: FINL), Image Entertainment (Nasdaq: DISK), Jackson Hewitt Tax Service (NYSE: JTX), Lennar (NYSE: LEN), McCormick & Co. (NYSE: MKC), Micron Technology (NYSE: MU), Palm Inc. (Nasdaq: PALM), Rand Logistics (Nasdaq: RLOG), Robbins & Myers (NYSE: RBN), Smart Modular Technologies (Nasdaq: SMOD), Standard Microsystems (Nasdaq: SMSC), Spectrum Control (Nasdaq: SPEC) and TIBCO Software (Nasdaq: TIBX).

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Wednesday, June 24, 2009

BDI Off Recent Peaks

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

MIRAL SHIPPING FREIGHT MARKET REPORT

(Tickers: SEA, EGLE, GNK, BDI, DSX, NAT, SINO, PRGN, XSEAX, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, EWZ, XBZLX, BZF, PXI, SNP)

BDI Off Recent Peaks


BDI Index off recent peaks Shipping AnalystIn the past two weeks, the BDI hit a peak, then corrected approximately 20%, then began another move higher to test the near-term highs of two - three weeks ago. It appears as though the freight market has now tested these highs and did not break through them. As has been the case recently, the Capesize segment (ships over 100,000 tons deadweight) has been the largest beneficiary with historically high freight differentials over panamax vessels (60-80,000 tons deadweight). Rates for Supramax (50-60,000 dwt) and handymax (40-50,000 dwt) vessels have been firm but have lagged behind the larger vessels for the most part. Smaller handies (under 40,000 deadweight) have continued to participate least in this rally.

As of today (June 23), The Baltic Freight Index stood at 3874, while the capesize, panamax and supramax indexes were 7441, 3021 and 1757, respectively. Last Friday, June 19th, the BDI was at 4070, only about 200 points from the recent highs.

The same market forces have been at work during the past two weeks as have been the case since February. Chinese iron ore demand is the single largest factor driving demand for capesize and panamax vessels, and port congestion in Brazil, Australia and China has continued. There also have been increases in mineral shipments (mainly iron ore and coal) to Europe and Japan, contributing to higher rates for capes and panamaxes in the major Atlantic and Pacific trade routes.

As it looks that the BDI has tested the recent highs of two weeks ago, and has now started to retreat, there is a good chance the market will correct about 20% or more to test the near-term lows - particularly in the capesize and panamax sizes. This must be watched carefully.

Key issues that could determine the near-term moves in the BDI:

  1. The differential between capesize and other vessel classes remain much wider than historical averages. Thus, either capesize rates should drop or those of panamaxes should increase. As of today, these rates have begun to narrow.
  2. Commodity prices, steel in China being among the most important, are another indicator. For example, if Chinese steel prices do not increase with freight rates, eventually demand for iron ore and vessels should drop. Prices of several commodities dropped yesterday; whether this trend continues is uncertain and needs to be watched.
  3. Developments in Iran can also potentially have an effect; freight could be impacted if the conflict intensifies and pushes up the price of fuel and disrupts or re-routes commodity flows - particularly for smaller vessel classes, and of course, oil tankers.
  4. Finally, supply of new vessels may be an issue but so far looks like their impact would occur later this year.
We will keep you updated on important developments.

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Today's Markets: Swiss Bank Action, FOMC on Deck

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The Swiss National Bank stole some of our Federal Reserve's thunder in today's markets, as it apparently acted to soften the Swiss franc. Durable Goods Orders came in stronger than expected, and mortgage activity improved as well. Existing Home Sales is on tap, and the FOMC Policy Statement at 2:15.

(Tickers: DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK, AM, BBBY, CKR, DRI, MLHR, MCZ, MON, NKE, OMN, PAYX, RHT, RAD and XRTX)

Today's Markets: Swiss Bank Action


wall street the greek economist analyst writerMarket speculation is squealing that the Swiss National Bank intervened to weaken the Swiss franc. The strategy seems to have proven effective, as Swiss franc weakened to 1.51 euro today, from 1.501 previously. The Swiss government said publicly in March that it would intervene if necessary, dropping its currency that day as well. The strength of the franc has stifled Swiss exports, and so the bank felt a necessity to act. The franc also dropped as much as 2.3% against the dollar.

Markets Overseas


Asia:
  1. MSCI Asia APEX 50: +2.19%

  2. Japan NIKKEI 225: +0.43%

  3. Hong Kong Hang Seng: +2.02%

  4. China CSI 300: +1.19%

  5. India BSE SENSEX 30: +0.69%

Europe:

  1. DJ Euro STOXX 50: +1.62%

  2. UK FTSE 100: +0.63%

  3. France CAC 40: +1.27%

  4. Germany DAX: +1.37%

(Prices as of hour of publishing, which may not be the close)

Mortgage Activity

With the contracted rate on 30-year fixed rate mortgages easing to 5.44%, from 5.5% last week, mortgage activity caught a breather. The Market Composite Index, which measures loan application volume, increased 6.6%, seasonally adjusted. The composite measure got an boost from refinance activity, with the Refinance Index improving 5.9%. The stubbornly steady Purchase Index, which measures loan activity on new housing starts, improved this week by 7.3%. Recall, in recent weeks, purchase activity has shown resilience while refinances illustrated sensitivity to long rates.

Durable Goods Orders

May's Durable Goods Orders showed unexpected strength today, as new orders rose 1.8%, against Bloomberg's economists forecast for a decline of 0.5%. May's figure compared against a 1.8% revised increase in April, and follows a recent trend of improvement. This was the third increase in the last four months. Excluding transportation, new orders increased 1.1%, against expectations for 0.8%. Excluding defense, new orders increased 1.4%.

Existing Home Sales - 10:00 AM

Like the Existing Home Sales data from the day before, economists foresee an improvement in New Home Sales for the month of May. The consensus forecasts the annual pace of sales will increase to 365K, from 352K the month before. The housing market seems to have its anchor caught finally, given the stubborn mortgage application activity in the face of rate increase of late. With builders still relatively inactive, supply has seen improvement (it's getting smaller) in recent months as well. New home supply stood at 10.1 months at last check.

FOMC Policy Statement - 2:15 PM

Based on the upward and unfavorable (for housing) movement in long-rates, we expect the Fed will refrain from any disruptive commentary. We expect the Fed may discuss its preparedness to counter any inflationary fire in an effort to talk down rates. At the same time, we see ongoing support of asset purchases. In other words, we anticipate a meticulously authored policy statement that might work in favor of the Fed's goals.

House Hearing on Fed

Regulation anyone? The House Financial Services Committee will hear testimony and weigh whether to allow the Federal Reserve to remain independent. That runs counter to the expanded powers recommended to it by the Obama Administration. Senate Democrat Chris Dodd is sternly opposed to the President's view here, stating last week that giving the Fed more powers was akin to buying your son a brand new car after he wrecked the family station wagon.

More Government...

Keeping with Washington, the SEC will meet to discuss options to allow money-market funds to float. In New York, the United Nations will take up discussion on the global crisis and its impact on economic development.

Petroleum Status

Look for the regular Petroleum Status Report from the EIA at 10:30. Last week's data showed crude oil stocks were drawn down by 3.9 million barrels. That news helped oil above $70, but recent reconciliation regarding economic recovery has brought oil lower along with equities.

Corporate Earnings Reports

Wednesday's earnings schedule includes American Greetings (NYSE: AM), Bed Bath & Beyond (Nasdaq: BBBY), CKE Restaurants (NYSE: CKR), Darden Restaurants (NYSE: DRI), Herman Miller (Nasdaq: MLHR), Mad Catz Interactive (AMEX: MCZ), Monsanto (NYSE: MON), Nike (NYSE: NKE), OMNOVA Solutions (NYSE: OMN), Paychex (Nasdaq: PAYX), Red Hat (NYSE: RHT), Rite Aid (NYSE: RAD) and Xyratex (Nasdaq: XRTX).

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Monday, June 22, 2009

This Week: Fed Soap Opera

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

(Tickers: DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK, GM, TM, MON, SGP, WAG, STT, ABT, ORCL, KR, BBBY, DRI, NKE, DRI, RAD, KBH)

This Week


wall street the greekThis week is all about the Fed soap opera, with the FOMC Policy Statement due to reach an ultra-sensitive marketplace that will be hanging on every word Wednesday afternoon. Also on Wednesday, a House committee will debate whether the Fed should remain an independent entity or not. Then on Thursday, Ben Bernanke faces the heat as he testifies to Congressional panel about his alleged bullying of one Bank of America CEO, Ken Lewis.

Monday

While the economic schedule was as light as most Mondays, SEC Chairperson Mary Schapiro testified before the Senate Banking Committee on OTC derivatives. Monday's EPS schedule includes news from Ennis Inc. (NYSE: EBF), Finish Line (Nasdaq: FINL), Highway Holdings (Nasdaq: HIHO), Smith & Wesson (Nasdaq: SWHC) and Walgreen (NYSE: WAG).

Tuesday

The highly anticipated two-day meeting of the Federal Open Market Committee commences on Tuesday. Speculation surrounding its result will be in no short supply up to the moment of the FOMC Policy Statement publishing on Wednesday.

The International Council of Shopping Centers reports on weekly same-store sales trends. Tuesday morning brings the latest news, and follows an extremely poor reading from the week ended June 13. Sales fell 1.5% year-to-year through that period. However, in the weeks preceding the latest report, we had noted solid year-over-year growth on an increasingly consistent basis. However, the month of June has been impacted by poor weather, rising energy prices and increasing unemployment.

Look for the Existing Home Sales Report for May at 10:00 a.m. May's report looks to build an improving trend, after April posted a 2.9% gain. Pending Home Sales, which precedes trend in the Existing Sales data, has offered insight into an improving marketplace here (+6.7% in April). We wrote a few months ago that government efforts toward housing revival should generate results by June, and it seems the first-time home buyer tax incentive is helping to provide some of that lift. However, sales levels remain relatively weak, mortgage rates have added a full percentage point in short time, and the inventory of unsold homes remains hefty. Bloomberg's consensus of economists forecasts home sales will run at a 4.85 million annual pace in May, up from 4.68 million.

State Street's (NYSE: STT) Investor Confidence Index will be reported at 10:00 as well. The measure of investors' collective risk appetite should show some gain from May, given the herd mentality that defines market momentum. However, in June we've seen investors reconsider valuation, and so it is unclear how far the June reading will vary from May's 106.3 (up from April's 79.6).

The FDA's pediatric advisory committee will consider data on Schering Plough's (NYSE: SGP) Asmanex and Abbott Labs' (NYSE: ABT) Depakote. Tuesday's EPS schedule includes news from AeroVironment (Nasdaq: AVAV), America's Car-Mart (Nasdaq: CRMT), Apogee (Nasdaq: APOG), Cascal NV (NYSE: HOO), Commercial Metals (NYSE: CMC), Culp (NYSE: CFI), H.B. Fuller (NYSE: FUL), Jabil Circuit (NYSE: JBL), Oracle (Nasdaq: ORCL), Sonic (Nasdaq: SONC), Steelcase (NYSE: SCS) and The Kroger Co. (NYSE: KR).

Wednesday

The last shall be first on Wednesday, as the final news driver of the day will command news flow throughout it. The FOMC will issue its Policy Decision and Statement at 2:15 EDT. Based on the upward and unfavorable (for housing) movement in long-rates, we expect the Fed will refrain from any disruptive commentary. We expect the Fed may discuss its preparedness to counter any inflationary fire in an effort to talk down rates. At the same time, we see ongoing support of asset purchases. In other words, we anticipate a meticulously authored policy statement that might work in favor of the Fed's goals.

Regulation anyone? The House Financial Services Committee will hear testimony and weigh whether to allow the Federal Reserve to remain independent. That runs counter to the expanded powers recommended to it by the Obama Administration. Senate Democrat Chris Dodd is sternly opposed to the President's view here, stating last week that giving the Fed more powers was akin to buying your son a brand new car after he wrecked the family station wagon. Keeping with Washington, the SEC will meet to discuss options to allow money-market funds to float. In New York, the United Nations will take up discussion on the global crisis and its impact on economic development.

The Mortgage Bankers Association publishes its regular Mortgage Activity data in the pre-market Wednesday. We have tracked a trend of lower refinancing activity matching with higher contracted 30-year fixed rate mortgages, but have noted a favorable resistance from Purchase Applications.

At 8:30, Durable Goods Orders will be reported for the month of May. Bloomberg's consensus of economists forecasts a modest decline of 0.5%, after a rebound of 1.7% in April (-2.2% in March). The Philly Fed posted an improved result last week, but economic contraction still rules the data. The "not as bad" figures that have lifted the market the past few months are no longer good enough to lift stocks further, so we expect little reaction to a so so data point.

Like the Existing Home Sales data from the day before, economists foresee an improvement in New Home Sales for the month of May. The consensus forecasts the annual pace of sales will increase to 365K, from 352K the month before. As we alluded to earlier in this article, the housing market seems to have its anchor caught finally, given the stubborn mortgage application activity in the face of rate increase of late. With builders barely active, supply has seen improvement (it's getting smaller) in recent months as well. New home supply stood at 10.1 months at last check.

Look for the regular Petroleum Status Report from the EIA at 10:30. Last week's data showed crude oil stocks were drawn down by 3.9 million barrels. That news helped oil above $70, but recent reconciliation regarding economic recovery has brought oil lower along with equities. Wednesday's earnings schedule includes American Greetings (NYSE: AM), Bed Bath & Beyond (Nasdaq: BBBY), CKE Restaurants (NYSE: CKR), Darden Restaurants (NYSE: DRI), Herman Miller (Nasdaq: MLHR), Mad Catz Interactive (AMEX: MCZ), Monsanto (NYSE: MON), Nike (NYSE: NKE), OMNOVA Solutions (NYSE: OMN), Paychex (Nasdaq: PAYX), Red Hat (NYSE: RHT), Rite Aid (NYSE: RAD) and Xyratex (Nasdaq: XRTX).

Thursday

Thursday has "hot soap opera episode" written all over it! Okay, "The Greek" admits to a General Hospital addiction during my teen years... Add that to the meaningless Greek trivia list... Still, you do not want to miss Ben Bernanke's testimony regarding his alleged bullying of Bank of America (NYSE: BAC) CEO Ken Lewis. This has the makings of Luke and Laura versus Stavros Cassadine and the weather machine. If C-SPAN does not cover this, be sure to catch it on Bloomberg Radio or the usual suspects of major media. This hot one is going to be covered across the spectrum.

Weekly Initial Jobless Claims are seen sticking stubbornly above 600K in this latest reporting of the death march. However, the market was enthused last week when continuing claims decreased significantly. Your favorite Greek analyst first reported to you that this was just as likely due to unemployment benefits running out for poor souls who could not find work as it was due to folks finding work. Barron's quoted another forecaster this week who seemed to pick up on that, though two days later. This kind of insight is why you read The Greek. Economists forecast weekly claims will tally 613K, versus the 608K reported last week.

General Motors (NYSE: GM) will be waiting on the final approval of the U.S. Bankruptcy Court in New York to grant permission for it to borrow $33 billion from us and the US territory of Canada (this is how I test my Canadian readership), while it works its way out of bankruptcy. Also, Toyota Motors (NYSE: TM) gives a timely update on its new management.

The final reporting of first quarter GDP is due, with no change seen from the last count of -5.7% economic contraction. The Price Index is seen holding at +2.8% annualized, quarter-to-quarter. Q1 Corporate Profits will also see last revision at 8:30, with a 22% year-to-year decline soothed by a 62.8% increase over Q4 2008. The Fed reports on its balance sheet and money supply at 4:30, though its policy statement will have already softened any blow this data could make.

German Chancellor Angela Merkel, perhaps the only EU national leader who might retain her position at next election, visits President Obama in DC. Thursday's EPS report list includes Accenture (NYSE: ACN), American Software (Nasdaq: AMSWA), Arcadia Resources (AMEX: KAD), Christopher & Banks (NYSE: CBK), ConAgra Foods (NYSE: CAG), Finish Line (Nasdaq: FINL), Image Entertainment (Nasdaq: DISK), Jackson Hewitt Tax Service (NYSE: JTX), Lennar (NYSE: LEN), McCormick & Co. (NYSE: MKC), Micron Technology (NYSE: MU), Palm Inc. (Nasdaq: PALM), Rand Logistics (Nasdaq: RLOG), Robbins & Myers (NYSE: RBN), Smart Modular Technologies (Nasdaq: SMOD), Standard Microsystems (Nasdaq: SMSC), Spectrum Control (Nasdaq: SPEC) and TIBCO Software (Nasdaq: TIBX).

Friday

A duo of economic reports will keep us busy on Friday, should Iranian and North Korean chaos get old on you. Look for Personal Income and Outlays at 8:30, and the all important PCE Price Index. The Fed's favored inflation gauge is anticipated to have calmed in May, to show only a 0.1% rise. Such a soft increase would compare rather favorably to April's 0.3% increase. Economists are basing their forecast on the soft CPI rise just reported. Spending is seen holding firm, after retail sales posted a 0.5% jolt in the month. Economists forecast Consumer Outlays rose 0.3%, compared against a 0.1% decline in April. Personal Income is forecast to move 0.4% higher in May, versus a 0.5% rise in April. The Core PCE Price Index will play a pivotal role Friday, especially if it contradicts Fed sentiment from a few days earlier.

Recent euphoria has run dry, and Reuters/Michigan Consumer Sentiment is seen sitting at 69.0, the level it was adjusted to in mid-June. Dallas Fed President Richard Fisher kicks off the post-FOMC Fed parade with his speech on the economy Friday. Much insight can be gained from these Fed appearances that just follow their group get-together, so pay attention.

Friday's EPS schedule includes news from AZZ Inc. (NYSE: AZZ), Gerber Scientific (NYSE: GRB), KB Home (NYSE: KBH), Logility (Nasdaq: LGTY) and Shaw Communications (NYSE: SJR).

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Sunday, June 21, 2009

Regulation & Treating Human Weakness

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

(Tickers: BAC, AIG, JPM, WFC, JPM, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK, GOD, LORD, HUM, MDT, MET, HIG)

The warning goes, beware of axe wielding Congressmen when Wall Street screws up. They will chop down every tree in the forest for the sake of a few bad apples. Before everything got cataclysmic-level bad in this Great Recession of ours, there were ample wise voices to be heard, warning of Congressional tendencies toward over regulation in similar periods of the past. Since the system nearly broke down though, the market minions seem content to turn the wheel over to big government, and to shut their eyes and hope for the best. So I pose the question, if a tree falls in the forest, does it make a sound? The answer may surprise you.

Regulation


regulation treating human weaknessThen again, there is not a Wall Street firm left that does not call Uncle Sam daddy these days. So, who would dare raise their voice, especially after the public ridicule and resentment born by once proud corporate leaders like John Thain and Angelo Mozilo. One man attempted to raise his voice and became a sacrificial lamb. Ken Lewis, the former CEO of the biggest bank in America, last week testified to a sort of bullying by government messengers Bernanke and Paulson. So who is left then to champion capitalism?

Was there really so much wrong with America before last November's election? Given the amount of reform legislation passed and ongoing efforts for change, one would think our great nation was a backward state before 2009. Listing reform efforts, we have seen or are seeing: financial markets reform (in its many facets); foreign policy reform; health care reform; credit card reform; housing reform; auto industry reform; immigration reform; and forgive me if I've forgotten any as the list is overwhelming...

One might accurately argue that the swing in party leadership that has occurred, with a Democratic Party led White House, Senate and House of Representatives, from a relatively recently Republican led one (over the years), should well be expected to usher in such vast change. Furthermore, it is inarguable that some change was desperately needed within each of the aforementioned segments of America. Still, history tells us that government has often been guilty of making a greater mess of things while reacting to the problem of the day. This has especially been the case when it comes to financial market regulation. This regulation has often proven less than optimal for free market operation. Thus, we wonder if, while we may be making great progress for society in this time of change, it is also possible we are overstepping our bounds.

Human Weakness


There is a tendency to see fault in others, the violators, that is stigmatized and attributed to "bad people." We view these bad people differently than our own selves and the ones we love. We give them labels and serve up their trials as complement to our bagels and coffee at brunch. We decide that we need to better police these "bad people" in order to safeguard the rest of us. Only when we can understand that we are all equally evil, just in different ways, can we sincerely forgive. In fact, if we could honestly do that, then we could forgive almost anything. So I posit that if we could police ourselves, and give high moral and ethical values the most fertile ground to thrive within our children, we would truly go further to solving our problems. We would cure them from the root. However, human nature is to treat the symptoms of our sickness, to remove the pain, and to ignore the common weakness we all have to illness. Similarly, we ignore immunizing our children from those illnesses.

Just as medicine can have side effects, regulation can as well. However, neither can truly solve the real problem, which is based in the weakness of our humanity. We need to look at things from a deeper perspective if our society is to truly progress. To cure illness is impossible without first understanding it. Understanding our individual weaknesses and those of our brothers, therefore, goes towards solving our societal issues.

Returning to the metaphor of the tree and the forest, before we cut down too many trees, perhaps we might inspect our own. Instead of destroying a single tree, we might consider fertilizing the ground the forest grows upon. Regarding the tree that deserves cutting down because of its rotten bounty, we might consider forgiving it to produce fruit another year. For it is assured that if a tree falls in the forest, a sound is heard by Someone.

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Friday, June 19, 2009

Quadruple Witching & Korean and Iranian Scare

quadruple witching Korean Scare IranianVisit the front page of Wall Street Greek to see our current coverage of economic reports and financial markets.

(Tickers: JPM, NOBH, FMCN, KMX, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK)

Quadruple Witching


quadruple witching Korean Missile ScareMarkets overseas recovered some of the week's losses today, and the same has been seen to start the day in the US. However, Quadruple Witching, a Korean missile scare and Iranian unrest threaten to destabilize stocks' gain before the day is through. The fuel behind the rallies overseas and at home was piped in with positive economic data released yesterday. Also, the rising stock market trend of the past few months is seeking technical truth following the week's retracing on skepticism. We remind readers that we again correctly advised near-term sale of equities in a timely manner. We believe the market wants to rise before and with economic stabilization and recovery, and the long-term trend will reflect that. However, we will see periods of retracing and reevaluation. Look for the return of our "Week Ahead" copy to provide insight into the coming trading period.

Markets Overseas


Markets reevaluated things in Asia this week, just as they did in the US. Still, a portion of the week's losses were retaken on Friday, as the MSCI Asia APEX 50 rallied 0.53%. JP Morgan's (NYSE: JPM) upgrade of Japanese banks surely played a role, as the NIKKEI 225 gained 0.85% today. Yesterday's positive economic reports in the US also boosted the dollar, and further restored hope for global recovery. That said, the Wednesday departure from North Korean port of a suspect vessel looks to dampen enthusiasm beyond the day. North Korea attempted to test fire a long range missile on July 4th three years, and the US anticipates it will do so again this year. The volatile and unpredictable regime has US armed forces on alert, and prepared to intercept any missile launch in the direction of Hawaii.

Asia:
  1. MSCI Asia APEX 50: +0.53%

  2. Japan NIKKEI 225: +0.85%

  3. Hong Kong Hang Seng: +0.81%

  4. China CSI 300: +0.74%

  5. India BSE SENSEX 30: +1.8%


European markets are gaining today as well, also recovering a portion of the week's losses. Global markets have reevaluated valuation and raised skepticism regarding the pace and sustainability of global economic recovery in a potentially inflationary environment in the years ahead. However, the UK's largest homebuilder, Taylor Wimpey Plc, today reported a gain in its order book, lifting the FTSE 100 a powerful 1.51%. Even so, we view today's recovery a temporary phenomenon, and something we see unlikely to follow through this coming week.

Europe:

  1. DJ Euro STOXX 50: +0.53%

  2. UK FTSE 100: +1.51%

  3. France CAC 40: +0.58%

  4. Germany DAX: +0.16%

(Prices as of hour of publishing, which may not be the close)

Supreme Leader of Iran's Address

In an unprecedented address, Iran's Supreme Leader, Ayatollah Khamenei, told the citizens of his country that the recent presidential election was not rigged and that protests should end. He said that protesters would be held responsible for their actions against the country's free election. Khamenei took a position your author did not expect. We thought he might sooth and refocus the populous on the common faith, and on the intended peaceful nature of God fearing peoples. We thought he would smooth over things more than he did, but he effectively showed the debate to be about the results and not the ruling system. However, he argued rather weakly that the election results could not have been rigged based on their sheer numbers and on the margin of victory. There remains strong possibility that the often reported moderate and modern people of Iran may finally rebel against their non-elected Theocracy. This is a critical moment for Iran, and may decide whether their nation is later entangled in messy war with the west or not.

Quadruple Witching


Markets are expected to be especially volatile today, as contracts for stock index futures, stock index options, stock options and single stock futures (SSF) all expire simultaneously. Quadruple Witching is a somewhat rare event, occurring only four times a year - on the third Friday of March, June, September and December.

Corporate Earnings Reports

The light EPS schedule includes CarMax (NYSE: KMX), Focus Media Holding (Nasdaq: FMCN), Nobility Homes (Nasdaq: NOBH) and a handful of foreign firms.

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Thursday, June 18, 2009

Weekly Jobs Report Implies Improvement

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

The weekly jobs report showed a stalled pace of job losses, though still a sad one. The market found uplifting news in the insured unemployment rate, which showed the level of continuing claims filers eased to 5.0%, from 5.1%. However, your old pal "Greek" finds a snake in the grass.

(Tickers: RHI, KFY, MAN, MWW, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK)

Weekly Jobs Report


weekly jobs reportIn the week ending June 13, weekly initial jobless claims amounted to 608K, versus the economists' consensus expectation for 610K. The figure compared against a prior week revised total of 605K. The four-week moving average eased by 7,000, to 615,750.

Now what matters...

The level of continuing claims filers improved to 5.0%, from 5.1%. Some 148K fewer folks claimed unemployment last week. Now before you run to your window and yell "the war is over," keep in mind that this data only tells us that fewer sorry souls entered the system than left it last week. Let's ponder how one leaves the system...

You are left off the unemployment line when you get a full-time or part-time job, OR when your benefits run out. Aha! That tricky Greek uncovered another snake in the grass. Popular press is advising the world today that people are getting jobs, when in fact it is more likely they are just not collecting checks any longer... and that's a bad thing.

As you collect unemployment (speaking from experience) you enjoy a sense of at-ease initially. This is likely similar to how you might feel as a lifeguard reaches you while at the will of the currents. Imagine how you feel though, when you realize both you and the lifeguard are surrounded by sharks.

"While there is a check coming in, the world is a wonderful place. You enjoy your days off, arising long after the sun and watching the fools on the cobblestone below rushing off to their cubicle prison cells."

While there is a check coming in, the world is a wonderful place. You enjoy your days off, arising long after the sun and watching the fools on the cobblestone below rushing off to their cubicle prison cells. You might even jeer at them, "Ha, fools, run! Hurry! Don't be late!" You enjoy the luxury of the movie matinee', something most of us consider an urban legend. You ponder the questions of life over hours long coffee breaks... Perhaps you plan and take that trip you've been long dreaming of... And after some time, you even send off a resume or two.

Then, maybe about halfway through your entitled benefits, reality hits! What if I don't get another job right away! I suspect many of us go through this initially, before enjoying the long days, and then return to the anxiety filled nights. Imagine what happens when the benefits run out; how spending habits might be affected...

We suspect this improvement reported today in continuing claims is dangerously misleading, though it should be obvious since employment is a lagging indicator. Eventually, this figure should improve and mean something, but we posit it's a bit too early for that yet. Last month's Employment Situation Report showed a rising jobless count, and while announced corporate layoffs declined, they remained significant.

More report details...

The highest insured unemployment rates in the week ending May 30 were in Michigan (7.5 percent), Oregon (7.0), Nevada (6.3), Puerto Rico (6.3), Pennsylvania (6.2), Wisconsin (6.0), Arkansas (5.6), South Carolina (5.5), California (5.4), and North Carolina (5.4).

The largest increases in initial claims for the week ending June 6 were in Pennsylvania (+6,861), Florida (+6,469), Ohio (+5,104), California (+4,894), and New York (+4,795), while the largest decreases were in Arkansas (-1,206), Puerto Rico (-1,131), Wisconsin (-707), Arizona (-693), and Nebraska (-450).

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Business News: Jobless Claims, Geithner, Leading Indicators, Philly Fed

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

(Tickers: DFS, ASUR, PIR, CCL, RIMM, WBD, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK)

Business News


business newsToday's business news drivers are keyed by a bland and still bad enough jobless claims report. We have Leading Indicators and Tim Geithner's testimony on financial regulation yet to come... oh and Philly is represented with its Fed Survey!

Weekly Jobless Claims

Keying the business news day, Weekly Initial Jobless Claims were reported this morning at 8:30. The news was as bad as expected and as of late. Claims of 608K compared against the 610K forecast by economists surveyed by Bloomberg, while matching with the 605K reported last week (revised from 601K). The four-week moving average was down a modest 7,000, to 615,750.

While it seems the worst of the bleeding is behind us, we're still bleeding and that's never good. Over the past few months, we've seen the market come to terms with the idea that trough has been touched and recession's conclusion is before us, however, there remains little sign for a robust economic recovery. The global economic engine takes some time to rev up it seems, but we look forward to momentum once it does. Look for more detail on this data later this morning.

Feds News

Federal government rep, Treasury Secretary Geithner is scheduled to testify before the Senate Banking Committee on the President's plan for regulatory reform. Geithner shared some tough criticism yesterday, and so we're looking for the Secretary to join in the chorus with constituent-conscious Congressmen in bashing the financial world.

The Philly Fed Survey is due at 10:00 a.m. The measure of business activity in the Philadelphia region becomes useful when taken as part of a five course meal, including several other similar reports. Economists forecast Philly's General Business Conditions Index will improve to a still sad -15.0, from -22.6 posted in May. The metric, still indicating economic contraction at that level, would be the best in eight months. The Federal Reserve releases the latest news on the state of its balance sheet at 4:30 p.m. EDT.

Leading Economic Indicators

Leading Indicators are seen rising for the second month in a row, +1.0% this time, matching the April gain. April's rise in LEI was the first in seven months. Stock market gains in May should once again play a big role in the change, as should improved consumer sentiment.

Earnings Reports

Thursday's EPS schedule includes reports from Asure Software (Nasdaq: ASUR), Carnival Corp. (NYSE: CCL), Discover Financial Services (NYSE: DFS), J.M. Smucker Co. (NYSE: SJM), Pier 1 Imports (NYSE: PIR), Progress Software (Nasdaq: PRGS), Research in Motion (Nasdaq: RIMM), Wimm-Bill-Dann Foods (NYSE: WBD) and Winnebago (NYSE: WGO).

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Wednesday, June 17, 2009

Premarket Report: CPI, Mortgage Activity & Oil Inventory

Premarket report
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(Tickers: FDX, SMTS, IHS, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK)

Premarket Report


premarket report wall street the greek economist analyst writerToday's premarket report highlights the Consumer Price Index, Mortgage Activity and Crude Oil Inventory data.


Consumer Price Index


Reported at 8:30, the Consumer Price Index rose 0.1% in May, versus economist consensus expectations for a 0.3% increase. Core CPI, less food and energy, increased 0.1% as well, against an expectation for a 0.1% rise. The increase in the core figure is consistent with recent trend, and continues to evidence prices as a stubborn foe. We've argued here that it's much easier for industry to raise prices than it is for prices to be cut. There is a natural anchor to human nature that competitive forces can impact, but against great resistance.

Mortgage Activity Report

The Mortgage Bankers Association reported on mortgage activity early this morning. Rates on contracted 30-year fixed rate mortgages eased a bit in the week ended on June 12, to 5.5%, from 5.57%. Still, the Market Composite Index dropped another 15.8% on a 23.3% decrease in refinancing activity. The Purchase Index continues to offer reason for hope, as it fell only 3.5%. Recall, over recent weeks, this measure has shown growth even as rates have climbed. We speculate it is a green shoot for housing, but also reflects the appeal of foreclosure property flooding the market.

Bernanke & Bair Road Tour

Federal Reserve Chairman Bernanke and FDIC Chair Sheila Bair are scheduled to address a summit on financial literacy. Based on his testimonies to Congress on the subject, we've come to know this as one of Bernanke's pet projects as he looks out for the little guy.

Oil Inventory

The EIA publishes its Petroleum Status Report at 10:30 this morning. Last week's data, covering the period ended on June 5, showed crude oil inventory decreased by 4.4 million barrels. That data further stoked the already spooked oil pit, taking oil solidly above $70. Recent valuation consideration and skepticism has impacted both equities and commodities (recall our call to sell in June), and oil flirts with the $60s once again. U.S. crude oil inventories are above the upper boundary of the average range for this time of year. Gasoline decreased by 1.6 million barrels; gas prices have increased steadily from their lows as well (in case you live on Mars).

Corporate EPS Reports

Wednesday's earnings schedule includes news from Actuant (NYSE: ATU), CLARCOR (NYSE: CLC), FedEx (NYSE: FDX), IHS, Inc. (NYSE: IHS) and Somanetics (Nasdaq: SMTS).

Markets Overseas


Asia:
  1. MSCI Asia APEX 50: -0.61%

  2. Japan NIKKEI 225: +0.90%

  3. Hong Kong Hang Seng: -0.45%

  4. China CSI 300: +1.67%

  5. India BSE SENSEX 30: -2.91%

Europe:

  1. DJ Euro STOXX 50: -0.85%

  2. UK FTSE 100: -0.81%

  3. France CAC 40: -0.72%

  4. Germany DAX: -0.68%

(Prices as of hour of publishing, which may not be the close)

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