This Week: Economic Fireworks

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Prepare 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!!!


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

Bernard Madoff Sentencing

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

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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)


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

Swine Flu Pandemic

Visit 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.

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Swine Flu Pandemic

The 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."

The 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.


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

Economic Data: Personal Income & Outlays, Michigan Sentiment

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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

Personal 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)


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

Economic News: Bernanke Faces the Music

Visit 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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Weekly Jobless Claims

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).


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

BDI Off Recent Peaks

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MIRAL SHIPPING FREIGHT MARKET REPORT

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BDI Off Recent Peaks

In 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.


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

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

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

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.

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Today's Markets: Swiss Bank Action

Market 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).


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

This Week: Fed Soap Opera

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

This 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).


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

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

Then 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.


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

Quadruple Witching & Korean and Iranian Scare

Visit 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

Markets 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.


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

Weekly Jobs Report Implies Improvement

Visit 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

In 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).


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

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

Visit 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

Today'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).


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

Premarket Report: CPI, Mortgage Activity & Oil Inventory

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

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

Premarket Report

Today'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)


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

Iran's Presidential Election Crisis

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

(Tickers: GULF, TRAMX, TRIAX, ISL, XISLX, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK)

Iran's Presidential Election Crisis

A Return to the Past?

Accusations and rumors of election irregularities and fraud have led to a review of the presidential election results in Iran. Late Sunday (June 14th), Ayatollah Ali Khamenei, the Supreme Leader of Iran, ordered the Council of Guardians to investigate Friday's elections.

Accusations include: missing election ballots; outright intimidation by Basij and military units; "overwhelming" Ahmadinejad victories in the hometowns of his three competitors, and a refusal of the Interior Ministry to detail the breakdown of voting by province (something that has been done in previous elections).

Khamenei's order is a major turn of events, as this reverses his pronouncement from Saturday blessing Ahmadinejad's victory (with 65% of the vote) as "a divine judgment." This election was crucial in the fact that the main challenger Mir-Hossein Mousavi stood a very good chance of succeeding Mahmoud Ahmadinejad. If that had been the case, it would have been the first time that an incumbent would have lost a presidential election. Mousavi's election (had it been successful) would have also returned a more moderate faction to power.

Herein lies the dilemma facing Iran and Iran's leadership: Has the time truly come to allow a newer, more pragmatic faction to power? Has the time come to allow the younger generations to begin acceding to positions of responsibility?

Mousavi favors some type of undefined engagement with the west as opposed to full confrontation (as favored by Ahmadinejad and other hard-line conservatives). This is no mere point; Mousavi like Khamenei was an active participant in Iran's 1979 Islamic Revolution. He (Mousavi) is one of the founding fathers of the Islamic Republic, and also a twice former Prime Minister.

His participation in the election was not trivial; if anything, this was a serious challenge to existing status quo and a challenge to what many Iranians perceive as an outdated, aging and dysfunctional political establishment.

The secondary question (to who rightfully won the election) is who is Iran? Ahmadinejad's victory, as it stands today, is based on an electorate that comprises the urban poor and the conservative rural districts. If Ahmadinejad truly won the majority of votes, then these populations indeed turned out in larger numbers than expected. This would also indicate that a majority of the people not only favor Ahmadinejad himself and his policies, but also a reluctance to change the nature and course of the Islamic Revolution. This is the "first" Iran, the population who supported, lived through and largely took part in the Islamic Revolution.

The ruling elite of the "first" Iran have gripes against the outside world (many, but not all legitimate). They also have a vision for Iran and the Iranian nation. This includes not only Ahmadinejad and Khamenei, but the Council of Guardians, arch-conservative clerics, the Islamic Revolutionary Guards Corps and nationalists.

The "second" Iran can be seen as the opposition. These are seen as the younger people, the urban rich and middle class and less religious (maybe even secularized) citizens. Demographics estimate that some 50 to 70% of Iranians are under age 30. Included in this grouping are (those over 50) many who took part in the 1979 Islamic Revolution, as they were just as opposed to the Shah's rule as their more conservative colleagues.

Those in this grouping over age 30 are seeking an Iran that is not feared, yet respected. Those in this group are more pragmatic, but no less nationalist guardians of their nation than their conservative colleagues. The difference is that these individuals are open to discussion and willing to change policy if it aids the nation and the state. As an example, Mir Hossein Mousavi is 68 years old, yet his political acumen seemed more reserved than Mahmoud Ahmadinejad (who is 53).

The younger people are portrayed as either seeking a more open political or socially "softer" Iran. They are seeking true economic and professional opportunities. This generation needs to grow and contribute to their nation; however, Iran's continuing economic morass prevents this. Through Ahmadinejad's mishandling of the economy, Iran is not losing time, but losing a generation of educated and talented people.

The middle class have their own concerns, largely that the stagnating economy is hurting them both materially and financially. The middle class would prefer more political openness, and the opportunity to conduct business with less control and oversight.

What cannot and must not be overlooked, ignored or forgotten is the theology which is the base of the Iranian Revolution, the Shi'a branch of Islam. The rulers of Iran are the clerics, full believers and leaders of the community (Ummah). Their role as leaders, is more than just political and religious; in many ways, their role is as fathers; true guardians. It is their duty (both collective and individual) to make sure the nation and state remains true to Allah and unblemished by the outside.

In this rubric, change, if it must happen must be done at the right time and entrusted to those who will truly guard the nation and state. Iran's leadership is aging and knows that sometime soon it must pass on what was achieved to the new generation. What will be passed is not just policy, but a legacy - and that legacy is from Allah.

It is worthy to note that the protests and slogans being shouted are very, very reminiscent of the years 1977 - 1979. One of the most frightening things that must be crossing Khamenei's mind is that there be no repetition of 1979. That type of change would be not only catastrophic, but seen as apostasy. That type of apostasy would not just be seen as a sin by the conservatives, but also as a failing on their part and to Allah to protect and properly guard the Revolution and the nation.

This sadly, is something that the non-Islamic and secularized world does not understand.

Change will not come easily. The review of the election results will probably not change the outcome, however, this signals that the leadership is willing to work to prevent social and political upheaval.

Iran has lived through one revolution in the last 30 years. It is a revolution that is still ongoing, only this time it is being fed by those who grew up and came of age during the revolution. The younger generation has no memory of the Shah's regime, and the nearly overnight transition of Iran into its modern era. They could, very well soon be the catalyst for yet another revolution in Iran. What direction that takes is yet to be seen, but should it happen, the world would have to deal with a "younger" led nation that holds one of the keys to the world.

That new leadership will not only have the responsibility to the Islamic Revolution which gave birth to the nation they will inherit, but also to prove themselves to their own people. They will have to ensure that the economic, political and geopolitical concerns of Iran are met and protected.


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

Obama's Address to Muslims Scores Foreign Policy Coup

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

President Obama's address to Muslims scored a masterful foreign policy coup. Over the short-term, it influenced Middle Eastern elections in favor of moderate and balance-minded men and parties. Over the long-term, it may have provided the right grass roots medicine to prevent what seemed an inevitable clash of cultures.

(Tickers: GULF, TRAMX, TRIAX, ISL, XISLX, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK, DXDWX, WMDFX, WMDGX, WINDX, WFIVX)

Obama's Address to Muslims Scores Foreign Policy Coup

President Barrack Obama's sweeping "change" extended through the Middle East this spring in a profound manner. The President's recent speech to the Muslim world was well timed to awaken the minds and soften the hearts of mankind. It drove progress in the short term, and brought blessing for the long. For those who really noticed, Barrack Obama's bright outreach and uplifting address to the Muslim world was perhaps the most important speech given by a human being since the cold war cracking words of Ronald Reagan.

In the timing of his address, Obama employed the same strategy for good that Osama bin Laden had manipulated for evil. His timely words, just before important elections across the Middle East, drove positive actions by desperate peoples. His heart-warming, bold and hopeful guidance supported the victory of the moderate leadership in Lebanon over a belligerent Hizbollah. His good message squeezed the tight presidential race between the bull-headed and destructive Mahmoud Ahmadinejad and the more open-minded Mir Mousavi in Iran. This played similarly to the way al-Qaeda's historic Spanish train bombing influenced Spain's prime ministerial elections three days before the vote in 2004. However, the intentions of the two parties could not be more dissimilar. While the purely evil bin Laden seeks chaos in which to thrive, Obama lays out a plan for real and lasting peace within which mankind could survive.

Insight has been proven plentiful within the US State Department and the White House. While we may never know just where the idea came from, we can be certain it was wise enough to go at least partly unnoticed by evil while influencing elections within Middle Eastern hot-spots in favor of moderation and peace. Still, Osama bin Laden reacted hastily in anger against Obama's peace seeking words, by breaking his code of secrecy and silence to declare publicly that cooperation with Jews and Christians was a crime. Psalm 5: "Their throat is an open tomb... Let them fall by their own counsels."

In a press conference on Friday, the President could nary contain his excitement when asked about the close Iranian election and the powerful response to Mousavi. However, in his prepared weekly address to the nation, he refrained from any commentary on the subject. The reason behind his caution and my candor is simple. Both Obama and I would hope to not pervert the message by giving cause to question the reason behind it. His speech was both necessary and inevitable, while its timing was wise and strategically powerful. We simply need balanced minds to negotiate a peaceful future with, because we cannot offer our pearls to swine...

If Obama's address did not bring tears to your eyes, I implore you to soften your heart and listen once again. The message was undeniably profound, and I am today even more behind this president than when I broke my lifelong string of Republican support; support that had even led me to vote against a Greek/American in Michael Dukakis, for a Republican in George H. W. Bush. Obama's message was receivable evenly and fairly by every listener from the far islands of Indonesia to the northern most reaches of Greenland. The words were digestible by the mind of righteous human kind, and believable due to their peaceful intent and hopeful promise. Paraphrasing, Obama said, "We speak privately the same words that we pronounce publicly." There was an intention for restoration of trust in the United States, and a reminder of what the model of our free and ethnic encompassing nation represents for mankind.

What the President has done in his monumental effort is admirable. He has employed effective foreign policy that holds true equally through the long-term as it is useful in the short. It contrasts starkly against the initiation of wars based on the misleading of the United Nations and our own citizens. We can commend President Bush for removing the dangerous tyrant, Saddam Hussein, but we regret the sour sentiment left throughout the Middle East by our methods. In contrast, what the current administration has accomplished here could prove lasting and worthy of global admiration. Bravo Obama!


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

Iran's Presidential Election

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

As Iranians go to vote for their President, the world will be watching along with the Iranian nation to see who the winner will be.

(Tickers: GULF, TRAMX, TRIAX, ISL, XISLX, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK)

Iran's Presidential Election

A Revolution's Maturity or Precipice

Four men are running for President:

1. Mahmoud Ahmadinejad - The incumbent and current president
2. Mir Hossein Mousavi - A member of Iran's Expediency Council and former Prime Minister
   
3. Mohsen Rezaei - A former Chief Commander in Iran's Revolutionary Guard Corps and a founder of Imam Hossein University. The University has been linked to the rocket test center at Parchin. Rezaei has also been accused of masterminding the July 18th, 1994 Buenos Aires Jewish Cultural Center bombing.
4. Mahdi Karroubi - Former Parliament Speaker

The most familiar candidate is President Ahmadinejad, an arch conservative who is also favored by the Supreme Leader, Ayatollah Ali Kahmeni. President Ahmadinejad has placed Iran at the forefront of international news by proceeding with nuclear energy development, rocket development, and calling for the destruction of Israel.

During the last days of the campaign, Ahmadinejad has accused his opponents (chiefly Mir Hossein Mousavi) of being agents of Israel, and of possibly countering the election results in the event of an Ahmadinejad victory. These accusations have drawn rebukes from Expediency Council Chairman (and former President) Ayatollah Ali Akbar Hashemi Rasfanjani. Rasfanjani has publicly called upon Ayatollah Ali Kahmeni to rebuke Ahmadinejad. A "scolding" of sorts was issued by the Council of Guardians late Thursday afternoon.

Also on Thursday, the Islamic Republican Guard Corps (IRGC) Commander, Mohammad Ali Jafari threatened to "put down" any protests in the event mass demonstrations take place. Mass demonstrations are expected by the opposition (most notably Mousavi) in the event that Ahmadinejad wins the election. Jafari's assertion, if not accusation, is that the losing side will claim voting fraud.

Needless to say, the opposition has claimed that using the IRGC to put down demonstrations is a sign and threat that the arch conservatives will retain power at any means.

The election is commencing in an atmosphere of distrust, uncertainty and high tension. This isn't saying that all hell won't break loose after the election results are finalized, but whoever the winner is will face a nation with a number of issues. Among them are: a severely strained economy coupled with a high unemployment rate; an economy largely reliant on oil and gas; a contentious relationship with the outside world due to its ongoing nuclear programmes; and a population eager for change (nearly one half of Iran's population is under age 30).

If Ahmadinejad wins, not much will change vis-a-vis the international scene. Tests will continue on Iran's rockets and the nuclear programs. Domestically, Iran could be in for a rough ride, if his victory is by a close margin. Supporters of Mousavi will challenge the outcome, and that undoubtedly will be followed by demonstrations and clashes with the security forces. The legitimacy of the election and of the government will be in question. This could very well raise the possibility of dissension and infighting within the leadership of Iran, leading to a period of paralysis.

A sizable margin of victory for Ahmadinejad will leave doubters, but probably less social upheaval and political paralysis. Either way, a second Ahmadinejad term will leave Iran under the control of a very conservative, anti-western and strongly nationalist government. The world, and in particular, the U.S. and Russia will have to deal with an aspiring Persian Gulf power.

One item that must be kept in mind and remembered is that both Ahmadinejad and Mousavi have pledged to continue Iran's nuclear and rocket programmes. This is a reality that the world will have to deal with on June 13th, just as it did on June 11th.

A Mousavi victory might bring an opening with the west; that will depend on what support Mousavi receives from Ayatollah Khameni and the IRGC. It will also depend on how the world receives Mousavi. Mousavi will have multiple challenges, and will need to walk the proverbial fence between conservatives and pragmatists.

Regardless, Iran's next president will need to address domestic issues. The Iranian people are young, vibrant and ready to take their place in society. The President of the Islamic Republic of Iran will be the person and face of their future.


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

Iranian Elections

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

Pre-Market Report

The day's news wire is keyed by the high profile Iranian elections. Iranians are choosing their next president, so clearly this Iranian election is of great significance to the entirety of the world. Meanwhile, the World Health Organization yesterday declared H1N1 (Swine Flu) the first pandemic our world has seen in 41 years. In the wake of all this sour news, the stock market receives the latest consumer sentiment reading and May's take on import and export prices.

(Tickers: BCS, BLK, MSB, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK)

Iranian Elections

Mir Hossein Mousavi, President Ahmadinejad's closest rival, is complaining that his people are not gaining access to polling numbers. Mr. Mousavi may do something today that has never been accomplished in Iran, the unseating of a sitting president. Mousavi has incorporated women more than any Iranian candidate of the past, employing his wife actively in his campaign. He has also promised more freedoms and seems to be the guy we might want to win... "We" being the rest of the world...

Import & Export Prices

Import prices rose 1.3% in May, meeting consensus expectations. Imports increased 0.2% when excluding petroleum, which marked a significant change. Inflation fear mongers have fuel to burn today, but prices had to eventually recover. Just as petroleum has recovered, so have commodities generally. This pushes all pricing higher as manufacturers must incorporate the change in costs into finished goods. We've noted here often how much more quickly that seems to occur on the way up than on the way down. Thus, there's an intrinsic anchor for inflation present in the pricing scheme. That said, prices were still 17.6% short of last year's levels (including petrol). Export prices rose 0.6%, versus the prior month 0.5% rise. Export prices were still 6.5% short of last year's level.

Reuters/University of Michigan Sentiment

At 9:55 AM, look for the latest reading on the Michigan Sentiment metric. The consumer sentiment take has improved from panic-level lows, but rising beyond much further will likely require labor market improvement. Employed folks can only get so happy! Sentiment is not going to improve for the unemployed and partially employed until that situation changes. Bloomberg's consensus of economists forecasts the June sentiment reading will mark 70.0, versus 68.7 at last take. Sentiment was lowest in the panicky days of last fall.

Corporate News Drivers

Blackrock (NYSE: BLK) agreed to buy Barclays' (NYSE: BCS) investment unit, Barclays Global Investors, for $13.5 billion. The cash ($6.6 billion) and stock (37.8 million shares) deal makes Blackrock the world's largest money manager. Afterward, Barclays will own 19.9% of its former unit. Blackrock will take on new debt and raise capital via equity offering. Barclays' shares were down 3% in the pre-market, while we did not get a quote for Blackrock. Corporate EPS news offers Mesabi Trust (NYSE: MSB) and a handful of non-US names.

Markets Overseas

Markets overseas look shaky after the murder of the top representative of the Iraqi Parliament's largest Sunni Muslim bloc today. The streets of Baghdad threaten to catch fire with religious vengeance as sectarian separation renews. Suddenly, a US withdrawal may not be so soon in coming.

Asia:

1. MSCI Asia APEX 50: -0.48%


2. Japan NIKKEI 225: +1.55%


3. Hong Kong Hang Seng: +0.52%


4. China CSI 300: -1.87%


5. India BSE SENSEX 30: -1.13%

Europe:

1. DJ Euro STOXX 50: -0.53%
   


2. UK FTSE 100: -0.39%


3. France CAC 40: -0.33%


4. Germany DAX: -0.68%

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


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

Financial News: Retail Sales, Jobless Claims, Business Inventories

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, ARST, CHDX, CIDM, CPY, DLM, FNSR, GLBC, HRLY, HOKU, LULU, MDZ, NSM, NOOF, OCLS, RGEN, SCHS, UTSI)

Financial News

Retail Sales Report

The Commerce Department reported this morning that retail sales increased 0.5% in May. The growth compared against a prior month result of -0.2% (revised). Bloomberg's consensus of economists had forecast sales would increase 0.6% in May, and the month's sales were still 9.6% short of last May's level.

Excluding autos, May sales also increased by 0.5%, versus the consensus view for a 0.3% rise. The ex-auto figure for April was also revised to -0.2%. Motor vehicle and parts dealers sales dropped 19.6% against the prior year level.

Bright spots were found in motor vehicles, gasoline stations, building material and garden equipment, food and beverage stores and health and personal care stores.

Initial Jobless Claims

Weekly initial jobless claims were reported at 601K for last week, down 24K from the 625K revised count from the prior week. The four-week moving average also dropped by 10,500, to 621,750. The insured unemployment rate remained high and increased by 59K, to a record level of 6.8 million or 4.6%.

RBC Cash Index

RBC reports on consumer attitudes and spending at 9:00 AM. May's RBC Cash Index improved to 43, from 38.3 in April and 1.6 in February.

Business Inventories

Following a favorable Wholesale Trade report that showed inventories contracted faster than sales on the wholesale level, we get the Business Inventories Report for April this morning. At 10:00 AM, economists expect April's Business Inventories will be reported down 0.8%, after dropping by 1.0% in March. Remember, it's a good thing when sellers are able to get a hold inventory during a period of economic contraction. From the floor, they can better manage growth and avoid discounting except for the purpose of drawing traffic. Business Sales fell 1.6% in March, so businesses did not yet have a grip on inventory, and the inventory-to-sales ratio stuck at a high level of 1.44 (high compared to recent trend and low). We have given you the Wholesalers numbers already, and Manufacturers inventories declined 1.0% in April.

Natural Gas Storage

At 10:30, the EIA will report on Natural Gas inventory levels. In the week ending on May 29th, natural gas in storage increased by 124 Bcf. This put gas stocks at a level 546 Bcf greater than the same point in the prior year and 423 Bcf above the five-year average. All of this is indicative of global economic contraction.

Fed Events

At 1:00 PM, Atlanta Fed President Dennis Lockhart will address the National Association of Securities Professionals. The Federal Reserve will report on its Balance Sheet at 4:30 PM.

Corporate EPS Reports

The day's light EPS schedule includes news from ArcSight (Nasdaq: ARST), Chindex Int'l (Nasdaq: CHDX), Cinedigm Digital (Nasdaq: CIDM), CPI Corp. (NYSE: CPY), Del Monte Foods (NYSE: DLM), Finisar (Nasdaq: FNSR), Global Crossing (Nasdaq: GLBC), Herley Industries (Nasdaq: HRLY), Hoku Scientific (Nasdaq: HOKU), Lululemon (Nasdaq: LULU), MDS Inc. (NYSE: MDZ), National Semiconductor (NYSE: NSM), New Frontier Media (Nasdaq: NOOF), Occulus Innovative (Nasdaq: OCLS), Repligen (Nasdaq: RGEN), School Specialty (Nasdaq: SCHS) and UTStarcom (Nasdaq: UTSI).

Markets Overseas

Asia:

1. MSCI Asia APEX 50: -0.02%


2. Japan NIKKEI 225: -0.1%


3. Hong Kong Hang Seng: +0.03%


4. China CSI 300: -0.94%


5. India BSE SENSEX 30: -0.36%

Europe:

1. DJ Euro STOXX 50: -0.01%
   


2. UK FTSE 100: +0.02%


3. France CAC 40: -0.16%


4. Germany DAX: +0.13%

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


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

Slim Jim Plant Explosion - Top Ten Causes

THE GREEK'S TOP TEN LIST

With our wealth of insight, we thought we might take a stab at the possible causes behind Conagra Foods' (NYSE: CAG) Slim Jim plant explosion in North Carolina. Enjoy!

Slim Jim Plant Explosion

Top Ten Causes

• 10 - Someone really did finally "Snap Into a Slim Jim!"
  
• 9 - MacGruber was called in to defuse a bomb
• 8 - After crossing the Mexican border and getting stranded in Texas, al-Qaeda terrorists were certain an attack on the Slim Jim plant would strike at the heart of America
• 7 - The secret ingredient in Slim Jims turned out to be the highly combustible combination of cow manure and gasoline
• 6 - 2 WORDS - Brokeback Mountain!
• 5 - A Mexican smuggling tunnel went tragically astray
• 4 - After inventing both SPAM and Slim Jims, Philadelphian genius ran thin
  
• 3 - Pop culture starved North Korean military strategists finally launched the big one
• 2 - So that's what Bush has been up to...
• 1 - Someone told Cheney where his shotgun was!
  

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

Pre-Market Business News: Mortgage Activity, International Trade, Treasury Budget

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, ISLE, OCCF, MEAS, LUB)

Pre-Market Business News

Weekly Mortgage Applications

The Mortgage Bankers Association made its regular reporting of weekly mortgage activity in the pre-market today. Recent troubling and enthusing trends held true. First and foremost, 30-year fixed rate mortgage loans saw another jump in the average contracted interest rate, to 5.57%, from 5.25%. As a direct result of this, refinancing activity posted another drop, as the MBA's Refinance Index sank 11.8%, week-to-week. This weighed on the Market Composite Index, driving it down by 7.2% on a seasonally adjusted basis. Now the good news... Despite the rise in rates, the Purchase Index, which measures contracted loan initiation on property purchases, rose again. This week's increase measured 1.1% and continues a notable trend. When purchase activity rises in the face of a tough rate change, that's a darn good sign for housing. We will have more to say on this later.

International Trade

The International Trade Report reached the wire at 8:30 this morning. April's trade deficit expanded to $29.2 billion, from $28.5 billion in March (revised). Export activity contracted at a faster pace than imports, leading to the change in trade. The consensus had reportedly forecast a $28.5 billion figure, so this data is modestly disappointing. One might argue that the trade deficit had recently held true during economic expansion, and so the data may not be so disappointing.

The trade gap expanded in both petroleum and non-petrol goods. Briefly, we suspect global economic strife, especially in Europe, and the earlier efforts of the US toward recovery have led to an environment that feeds trade deficit expansion. As mentioned above, this should not change even as Europe eventually recovers, due to our consumption character.

Quarterly Services Survey

Look for the Quarterly Services Survey at 10 AM today. Today's report will cover the first quarter of 2009. In Q4 2008, the measured information and technology sector experienced quarter-over-quarter revenue decline of 1.2%, and year-to-year slippage of 1.5%. There is no forecast for this report.

Federal Reserve Speakers

Today at 10:00, Richmond Fed President Jeffrey Lacker addresses the North Carolina state Senate Appropriations Committee. At 12:15, Fed Governor Elizabeth Duke addresses the systemic importance of consumer protection at a Cleveland event.

EIA Petroleum Status

At 10:30, the EIA will make its regular reporting of changes in Petroleum and derivatives storage. Last week's data showed a crude oil storage increase of 2.9 million barrels.

Beige Book

The Fed releases its Beige Book of regional economic indicators at 2:00 PM today.

Treasury Budget

The federal government reports on the monthly change in its Treasury Budget at 2:00 PM. Bloomberg's consensus of economists forecasts an expansion of deficit of $180 billion. In April, a month where tax revenues regularly produce a surplus, a $20.9 billion deficit was reported. Historic government aid in dramatic times can bring such change.

Corporate News Drivers

Look for EPS news from Isle of Capri Casinos (Nasdaq: ISLE), Linktone (Nasdaq: LTON), Luby's (NYSE: LUB), Measurement Specialties (Nasdaq: MEAS), North American Energy Partners (NYSE: NOA), Optical Cable (Nasdaq: OCCF), PURE Bioscience (Nasdaq: PURE), Selectica (Nasdaq: SLTC), Spartech (NYSE: SEH) and Volt Information Sciences (NYSE: VOL).

Markets Overseas

Asia:

1. MSCI Asia APEX 50: +3.82%


2. Japan NIKKEI 225: +2.09%


3. Hong Kong Hang Seng: +4.03%


4. China CSI 300: +0.98%


5. India BSE SENSEX 30: +2.25%

Europe:

1. DJ Euro STOXX 50: +1.77%
   


2. UK FTSE 100: +1.69%


3. France CAC 40: +1.61%


4. Germany DAX: +2.06%

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


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

Stock News: TARP Repayment, ICSC Report, Wholesale Trade

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, NDN, CRAI, GIGM, KFY, LAKE, MDNU, MLNK, MOV, NAV, NCS, OXM, RENT, RSC, SHFL, SINA, STRM, TLB, TITN)

Stock News

In today's stock news, rumor has it the government might allow 10 banks to repay TARP funds. The stagnant market (by recent basis anyway) might have reason for enthusiasm this morning. Financial sector stocks have already returned from the dead, but at least it seems we can take them off the critical care list too. Those of you freaked about the prospect of inflation, might also consider that the banks may not need new money issuance any time soon.

The regular ICSC data was reported this morning, and still reflects stabilization in my eyes. Wholesale Trade is also due up for reporting later this AM. However, I'm throwing all this information out the window today, as I'm seeing something in the marketplace. I'm seeing doubt... in Obama, in economic prospects, in a chance for a swift recovery. This should allow for some further reflection upon valuation and some reconsideration of holdings. In other words, I see a near-term correction, or adjustment, or whatever you want to call it. So what am I saying then? I'm saying, sell in June and walk away for a little while...

ICSC Weekly Same-Store Sales Report

Reported early this morning, the weekly sales data showed a year-over-year decline of 0.8% this time around, matched with a 0.2% weekly rise. Most expert commentators are now speaking of a coming decline in consumer spending and a coinciding hit to retail, but we have been pointing to the stabilization in the weekly same-store sales figures published by the ICSC. The size and growth of our economy forces stabilization at some point, and that appears to be happening, as seen in the trend table below.

Are there significant pitfalls before us? Yes... Consumer credit continues to contract, consumer loan defaults continue to rise, and unemployment continues to deteriorate. Meanwhile, economic stabilization is seen by most economists before or around the year's end. We heard Mr. Krugman (an economist you should have heard of) this morning say the turn may be in by September.

Looking around my neighborhood (in Manhattan mind you), I see vacant commercial space after vacant commercial space, and local in-the-knows chirp to me that it's due to stubborn landlords who will not cut rental rates. For certain, there was also an excess of marginal shops that had confounded me with their existence for years. A little shake up was certain to sink the plethora of chic toy stores and overpriced designer children's clothing. The shake up we got though, did in a bunch more.

ICSC Weekly Trend

Week Ending

Weekly Change

Yearly Change

June 6

+0.2%

-0.8%

May 30

-0.6%

+0.6%

May 23

+0.8%

+0.5%

May 16

-1.2%

-0.3%

May 9

+0.3%

+0.5%

May 2

+0.3%

+0.5%

April 25

-0.7%

-1.7%

April 18

-0.4%

-0.1%

April 11

+0.8%

-0.4%

April 4

+0.6%

-0.3%

Wholesale Trade - April

Later this morning, at 10:00 a.m., look for the Commerce Department to report on Wholesale Trade. At last check, the inventory/sales balance reverted to its old ways after showing signs of stabilization. Sales fell at a faster pace than inventories last month (for March), so the important inventory-to-sales ratio took a step backwards, to 1.32, from 1.31. Sales declined by 2.4% on the wholesale level, while inventories contracted by just 1.6%. Much of this had to do with a matching reversion in durables, but rising commodity prices also took nondurables sales lower.

"This mix of messages... makes the case for a U-shaped recovery..."

This mix of messages simply evidences the fact that stabilization does not mean recovery is nearby, and it makes the case for a U-shaped recovery, over the V-shaped argument. Barron's reports the economists' consensus for Wholesale Inventory for April at -1.1%.

Other Happenings

The American Petroleum Institute will publish its weekly U.S. crude oil and fuel inventory data. Needham & Co. forgot to invite me to its fourth annual Internet & Digital Media Conference today at the New York Palace Hotel, but maybe I'll squeak my way in if I find some time.

Markets Overseas

Asia:

1. MSCI Asia APEX 50: -1.47%


2. Japan NIKKEI 225: -0.8%


3. Hong Kong Hang Seng: -1.07%


4. China CSI 300: +0.41%


5. India BSE SENSEX 30: +3.14%

Europe:

1. DJ Euro STOXX 50: +0.51%
   


2. UK FTSE 100: +0.1%


3. France CAC 40: +0.19%


4. Germany DAX: -0.03%

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

Stock News

Tuesday's earnings schedule includes reports from 99 Cents Only Stores (NYSE: NDN), CRA International (Nasdaq: CRAI), GigaMedia (Nasdaq: GIGM), Korn Ferry (NYSE: KFY), Lakeland Industries (Nasdaq: LAKE), Medical Nutrition USA (Nasdaq: MDNU), ModusLink Global Solutions (Nasdaq: MLNK), Movado (NYSE: MOV), Navistar Int'l (NYSE: NAV), NCI Building Systems (NYSE: NCS), Oxford Industries (NYSE: OXM), Rentrak (Nasdaq: RENT), Rex Stores (NYSE: RSC), Shuffle Master (Nasdaq: SHFL), SINA Corp. (Nasdaq: SINA), Streamline Health Solutions (Nasdaq: STRM), Talbots (NYSE: TLB) and Titan Machinery (Nasdaq: TITN).

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

Business Preview: European Elections, Gordon Brown Down, Obama's Jobs Initiative, McDonald's Miss

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

These guys are cooked! Take a close look at the image here. In the months ahead, these faces will be lost with the many other casualties of The Great Recession. Fringe parties took seats from socialist defenders in the broad sweeping EU elections. Voters displayed a sense of frustration just short of anarchy. We suspect there's a good chance Gordon Brown resigns before the end of the week, and the rest of this crew not long thereafter. European markets reflected concern today as visibility fogged. There's very little economic news to report today, so President Obama took advantage and presented a job creation plan. McDonald's reported growth in May, but it fell short of analysts' hopes, and the stock started lower.

(Tickers: MCD, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK, AOI, BKRS, BTH, FGP, FCEL, IDT, PLL, ZQK)

Business Preview

Overseas Markets

Stubborn Brown Faces New Onslaught

With his Labor Party losing seven percentage points and its EU position cut at the knees, the pressure on UK Prime Minister Gordon Brown now seems certain to overwhelm him. Conservatives took the election across broader Europe, and by 12 percentage points in the UK. Members of his own party are more likely to seek his resignation now, after losing long-lasting seats to fringe parties across the UK. For instance, a party that only allows whites in its membership took local seats in the EU away from Labor, while a party seeking Scottish independence did as well. We cannot see how Brown can retain his leadership role without the support of his party for long. Elections are due within a year, and Labor has the long-term to concern itself with.

European Elections

The distraught citizenry of the European Union expressed their frustration with the economic crisis and with political scandal in dramatic fashion. Previously popular socialists scattered lost support in every which direction, losing seats in some cases to extremists. Needless to say, expect to see far different faces atop governments across Europe as elections come to pass, and in some cases are forced to the fore. The upheaval spurred concern in financial markets that prefer visibility. Across the whole of Europe, national indexes declined significantly.

Asia:

1. MSCI Asia APEX 50: -1.94%


2. Japan NIKKEI 225: +1.0%


3. Hong Kong Hang Seng: -2.28%


4. China CSI 300: +0.31%


5. India BSE SENSEX 30: -2.9%

Europe:

1. DJ Euro STOXX 50: -1.48%
   


2. UK FTSE 100: -1.14%


3. France CAC 40: -1.5%


4. Germany DAX: -1.42%

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

Obama's Jobs Plan

The economic schedule is blank today in the US, but President Obama unveiled 10 government projects he hopes and expects will save or create 600,000 jobs. Obama's plan is to efficiently put to use the $787 billion in stimulus funds his Administration asked for and received in February. Obama has branded this initiative, the "Summer of Accelerated Recovery Act Activity." Yikes! It lacks ring... The plan will direct funds to health centers, national parks, airports, highways and veterans' medical facilities, so go turn in your resume...

Corporate News Drivers

The day's earnings schedule is light, including news from Alliance One Int'l (NYSE: AOI), Bakers Footwear (Nasdaq: BKRS), Blyth (NYSE: BTH), Ferrellgas Partners (NYSE: FGP), FuelCell Energy (Nasdaq: FCEL), IDT Corp. (NYSE: IDT), Pall Corp. (NYSE: PLL) and Quiksilver (NYSE: ZQK).

McDonald's Sales

McDonald's (NYSE: MCD) shares were down 2.8% in the premarket after reporting May same-store sales increased 5.1%. While McDonald's international sales benefited from longer breakfast hours and other initiatives, its US business displayed same-store sales growth of just 2.8% (4.3% last year). The stock's decline can be attributed to the company's falling short of analysts' expectations. One cannot deny the importance of growth in such an economy, so this is a valuation check more than anything else. The money had already been made in MCD.


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

Unemployment Rate Jump Outweighed by Better Payrolls

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

May's jump in the unemployment rate was outweighed by a lighter nonfarm payroll loss. Stock index futures moved higher as a result.

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

Unemployment Rate Outweighed by Payrolls

Ladies, have you heard this pick up line yet? "Hi, I'm Jobless." I remember the old days when I would throw my own collateral around, proclaiming to superficial takers, "I'm a Wall Street Analyst" (stressing Wall Street). Nowadays, you would omit the term "Wall Street," as it would return a smirk or a slap to the face, alongside a comment about how you ruined someone's life. Today, you are highly likely to hear the jobless line in a bar, since about one out of every ten of you is now unemployed, and even more of you are under-employed.

Employment Situation Report

Today's take on May employment offered a little good and a little bad news.

The bad: The unemployment rate moved to 9.4%, versus the economists' consensus forecast for 9.2%.

The good: In the eyes of the market, the jump in unemployment was more than offset by a sharp drop in the rate of Nonfarm Payroll decline.

We told you in our "Week Ahead" copy that the unemployment rate would likely exceed expectations. Specifically, we noted, "Ongoing unemployment claims have persisted in their ascension, and so I think economists are making a mistake here."

Still, there was a powerful surprise within the monthly report, at least on the surface of things. Nonfarm Payrolls came in down only 345K in May, where economists were forecasting a job loss of 530K. Remember, even before directional change makes its impact, the rate of change is noticed by the market. So, once again, a less bad, bad number was greeted favorably. After all, it offers another sign that better times await us.

Raising suspicion about this sudden improvement, talking heads are pointing toward a heavy birth/death rate adjustment that acted to subdue the payrolls figure. Thus, there could be a later adjustment to this month's number when June's Employment Situation is reported (this would follow trend as well). Also, the under-employed now sum to plus 16%, and that impacts tax revenues and personal spending. We have not even mentioned the newly unemployed at General Motors (NYSE: GM), associated dealerships and impacted suppliers. So, while green shoots are sprouting, a frost might subdue them in June's figure.

Consumer Credit Report

At 3:00 p.m., we will receive the Consumer Credit Report. Economists see another contraction in consumer credit, this time by $7.0 billion. Credit contracted by $11.1 billion in March. This is an inevitable event, as credit card issuers come under regulatory pressure and face the reality of rising default rates... and the hangover from decades of free money is going to last a while.

Corporate Earnings Drivers

The light EPS schedule includes news from Agilysys (Nasdaq: AGYS), American Woodmark (Nasdaq: AMWD), Exide (Nasdaq: XIDE), Oil-Dri Corp. of America (NYSE: ODC) and that giant of industry, Carphone Warehouse (Nasdaq: CPW).


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

Premarket News: Obama Inspires Hope

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

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

Premarket News: Obama Inspires Hope

President Obama gave a historic speech today in Egypt, at the University of Cairo, where he compared the common characteristics of the Western and Middle Eastern worlds. It was one of those addresses to remember, the kind that live on in the history books.

Obama sought to turn the tide of Islamic sentiment toward one of hope and vision, and away from the perilous path the two cultures have been on for decades. One can only hope that this fire for peace will be safely-kept from those who might extinguish it, and that it not spread to those who might abuse it. You can see Obama's effect on financial markets today in the turn from an early Asian market decline to a reversal in Europe.

We expect the market will also find positive news from the ongoing unemployment claims improvement noted this morning, as these continuing claim filers declined by 15,000. Still, the wise will point to the pending impact from GM, its dealers and supplier fallout. We still find today's news mostly positive, and we like the sign that even the labor market, a lagging indicator, seems ready to stabilize.


Overseas Markets

Asia:

1. MSCI Asia APEX 50: -1.45%


2. Japan NIKKEI 225: -0.75%


3. Hong Kong Hang Seng: -0.4%


4. China CSI 300: +0.49%


5. India BSE SENSEX 30: +0.93%

Europe:

1. DJ Euro STOXX 50: +0.46%


2. UK FTSE 100: +0.05%


3. France CAC 40: +0.7%


4. Germany DAX: +0.64%

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

European Central Bank (ECB) & Bank of England (BOE)

Over there on the other side of the pond, where we will shortly commemorate the 65th anniversary of D-Day, central bankers at the Bank of England and ECB announced their latest monetary policy decisions. The BOE said it would keep its official bank rate paid on commercial bank reserves steady at 0.5%, while maintaining its asset purchase program of 125 billion pounds. The BOE reiterated that the extent of asset purchases remained flexible and would be monitored as conditions persist. We will call this a neutral market factor for today's trading.

The ECB also kept rates steady, announcing the interest rate on its main refinancing operations and interest rates on the marginal lending facility and the deposit facility will remain unchanged at 1.00%, 1.75% and 0.25% respectively. At time of publication, we were still awaiting the ECB President's news conference and Introductory Statement. We expect details will be shared regarding the ECB's own nonstandard measures to boost the regional economy.

The Bank of Canada held its key rate to 0.25%, while Russia's central bank cuts its rate by 0.5%, to 11.5%. This marked the third rate cut since April in Russia.

Economic Reports

Monster Employment Index

Thursday's economic slate here at home began with the release of the Employment Index from Monster Worldwide (NYSE: MWW). Monster's measure of online job demand (from the employer's perspective) deteriorated to a level of 118 in May, versus the 120 measure taken in April. In our "Week Ahead" copy, we said, "We suspect the metric will shed a point or two this time around, if it does not stick at the current mark, as temporary and part-time work serve to stabilize the supply of overall employment opportunities."

To provide some perspective, at this time last year, the MEI stood at 166. Every region of the country declined, while 19 of 28 metro markets fell. However, Monster notes signs of stabilization. We took note that job losses seem to be weighing in ancillary business segments, or those that support main operations. Monster noted weakness in engineering, IT and legal functions. We suspect ancillary position layoffs follow the major segment shedding and fat cutting in recession, as companies realize their smaller size allows for less support; also as they stretch job cuts. Thus, for the deep thinker, we view this report a net positive. The market does not give it much weight anyhow, so its likely negative impact should not be market moving.

"Continuing Claims decreased by 15,000, signaling to us that the labor market wants to stabilize here. However, this disregards General Motors' bankruptcy, dealership closings and parts makers' fallout to come."

Weekly Jobless Claims

The regular Weekly Jobless Claims Report showed 621K initial jobless claims, versus the expected 620K. This week's claims compared against the prior week's revised 625K mark. There was an energizing green shoot in the report this week, so take note. Continuing Claims decreased by 15,000, signaling to us that the labor market wants to stabilize here. However, this disregards General Motors' bankruptcy, dealership closings and parts makers' fallout to come. So, unemployment that might have otherwise started stabilizing in June, may have another month of increase left in it. Just the same, we can see the light... and this is a lagging indicator, so it's an especially encouraging sign.

Productivity & Costs for Q1

The Department of Labor also produced its Productivity and Costs Report at 8:30. We expected both metrics to benefit from favorable revision after the improved reporting of Q1 GDP. With capacity lighter and hours still softening, any positive change in economic activity (even from bad to less bad) allows for improved Productivity and Unit Labor Costs. Revised Q1 Productivity improved 1.6%, compared against the economists' forecast for a revision to +1.2%. The result also marked an improvement from the initially reported +0.8%. Unit Labor Costs, however, only improved to a +3.0% change, versus the expected +2.8%, and off of the +3.3% initially reported. We'll call this market driver a net neutral, because labor costs are still reminding us of the coming inflation threat.

Fed Parade and Natural Gas Report

Federal Reserve Messengers Bernanke, Pianalto and Dudley will each address regional audiences in a sort of Fed parade of their own. The Fed will also report on the state of its balance sheet at 4:30 p.m. The regular EIA Natural Gas Report is due at 10:30.

Retailers will mostly report May Chain Store Sales today. However, Wal-Mart (NYSE: WMT), the nation's critical retailer, recently decided against offering monthly updates.

The day's EPS slate includes ABM Industries (NYSE: ABM), Analogic (Nasdaq: ALOG), Bio-Reference Laboratories (Nasdaq: BRLI), Cantel Medical (NYSE: CMN), Cascade (NYSE: CAE), Ciena (Nasdaq: CIEN), Conn's (Nasdaq: CONN), CorVel (Nasdaq: CRVL), Guess (NYSE: GES), Jos A. Banks (Nasdaq: JOSB), KMG Chemicals (Nasdaq: KMGB), Krispy Kreme Donuts (NYSE: KKD), Medical Action (Nasdaq: MDCI), Navisite (Nasdaq: NAVI), SeaChange Int'l (Nasdaq: SEAC), Signet Jewelers (NYSE: SIG), Teekay Corp. (NYSE: TK), The Cooper Cos. (NYSE: COO), Ulta Salon (Nasdaq: ULTA), Uroplasty (AMEX: UPI), UTI Worldwide (Nasdaq: UTIW), Vail Resorts (NYSE: MTN), Valence Technology (Nasdaq: VLNC), Wind River Systems (Nasdaq: WIND), Xinyuan Real Estate (NYSE: XIN) and more.


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

BDI Continues Rapid Increase

Visit 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 Continues Rapid Increase

In the past week, there have been astounding increases in the drybulk freight market. So far, these increases have been greatly skewed towards the Capesize segment (ships over 100,000 tons deadweight); though panamaxes (60-80,000 tons deadweight) are also showing large increases. Supramaxes and smaller vessels have not yet participated much in this rally. The Baltic Freight Index (BDI) currently stands at 4291, while the Capesize, Panamax and Supramax indexes are at 8147, 3505, 1862, respectively. Most often, in market rallies the larger ships lead on the way up, but during market corrections they also lead on the way down.

The big story is the incredible increase in the Capesize vessel rates during the past ten days, where the timecharter average has almost doubled. They increased 16% on June 2nd, alone! The cause has been mainly due to increased iron ore demand from China, and with it, now considerable port congestion in the iron ore loading areas of Brazil and Australia, and also the discharge ports in China. Port congestion takes ships off the market, and its effect usually causes an amplification of the upward pressure on freight rates.

The next strong resistance level for Capes is at about $115,000 per day 4 TC average; for panamaxes around $38,000 per day; and supramaxes $32,000 per day. For the overall BDI, the next resistance level is approximately 4700. The rate of market ascent makes it appear that these levels might be reached within the next week, though there are some reasons to be more cautious.

Going forward there are certain key issues to keep in mind. The differential between capesize and other vessel classes are now historically wide. For example, average capesize rates are now more than 3 times those of panamaxes. A key reason behind this seems to be due to iron ore trade's role as the chief driver of this rally, compared to demand for most other commodities, which have increased significantly less. When differentials become so wide, there is the potential for significant narrowing. The question is in which direction... It appears now that iron ore demand will require the use of smaller vessels, therefore, one can expect these rates to increase further. We also have to wait and see where the capesize market levels off, and measure its sustainability before the amount of increase in the smaller vessels becomes clear. Also, the grain and coal trades must be watched. Further demand for these commodities can drive up the rates for the smaller vessels quickly.

Chinese authorities may turn off the switch

Due to the large quantities of cargoes destined for China that were reportedly purchased purely on speculation, there is a strong possibility of the Chinese government stepping in and canceling or curtailing future shipments. This has happened before and when it does happen, freight rates can plunge as fast as they went up. Will there be such action by the Chinese authorities? How high does the market go before any such action? Nobody knows outside the Chinese government.

The weaker dollar certainly plays a role. The periods of the highest freight rates have generally coincided with periods of a lower dollar. This time is no different, and indicates how global government policies can affect dry bulk shipping. In this case, stimulus spending in China is clearly affecting the demand for freight. A large flood of liquidity seems to be fueling speculation in commodity markets, much as it did during 2008. These trends look set to continue for the foreseeable future and are positive for shipping as long as they last.

Finally, the predicted oversupply of vessels (particularly capsizes) has not yet materialized, with the deliveries of most new vessels reportedly delayed. This is also positive for freight rates in the near-term.

However, the most significant factor right now is the strong demand for iron ore in China. Resistance levels at about 30% above today's freight levels for capesizes, and approximately 50% for panamaxes and smaller vessels, should be strong. We will further advise important developments when they occur.


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

Today's Business: Brown Pressured, Decent Jobs Data, Bernanke Testifies

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

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

Today's business news schedule offers a busy slate, with three economic reports released in the pre-market and another two scheduled for the early morning. We found the early jobs data mildly positive, and for once we believe the Challenger Job-Loss Report will prove a market-moving factor, and a positive one at that. There's a trend of decline visible in announced corporate layoffs, and that's a great thing. Unfortunately, troubles are mounting overseas. Our prediction that several European governments would be toppled this summer seems to be showing signs of truth in the off-European U.K.

Today's Business

Overseas Markets

Asia:

1. MSCI Asia APEX 50: +0.82%


2. Japan NIKKEI 225: +0.38%


3. Hong Kong Hang Seng: +1.02%


4. China CSI 300: +2.59%


5. India BSE SENSEX 30: -0.03%

Europe:

1. DJ Euro STOXX 50: -0.98%


2. UK FTSE 100: -1.93%


3. France CAC 40: -1.17%


4. Germany DAX: -0.65%

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

Gordon Brown's Government Challenged

U.K. Prime Minister Gordon Brown is said to be under pressure today, as a fourth Minister of his government resigns. This latest resignation has come as the result of a scandal, reflecting poorly on the boss-man. The Prime Minister criticized his Communities Secretary, Hazel Blears, after it was exposed by the Daily Telegraph that she did not pay taxes on the sale of a property upon which she had claimed taxpayer-funded expenses. She later paid a sum, but Brown called her behavior "totally unacceptable." Still, the populous may hold him responsible, and this marks his fourth lost Minister!

With the nation under economic stress, Brown is feeling pressure to replace his Chancellor of the Exchequer (akin to our Treasury Secretary), Alistair Darling. The feeling is that too many supports have fallen beneath Brown for him to retain his leadership role. Recall, we were an early voice declaring that many governments will turn over in Europe this summer, as socialist citizenry finds unemployment offers available time, and the heat inspires enough catalystic annoyance to hit the streets in protest.

Challenger Job-Cuts Report

Challenger, Gray & Christmas produced its Challenger Job-Cut Report earlier this AM. Challenger tracks announced corporate layoffs. This month's data showed job cuts summed to 111,182, which compares against the 132,590 layoffs posted for April. There's a clear trend of improvement visible now, as this May's decline continued a line stretching for four straight months.

ADP Private Employment Report

ADP published its Private Employment Report this morning, which measures changes in private employment within industrial sectors. It's the precursor to the government's Employment Situation Report scheduled for Friday. ADP's data for May showed improvement, but unfortunately, it came off of a revised worse April result. May's nonfarm payroll loss, as recorded by ADP, showed a 532K monthly decline. That compared against April's revised nonfarm job loss of 545K, which was adjusted from the initially reported loss of 491K nonfarm payrolls in April. The number coincides with forecasts for Friday's government report, which includes public sector jobs, and offers a net negative for trading today. Still, Challenger seems to overwhelm this report today.

Weekly Mortgage Activity

The report produced by the Mortgage Bankers Association showed a precipitous drop in Mortgage Activity, largely impacted by a likewise sharp rise in long-rates and possibly also swayed by the Memorial Day Holiday. The MBA's Market Composite Index dropped 16.2% even after adjustment for the holiday, but we wonder how well the adjustment covered the difference. The Refinance Index collapsed 24.1%, as contracted 30-year fixed rates jumped to 5.25%, from 4.81%. There was a bit of good news to be found though, as the Purchase Index, which is tied to home buying activity, increased 4.3% despite the rate rise. This marks a positive trend that we've smartly noticed as well. The bottom is setting for housing.

Factory Orders Report - April

Factory Orders will be reported for the month of April later this morning, with Bloomberg's consensus of economists forecasting a 1.1% rise. That compares against the 0.9% drop posted in March. Economists see a lift in factory orders, because of the already reported durable goods orders data that showed a burst of 1.9%. However, several recent "green shoots" have really been products of mirage, as prior-month results have been revised lower. In this case, durables for March were revised lower to a 2.1% decline for the month, allowing for the big gain in April's number. We expect a similar result here.

ISM Non-Manufacturing Report

ISM produces its Non-Manufacturing Report at 10:00 a.m. Economists see this important service sector measure improving. ISM's Composite Index is seen reaching 45.0 for May, versus the 43.7 level seen in April. Earlier this week, ISM's Manufacturing data was reported improved, but readings short of 50.0 still signify a recessionary environment, or rather that expectation by industry participants.

Federal Reserve Activity - Must See TV

It's time to tune into C-SPAN for "must see TV." At 10:00 a.m., Federal Reserve Chairman Bernanke will testify before the House Budget Committee on the economy and financial conditions. You can catch it by visiting the Wall Street Greek website, where you can click through to C-SPAN or listen in at Bloomberg Radio. As you know, Congressional testimonies like this have produced some of the best television this season, raising C-SPAN into position to compete with the likes of popular media. Okay, not really... but it plays big in "The Greek's" cave anyway. In other Fed news, Kansas City Fed President Thomas Hoenig will address a group in Wyoming in the afternoon.

EIA Petroleum Status Report

Look for the regular EIA Petroleum Status Report at 10:30 a.m. Last week's data showed crude oil inventories decreased by 5.4 million barrels. Oil is flirting with $70+ now thanks to green shoots and growing expectation for economic recovery. OPEC would like to see oil priced above $75, so it will not provide any production support for gas guzzling Americans any time soon. President Obama is in the Middle East today, and will likely ask for a little help on that front.

Corporate News Drivers

The earnings report schedule includes news from luxury home builder, Toll Brothers (NYSE: TOL), and DHA pioneer, Martek Biosciences (Nasdaq: MATK). The schedule includes ADC Telecommunications (Nasdaq: ADCT), Amerco (Nasdaq: UHAL), Collective Brands (NYSE: PSS), Comtech Telecommunications (Nasdaq: CMTL), Copart (Nasdaq: CPRT), Cyberonics (Nasdaq: CYBX), Dynamex (Nasdaq: DDMX), DynCorp Int'l (NYSE: DCP), G-III Apparel (Nasdaq: GIII), Gander Mountain (Nasdaq: GMTN), Greif Brothers (NYSE: GEF), Joy Global (Nasdaq: JOYG), LTX-Credence (Nasdaq: LTXC), Mechel Open Joint Stock (NYSE: MTL), SAIC, Inc. (NYSE: SAI), Shanda Interactive Entertainment (Nasdaq: SNDA), Williams-Sonoma (NYSE: WSM) and more.


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

This Week: GM Dead, Jobs Trouble Ahead

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

A busy week is under way, as the economic slate started heavy and finishes with a bang. Read on, because I suspect the confused marketplace will have reason to move before the close of trading this week. Unfortunately, you're not going to like the direction I see for the short-term.

(Tickers: GM, MWW, JOSB, ALTR, AINV, ENS, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK, RHI, KFY, MAN, TOL, HOV, CPRT, WMT, MATK)

This Week

Monday

We covered Monday in a premarket article you can see via this link.

Tuesday

It would be a miracle if Motor Vehicle Sales improved during a period when Chrysler was newly bankrupt and GM moved towards it; I'm talking about May. Despite the government's warranty guarantees, consumers remained in no shape to splurge last month, and who would, with the car-makers falling by the way side. Economists surveyed by Bloomberg forecast domestic vehicle sales of 7.0 million for May, compared against the 6.9 million posted in April. We would expect less than that, given the aforementioned obstacles. The median of surveyed economists' forecasts seems to sit just below last month's tally of 6.9 million, and likewise appears to us better reflective of reality this time around.

Tuesday offers the regular Weekly Same-Store Sales Report from the International Council of Shopping Centers. We called the prior week's recovery correctly. Recall, our point was that at some point sales must bottom based on population growth and consumption needs alone. We think that bottom has been reached.

We have taken note of market noise that warns of pending tougher comparables due to last year's tax give away. The greater point to make would be the significantly deteriorated employment situation though, and that has not even delayed stabilization. I argue here that what is playing a big role in consumer spending stabilization is the fact that the nation is no longer discounting the end of the world into their consumption habits (similarly to how it's allowed the market to recover to a more defensible level). In other words, all those folks who still have jobs and homes, but who also stopped spending and lived on canned beans and tuna like me, have ventured out into the sunlight again. I'm still in my cave though; rescue me please!!!

ICSC Weekly Trend

Week Ending

Weekly Change

Yearly Change

May 23

+0.8%

+0.5%

May 16

-1.2%

-0.3%

May 9

+0.3%

+0.5%

May 2

+0.3%

+0.5%

April 25

-0.7%

-1.7%

April 18

-0.4%

-0.1%

April 11

+0.8%

-0.4%

April 4

+0.6%

-0.3%

Pending Home Sales will be reported at 10:00 a.m. on Tuesday. There have been signs of stabilization of late, and this measure of contract activity within the existing home market stands good chance for improvement. Existing Home Sales were reported for April just last week, and those gained on the month. However, they gained on revised lower previous month data. If we can believe the National Association of Realtors (questionable), then repeat home buyers are actually returning to the market and even bidding up foreclosure property prices. Despite my natural skepticism, I actually believe it this time... Douville, what say you?

Dallas Federal Reserve President Richard Fisher is scheduled to speak on the topic of the global economy. The earnings slate highlights news from Alloy (Nasdaq: ALOY), Applied Signal (Nasdaq: APSG), Aries Maritime (Nasdaq: RAMS), Blue Coat Systems (Nasdaq: BCSI), Bob Evans Farms (Nasdaq: BOBE), Daktronics (Nasdaq: DAKT), Financial Federal (NYSE: FIF), hhgregg (NYSE: HGG), Hovnanian (NYSE: HOV), Layne Christensen (Nasdaq: LAYN), Mitcham Industries (Nasdaq: MIND), Modine Manufacturing (NYSE: MOD), United Natural Foods (Nasdaq: UNFI) and VeriFone Holdings (NYSE: PAY).

Wednesday

For those of you familiar with street drag racing (which is illegal so shh!) and the tricks of the trade, we will hit the nitrous button on Wednesday for a spurt of economic hyperactivity that will run through the remainder of the week. Even before the market open on Wednesday, three reports will greet us bright and early.

That familiar monthly parade of employment data starts off with the Challenger Job-Cut Report at 7:30 a.m. Challenger, Gray & Christmas, Inc. tracks announced corporate layoffs. This report is first, most likely because it would otherwise have little pull while mixed in with the rest of the employment reports. Last month, Challenger showed 132,590 layoffs for April, which compared against the 150,411 announced in March.

At 8:15, ADP publishes its Private Employment Report, which measures changes in private employment within industrial sectors. It's the precursor to the government's Employment Situation Report published two days later. Last month's release showed a loss of 491K nonfarm payrolls in April.

The news flow continues heavy after the opening bell, with two more economic reports due at 10:00 a.m. Look for Factory Orders, with Bloomberg's consensus of economists forecasting a 1.1% rise in April, compared to the 0.9% drop in March. ISM produces its Non-Manufacturing Report at the same time. Economists see its Composite Index reaching 45.0 for May, versus the 43.7 level seen in April. ISM's Manufacturing data was reported improved on Monday of this week, but readings short of 50.0 still signify a recessionary environment, or rather that expectation by industry participants. Also at 10:00 a.m., Federal Reserve Chairman Bernanke will testify before the House Budget Committee on the economy and financial conditions.

Look for the regular EIA Petroleum Status Report at 10:30 a.m. Last week's data showed crude oil inventories decreased by 5.4 million barrels, and OPEC decided to keep production quotas unchanged as it targets a price above $75 for oil. Kansas City Fed President Thomas Hoenig addresses a group in Wyoming in the afternoon.

The earnings report schedule includes news from a few of "The Greek's" old favorites, Toll Brothers (NYSE: TOL) and Martek Biosciences (Nasdaq: MATK). The schedule includes ADC Telecommunications (Nasdaq: ADCT), Amerco (Nasdaq: UHAL), Collective Brands (NYSE: PSS), Comtech Telecommunications (Nasdaq: CMTL), Copart (Nasdaq: CPRT), Cyberonics (Nasdaq: CYBX), Dynamex (Nasdaq: DDMX), DynCorp Int'l (NYSE: DCP), G-III Apparel (Nasdaq: GIII), Gander Mountain (Nasdaq: GMTN), Greif Brothers (NYSE: GEF), Joy Global (Nasdaq: JOYG), LTX-Credence (Nasdaq: LTXC), Mechel Open Joint Stock (NYSE: MTL), SAIC, Inc. (NYSE: SAI), Shanda Interactive Entertainment (Nasdaq: SNDA), Williams-Sonoma (NYSE: WSM) and more.

Thursday

A very busy day is in store for Thursday as well. The employment data parade proceeds on Thursday with the early morning reporting of the Employment Index from Monster Worldwide (NYSE: MWW). Monster's measure of online job demand (from the employer's perspective) is basically replacing print as the main place people look for jobs. Thus, it is increasingly becoming a more important metric. Last month's data showed the MEI moved to a level of 120 in April, from 118 in March. We suspect the metric will shed a point or two this time around, if it does not stick at the current mark, as temporary and part-time work serve to stabilize the supply of overall employment opportunities.

At 8:30, the regular Weekly Jobless Claims Report is expected to show new benefits filers at 620K, compared against the prior week's 623K mark. We often highlight the fact that economists' consensus does not stray very far from the prior week result here. It's a simple matter of safe forecasting (or logic), and has much to do with the likelihood that a similar flow of job loss will persist from one week to another, considering the short time span in between.

The Department of Labor will also produce its Productivity and Costs Report at 8:30 on Thursday. Both metrics have likely benefited of late due to favorable revision. With capacity lighter and hours still softening, any positive change in economic activity (even from bad to less bad) allows for improved Productivity and Unit Labor Costs. Economists forecast a revision of Q1 Productivity to +1.2%, from +0.8%, and Unit Labor Costs to +2.8%, from +3.3%, due to the recent favorable adjustment to Q1 GDP.

Federal Reserve Messengers Bernanke, Pianalto and Dudley will each address regional audiences in a sort of Fed parade of their own. The Fed will also report on the state of its balance sheet at 4:30 p.m. On the other side of the pond, central bankers at the Bank of England will announce their latest monetary policy decision. Also, the ECB is expected to get into more detail about its extraordinary economic stimulation efforts. The regular EIA Natural Gas Report is due at 10:30.

Retailers will mostly report May Chain Store Sales on Thursday. However, Wal-Mart (NYSE: WMT), the nation's critical retailer, recently decided against offering monthly updates. The day's EPS slate includes ABM Industries (NYSE: ABM), Analogic (Nasdaq: ALOG), Bio-Reference Laboratories (Nasdaq: BRLI), Cantel Medical (NYSE: CMN), Cascade (NYSE: CAE), Ciena (Nasdaq: CIEN), Conn's (Nasdaq: CONN), CorVel (Nasdaq: CRVL), Guess (NYSE: GES), Jos A. Banks (Nasdaq: JOSB), KMG Chemicals (Nasdaq: KMGB), Krispy Kreme Donuts (NYSE: KKD), Medical Action (Nasdaq: MDCI), Navisite (Nasdaq: NAVI), SeaChange Int'l (Nasdaq: SEAC), Signet Jewelers (NYSE: SIG), Teekay Corp. (NYSE: TK), The Cooper Cos. (NYSE: COO), Ulta Salon (Nasdaq: ULTA), Uroplasty (AMEX: UPI), UTI Worldwide (Nasdaq: UTIW), Vail Resorts (NYSE: MTN), Valence Technology (Nasdaq: VLNC), Wind River Systems (Nasdaq: WIND), Xinyuan Real Estate (NYSE: XIN) and more.

Friday

The close of the week will not offer a lazy day nor an opportunity to leave for the beach too soon. Nada! The Unemployment Disaster is due first thing Friday, affectionately known as the Employment Situation Report. Watching the unemployment rate rise into the harrowing heights of 9+% is akin to sitting in on one of these new movies telling the stories of tortured souls. Actually, it's exactly like that!

This latest horror story is expected to show unemployment at 9.2%. Tell me when to open my eyes! Okay, now's good, as the monthly change in nonfarm payrolls is expected to show one of those less bad numbers the market has recently fallen in love with. According to Bloomberg's survey of economists, the labor market should have shed about 530K jobs last month, which compares uncannily with last month's loss of 539K. Although plus 500K numbers use to scare the (your word here) out of us, it's now welcomed good news.

Look for a worse result folks, and a possible jump to an even higher unemployment rate than forecast. I think we're going to get a negative surprise and reason for the market to reconsider recent gains. Ongoing unemployment claims have persisted in their ascension, and so I think economists are making a mistake here. And even if they are not, the talk of the town on Friday will be about the impact of auto market upheaval on the job market. The panicky crowd will scream of the tentacles of terror that reach through dealerships, suppliers and all other associated industries. Thus, even a good number will turn up skeptics who will warn of June's likely fright. We suspect the skeptics will begin turning up before Friday's data, so the decline I smell could start sooner.

At 3:00 p.m., we will receive the Consumer Credit Report, though most of you will be on your helicopter to the Hamptons by then (BTW: can I get a lift? and a bed? and some spending cash?). Economists see another contraction in consumer credit, this time by $7.0 billion. Credit contracted by $11.1 billion in March. This is an inevitable event, as credit card issuers come under regulatory pressure and face the reality of rising default rates... and the hangover from decades of free money is going to last a while.

The light EPS schedule includes news from Agilysys (Nasdaq: AGYS), American Woodmark (Nasdaq: AMWD), Exide (Nasdaq: XIDE), Oil-Dri Corp. of America (NYSE: ODC) and that giant of industry, Carphone Warehouse (Nasdaq: CPW).

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

Premarket: GM Bankruptcy Keys Wire

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

(Tickers: GM, F, TM, HMC, ALTR, AINV, ENS, TUTR, GAIN, LGF, NAVR, ONAV, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK)

It is a sad, sad day for American industry. A company a century old, General Motors (NYSE: GM), will be laid to rest today. General Motors has filed for bankruptcy. The symbolic end is not really an end, however, but merely a transfer of ownership and a chance for a better start in tougher times. The day's wire includes several economic reports that we anticipate will offer better news, but GM's gloomy announcement seems set to seal the Monday blues.

Premarket: GM Bankruptcy

General Motors - End of a Legend

General Motors (NYSE: GM) announced its bankruptcy plans just as Motor Vehicle Sales are reported for the month of May (Tuesday). The President will speak on the historic failure around noontime today. GM was officially removed from the Dow Jones Industrials Index, which is equally saddening. We can only imagine what the mood is in Detroit today, and across the country at General Motors dealerships and supplier factories. GM is closing 12 more plants, as part of its bankruptcy plans, so a good number of blue collar folks are facing a tough one as well. Our hearts pour out to you. We'll follow up with a few more stories on this subject, so stay tuned.

Geithner to China

Timothy Geithner finds himself back in China, at Peking University, where he once studied. Geithner discussed the economic interdependence of the United States and China in his opening public statements, and we expect further goodwill tidings. Recall, the fresh Treasury Secretary put his foot in his mouth when he declared China guilty of currency manipulation. We expect a good portion of this trip will include reconciliation and foregiveness.

Personal Income & Outlays

Personal Income & Outlays were reported Monday morning at 8:30 a.m. Personal income jumped 0.5% in April, versus consensus expectations for a 0.2% decline (and vs. a revised 0.2% decline in March). The income boost was attributed to lower current taxes and increased government aid distributions.

Personal consumption expenditures declined by 0.1% in April, versus a -0.2% expectation and a revised 0.3% March decline. What's most troubling is that the PCE Price Index increased 0.1%, and rose 0.3% when excluding food and energy. As stubborn pricing holds and commodities recover, the specter of inflation looms.

ISM Manufacturing Report

At 10:00 a.m., ISM will produce its Manufacturing Index for the month of May. All signs point toward improvement for this month's report, as New Orders rose last month. Besides this, green shoots abound, and we have seen signs of regional manufacturing stabilization in the New York, Philadelphia and Chicago area measures. Bloomberg's consensus again looks cautious, forecasting a gain to 42.0 this month, versus the 40.1 take in April. Recall that a reading below 50.0 still signifies a state of economic contraction. We're looking for a better than consensus read on this metric.

Construction Spending

Also at 10:00, look for the Commerce Department report on Construction Spending for April. We have reported here that homebuilder sentiment improvement of late has allowed for the removal of industry participants from suicide watch. However, make no mistake, builders are still wary and depressed. They understand the marketplace better than anyone, and foreclosures continue to flood the overall housing market inventory and weigh on pricing. Therefore, we expect construction spending to stay on its downtrend for the reported month of April. Bloomberg's consensus forecasts a decrease of 0.8% for the month, following a modest bounce of 0.3% in March (coming off a 1.0% drop in February).

The day's earnings schedule includes reports from Altera (Nasdaq: ALTR), Apollo Investment (Nasdaq: AINV), EnerSys (NYSE: ENS), Gladstone Investment (Nasdaq: GAIN), Lions Gate Entertainment (NYSE: LGF), Navarre (Nasdaq: NAVR), Omega Navigation (Nasdaq: ONAV), Plato Learning (Nasdaq: TUTR) and a few more.


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