Business Headlines: Q2 GDP Contracted 1.0%

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Business Headlines - Q2 GDP Contracts

Q2 GDP contracted at an annual rate of 1.0%, worse than was foreseen by economists surveyed by Bloomberg. The consensus forecast was for a 0.7% decline, according to Bloomberg, but -1.5% according to Barron's. This data was made even harder to digest, as the Bureau of Economic Analysis revised first quarter GDP lower, to -6.4%, from the earlier reported -5.5%. This, by far, is the worst economic decline since The Great Depression.

Despite all the worse than foreseen data, a lesser rate of contraction should still prove soothing to market enthusiasts. Still, the greatest positive contributors to GDP were federal, state and municipality government spending. We would have hoped to have seen some sign of natural support. Instead, the usual suspects of depressed real estate activity, light export demand and nonexistent personal consumption kept things cool. Futures are lower this morning, but we're not convinced stocks will close the day decisively lower.

Employment Costs

Employment Costs are released with the GDP data. Costs rose 0.4%, more than economists were looking for (0.3%). The federal minimum wage was hiked in July though, so Q3 should offer a more significant increase.

Chicago PMI

The tally of Midwestern manufacturing activity, the Chicago Purchasing Managers Index, is due at 9:45 a.m. Friday. Given the revival of the auto sector, and we use that word loosely, economists are expecting an improvement in this metric to 44.0 for July, versus the 39.9 take in June. Remember, when the index is short of 50.0, it signifies economic contraction.

Farm Prices

Farm Prices will be reported at 3:00 p.m., but most of you will miss it as you plan your weekend. The changes in pricing are greatly dependent on allocated acreage per crop and the development of those crops (weather, etc.), but also on the general local and global economic demand for foods and the use of foods in energy development.

Corporate Earnings Slate

The earnings slate includes Allergan (NYSE: AGN), Anglo American (Nasdaq: AAUK), AngloGold Ashanti (NYSE: AU), Apartment Investment Management (NYSE: AIV), Autonation (NYSE: AN), Calpine (NYSE: CPN), Chevron (NYSE: CVX), CNA Surety (NYSE: SUR), Constellation Energy (NYSE: CEG), Dominion Resources (NYSE: D), DryShips (Nasdaq: DRYS), FUJIFILM Holdings (Nasdaq: FUJI), Harte-Hanks (NYSE: HHS), ITT Corp. (NYSE: ITT), Johnson Outdoors (Nasdaq: JOUT), Kaydon (NYSE: KDN), Magellan Health (Nasdaq: MGLN), Makita (Nasdaq: MKTAY), Mitsubishi UFJ Financial (NYSE: MTU), Nicor (NYSE: GAS), PNM Resources (NYSE: PNM), PSE&G (NYSE: PEG), Sempra Energy (NYSE: SRE), Snap-on Inc. (NYSE: SNA), The Washington Post (NYSE: WPO), Total (NYSE: TOT), Weyerhaeuser (NYSE: WY) and several others.


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Pre-Market: Jobless Claims & Exxon Mobil (NYSE: XOM)

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Pre-Market: Jobless Claims & Exxon Mobil (NYSE: XOM)

A slew of earnings reports and higher jobless claims threaten the market yet again today. Exxon Mobil missed analysts consensus significantly, though reported higher than expected revenues.

Jobless Claims

The weekly Initial Jobless Claims Report sits all alone on Thursday, as the only economic data point released. We noted in our weekly copy that forecasters had uncharacteristically strayed from the prior week's tally to go out on a limb with a consensus view for 585K new benefits filers in the measured period. In another amazing change for this data point, forecasters almost hit the bulls eye. New claims filers numbered 584K in the week ended July 25! The mark signified a 25K increase from the revised prior week tally. Still, the four-week moving average moderated by 8,250, to 559K, and the insured unemployment rate stuck at 4.7%.

Noteworthy State Data

The highest insured unemployment rates in the week ending July 11 were in Puerto Rico (7.3 percent), Michigan (7.2), Oregon (6.7), Pennsylvania (6.4), Nevada (6.2), Wisconsin (6.1), Connecticut (5.6), New Jersey (5.6), Arkansas (5.5), California (5.5), North Carolina (5.5), and South Carolina (5.5).

The largest increases in initial claims for the week ending July 18 were in California (+4,290), Michigan (+3,654), Florida (+3,291), Connecticut (+749), and Indiana (+526), while the largest decreases were in New York (-22,052), Wisconsin (-6,791), Missouri (-6,529), Pennsylvania (-6,420), and Ohio (-5,062).

Exxon Mobil (NYSE: XOM) EPS Report

Exxon Mobil is down about 2% in pre-market trading after missing analysts' consensus in its second quarter report. Revenues dropped 46% on significantly lower oil and natural gas spot market pricing, but also on a 3% production decline. However, Exxon's Q2 revenue of $74.457 billion exceeded analysts' consensus expectation for $71.29 billion, based on Thomson Reuters data. Still, excluding "special items," XOM earned $0.81 per share, which compared unfavorably with both the analysts' view for $1.02/share and with its prior year earnings of $2.22 per share.

Exxon said that both lower pricing and reduced demand for its production played against its quarterly operational results. The company also noted that it has kept with its heavy capital investment efforts, which seemingly weighed on the total expense line, but agrees with its long-term strategy. It also noted that share repurchases were ongoing.

Natural Gas Report

The EIA reports on Natural Gas inventory at 10:30 this morning. Last week's data showed Nat Gas levels increased by 66 Bcf in the week ended July 17.

Government Events

The FDA will review Schering-Plough's (NYSE: SGP) application for schizophrenia drug Saphris and decide on a Bristol-Myers Squibb/Astranzeneca (NYSE: BMY, AZN) diabetes treatment. The Fed reports on its balance sheet at 4:30 p.m.

Corporate Earnings Schedule

The earnings schedule includes news from Akeena Solar (Nasdaq: AKNS), Alcatel-Lucent (NYSE: ALU), AmeriSourceBergen (NYSE: ABC), Apache (NYSE: APA), Arch Chemicals (NYSE: ARJ), Asset Acceptance (Nasdaq: AACC), AstraZeneca (NYSE: AZN), Automatic Data Processing (NYSE: ADP), Avery Dennison (NYSE: AVY), Barrick Gold (NYSE: ABX), Beckman Coulter (NYSE: BEC), Becton, Dickinson & Co. (NYSE: BDX), BioScrip (Nasdaq: BIOS), Cablevision (NYSE: CVC), CARBO Ceramics (NYSE: CRR), CIGNA (NYSE: CI), Colgate-Palmolive (NYSE: CL), Dresser-Rand (NYSE: DRC), drugstore.com (Nasdaq: DSCM), Eastman Kodak (NYSE: EK), Evergreen Solar (Nasdaq: ESLR), Expedia (Nasdaq: EXPE), ExxonMobil (NYSE: XOM), First Solar (Nasdaq: FSLR), Gentiva Health (Nasdaq: GTIV), Goodyear Tire & Rubber (NYSE: GT), International Paper (NYSE: IP), Internet Capital Group (Nasdaq: ICGE), Iron Mountain (NYSE: IRM), Kellogg (NYSE: K), Kennametal (NYSE: KMT), MasterCard (NYSE: MA), McAfee (NYSE: MFE), MetLife (NYSE: MET), Monster Worldwide (NYSE: MWW), Mylan (NYSE: MYL), Newell Rubbermaid (NYSE: NWL), Noble Energy (NYSE: NBL), NTT DoCoMo (NYSE: DCM), NYSE Euronext (NYSE: NYX), Parker Hannifin (NYSE: PH), PerkinElmer (NYSE: PKI), Regal Entertainment (NYSE: RGC), Rockwell Collins (NYSE: COL), Sony (NYSE: SNE), Dow Chemical (NYSE: DOW), Travelers (NYSE: TRV), Tyco Int'l (NYSE: TYC), Walt Disney (NYSE: DIS) and many more.


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Business News: Durable Goods & Microsoft / Yahoo Deal

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Today's economic data offers a tough chew. Both Durable Goods Orders and Mortgage Activity posted declines, offering more poison for skeptical investors to use for sale. Still, the deal between Microsoft and Yahoo has the market a buzz!

Business News: Durable Goods & Microsoft Yahoo Deal

Durable Goods Orders

Durable Goods Orders for June declined 2.5%, driven by soft auto, aerospace and defense orders. Excluding transportation, however, Orders rose 1.1%. The reported data offered an unquestionable disappointment, as economists were expecting just a 0.5% decline. The headline result also contrasts harshly against May's Order improvement of 1.8%. In our "Week Ahead" copy, we presciently offered, "We suspect some of the spring improvement came as a result of pent up demand given the panic-level ordering patterns that existed through the turn of the year and into March." The market seems to be receiving good enough reason to trade sideways to lower as economic recovery appears likely to be slow and weak in its arrival and duration.

Mortgage Activity Report

The Mortgage Bankers Association is once again attempting to draw subscribers for its data, and so made the current report unavailable to us. However, the numbers are public information, and seemed to suffer from prior week rise in contracted 30-year fixed rate mortgages. A week ago we saw those rates jump significantly, to 5.31%, from 5.05%, and this week they rose another 5 basis points. As a result, the Market Composite Index took a hit on Refinance Index decline. Purchase activity drifted only modestly lower, giving further sign to a stabilized housing market.

US Government Events

The Senate Banking Committee will turn its focus on shareholder protection and corporate governance on Wednesday. A U.S. bankruptcy court will deliberate on the reorganization or sale of auto parts supplier Delphi.

New York Fed President Bill Dudley will discuss factors driving US growth and also the topic of inflation at a morning meeting of a NY group. The Federal Reserve releases its Beige Book of regional economic indicators in the afternoon, at 2:00 p.m.

Petroleum Status Report

The EIA releases its Petroleum Status Report at 10:30. Last week's data showed US crude oil inventory decreased by 1.8 million barrels in the week ending July 17, while gasoline stores increased by 0.8 million barrels. Both inventory levels stood above normal for this time of year and therefore offer little support to volatile pricing. However, the jolly sentiment around earnings season has put its arms around the commodity, lifting futures back up towards the $70 mark.

Microsoft & Yahoo Pen Deal

Microsoft (Nasdaq: MSFT) shares are up nearly 2%, while Yahoo (Nasdaq: YHOO) shares have dropped 6% off the morning bell; this after the two technology leaders penned a deal for their online search businesses. Search giant Google (Nasdaq: GOOG) controlled approximately 80% of the search market at our last check, and so the two technology and Internet players felt need to combine their second and third place efforts toward challenging their much more significant rival. Yahoo's share decline reflects disappointment that the company now looks unlikely to be acquired outright by Microsoft. However, the deal, which lasts for 10 years, may still add significant value to both Yahoo and Microsoft shareholders. We may analyze this further for you later. Let me know if you would like that via the "Discuss" button below.

Corporate Earnings Schedule

The day's earnings slate includes news from Advance America Cash America (NYSE: AEA), Aflac (NYSE: AFL), Agnico-Eagle Mines (NYSE: AEM), Akamai (Nasdaq: AKAM), Akzo Nobel (Nasdaq: AKZOF.PK), Amkor (Nasdaq: AMKR), ArcelorMittal (NYSE: MT), Arctic Cat (Nasdaq: ACAT), ASM Int'l (Nasdaq: ASMI), Banco Santander (NYSE: STD), BOK Financial (Nasdaq: BOKF), BorgWarner (NYSE: BWA), Brookfield Homes (NYSE: BHS), Cadence Designs (Nasdaq: CDNS), Cal Dive Int'l (NYSE: DVR), Callaway Golf (NYSE: ELY), Cerner Corp. (Nasdaq: CERN), Coca-Cola (NYSE: CCE), ConocoPhillips (NYSE: COP), Covance (NYSE: CVD), Daimler (NYSE: DAI), Delphi Fin'l (NYSE: DFG), Digital River (Nasdaq: DRIV), Electronics for Imaging (Nasdaq: EFII), Express Scripts (Nasdaq: ESRX), FBR Capital Markets (Nasdaq: FBCM), Fiserv (Nasdaq: FISV), Genco Shipping (NYSE: GNK), General Dynamics (NYSE: GD), General Maritime (NYSE: GMR), GSI Commerce (Nasdaq: GSIC), Goldcorp (NYSE: GG), Hecla Mining (NYSE: HL), Honda Motor (NYSE: HMC), Hospira (NYSE: HSP), Internet Brands (Nasdaq: INET), Jones Apparel (NYSE: JNY), Kaiser Aluminum (Nasdaq: KALU), Kulicke & Soffa (Nasdaq: KLIC), Lam Research (Nasdaq: LRCX), Martha Stewart (NYSE: MSO), MeadWestVaco (NYSE: MWV), Medco Health (NYSE: MHS), Moody's (NYSE: MCO), Nissan Motor (Nasdaq: NSANY), Nomura Holdings (Nasdaq: NRSCF.PK), Oceaneering Int'l (NYSE: OII), Penn National Gaming (Nasdaq: PENN), Praxair (NYSE: PX), Qwest Communications (NYSE: Q), Royal Caribbean (NYSE: RCL), Ryland Group (NYSE: RYL), Sanofi-Aventis (NYSE: SNY), SAP AG (NYSE: SAP), Sealed Air (NYSE: SEE), Southern Co. (NYSE: SO), Sturm Ruger (NYSE: RGR), Symantec (Nasdaq: SYMC), Teradyne (NYSE: TER), Time Warner (NYSE: TWX), Visa (NYSE: V), WellPoint (NYSE: WLP), World Acceptance (Nasdaq: WRLD) and many more.


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Morning Report: S&P Case Shiller & Consumer Confidence

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Morning Report

S&P Case Shiller

S&P Case Shiller provided its Home Price Index for the lagged month of May this morning. It's not a fresh read as we enter August, but it is still a commonly reviewed index for housing price measurement. Over the last two reported periods, the annual price drop has moderated, but still read down 18% and 18.1%, respectively for the 10-City and 20-City Composites. In this latest reporting, the S&P Case Shiller Home Price Index noted further moderation of annual price decline. It was the fourth such month of less bad results, and followed a period of 16 months of decline that began in October of 2007.

S&P Case Shiller reported its 10-City and 20-City Composites declined 16.8% and 17.1%, respectively. The chart provided by the partnership shows a notable uptick in the trend line. Of the 20 metropolitan regions measured, 17 saw improved rates of price decline in May. What's more enthusing though is that 13 of the measured regions showed improved pricing. So you can tell your uncle that it's time to buy now...

ICSC Weekly Sales

The International Council of Shopping Centers (ICSC) Weekly Same-Store Sales data offered a nice 1.0% weekly rise in its latest check. On a year-to-year basis, sales fell 0.5%. Last week's tally showed sales rose 0.5% week-to-week, but fell 0.3% year-to-year. Next week's data might show some weather impact as stormy activity overwhelms the Northeast this week.

Even as the economy stabilizes, with a modest decrease anticipated for Friday's second quarter GDP reading, rising unemployment acts as a drag on consumer confidence and spending. With such a high level of unemployment seen at the peak of this current cycle, we risk double dip recession, if not the slow economic recovery that the Federal Reserve foresees.

Consumer Confidence Index

At 10:00 AM, the Conference Board reports on its Consumer Confidence Index. This reading saw a steep decline last month, dropping 5.5 points. Economists forecast confidence will improve to 50.0 in this latest reading, up from 49.3 last month.

State Street Investor Confidence Index

A second sentiment measure, the State Street Investor Confidence Index is also due at 10:00. State Street (NYSE: STT), measures real portfolio risk based on the holdings of investors at a given time. As the economy shows signs of life and stocks rise, momentum builds as the herd also runs. As a result, risk taking is increasing and equity weightings rising. However, much has been said about the light volume behind this nascent summer rally. The State Street measure increased to 115.5 in June, but there is no forecast available to report.

Government Events

The Senate Judiciary Committee will vote on the nomination of Sonia Sotomayor to the Supreme Court later today. The House Financial Services Committee will examine executive compensation, just as Goldman Sachs (NYSE: GS) prepares to issue big bonuses for 2009. San Francisco Fed President Janet Yellen is scheduled to address a group around 10:00 a.m. A high ranking Chinese administration representative, Vice Premier Quishan, will meet with US business men. The FDA will examine King Pharmaceuticals' new cardiovascular drug.

Corporate Earnings Schedule

The earnings schedule includes reports from AGCO (Nasdaq: AGCO), AMCORE Financial (Nasdaq: AMFI), Arthur J. Gallagher (NYSE: AJG), BP plc (NYSE: BP), Calamos Asset Management (Nasdaq: CLMS), Celanese (NYSE: CE), Ceradyne (Nasdaq: CRDN), Check Point Software (Nasdaq: CHKP), Coach (NYSE: COH), Coventry Health (NYSE: CVH), Deutsche Bank (NYSE: DB), Energizer (NYSE: ENR), Jacobs Engineering (NYSE: JEC), Massey Energy (NYSE: MEE), National Oilwell Varco (NYSE: NOV), Norfolk Southern (NYSE: NSC), Panera Bread (Nasdaq: PNRA), Potlatch (NYSE: PCH), Psychiatric Solutions (Nasdaq: PSYS), Rockwell Automation (NYSE: ROK), Smith Int'l (NYSE: SII), Teva Pharmaceuticals (Nasdaq: TEVA), Valero Energy (NYSE: VLO), Viacom (NYSE: VIA), Waters Corp. (NYSE: WAT), Western Digital (NYSE: WDC) and others.


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

Week Ahead - GDP et al

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Week Ahead - GDP

The week ahead highlights the critical reporting of second quarter gross domestic product (GDP). While we have seen indications of economic stabilization and recovery in Leading Indicators and other key metrics, GDP will have its first chance to confirm the news that has helped to lift the market so high so fast. Of course, by "high," we mean better than six feet under.

Monday

Following up last week's Existing Home Sales surge, New Home Sales are due for report this Monday at 10:00 a.m. Economists surveyed by Bloomberg forecast the annual pace of New Home Sales will rise just slightly to 350K, from the 342K recorded for May.

We do not expect to see the same kind of lift in New Home Sales, as seen in the 3.6% jump for Existing properties. Much of the sales of previously owned homes has come from foreclosure and distressed property absorption. The National Association of Realtors reported that distressed properties composed about one-third of the used home sales recorded for June, though down from one-half this past spring. Interest rates inched up slightly, but consumer sentiment is improved from earlier in the year, so we can attribute some of the gain to distressed property absorption now that the economy appears to be stabilizing.

Home Builder sentiment is still down in the dumps, and the builders are not going to be too enthusiastic about putting up new properties until existing inventory eases even further. The inventory of homes for sale stood at 9.4 months, down from 9.8 months in May. This should help to stop the bleeding in pricing and further aid sentiment for home purchase.

The Securities and Exchange Commission is scheduled to meet with its investor-advisory committee. An early sign of relieved liquidity, two initial public offerings are planned for the week ahead. Look for the launch in trading of shares of Sutherland Asset Management ($15 IPO price) and PennyMac Mortgage Investment Trust ($20).

The board of the Chrysler Group is scheduled to meet on Monday. The day's earnings schedule highlights reports from Alberto Culver (NYSE: ACV), Amgen (Nasdaq: AMGN), Buffalo Wild Wings (Nasdaq: BWLD), Cal-Maine Foods (Nasdaq: CALM), Corning (NYSE: GLW), Danaos (NYSE: DAC), Fidelity National Financial (NYSE: FNF), Health Management Associates (NYSE: HMA), HealthStream (Nasdaq: HSTM), Honeywell (NYSE: HON), Manitowoc (NYSE: MTW), PrePaid Legal (NYSE: PPD), RadioShack (NYSE: RSH), Rent-A-Center (Nasdaq: RAII), SOHU.com (Nasdaq: SOHU), Tellabs (Nasdaq: TLAB), Torchmark (NYSE: TMK), Travelzoo (Nasdaq: TZOO), Verizon (NYSE: VZ) and many others.

Tuesday

We will receive the latest read on home pricing Tuesday morning around 9:00 a.m. S&P Case Shiller provides its Home Price Index for the lagged month of May at that time, so we will not get a fresh read. Over the last two reported periods, the annual price drop has moderated, but still read down 18% and 18.1%, respectively for the 10-City and 20-City Composites. We expect the "less bad" trend will continue through June, and the market rally will thus be reinforced. It's worth noting that 13 of 20 metropolitan regions saw improved rates of price decline in April.

On Friday, the Reuters/University of Michigan Consumer Sentiment reading stabilized after a mid-July drop. On Tuesday at 10:00 AM, the Conference Board reports on its Consumer Confidence Index. This reading also saw a steep decline last month, dropping 5.5 points. Economists forecast confidence will improve to 50.0 in this latest reading, up from 49.3 last month.

A second sentiment measure, the State Street Investor Confidence Index is also due at 10:00. State Street (NYSE: STT), measures real portfolio risk based on the holdings of investors at a given time. As the economy shows signs of life and stocks rise, momentum builds as the herd also runs. As a result, risk taking is increasing and equity purchases rising. However, much has been said about the light volume behind this nascent summer rally. The State Street measure increased to 115.5 in June.

The International Council of Shopping Centers Weekly Same-Store Sales data is due in the pre-market as always. Last week's tally showed sales rose 0.5% week-to-week, but fell 0.3% year-to-year.

The Senate Judiciary Committee will vote on the nomination of Sonia Sotomayor to the Supreme Court. The House Financial Services Committee will examine executive compensation. San Francisco Fed President Janet Yellen is scheduled to address a group around 10:00 a.m. A high ranking Chinese administration representative, Vice Premier Quishan, will meet with US business men.

The FDA will examine King Pharmaceuticals' new cardiovascular drug. The earnings schedule includes reports from AGCO (Nasdaq: AGCO), AMCORE Financial (Nasdaq: AMFI), Arthur J. Gallagher (NYSE: AJG), BP plc (NYSE: BP), Calamos Asset Management (Nasdaq: CLMS), Celanese (NYSE: CE), Ceradyne (Nasdaq: CRDN), Check Point Software (Nasdaq: CHKP), Coach (NYSE: COH), Coventry Health (NYSE: CVH), Deutsche Bank (NYSE: DB), Energizer (NYSE: ENR), Jacobs Engineering (NYSE: JEC), Massey Energy (NYSE: MEE), National Oilwell Varco (NYSE: NOV), Norfolk Southern (NYSE: NSC), Panera Bread (Nasdaq: PNRA), Potlatch (NYSE: PCH), Psychiatric Solutions (Nasdaq: PSYS), Rockwell Automation (NYSE: ROK), Smith Int'l (NYSE: SII), Teva Pharmaceuticals (Nasdaq: TEVA), Valero Energy (NYSE: VLO), Viacom (NYSE: VIA), Waters Corp. (NYSE: WAT), Western Digital (NYSE: WDC) and others.

Wednesday

Durable Goods Orders are due first thing in the morning at 8:30. While orders have improved sequentially from time to time of late, they remain sharply below prior year levels. That said, much like your president, the market looks for change. In May, Durable Goods improved 1.8% over April's depressed level (April Orders fell 1.4%). For June, economists surveyed by Bloomberg anticipate orders will moderate some 0.5%. We suspect some of the spring improvement came as a result of pent up demand given the panic-level ordering patterns that existed through the turn of the year and into March.

The regular Mortgage Bankers reporting of weekly mortgage applications is due in the pre-market. Last week's data showed summer taking a toll on activity, not to mention a significant uptick in fixed mortgage rates. The Market Composite Index improved 2.8% on a seasonally adjusted basis, driven by a Purchase Index gain of 1.3% and Refinance move of 4.0%. Fixed 30-year mortgages were contracted at an average rate of 5.31% during the week, up from 5.05% the week before.

The Senate Banking Committee will turn its focus on shareholder protection and corporate governance on Wednesday. A U.S. bankruptcy court will deliberate on the reorganization or sale of auto parts supplier Delphi.

New York Fed President Bill Dudley will discuss factors driving US growth and also the topic of inflation at a morning meeting of a NY group. The Federal Reserve releases its Beige Book of regional economic indicators in the afternoon, at 2:00 p.m.

The EIA releases its Petroleum Status Report at 10:30. Last week's data showed US crude oil inventory decreased by 1.8 million barrels in the week ending July 17, while gasoline stores increased by 0.8 million barrels. Both inventory levels stood above normal for this time of year and therefore offer little support to volatile pricing. However, the jolly sentiment around earnings season has put its arms around the commodity, lifting futures back up towards the $70 mark.

The day's earnings slate includes news from Advance America Cash America (NYSE: AEA), Aflac (NYSE: AFL), Agnico-Eagle Mines (NYSE: AEM), Akamai (Nasdaq: AKAM), Akzo Nobel (Nasdaq: AKZOF.PK), Amkor (Nasdaq: AMKR), ArcelorMittal (NYSE: MT), Arctic Cat (Nasdaq: ACAT), ASM Int'l (Nasdaq: ASMI), Banco Santander (NYSE: STD), BOK Financial (Nasdaq: BOKF), BorgWarner (NYSE: BWA), Brookfield Homes (NYSE: BHS), Cadence Designs (Nasdaq: CDNS), Cal Dive Int'l (NYSE: DVR), Callaway Golf (NYSE: ELY), Cerner Corp. (Nasdaq: CERN), Coca-Cola (NYSE: CCE), ConocoPhillips (NYSE: COP), Covance (NYSE: CVD), Daimler (NYSE: DAI), Delphi Fin'l (NYSE: DFG), Digital River (Nasdaq: DRIV), Electronics for Imaging (Nasdaq: EFII), Express Scripts (Nasdaq: ESRX), FBR Capital Markets (Nasdaq: FBCM), Fiserv (Nasdaq: FISV), Genco Shipping (NYSE: GNK), General Dynamics (NYSE: GD), General Maritime (NYSE: GMR), GSI Commerce (Nasdaq: GSIC), Goldcorp (NYSE: GG), Hecla Mining (NYSE: HL), Honda Motor (NYSE: HMC), Hospira (NYSE: HSP), Internet Brands (Nasdaq: INET), Jones Apparel (NYSE: JNY), Kaiser Aluminum (Nasdaq: KALU), Kulicke & Soffa (Nasdaq: KLIC), Lam Research (Nasdaq: LRCX), Martha Stewart (NYSE: MSO), MeadWestVaco (NYSE: MWV), Medco Health (NYSE: MHS), Moody's (NYSE: MCO), Nissan Motor (Nasdaq: NSANY), Nomura Holdings (Nasdaq: NRSCF.PK), Oceaneering Int'l (NYSE: OII), Penn National Gaming (Nasdaq: PENN), Praxair (NYSE: PX), Qwest Communications (NYSE: Q), Royal Caribbean (NYSE: RCL), Ryland Group (NYSE: RYL), Sanofi-Aventis (NYSE: SNY), SAP AG (NYSE: SAP), Sealed Air (NYSE: SEE), Southern Co. (NYSE: SO), Sturm Ruger (NYSE: RGR), Symantec (Nasdaq: SYMC), Teradyne (NYSE: TER), Time Warner (NYSE: TWX), Visa (NYSE: V), WellPoint (NYSE: WLP), World Acceptance (Nasdaq: WRLD) and many more.

Thursday

Weekly Jobless Claims sit alone on Thursday, with nary an economic report to be found. In uncharacteristic fashion, forecasters have strayed from the prior week's tally to go out on a limb with a consensus view for 585K new benefits filers in the measured period. That would mark another sharp jump from the prior week tally, which measured 554K. Recall, last week's total signified a 30K jump from a sweet count the week before that.

The EIA reports on Natural Gas inventory at 10:30. Last week's data showed Nat Gas levels increased by 66 Bcf in the week ended July 17. The FDA will review Schering-Plough's (NYSE: SGP) application for schizophrenia drug Saphris and decide on a Bristol-Myers Squibb/Astranzeneca (NYSE: BMY, AZN) diabetes treatment. The Fed reports on its balance sheet at 4:30 p.m.

The earnings schedule includes news from Akeena Solar (Nasdaq: AKNS), Alcatel-Lucent (NYSE: ALU), AmeriSourceBergen (NYSE: ABC), Apache (NYSE: APA), Arch Chemicals (NYSE: ARJ), Asset Acceptance (Nasdaq: AACC), AstraZeneca (NYSE: AZN), Automatic Data Processing (NYSE: ADP), Avery Dennison (NYSE: AVY), Barrick Gold (NYSE: ABX), Beckman Coulter (NYSE: BEC), Becton, Dickinson & Co. (NYSE: BDX), BioScrip (Nasdaq: BIOS), Cablevision (NYSE: CVC), CARBO Ceramics (NYSE: CRR), CIGNA (NYSE: CI), Colgate-Palmolive (NYSE: CL), Dresser-Rand (NYSE: DRC), drugstore.com (Nasdaq: DSCM), Eastman Kodak (NYSE: EK), Evergreen Solar (Nasdaq: ESLR), Expedia (Nasdaq: EXPE), ExxonMobil (NYSE: XOM), First Solar (Nasdaq: FSLR), Gentiva Health (Nasdaq: GTIV), Goodyear Tire & Rubber (NYSE: GT), International Paper (NYSE: IP), Internet Capital Group (Nasdaq: ICGE), Iron Mountain (NYSE: IRM), Kellogg (NYSE: K), Kennametal (NYSE: KMT), MasterCard (NYSE: MA), McAfee (NYSE: MFE), MetLife (NYSE: MET), Monster Worldwide (NYSE: MWW), Mylan (NYSE: MYL), Newell Rubbermaid (NYSE: NWL), Noble Energy (NYSE: NBL), NTT DoCoMo (NYSE: DCM), NYSE Euronext (NYSE: NYX), Parker Hannifin (NYSE: PH), PerkinElmer (NYSE: PKI), Regal Entertainment (NYSE: RGC), Rockwell Collins (NYSE: COL), Sony (NYSE: SNE), Dow Chemical (NYSE: DOW), Travelers (NYSE: TRV), Tyco Int'l (NYSE: TYC), Walt Disney (NYSE: DIS) and many more.

Friday

The all important GDP report is on tap for the last day of July. This initial reporting on the second quarter economy is expected to show moderation of contraction after the prior two quarters of demise. Bloomberg's survey of economists indicates expectations for a 0.7% contraction in Q2. That's not good news on an absolute basis, but when comparing to the prior two quarters' contraction in the mid-single digits, it's at least better news. We expect the market will be sensitive to variation from consensus on this data point, so note the news versus expectations in your pre-market evaluation.

Employment Costs are released with the GDP data, and economists are looking for a 0.3% increase, which is low. The federal minimum wage was hiked in July though, so Q3 should offer a more significant increase.

The tally of Midwestern manufacturing activity, the Chicago Purchasing Managers Index, is due at 9:45 a.m. Friday. Given the revival of the auto sector, and we use that word loosely, economists are expecting an improvement in this metric to 44.0 for July, versus the 39.9 take in June. Remember, when the index is short of 50.0, it signifies economic contraction.

Farm Prices will be reported at 3:00 p.m., but most of you will miss it as you plan your weekend. The changes in pricing are greatly dependent on allocated acreage per crop and the development of those crops (weather, etc.), but also on the general local and global economic demand for foods and the use of foods in energy development.

The earnings slate includes Allergan (NYSE: AGN), Anglo American (Nasdaq: AAUK), AngloGold Ashanti (NYSE: AU), Apartment Investment Management (NYSE: AIV), Autonation (NYSE: AN), Calpine (NYSE: CPN), Chevron (NYSE: CVX), CNA Surety (NYSE: SUR), Constellation Energy (NYSE: CEG), Dominion Resources (NYSE: D), DryShips (Nasdaq: DRYS), FUJIFILM Holdings (Nasdaq: FUJI), Harte-Hanks (NYSE: HHS), ITT Corp. (NYSE: ITT), Johnson Outdoors (Nasdaq: JOUT), Kaydon (NYSE: KDN), Magellan Health (Nasdaq: MGLN), Makita (Nasdaq: MKTAY), Mitsubishi UFJ Financial (NYSE: MTU), Nicor (NYSE: GAS), PNM Resources (NYSE: PNM), PSE&G (NYSE: PEG), Sempra Energy (NYSE: SRE), Snap-on Inc. (NYSE: SNA), The Washington Post (NYSE: WPO), Total (NYSE: TOT), Weyerhaeuser (NYSE: WY) and several others.

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

Stock News: Consumer Sentiment, Minimum Wage Increase, Bernanke & Geithner Testify

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(Tickers: IR, SR, SLB, FFCH, TROW, IDXX, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK)

Stock News

Today's stock news includes the Reuters/University of Michigan Consumer Sentiment reading, the testimony of Bernanke and Geithner on financial regulatory reform, the effective increase of the minimum wage and several corporate earnings reports.

Consumer Sentiment

The University of Michigan produces its Consumer Sentiment measure this morning in cooperation with Reuters. At 9:55, economists expect to see the latest reading reach 65.0, up from the mid-July reading of 64.6. That prior check was the one that indicated a drastic retrenchment in sentiment, down six points from the reading before that. Since that time, the stock market has found its second wind on earnings drivers and ongoing positive signs in housing.

Bernanke & Geithner Testify

Federal Reserve Chairman Benjamin Bernanke and Treasury Secretary Timothy Geithner testify before the House Financial Services Committee on the Administration's new regulatory reform plan, and generally on the topic. This all-important gathering takes place at 10:00 a.m. ET.

Minimum Wage Increase

The federal minimum wage increases today, rising $0.70, to $7.25. Thank you my government, as many Americans see their monthly income increase enough to pay another bill or two ($124 increase on a 40-hour work week).

Corporate Earnings Schedule

The day's list includes reports from Arch Coal (NYSE: ACI), Black & Decker (NYSE: BDK), Exelon (NYSE: EXC), First Financial Holdings (Nasdaq: FFCH), Horizon Lines (NYSE: HRZ), Idexx Laboratories (Nasdaq: IDXX), Ingersoll-Rand (NYSE: IR), optionsXpress Holdings (Nasdaq: OXPS), Pinnacle Entertainment (NYSE: PNK), Schlumberger (NYSE: SLB), Sepracor (Nasdaq: SEPR), Standard Register (NYSE: SR), T. Rowe Price (Nasdaq: TROW), Wilmington Trust (NYSE: WL) and several others.


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

Today's Market: Ford EPS, Jobless Claims, Existing Home Sales

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(Tickers: F, MMM, ALK, AMZN, AXP, BIDU, BMY, BRCM, CB, CS, ECA, KMB, KLAC, MSFT, NOC, OXY, PM, PNC, RTN, CAKE, WOOF, WYE, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK)

Today's Market

Ford EPS Results

Ford actually posted a profit in its second quarter ended June, lifting the shares in the pre-market. A closer look reveals that it was not market share gains or superiority that drove the green results, but debt restructuring. The only US automaker of significance to not go bankrupt posted a loss from continuing operations of $0.21, excluding other one-time items, comparing favorably against the analysts' consensus for a $0.50 loss, according to Reuters and Bloomberg. That significant difference is certainly playing a greater role in lifting Ford shares today (+10% in pre-market) than its news that it will post a profit in 2011! We now have impetus to post an article we've been long planning regarding Ford, so stay tuned.

Jobless Claims

Jobless claims jumped 30,000, to 554K for the week ending July 18. The four-week moving average still eased 19K, to 566K, given recent period improvement. Insured unemployment stuck at 4.7%, which means the other 5% is lacking a source of income, weighing on spending. Same goes for the other 7% who are underemployed, working part-time jobs for survival's sake.

Hope this helps...

In case you were unaware, extended unemployment insurance benefits were available in Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, Washington, and Wisconsin during the week ending July 4.

Places you might not want to move to just yet:

The largest increases in initial claims for the week ending July 11 were in New York (+12,504), North Carolina (+10,382), Florida (+10,043), Missouri (+8,293), and Tennessee (+6,943), while the largest decreases were in Michigan (-6,648), Massachusetts (-2,910), New Jersey (-2,888), Indiana (-2,497), and California (-1,755).

Existing Home Sales

Existing Home Sales for June are due for report at 10:00 AM this morning. Bloomberg's consensus of economists sees the annual pace of sales improving to 4.85 million, after posting a 2.4% increase in May. Whether you want to believe it or not, housing has stabilized and is improving modestly. The inventory of homes for sale improved in May as well, and significantly so. Housing inventory stood at 9.6 months, down from 10.1 in April. However, you should know that the calculation of inventory includes the monthly sales pace as the denominator, and that was drastically depressed in the earlier months of this year. A lower denominator makes for a larger "months" figure. That said, as the sales pace has improved to a more normalized rate, inventory might finally see real change for the better.

EPS Schedule

Look for EPS news from 3M (NYSE: MMM), Alaska Airlines (NYSE: ALK), Amazon.com (Nasdaq: AMZN), American Express (NYSE: AXP), Baidu (Nasdaq: BIDU), Bristol-Myers Squibb (NYSE: BMY), Broadcom (Nasdaq: BRCM), Chubb (NYSE: CB), Credit Suisse (NYSE: CS), Encana (NYSE: ECA), Kimberly-Clark (NYSE: KMB), KLA-Tencor (Nasdaq: KLAC), Microsoft (Nasdaq: MSFT), Northrop Grumman (NYSE: NOC), Occidental Petroleum (NYSE: OXY), Philip Morris (NYSE: PM), PNC Financial (NYSE: PNC), Raytheon (NYSE: RTN), The Cheesecake Factory (Nasdaq: CAKE), VCA Antech (Nasdaq: WOOF), Wyeth (NYSE: WYE) and many more.


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

Business News Preview: Caterpillar, Texas Instruments, ICSC & Bernanke Testimony

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(Tickers: CAT, TXN, LMT, SGP, GILD, MRK, UTX, UNH, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK)

The tone of trading turned this morning thanks to a better than expected result from Caterpillar. The company's profits came in three times higher than analysts' expectations.

Business News Preview

ICSC Weekly Same-Store Sales

Weekly same-store sales improved in the period ended July 18, according to the International Council of Shopping Centers. The latest check showed sales rose 0.5% week-to-week, versus the prior week's shrinkage of 0.9%. We've noted improvement in this report over recent months, and a clear stabilizing pattern. The measure had become as sensitive to weekly weather as anything else, signifying to us that normalized sales levels were about even to the prior year. However, on a year-to-year basis, sales fell 0.3% in the July 18 period, versus the -0.7% drop in the prior week period. Consumer Sentiment has recently dropped as well, giving further evidence that rising unemployment is already acting as a drag to economic recovery. Your "V-Shaped" recovery is flattening out, and looking more like a "U", and many would argue, a "W" or "M", once inflation kicks in.

Bernanke Testimony

Federal Reserve Chairman Ben Bernanke hits the "Hill" today to give his semi-annual monetary policy testimony to the House Financial Services Committee. Once known as the Humphrey-Hawkins annual testimony, the meeting now competes with regular interrogations of the Fed Chief, and has lost some of its "Must-See TV" appeal. We wouldn't miss it though!

Later today, the House committee will debate the "too big to fail" problem. Bernanke speaks with the Senate Banking Committee tomorrow, as part of his two-day ordeal.

Texas Instruments Results

After the bell Monday, Texas Instruments (NYSE: TXN) reported weak year-over-year numbers, but the market may find hope in its sequential quarter improvement. Indeed, Texas Instruments executives noted that the bottom seems to be in, and that customers are ordering in a more normal manner to reflect real demand. The panic of the first quarter spread far, as seen in that statement and the numbers. Still, the TXN team noted few signs of broader economic improvement as yet.

TXN posted EPS of $0.20 in its second quarter, beating the tempered analysts' consensus for $0.18, according to Thomson Reuters. Revenues of $2.46 billion also surpassed expectations for $2.41. "The Greek" learned through my Wall Street time that both analysts and corporate executives get better at managing expectations as the economic trend is understood.

Still, the numbers were not good at all on an absolute basis, and that may be reflected this morning, as the stock is down more than 2% in the pre-market. Do not fail to recall, however, that the entire industry got a lift last week on Intel's results (Nasdaq: INTC), and so some expectations had been built into this report.

EPS Schedule

The rest of today's schedule highlights reports from Caterpillar (NYSE: CAT), Lockheed Martin (NYSE: LMT), Schering-Plough (NYSE: SGP), Apple (Nasdaq: APPL), Merck (NYSE: MRK), Coca-Cola (NYSE: KO), UnitedHealth (NYSE: UNH), Gilead Sciences (Nasdaq: GILD), United Technologies (NYSE: UTX) and more.


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

Leading Economic Indicators Show Fair Weather Ahead

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

Quoting The Conference Board, publisher of the Leading Economic Indicators Index, "All in all, the behavior of the composite indexes suggest that the recession will continue to ease and that the economy may begin to recover in the near term."

Leading Economic Indicators

The Conference Board's Leading Economic Indicators Index shows fair weather ahead. The June reporting of the LEI improved 0.7%, versus expectations for a 0.5% gain, based on Bloomberg's survey of economists. On a day that was otherwise light of economic data, though not short of earnings news, Leading Indicators guided the way for stocks Monday.

Of course, the Leading Economic Indicators Index plays importantly in times of economic transition, and would have held weight even if the day offered a full data slate. Plus, after two sequential quarters of deep economic contraction (-5.5% GDP in Q1, -6.3% in Q4), this third straight monthly improvement in the LEI is just the right reassurance we need that things will improve. The 0.7% rise recorded for this past month matches against May's 1.3% increase and April's 1.0% gain.

Did you notice that the pace of monthly LEI improvement is slowing? This mirrors the stock market, which soared from March's "panic level lows," but has since sought further reason for continued rise. It seems to us likely that the natural drag of unemployment will limit the pace of recovery over the next few months, maybe couple quarters, weighing on the Coincident Index and even the Leading Economic Indicators Index.

Factors Driving Leading Economic Indicators

Seven of the ten component factors of the LEI improved in June, giving further cause to believe in a nearing end to our current economic misery (in the numbers anyway). Leading drivers included moderated interest rate spreads, increased building permits, rising stock prices, lower weekly initial claims, average weekly manufacturing hours, supplier deliveries and manufacturers new orders for consumer goods and materials.

The Leading Economic Index crossed paths with the Coincident Economic Index for the first time since the spring of 2006, when it last dropped below it. This rise of the LEI, therefore, looks to signal an important change for the better. However, the CEI kept rising from the spring of 2006 until just before the start of the recession. A leveling of the CEI now would seem likely then to mark the finish of it. Exactly that sort of leveling is becoming apparent in the graph, but has not been achieved yet. However, the CEI fell less last month (-0.2%) than the prior two (-0.3% each).


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

Stock Market Catches Its Second Wind

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(Tickers: GS, GE, MRK, DD, CAT, INTC, GOOG, IBM, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK)

Stock Market Second Wind

The stock market recovery of 2009 found its second wind last week, as it was lifted by a handful of positive earnings reports and a note of approval from one of its harshest critics. Influential analyst Meredith Whitney injected the market with life on Monday morning when she raised her view on Goldman Sachs and predicted the company's quarterly outperformance that played true the next day. Further good news from Intel on Wednesday, and a note of support from Economist Nouriel Roubini helped to reinforce confidence and buying in stocks. The Dow Jones Industrial Average posted its strongest weekly gain since the week ended March 13, soaring 7.3% last week. The S&P 500 Index and Nasdaq Composite concurred, as they rose 7.0% and 7.4%, respectively.

Meredith Whitney is a well-known and influential voice on Wall Street. On Monday, she was spot on with her buy recommendation on Goldman Sachs, and her forecast for significant quarterly outperformance the next day. Goldman, one of the market share beneficiaries of its competitors' demise, once again illustrated its trading savvy on Tuesday morning. Traded via NYSE symbol GS, the company posted revenues of $13.8 billion for the closed quarter, up from $9.42 billion in the prior year period. Goldman's EPS came in well above analysts' consensus view as well, but the shares held steady after having risen 5.3% the day before on Ms. Whitney's preview.

The market found further drive though when Intel beat analysts' EPS consensus by 125%, and reported that it was shaping up to post revenues of $8.5 billion for its current quarter, versus expectations for just $7.8 billion. On Thursday, the masses, hungry for more reason to buy stocks, took the words of Nouriel Roubini as the all clear to do so. However, Mr. Roubini later refuted the interpretation of his comments, saying he had not altered his forecast at all. He still saw five more months of recession... The market could care less about current conditions though, as it is a forerunner of the real economic environment. In fact, it is regularly described as a six-month forerunner, so the gates had been opened nonetheless, and off to the races it was.

Before the week was over, several other high profile so-so reports managed to support stocks until General Electric (NYSE: GE) noted severely lower revenues on Friday. However, rather than consolidating gains, the euphoric market simply held steady to close the week. A strong Housing Starts figure for June went far in offsetting GE's bad news. Housing Starts rose 3.6% above the revised May figure, and Building Permits jumped 8.7%, giving some life to the shares of beaten down homebuilders as well.

This "Second Wind" the market found was not unforeseen by your favorite Wall Street tracker, as noted in our regular weekly market preview on the blog. The big question now is, does the market have enough gusto to keep it up in the week ahead. This coming trading period offers many more earnings reports, including big ones from Dow components Caterpillar (NYSE: CAT), Merck (NYSE: MRK) and DuPont (NYSE: DD). The economic slate is a light one, but includes the semi-annual testimony of Federal Reserve Chairman Bernanke before the House Financial Services Committee and the Senate Banking Committee on Tuesday and Wednesday. Leading Indicators is also due this week, and may offer insight into how long this recession will drag on, clearly a market-moving bit of information as well. For all of the week's events, see our forthcoming "Week Ahead" article.


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

BDI Recovering - All Eyes on China

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(Tickers: SEA, EGLE, GNK, DSX, NAT, SINO, PRGN, XSEAX, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK)

Miral Shipping Freight Market Report

Authored July 15, 2009


Independent Shipbroker & Consultant to commodities traders, Alexander Miral offers Wall Street Greek readers a timely take on the Shipping Freight Market.

BDI Recovering After Recent Slump

During the past three weeks, the Baltic Dry Index fell to 2975 points or just over 30 percent, and now has risen back to 3324. Most of the drop in rates was in the capesize sector (over 100,000 tons deadweight), which has fallen to 4788, or approximately 40%, but has now recovered to 5549. Other vessel classes have been less volatile; the panamax ship index (over 60,000 dwt) went slightly negative to 2955, less than 5 percent, before turning positive and closing today at 3141; the supramax index (50,000 dwt) stood at 1953 and handysize (below 40,000 dwt) just over 800. Both vessel indexes have posted slight gains of approximately 5 percent.

Much has happened in this time. Iron Ore shipments to China seem to have slowed amidst difficult talks going on between Australian iron ore suppliers and Chinese buyers. The Chinese are still fighting for more than the 33% price reduction agreed to with other Asian steel producers. Negotiations are such that three workers of Rio Tinto were detained in Shanghai by the Chinese authorities for espionage and bribery!

Panamax, Supramax and handysize vessels all have benefited from healthy amounts of grain, fertilizer and coal currently being shipped. The main areas of strength continue to be out of East Coast South America and the US Gulf to both Atlantic and Far East destinations.

Going forward, all eyes are on China, which continues to show signs of strength. Chinese GDP growth appears to be headed for 8% for 2009, a remarkable achievement. Fixed investment and retail sales have shown large gains in May. Furthermore, the Chinese auto sector alone was recently reported to have grown by more than 48% year-over-year in June. Exports are also showing stabilization and even a slight rise after falling considerably earlier this year.

Certainly a substantial part of this growth is related to Chinese government stimulus packages and incentives, and there are doubts about how much underlying demand there would be without the stimulus. Nevertheless, it appears as though the Chinese authorities will continue to support growth of 8% or more, a positive for the global freight market. The expected supply of new vessels later this year may be a negative factor, depending mainly on whether Chinese demand continues.

Technically, the Baltic Freight Index is looking for support, and the situation is different for every vessel class. The Capesize market shows major support at the $40,000 TC average and appeared to be headed that way, but it found support yesterday (at least temporarily) at approximately $53,000 and has already risen 10% from there. It could now rise to over $70,000 TCE before hitting major resistance.

The Panamax index, which stands now at a more historically average differential to the capsize market, has been in a technical triangle for nearly two months, but appears to be breaking the pattern on the upside and could move up another 10% before finding resistance. Supramaxes are close to resistance on the upside and could break out shortly, in my view. Handysizes have approximately 10% more upside before major resistance.

Also interesting to note: the Baltic Exchange is changing the way it will calculate the Baltic Dry index (BDI). It will only use timecharter rates to calculate the Capesize, Panamax, Supramax and Handysize indexes, and will no longer use voyage rates. These changes are meant to facilitate derivative trading, and we will keep a close eye on its effect on the BDI.

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

Market Summary: CPI, Industrial Production & Intel

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(Tickers: INTC, GM, GS, F, ABT, AMR, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK)

Market Summary

Yesterday's hot PPI data managed to cool an enthused market that seemed poised to post a nice jump on Goldman Sachs' (NYSE: GS) earnings beat. By the end of the day, the market was dwelling on the sustainability of Goldman's and the banking industry's performance. Hot prices on the producer level is just the right concern to sicken stocks these days, so this morning's consumer price data was all the more important. However, we got a busy news day, with a positive report from Intel, decent Industrial Production data and more to smooth out a hot Core CPI number.

Consumer Price Index (CPI)

The Consumer Price Index (CPI) was reported at 8:30 this morning. As with the PPI, gasoline price increase was seen driving overall prices higher. Headline CPI was reported right in line, up 0.7% in June, which compared against the modest 0.1% increase posted in May. The gasoline index increased 17.3%, playing the most significant role in the increase and complemented by other energy costs (Energy Index +7.3%).

However, Core CPI, which excludes food and energy prices, was expected to exhibit only a moderate rise. Core CPI surprised slightly higher this morning, rising 0.2%, versus the consensus expectation for a 0.1% increase. May's Core CPI posted a 0.1% increase.

As with the PPI, a reincarnated auto industry, with manageable debt structure, was able to boost pricing to reflect the less desperate sellers in General Motors (NYSE: GM) and Chrysler. This played a significant role in driving both Core PPI and CPI. Most components increased though, and so we continue to view forward looking inflation concerns warranted.

NY Fed Manufacturing Survey

The Empire State Manufacturing Survey showed a pleasant improvement this morning. July's reading showed a -0.55 number, which restored a longer term improving trend from cycle bottom. Today's reading beat economists' forecasts for a result of -4.5 this month, versus -9.4 in June.

Mortgage Activity

Last week's mortgage application data got a weather aided boost, in our opinion. After day in and day out of rain here in the busy Northeast, the sun broke through. Recall, the prior week's data dropped off significantly, and it is seasonally adjusted so the holiday should have played no role. So last week noted recovery, as the Market Composite Index jumped 10.9%. This week, the Market Composite Index change normalized, and rose 4.3%, but got a late push from dropping long rates. Contracted 30-year fixed rate mortgages fell to 5.05% last week, from 5.34%. Look for next week's data to see a significant refinance push as a result.

Industrial Production

Industrial Production, posted this morning, showed one of those "less bad" results the market is tired of. However, at -0.4%, it also beat economists' expectations for a contraction of 0.7% for June, and compared more favorably against the 1.2% revised decline recorded in May. Manufacturing capacity was expected to slip further to a new record low of 67.8%, from 68.2% (revised) in May, but it only fell to 68%. Might we be setting up for an inflection point turn...

Oil Inventory - 10:30 AM

The EIA Petroleum Status Report is up later this morning. Last week's data showed crude oil stocks saw a draw of 2.9 million barrels, while gasoline stocks built by 1.9 million.

Fed Meeting Minutes - 2:00 PM

The Federal Reserve releases the meeting minutes from its last get-together at 2:00 PM. The Bank of Japan, under political pressure and economic strain will likely extend corporate financing aids, given its lack of room to help with rates. The SEC is hearing testimony on broker dealer underwritings of municipal securities. The Senate Banking Committee interrogates folks on hedge-fund regulation, while the House Financial Services group discusses the Administration's financial regulation reform plan.

Corporate Earnings Schedule

Intel (Nasdaq: INTC) reported results last evening, and said sales would be significantly higher than Wall Street expected in the third quarter. Not insignificant, Intel also beat analysts' consensus Q2 estimates for $0.08 by posting EPS of $0.18, on an adjusted basis. The chip giant sees revenues of $8.5 billion this quarter, which compares against analysts' view for $7.8 billion. Needless to say, INTC shares jumped 7% on the open.

Earnings season heats up on Wednesday, with reports due from Abbott Laboratories (NYSE: ABT), Acergy (Nasdaq: ACGY), ADTRAN (Nasdaq: ADTN), Alliance Financial (Nasdaq: ALNC), AMR Corp. (NYSE: AMR), ASML Holdings (Nasdaq: ASML), China-Biotics (Nasdaq: CHBT), Cintas (Nasdaq: CTAS), Crown Holdings (NYSE: CCK), Fortune Industries (AMEX: FFI), Gannett (NYSE: GCI), Joe's Jeans (Nasdaq: JOEZ), Kinder Morgan Management (NYSE: KMR), Landstar System (Nasdaq: LSTR), Lufkin Industries (Nasdaq: LUFK), MEDTOX Scientific (Nasdaq: MTOX), Polycom (Nasdaq: PLCM), Resources Global Professionals (Nasdaq: RECN), Rurban Financial (Nasdaq: RBNF), Schawk (NYSE: SGK), Stanley Furniture (Nasdaq: STLY), Texas Industries (NYSE: TXI), United Community Fin'l (Nasdaq: UCFC), Universal Forest Products (Nasdaq: UFPI), W.W. Grainger (NYSE: GWW), Wolverine Worldwide (NYSE: WWW), Worthington Industries (NYSE: WOR) and Xilinx (Nasdaq: XLNX).


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

This Week: Potential EPS Catalyst for Market Rise

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(Tickers: DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK, GE, INTC, GS, C, BAC, GOOG)

This Week

This week offers an All-Star Break and breaking EPS news from corporate leaders General Electric, Goldman Sachs, Intel, Bank of America and Google. With S&P 500 companies still losing earnings ground against last year's comparable results, there's speculation that Goldman might have uplifting news the whole market might enjoy. If analyst Meredeth Whitney has it right, Goldman's report might be the catalyst this market has been lacking in recent weeks.

Monday

Supreme Court Justice nominee Sonia Sotomayor faces Congressional hearings as part of the regular process toward her confirmation. Unless an opposing party is holding some unknown fact that might undermine her confirmation, it looks like she will be confirmed.

A June Treasury budget deficit of $94.3 billion piled on to a mounting net spending count. With three months to go in fiscal year 2009, the deficit stands at $1.086 trillion. Calls for new stimulus were quietly put to rest last week, as the government seems to have reached a point where it is cautiously mindful of new ideas for spending. Signs of economic life (not growth mind you) have allowed the feds a chance to breath after months of fire fighting.

Treasury Secretary Geithner met with his counterparts in the UK on Monday. He'll be in Saudi Arabia by Tuesday, and Abu Dhabi by Wednesday.

The US government pushes in court to force Swiss bank UBS (NYSE: UBS) to reveal the names of Americans behind secretive accounts held there. The earnings schedule highlights reports from Bank of the Ozarks (Nasdaq: OZRK), CSX Corp. (NYSE: CSX), Fastenal (Nasdaq: FAST), Magal Security Systems (Nasdaq: MAGS), Merix (Nasdaq: MERX), Novellus Systems (Nasdaq: NVLS), POSCO (NYSE: PKX) and Wegener (Nasdaq: WGNR).

Tuesday

Goldman Sachs' (NYSE: GS) EPS report has the ability to rejuvenate a tired market on Tuesday. Goldman reports in the pre-market. Meredith Whitney upgraded the stock on Monday, noting expectations for quarterly earnings of $4.65, well above the analysts' consensus of $3.48, as reported by Thomson Reuters. Ms. Whitney, just launching her own firm, set her target at $186. Goldman's shares jumped 5% on the day, to $149.

Four economic reports reach the wire on Tuesday, three of which we will discuss here. Retail Sales are due for their monthly report Tuesday morning at 8:30. Sales activity in June was dampened by greater than average rainfall in the heavily populated Northeast, West and portions of the Southwest US. Even so, higher oil and gasoline prices are expected to drive a rise in retail sales for the second consecutive month. Gasoline stations (+3.6%) contributed greatly to May's 0.5% increase, and economists see the same driver pushing sales growth of 0.5% in June. Excluding autos, sales are seen increasing 0.6%.

Economists surveyed by Bloomberg forecast Producer Prices likely increased 0.8% in June, driven by an energy price boost. PPI rose 0.2% in May. Excluding food and energy, the Core PPI is expected to post a 0.1% increase, contrasting against the 0.1% decline posted in May.

Last week's ICSC Weekly Same-Store Sales data showed an increase of 0.1% week-to-week and a 0.5% year-over-year rise. Wal-Mart's (NYSE: WMT) withdrawal from posting interim monthly results has skewed retail sales data to the downside. Throughout this recession, Wal-Mart has progressed, taking market share from trade-down shoppers.

Business Inventories are due up at 10:00 a.m. Drops in Wholesale and Manufacturers' inventories have led economists to forecast a similar decline in business level stocks. Economists surveyed by Bloomberg see a -0.8% decline this time around, compared to the 1.1% drop in April. Sales fell at a lesser rate in April, leading to improvement in the inventory-to-sales ratio to a still relatively high 1.43.

SEC Chair Mary Schapiro has a scheduled date with the House Financial Services Committee, and a Senate grouping considers a new consumer financial protection agency. Tuesday brings earnings news from Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), St. Jude Medical () and Yum! Brands (NYSE: YUM). Also look for news from AAR Corp. (NYSE: AIR), Altera (Nasdaq: ALTR), AMREP Corp. (NYSE: AXR), Goldman Sachs (NYSE: GS), HDFC Bank (NYSE: HDB), Hi-Tech Pharmacal (Nasdaq: HITK), Life Partners Holdings (Nasdaq: LPHI), Ocean Power Technologies (Nasdaq: OPTT), Palm Harbor Homes (Nasdaq: PHHM), Peregrine Pharmaceuticals (Nasdaq: PPHM), RF Monolithics (Nasdaq: RFMI) and others.

Wednesday

The Consumer Price Index (CPI) is due for report at 8:30 on Wednesday morning. As with the PPI, higher gasoline prices are seen driving Headline CPI up 0.7% in June, compared to the modest 0.1% increase posted in May. Core CPI, excluding food and energy prices, should exhibit more moderation, rising 0.1%, according to Bloomberg's survey of economists. That matches up against May's 0.1% increase.

The Empire State Manufacturing Survey is also due at 8:30. The take on New York area manufacturing backed up from an improving trend (less contraction) in June, and not much change is seen for July, given leading indicator data within the survey. Economists are looking for a reading of -4.5 this month, versus -9.4 in June.

Industrial Production is due at 9:15 AM ET, and is seen posting one of those "less bad" results the market is tired of. Economists see contraction of 0.7% in June, compared against the 1.1% decline recorded in May. Manufacturing capacity is expected to slip further to a new record low of 67.8%, from 68.3% in May. Any ideas what to do with all the empty plants?

Last week's mortgage application data got a weather aided boost, in our opinion. After day in and day out of rain here in the busy Northeast, the sun broke through. Recall, the prior week's data dropped off significantly, and it is seasonally adjusted so the holiday should have played no role. Last week noted recovery, as the Market Composite Index jumped 10.9%, on a 15.2% Refinance Index push and 6.7% Purchase Index rise. Rates on contracted 30-year mortgages stuck at 5.34%.

The EIA Petroleum Status Report is up at 10:30. Last week's data showed crude oil stocks saw a draw of 2.9 million barrels, while gasoline stocks built by 1.9 million.

The Federal Reserve releases the meeting minutes from its last get-together at 2:00 PM. The Bank of Japan, under political pressure and economic strain will likely extend corporate financing aids, given its lack of room to help with rates. The SEC is hearing testimony on broker dealer underwritings of municipal securities. The Senate Banking Committee interrogates folks on hedge-fund regulation, while the House Financial Services group discusses the Administration's financial regulation reform plan.

Earnings season heats up on Wednesday, with reports due from Abbott Laboratories (NYSE: ABT), Acergy (Nasdaq: ACGY), ADTRAN (Nasdaq: ADTN), Alliance Financial (Nasdaq: ALNC), AMR Corp. (NYSE: AMR), ASML Holdings (Nasdaq: ASML), China-Biotics (Nasdaq: CHBT), Cintas (Nasdaq: CTAS), Crown Holdings (NYSE: CCK), Fortune Industries (AMEX: FFI), Gannett (NYSE: GCI), Joe's Jeans (Nasdaq: JOEZ), Kinder Morgan Management (NYSE: KMR), Landstar System (Nasdaq: LSTR), Lufkin Industries (Nasdaq: LUFK), MEDTOX Scientific (Nasdaq: MTOX), Polycom (Nasdaq: PLCM), Resources Global Professionals (Nasdaq: RECN), Rurban Financial (Nasdaq: RBNF), Schawk (NYSE: SGK), Stanley Furniture (Nasdaq: STLY), Texas Industries (NYSE: TXI), United Community Fin'l (Nasdaq: UCFC), Universal Forest Products (Nasdaq: UFPI), W.W. Grainger (NYSE: GWW), Wolverine Worldwide (NYSE: WWW), Worthington Industries (NYSE: WOR) and Xilinx (Nasdaq: XLNX).

Thursday

Do NOT miss the testimony of former Treasury Secretary Hank Paulson on Thursday as he faces a grilling on the alleged strong-arming of Bank of America's Ken Lewis.

Weekly Initial Jobless Claims offered a breather at last check, dropping well below the 600K mark, to 565K. We'll be curious to see if moderation of job attrition continues here. Last week's drop was steep, recording 52K less layoffs than the week before. If a trend has begun, it will likely find welcome with traders.

The RBC Cash Index, a sentiment measure of household attitudes and spending, is due out at 9:00 AM. The barometer backtracked last month to 34.3, from 43 in May. If you tied me up, I would say to expect little change this time around, and that it will not matter to traders anyway.

Treasury International Capital is due at 9:00 a.m. as well. This report illustrates the flow of funds into and out of US investments. As it measures May this time around, we would look for foreign interest in rising American investments to have prevailed.

Following New York in economic reporting, though definitely not baseball, look for the Philly Fed Survey at 10:00. This latest take on Philadelphia area business activity (manufacturing) is seen backing off of its May improvement. The Philly Fed measure improved greatly to -2.2 in June, versus the -22.6 read in May. Economists anticipate something near -5.0 for July's reading. Note that each of these three readings indicate economic contraction, just at varying rates.

Working gas in storage increased by 75 Bcf at the last check of the EIA. Natural gas inventory regularly builds in summer, but a mild summer for much of the country allows for less air conditioner usage. Also, less factory capacity means less energy is used to run them. Thus, natural gas languishes, since it is still greatly a locally demanded resource. Oil prices shot up at a greater pace due to its global demand base and limited resource.

The Housing Market Index is due at 1:00 PM. This measure of home builder sentiment fell in June to 15, from 16 in May. Both are pathetic readings, versus healthy environment checks. The Fed publishes its Balance Sheet data at 4:00 PM.

Thursday's EPS schedule highlights news from Amphenol (NYSE: APH), AngioDynamics (Nasdaq: ANGO), AptarGroup (NYSE: ATR), Aracruz Celulose (NYSE: ARA), Associated Banc-Corp (Nasdaq: ASBC), Badger Meter (NYSE: BMI), Baxter Int'l (NYSE: BAX), Biogen Idec (Nasdaq: BIIB), Courier Corp. (Nasdaq: CRRC), Cubist Pharmaceuticals (Nasdaq: CBST), Cypress Semiconductor (NYSE: CY), Cytec Industries (NYSE: CYT), Datalink (Nasdaq: DTLK), East West Bancorp (Nasdaq: EWBC), Fidelity Southern (Nasdaq: LION), Genuine Parts (NYSE: GPC), Google (Nasdaq: GOOG), Harley-Davidson (NYSE: HOG), Home Bancshares (Nasdaq: HOMB), Insteel Industries (Nasdaq: IIIN), International Business Machines (NYSE: IBM), JP Morgan Chase (NYSE: JPM), Knoll Inc. (NYSE: KNL), Marriott Int'l (NYSE: MAR), MB Financial (Nasdaq: MBFI), McMoRan Exploration (NYSE: MMR), Meridian Biosciences (Nasdaq: VIVO), MGIC Investment (NYSE: MTG), Mission West Properties (Nasdaq: MSW), NEXEN (NYSE: NXY), Nokia (NYSE: NOK), Novartis (NYSE: NVS), People's United Financial (Nasdaq: PBCT), Polaris Industries (NYSE: PII), Popular (Nasdaq: BPOP), PPG Industries (NYSE: PPG), Provident Bancorp (Nasdaq: PBNY), Renaissance Learning (Nasdaq: RLRN), Simmons First National (Nasdaq: SFNC), Sonoco Products (NYSE: SON), Tempur Pedic Int'l (NYSE: TPX), Umpqua Holdings (Nasdaq: UMPQ) and several others.

Friday

Economists are not looking for significant improvement in June's Housing Starts data, despite the 17.2% jump in May. The forecast calls for the annual pace to ease to 530 million, from the 532 million pace seen in May.

The nation's governors will get together for their annual confab, and the talk of the town will undoubtedly be one Sarah Palin. Mexico's central bank is seen easing rates by a quarter point or more, as it deals with the general economic trouble we share, though compounded by drug wars and epidemic effects on its tourism base.

The week's EPS schedule concludes on news from some of our most important companies. Expect reports from Bank of America (NYSE: BAC), Citigroup (NYSE: C), General Electric (NYSE: GE), A.O. Smith (NYSE: AOS), Acme United (AMEX: ACU), BB&T Corp. (NYSE: BBT), First Horizon National (NYSE: FHN), Marshall & Ilsley (NYSE: MI), Mattel (NYSE: MAT), Meade Instruments (Nasdaq: MEAD), Prosperity Bancshares (Nasdaq: PRSP), Student Loan (NYSE: STU), Votorantim Celulose (NYSE: VCP) and Webster Financial (NYSE: WBS).

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

G-8 Summit

Does "G" Stand for Goodwill or Gimcrackery?

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G-8 Summit

It took place in a cracked village that lay in ruins, perhaps symbolic of the economies of the Group of Eight developed nations that met there. What resulted was a mix of the usual cliches saturated with big statements for unity, but also some common sense and direction from the new kid on the block, one Barrack Obama.

Earthquake shattered L'Aquila, Italy hosted this latest meeting of the G-8, and offered a meaningful change from the usual pomp and circumstance these gatherings tend to display. Not for one minute could the leaders of the wealthiest nations on earth forget the state of their own countries' affairs, nor that of the global economy. All they had to do was look out the window for a reminder.

It seems mankind is hungry for change as well, as men have lifted a special bunch into command. Led by a new catalyst in the perfectly-naive-to-global-politics Barrack Obama, this charismatic bunch seems to possess the right stuff for this very special era. Nicolas Sarkozy, Angela Merkel, Hu Jintao and even Dmitry Medvedev have an important understanding of their special position in world history, and we are hopeful, a resolve to make a difference. Still, make no mistake about it, it took the bold entry of Barrack Obama to light the fire.

The greatest result of this latest G-8 summit was the understanding that it should be one of the final such gatherings. Instead, the G-8 is evolving with the developing world into a better representative grouping of humanity. President Obama said it best in his noting that a meeting of world leaders that excludes India and Brazil, and at one time China, seems somewhat irrelevant. At the previous G-20 meeting in April, German Chancellor Angela Merkel acknowledged that the G-8 was dead.

Recognition that the world's people, more so than its wealth, deserve a voice in the discussion of its future is progressive. Let's face it though, it's also sound political policy. When seeking to reverse global warming, one must include the developing industrial giants, China and India, in the discussion.

Politically speaking, each nation seeks to pay a fair price in this bold global climate change initiative, and this is where the goal finds its greatest obstacle. Developing nations argue that the developed and wealthy world should bear the economic burden of reversing a problem they mostly created. At the same time, the G-7 realizes that future contributions to global warming will be mostly driven by China and India. Each side leverages this argument to push the other, and neither seems to budge as a result.

In the past, these meetings have drawn the ire of the world's working class, and of hooligans, many of whom view the gathering as the ultimate display of arrogance. The world's richest nations get together, often determining the degree of aid that will be distributed to the world's poor, while neglecting to address so many of their own failings. That "New World Order" flavor leaves an understandably distasteful tinge to tongue of those on the lower rung.

However, with a wise expansion of the group, we expect it will gain more support from the world's general populace. The smart location of its meetings, in the midst of need rather than extravagance, will also go far in better reflecting, and perhaps setting, the group's intentions. The results are not too bad either. This latest meeting led to agreement that the global economy remains vulnerable and that the reversal of economic stimulus too soon might risk laboring its recovery. Meanwhile, additional significant stimulus was ruled out for now, but Africa will receive $20 billion in new aid from a group that is well aware of its unfulfilled promises to the continent. While the G-8 failed to find agreement on emission targets, the group reached accord to strive to reduce global temperature to at least two degrees centigrade above pre-industrial levels.

While these steps seem progressive on the surface, many, including UN Secretary General Ban Ki-moon, see them as inadequate. The UN Chief said that emission standards are, "politically and morally imperative, and a historic responsibility for the leaders, for the future of humanity." However, President Obama wisely addressed this concern, advising that, "we must fight the temptation toward cynicism, to feel the problem is so immense that somehow we cannot make strides."

As for the gatherings of leaders to resolve shared global problems, the greatest question is yet to be answered. Can men overcome political pressure and an inherent selfish tendency to gain enough willpower to strive for the good of mankind?


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

Pre-Market: Trade Data, GM, Geithner Testimony

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Pre-Market

GM Emerges

GM gained approval to complete its asset sales to the newly formed and mostly publicly owned entity. GM's emergence from bankruptcy will allow it to halve its product lines and cut 6K more salaried employees. This looks like a positive driver today, similar to the bank announcements in March, through which they declared their return to profitability. It's a change symbolic of putting our troubles behind us and the risk of catastrophe away.

Trade Data

The trade gap narrowed in May, surprising economists who forecast a widening deficit on the significant rise in crude oil pricing that occurred through the measured period. The trade gap narrowed to -$26.0 billion, from April's revised $28.8 billion deficit (from -$29.2 billion). Bloomberg's tally of economists had pegged consensus at a $-28.8 billion for May, and Barron's saw consensus at -$30.0 billion. The surprising result came on expanding exports that matched against declining imports, no doubt the result of a softer dollar. While a weaker dollar raises the dollar cost of imported oil, it also makes exported goods more competitive overseas. The only segment to show decrease in exports was automotive and auto parts and engines, for obvious reasons.

Import & Export Prices

The dollar impact was also visible in June's Import & Export Price data. June export prices rose 1.1% (against May's 0.5% rise), but that matched against an import price increase of 3.2% (revised 1.4% increase in May). June's import price jump was largely driven by a 20.3% increase in petroleum prices. However, non-petroleum import prices also increased 0.2%, marking the second sequential monthly rise; and likely due to the change in the dollar. Inflation is not a concern in the near-term though, given the sharp year-over-year price drops for both imports and exports.

Later Today

Geithner Testimony

Treasury Secretary Timothy Geithner testifies before the House Financial Services Committee at 10:00 a.m. The focus of the hearing is on derivatives and the President's financial reform plans.

Reuters/University of Michigan Consumer Sentiment

This data is due up at 9:55 a.m. Consensus sees further improvement to 71.5, from 70.8 in June. May produced 1.9 points of positive change, but the impact of "green shoots," and perhaps smoke, have stalled as investors weigh the potential drag of significant unemployment.

IEA Oil Report

The International Energy Agency (IEA) produces its Monthly Oil Report Friday.

Corporate EPS Schedule

The earnings slate includes Audiovoxx (Nasdaq: VOXX), Infosys Technologies (Nasdaq: INFY), PriceSmart (Nasdaq: PSMT), The Progressive Corp. (NYSE: PGR) and a few pink sheets.


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

Before the Bell: Jobless Claims & Alcoa's EPS Results

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Weekly initial jobless claims and Alcoa's lead-off earnings report key the wire this morning. However, the day's schedule is full of market-moving news potential.

Before the Bell

Weekly Initial Jobless Claims

New benefits filers amounted to 565K in the week ending July 4, comparing favorably against consensus expectations for 610K, based on economists surveyed by Bloomberg. We remind you though that the forecast for this regular count never varies far from the prior week result, which makes perfect sense. Even so, the dip below 600K is welcomed. It marked a 57,000 decrease from the prior week's revised count of 617K. The four-week moving average moved 10K lower, to 606K.

Now the bad news... Continuing claims filers stuck, piling on the insured unemployment pool and taking that rate to 5.1%, from 5.0% (+159K continuing claims filers). The total count of unemployment claims beneficiaries amounts now to 6,883,000, which is nothing to get excited about.

The highest insured unemployment rates in the week ending June 20 were in Michigan (6.8 percent), Puerto Rico (6.8), Oregon (6.7), Pennsylvania (6.4), Nevada (6.2), Wisconsin (5.7), California (5.3), Illinois (5.3), North Carolina (5.3), and South Carolina (5.3).

The largest increases in initial claims for the week ending June 27 were in New Jersey (+7,876), Massachusetts (+4,730), Kansas (+4,469), Kentucky (+3,614), and New York (+3,019), while the largest decreases were in Florida (-12,493), Illinois (-5,321), Pennsylvania (-3,949), California (-2,919), and Tennessee (-2,743).

Alcoa's EPS Results

Alcoa (NYSE: AA) reported quarterly results last evening, formally kicking off the second quarter earnings season. However, earnings do not get into full swing for a couple weeks yet.

Alcoa noted a narrower loss than was anticipated by Wall Street, giving enthusiasm to futures in the early going. Much of the surprise came due to Alcoa's cost cutting efforts, but the cyclical barometer noted some aluminum markets have begun stabilizing. Still, the company kept with its forecast that the aluminum market will contract by 7% this year due to the global recession.

Alcoa lost $0.32 per share from continuing operations, and after restructuring charges, the bellwether lost only $0.26 (analysts usually exclude these charges). This compared against analysts' consensus expectations for a loss of $0.38. Revenue, perhaps a better barometer of the environment in times of chaos, dropped 41% versus the prior year count. The decline in year-over-year revenue was driven by a 49% drop in the price of the metal relative to Alcoa's dealings. Compared to the quarter just prior, sales rose 2%, lending to market enthusiasm.

To see the entire schedule for Thursday, including the yet to be reported data, please see our "Week Ahead" copy.

Other Corporate EPS Today

The corporate earnings slate includes news from 3Com (Nasdaq: COMS), Chevron (NYSE: CVX), Adams Express (NYSE: ADX), CalAmp (Nasdaq: CAMP), Chattem (Nasdaq: CHTT), FCStone Group (Nasdaq: FCSX), Franklin Covey (NYSE: FC), Helen of Troy (Nasdaq: HELE), Lawson Software (Nasdaq: LWSN), Rocky Mountain Chocolate Factory (Nasdaq: RMCF), Shaw Group (NYSE: SGR), Tortoise Capital Resources (NYSE: TTO) and Value Line (Nasdaq: VALU).


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

Weekly Mortgage Applications Survey Weed

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Wall Street Greek suggested in our weekly preview that weekly mortgage application activity was disrupted by weather in its latest reporting. We feel our insight has been verified by this week's reflexive bounce.

"Mortgage Activity increased in the week ended July 3rd, and several major media outlets are reporting the news as if it were a "green shoot." It's a weed folks, and you heard it here first!"

Weekly Mortgage Applications Survey

Mortgage applications activity increased in the week ended July 3rd, and several major media outlets are reporting the news as if it were a "green shoot." It's a weed folks, and you heard it here first! Last week's data showed sharp decline in mortgage activity despite favorable rate change. Contracted 30-year fixed rate mortgages adjusted to 5.34%, from 5.44% in the week ended June 26. Yet, the Market Composite Index dropped 18.9%, after seasonal adjustment. The Refinance Index sank 30.0%, and recently resilient Purchase Activity fell 4.5%. We pointed to notable levels of rainfall through the measured period, and this week's data seems to verify its impact.

Even as contracted rates on 30-year fixed rate mortgages held steady at 5.34%, and as 15-year contracts inched higher, mortgage application activity reportedly climbed significantly. The Market Composite Index of activity showed an improvement of 10.9%, after adjustment for the shortened holiday week. This adjustment may have also exacerbated the special impact of the prior week's weather. Refinance Activity increased 15.2% and the Purchase Index rose a strong 6.7%, but pick the weed folks.


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

This Week: G-8, Chain Store Sales, Congressional Hearings

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This Week

Monday was covered in our article, "Morning Business: Obamas Take Moscow."

Tuesday

Last week's check of the ICSC Weekly Same-Store Sales data showed a 0.6% year-over-year increase and a 0.6% week-to-week decline. We noted the stabilizing situation in this data that has thus far not coincided with the thoughts of most talking heads, nor other lagged economic reports. Look for Chain Store Sales on Thursday to also disagree...

The Reserve Bank of Australia will issue its latest monetary policy statement on Tuesday, with expectations for the RBA to hold rates steady. The day also marks Egypt's deadline for Palestine to form a unity government. We are not sure what kind of penalty Egypt has in mind, nor if it could possibly make things any worse for Palestinians.

Reporting earnings on Tuesday, look for news from A. Schulman (Nasdaq: SHLM), International Speedway (Nasdaq: ISCA), Kayne Anderson Energy Development (NYSE: KED), Ruby Tuesday (NYSE: RT) and The Greenbrier Companies (NYSE: GBX).

Wednesday

Wednesday brings another relatively quiet day, with Consumer Credit on tap along with the regular weekly report schedule. The G-8 summit kicks off in L'Aquila, Italy, with climate change and economic distress/cooperation at the forefront of discussion.

Look for the Mortgage Bankers Association Mortgage Activity Report bright and early. Last week's data showed sharp decline in mortgage activity despite favorable rate change. Contracted 30-year fixed rate mortgages adjusted to 5.34%, from 5.44% in the week ended June 26. Yet, the Market Composite Index dropped 18.9%, after seasonal adjustment. The Refinance Index sank 30.0%, and recently resilient Purchase Activity fell 4.5%. We speculated here that the weather had much to do with the downfall in activity. Levels of rainfall had been notable through the measured period.

At 10:30, look for the EIA's Petroleum Status Report. Last week, commercial crude oil inventories fell by 3.7 million barrels, and stocks of oil stood above average. Gasoline stocks increased, however, by 2.3 million barrels, keeping pressure on retail gasoline pricing. The summer driving season is active, and gasoline stocks can be expected to continue seeing draws in the near-term.

At 3:00 PM, the Consumer Credit Report is widely expected to post a third consecutive monthly contraction. Economists surveyed by Bloomberg see a $7.5 billion change for May, versus the $15.7 billion shrinkage in April. Credit card defaults, consumer retrenching and lending standard reassessment have all impacted the degree of available and demanded credit. This is seen as a long-lasting change in a return to a more normal environment that matches better against historical standards. Free money, assisted by the securitization of pools of loans, has been adequately exposed for its risks to economic development.

FDIC Chair Sheila Bair is scheduled to address the organization's conference today. The NYSE Euronext (NYSE: NYX) holds a virtual investment forum on the topic of banking and banks. Earnings season starts with the report of Alcoa (NYSE: AA). Also look for news from Family Dollar (NYSE: FDO), Nevado Gold & Casinos (AMEX: UWN), Nu Horizons Electronic (Nasdaq: NUHC), Pepsi Bottling Group (NYSE: PBG), Rodman & Renshaw (Nasdaq: RODM) and WD-40 (Nasdaq: WDFC).

Thursday

Weekly Initial Jobless Claims, due at 8:30, should show 610K new benefits filers, based on economists surveyed by Bloomberg. That would compare against the prior week's 614K and the four-week moving average count of 615,250. With this degree of job loss, double-digit unemployment is inevitable and soon in coming. Last week's Labor Department Report showed unemployment at 9.5% (highest in a quarter century), but the effective non-employed count, concerns more at 16.5%. Recall, this measure includes the folks who have given up on getting a job and those working part-time, but who would prefer a real job.

At 10:00 a.m., look for the Wholesale Trade data. April's count showed Wholesale Inventories fell 1.4%, against a shorter 0.4% drop in sales. Durable goods pressured the count, and understandably so, given the trouble in autos and credit. Auto inventories fell 4.5% through the month.

Must-see TV returns, as the House Financial Services Committee continues its interrogation of government messengers Bernanke and Paulson. This time, the committee will hear testimony on the Federal Reserve's role in financial overhaul. Separately, Federal Reserve Governor Elizabeth Duke is scheduled to speak at the FDIC confab.

The Bank of England will be on record with its latest decision on rates. The ECB produces its Monthly Bulletin, and our Fed produces its Balance Sheet statistics at 4:30.

Natural Gas continued to find pressure, as the weekly inventory data showed a build of 70 Bcf. This left gas in storage still well above historical average marks. This week's take comes at the usual 10:30 a.m.

Individual retailers report on monthly Chain Store Sales mostly on Thursday. Thomson Reuters reports expectations for a 4.5% aggregate June decline. We suspect the weather will be widely cited as catalyst for special weakness in June. The corporate earnings slate includes news from 3Com (Nasdaq: COMS), Chevron (NYSE: CVX), Adams Express (NYSE: ADX), CalAmp (Nasdaq: CAMP), Chattem (Nasdaq: CHTT), FCStone Group (Nasdaq: FCSX), Franklin Covey (NYSE: FC), Helen of Troy (Nasdaq: HELE), Lawson Software (Nasdaq: LWSN), Rocky Mountain Chocolate Factory (Nasdaq: RMCF), Shaw Group (NYSE: SGR), Tortoise Capital Resources (NYSE: TTO) and Value Line (Nasdaq: VALU).

Friday

Treasury Secretary Timothy Geithner testifies before the House Financial Services Committee at 10:00 a.m. The focus of the hearing is on derivatives and the President's financial reform plans. Separately, the government's deadline for GM to get bankruptcy approval for its asset sales looms; at risk, the loss of government loans. Sure, like that's going to happen...

Look for the International Trade Report at 8:30. The trade gap is expected to post expansion for May, after a significant rise in crude oil pricing. Bloomberg's tally of economists pegs consensus at a $-28.8 billion deficit though, which would represent a positive change from April's $-29.2 billion. Barron's seems to have a better read here, with its check of consensus at -$30.0 billion.

Also in the pre-market, look for Import and Export Prices. May's data showed a 0.6% increase in export prices and a 1.3% monthly rise in imports. Inflation is not a concern in the near-term though, given the 6.5% and 17.6% year-over-year price drops, respectively.

The Reuters/University of Michigan Consumer Sentiment data is due up at 9:55 a.m. Consensus sees further improvement to 71.5, from 70.8 in June. May produced 1.9 points of positive change, but the impact of "green shoots," and perhaps smoke, have stalled as investors weigh the potential drag of significant unemployment.

The International Energy Agency (IEA) produces its Monthly Oil Report Friday. The earnings slate includes Audiovoxx (Nasdaq: VOXX), Infosys Technologies (Nasdaq: INFY), PriceSmart (Nasdaq: PSMT), The Progressive Corp. (NYSE: PGR) and a few pink sheets.


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Morning Business: Obama's Take Moscow

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Morning Business

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Welcome back from the long weekend. You'll find very little economic data awaiting you and the earnings slate is nearly empty ahead of this week's kick off to Q2 earnings season.

Obamas Take Moscow

A meeting of President Obama and Russian President Medvedev should result in some form of constructive nuclear disarmament announcement. Both parties have publicly declared expectations for such an event. We wonder if President Obama will do some soul searching, that is, seeing into his counterpart's soul vis-a-vis his predecessor. Michelle Obama hopes to break down cautious Russian sentiment and the barriers of the Putanic Age.

ISM Non-Manufacturing Report

The Institute for Supply Management will publish its Non-Manufacturing Index at 10:00 a.m. on Monday. ISM reported its Manufacturing Index last week, and it showed improvement. The service sector is significantly more important to the US economy, so this report is likewise a more important measure. The consensus of economists forecasts a modest improvement in this Non-Manufacturing Report, looking for a reading of 46.7, versus May's 44.0. May's New Orders and Backlogs readings deteriorated, however, so some economists look for a modest decline in this broader measure in June as a result.

Treasury Activity

The first set of Treasury auctions that pack the busiest week of such money raising kick off on Monday. This will very likely raise the specter of inflation on a news light trading day post the long weekend. Look for EPS news from Vimicro International (Nasdaq: VIMC).


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Jobs Data: Employment Situation Report & Weekly Jobless Claims

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Jobs Data

Employment Situation Report

Unemployment edged higher to 9.5%, compared against the economists' consensus forecast for 9.6% and up modestly from the 9.4% reported in May. However, nonfarm payrolls shed 467K jobs on net in June, versus a much lower expectation for 350K, based economists surveyed by Bloomberg. The Labor Department reported that job losses were widespread across major industry sectors, including large declines in manufacturing, professional and business services, and construction. Some 136K jobs were lost in manufacturing alone in June, likely driven by the auto sector.

Double digit unemployment seems a formality at this point, as new benefits filers continue to pile on to the massive number of already jobless. At this point, 7.2 million more Americans are unemployed than was the case at the start of the recession in December of 2007. However, there have been some signs of hope here, with the green shoot of a continuing claim filers improvement a few weeks back. Another positive note came in today's report, as the "underemployed," or those working part-time jobs who would prefer full-time work, was little changed in June.

Long term unemployed folks, or those looking for work for 27 months or more, increased by 433K, to 4.4 million. This illustrates how much more competitive the job market is today versus recent times. Three out of ten of the unemployed have been that way for 27 months or more, weighing on spending and distressing a significant portion of our population.

Weekly Jobless Claims

Weekly Initial Jobless Claims were reported at 614K this week, versus expectation for 619K. That compared against last week's shedding of 627K jobs.

Factory Orders

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.

Natural Gas Report

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.

EPS Reports

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).

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Employment Reports: ADP, Challenger & Monster

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Nine economic reports are due to reach the wire today, so buckle your seat belt. A trio of employment reports set the stage for tomorrow's Labor Department tally of unemployment. Today, we received ADP's Private Employment Report, Challenger Gray & Christmas' Job-Cuts data and Monster Worldwide's Employment Index.

Employment Reports

ADP Private Employment Report

ADP's Private Employment Report produced a mildly positive result that seems unlikely to move the market, in our opinion. ADP reported nonfarm private payroll contraction of 473K in June, which would have marked a significant improvement from May. However, May was adjusted to a better place, with initially reported contraction of 532K jobs, cleaned up to 485K. We wonder if ADP did not seek ways to bring its May figure more in line with the Labor Department's May result, which was substantially lower. Also, we suspect the Labor Department might adjust its figure upward, making this change even more suspect. April's private market job cuts amounted to 491K, so looked at in another manner, not much has changed on the private market end of labor.

Challenger, Gray & Christmas Job-Cuts Report

Challenger, Gray & Christmas published its Job-Cut Report detailing announced corporate layoffs at 7:30 AM. Challenger offers a more clear cut view of an improving situation, as its June tally continued a trend of lower announced corporate layoffs. June's sum amounted to 74,393, which compared well with May's result of 111,182 job cuts (April 132,590). So where are the auto industry cuts then... perhaps more of those follow GM's emergence from bankruptcy; suppliers may have a longer lifespan than one month before more attrition comes naturally due; dealership jobs may not have amounted to a significant number when diluted by the general population. Your two-cents welcomed here, so comment below...

Mortgage Activity

The Mortgage Bankers Association produced 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. For the week ended June 26, it looks like a rain out! Even as contracted 30-year fixed rate mortgages fell on average, to 5.34%, from 5.44%, the MBA's Market Composite Index decreased 18.9% on a seasonally adjustment basis. The Refinance Index dropped to its lowest mark since November 2008, down 30% from the prior week. Purchase Applications also fell 4.5%, despite recent stubborn rise through rate increase. We speculate this change had much to do with weather, though we have not compared rainfall levels scientifically.

Monster Employment Index

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's data acted as we expected, moving slightly lower from its prior reading. Monster reported its MEI backtracked slightly in June to 117, from 118 in May (120 in April).

ISM Manufacturing Index

ISM will publish its Manufacturing Index for June after the opening bell. 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

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.

Pending Home Sales

This leading indicator for the housing industry improved 6.7% in April, to 90.3, and further gains are expected for May when reported at 10:00 a.m. 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.

Motor Vehicle Sales

Intermittently during the day today, 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.

Petroleum Status

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?

Corporate News Drivers

General Mills (NYSE: GIS) posted better than expected results this morning, earning $0.86 a share after nonrecurring items, compared against analysts' consensus for $0.80, according to Reuters. The food maker noted benefit from lower commodity costs, and raised its full-year forecast for the current period.

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).

Markets Overseas

Asia:

1. MSCI Asia APEX 50: +0.76%

2. Japan NIKKEI 225: -0.19%

3. Hong Kong Hang Seng: -0.81%

4. China CSI 300: +2.26%

5. India BSE SENSEX 30: +1.05%

Europe:


1. DJ Euro STOXX 50: +1.11%

2. UK FTSE 100: +1.27%

3. France CAC 40: +1.45%

4. Germany DAX: +1.26%


(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.