Memorial Day Stock Market Closed

Wall Street Greek offers our condolences to the families of soldiers who have died in the service of the United States of America, and we thank all currently active and retired servicemen for their valor, courage and love of country. God bless the USA! The stock market is closed on Memorial Day. Now go barbecue or something!

"The Greek" earned clients a 23% average annual return over five years as a stock analyst on Wall Street. While writing for Wall Street Greek and others, he presciently predicted the financial crisis and housing and banking failures of the Great Recession. Visit the front pages of Wall Street Greek now to see our current coverage of business news, global financial markets, real estate, shipping, fine art, technical analysis and global affairs.

(Tickers: NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, Nasdaq: NDAQ)

Memorial Day - Stock Market is Closed

Memorial Day is a United States federal holiday observed on the last Monday of May (May 31 in 2010). Once known as Decoration Day, the holiday commemorates U.S. soldiers who died while in military service. While it was first enacted to honor Union soldiers of the American Civil War (the reason why it is celebrated near the day of reunification after the Civil War), it has since been expanded (after World War I) to make it more relevant to modern living in the US. Thus, we now honor Americans who died in any service on Memorial Day.

The day also informally marks the start of the summer season, while summer does not officially begin until the summer solstice on June 21st. On that day, the northern hemisphere reaches its closest point in proximity to the sun; and the Tropic of Cancer is closer than the equator is to the sun. As the earth circles the sun, and because of its tilt, the northern and southern hemispheres exchange seasons throughout the year. On December 21st, the shortest day of the year in the northern hemisphere, the north begins winter, while the southern hemisphere starts its summer season (Tropic of Capricorn is closes point to sun). June 21st also marks the longest day of the year in the North.



The informal start to the summer season is marked on Memorial Day, as beach season officially opens along US coasts (at least along the East Coast). It's the beginning of summer driving season as well, and the start to greater draws on gasoline inventory levels. You can monitor gasoline activity, by tuning in to Wall Street Greek on Wednesday's, as we report on and analyze EIA energy data.

Memorial Day is an important holiday for patriotic Americans and everyone else as well, and so the stock market is closed to trading. The summer season also usually sees lulls in trading volume, as vacation season swings into full gear. Your author recalls how much easier it is to get to Wall Street during summer, with schools closed, many on vacation and roads much clearer.

We hope you are enjoying your holiday and wish you a swell summer!



Relevant Tickers: NYSE: GLD, NYSE: XLE, NYSE: XLF, NYSE: BJV, NYSE: SZI, NYSE: BPD, NYSE: IEL, NYSE: PBN, NYSE: CGW, NYSE: LVL, NYSE: FRI, NYSE: PBP, NYSE: RSU, NYSE: RMM, NYSE: REA, NYSE: RFL, NYSE: RHM, NYSE: RTG, NYSE: RSW, NYSE: RMS, NYSE: REC, Nasdaq: PDOWX, Nasdaq: XDPOX, Nasdaq: XDPDX, Nasdaq: NDUAX, Nasdaq: NDUBX, Nasdaq: IDJAX, Nasdaq: NJCRX, Nasdaq: UDPIX, Nasdaq: UDPSX, Nasdaq: UWPIX, Nasdaq: RYLDX, Nasdaq: RYIDX, Nasdaq: RYCWX, Nasdaq: ONEQ, Nasdaq: QCLN, Nasdaq: QQEW, Nasdaq: QQXT, Nasdaq: QTEC, Nasdaq: NASDX, Nasdaq: NDXKX, Nasdaq: POTCX, Nasdaq: DXQSX, Nasdaq: DXQLX, Nasdaq: FNCMX, Nasdaq: INQAX, Nasdaq: MOTAX, Nasdaq: XQQQX, NYSE: NYX, Nasdaq: NDAQ, NYSE: ICE, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Wall Street Week in Wild Review

It was a wild ride on Wall Street last week as volatility dominated the day

"The Greek" earned clients a 23% average annual return over five years as a stock analyst on Wall Street. While writing for Wall Street Greek and others, he presciently predicted the financial crisis and housing and banking failures of the Great Recession. Visit the front pages of Wall Street Greek now to see our current coverage of business news, global financial markets, real estate, shipping, fine art, technical analysis and global affairs.

(Tickers: NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: ICE, NYSE: NYX, Nasdaq: NDAQ)

Wall Street Week in Wild Review

A slew of foreign factors along with regular economic reports played havoc with Wall Street again last week. While the Dow Jones Industrials Index only dropped fractionally, hidden within the weekly chart is a virtual roller coaster ride. The daily differences between high and low price marks swung wildly all week long, with Monday's spread measuring 207 points; Tuesday's gap marking 305 points; Wednesday measuring 273 points; Thursday swaying 307 points; and Friday settling after a 215 point swing. Believe it or not though, the week was relatively calm when compared to its near predecessors. The S&P Volatility Index, known affectionately to traders as the "VIX", actually dropped 20% through the week. Still, the situation is like saying this latest hurricane did not kill as many people as the last. It has been an especially rough hurricane season, by the way, with stocks closing out their worst month in over a year as the Dow dropped 7.9%. Proponents of the old adage, "Sell in May and walk away," could likewise walk with heads held high, as this year's version of May looks to be the worst since 1962.

Driving the swings in shares were some old familiar faces and some new ones to keep things fresh. Europe is now a regular pain in the rear, and last week saw Spain's government debt downgraded for the second time in a month. The poor Spanish, though, only sought to give their debt judges and European masters what they demanded. In a cruel twist of fate, Fitch downgraded the Spaniards' sovereign debt rating because of their implementation of austerity measures, noting in their critical report that its latest prudent budget management would slow Spain's economy. Talk about a lose lose situation! So what do you think Greece's extreme austerity measures threaten to lead to in the motherland? Looks to me like the worst economic situation since World War II.

Regarding Spain, Fitch also noted the nation's central bank bailout of one of its regional banks. This leads us to one of the few positive factors found in the spastic week. European Union Financial Services Commissioner Michel Barnier said last week that the EU should levy a tax on banks to secure an emergency pool of funds for the future orderly unwinding of important financial institutions. This reassuring announcement acted as a counter against rising rumors and collecting concern about the current financial well-being of EU area banks.

However, another rumor surfaced and weighed on stocks last week. It was an old concern that burdened US shares once before. The Chinese were rumored to be cutting back on European debt interests on fear that the EU credit crisis might become endemic to the region. The Chinese offered appropriate lip service to counter the rumors and protect their own interests, however, we are not so sure they are putting their money where their mouth is. Rather, we expect the Chinese are hoarding commodities, including precious metals, as global currencies seem to face an impending threat.

The week's economic data was not all that supportive either last week, as first quarter GDP growth was revised lower to +3.0%, from the previously reported 3.2% rate. What was more worrisome was that economists were looking for an increase of 3.5%. Personal spending also ceased, but we found reason to blame that on the fall of Easter, as April's data matched against stellar March growth. The week ahead should perpetuate rough trading seas, as it brings market-moving catalysts like the Employment Situation Report. Thus, you might want to check in with the Wall Street Greek blog in between martinis.



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Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

I Told You So

I hate to say I told you so, but I told you so! Yesterday we said the market was up on soft catalyst, that being the Chinese lip service regarding its confidence in European debt. This angered some of our readers with close ties to China. We said specifically, "you are banking on false hopes" if you were buying on that news alone. Given that the economic data was weak, we thought stocks would retrench Friday heading into a long weekend with the trigger happy North Koreans getting antsy.

"The Greek" earned clients a 23% average annual return over five years as a stock analyst on Wall Street. While writing for Wall Street Greek and others, he presciently predicted the financial crisis and housing and banking failures of the Great Recession. Visit the front pages of Wall Street Greek now to see our current coverage of business news, global financial markets, real estate, shipping, fine art, technical analysis and global affairs.

(Tickers: NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, Nasdaq: NDAQ)

I Told You So

Acting as an obstacle to your smooth transitioning into the long weekend, Friday produced four economic reports. Between Personal Income and Outlays, Chicago PMI, Consumer Sentiment and the Farm Prices reports, the market had its hands full. The Dow gave back more than a percentage point, as investors entered the long weekend purposely light.

Personal Income & Outlays

Personal Outlays inched up fractionally (less than 0.1%) in April, falling short of economists' consensus expectations for a 0.2% increase. By this time, we've adequately pounded home the fact that the early April Easter aided March consumer spending while pulling from April. March outlays jumped 0.6% after all, clearly illustrating this effect; though March's big gain followed a rise of 0.5% in February. Moving forward, May's figures should prove revealing, as we move away from the Easter skew. We think the skew is especially clear in spending activity for nondurable goods, which decreased 0.1% in April.

Spending on durable goods was more likely impacted by very specific factors affecting motor vehicles. Durable goods orders still rose 0.1% in April, versus a 3.6% gain in March. In exposing the March driver, we call your attention to the effect the Toyota (NYSE: TM) scandal had on the industry. General Motors and Ford (NYSE: F) took swift action to take market share from Toyota by offering special discounts for drivers who switched from Toyota to the US brands. Honda Motors (NYSE: HMC) took its own steps and Toyota countered. All this price cutting led to a boost in overall sales.

The Core PCE Price index moved higher by 0.1%, versus expectations for the same. Personal Income rose 0.4%, less than economists' expectations for a 0.5% increase. Personal income also rose 0.4 (revised from 0.3%) in March. Goods-producing industries' payrolls increased $5.8 billion, compared with an increase of $4.1 billion in March; manufacturing payrolls increased $4.5 billion, compared with an increase of $1.6 billion. Services-producing industries' payrolls increased $18.6 billion, compared with an increase of $9.6 billion. Government wage and salary disbursements increased $1.9 billion, compared with an increase of $2.9 billion.

Chicago Purchasing Managers Index

After gaining in April to its highest mark since April 2005, the Chicago PMI backtracked a bit in May. The index fell to 59.7, from April's 63.8, which was a full five points higher than March. The consensus pegged May's measure at a higher 62.0, and the employment measure sank to below break-even at 49.2 (50 marks expansionary activity). New Orders remained strong at 62.7, and Production also proved healthy at 61.0. Finally Inventory showed serious signs of restocking activity, as the component measure moved higher to 56.4. Prices Paid remained concerning, as the measure for it fell, but to a still hot 64.0 figure.

Consumer Sentiment

The Reuters/University of Michigan Consumer Sentiment Index showed consumer hopes rose in May, but inflation expectations increased even more. The final reading on the May Reuters/University of Michigan Consumer Sentiment Index came in at 73.6, up from April's 72.2. Still, the general consumer feel has not changed much this year, with February and March both ending at 73.6. It seems consumers are unsure more than anything else.

The Current Situation measure stuck at 81.0 in May, equalling April's feeling among consumers. However, Expectations for the future improved, as that index moved to 68.8, from 66.5. Meanwhile, consumers' inflation expectations increased dramatically, with shoppers pegging a 3.2% rise for the next year, versus April's estimate of 2.9%.

Farm Prices & Other

The Department of Energy review of the Deepwater Horizon oil spill led to an emotional hearing, bringing one LA congressman to tears. President Obama ventured to Louisiana to test the waters, and the issue is quickly looking like yet another major failure of modern America in risk management and problem mitigation. Gee, maybe you should have studied in class instead of drinking all week long and cheating your way through college! We have a serious education issue in this country, and a mania with law manipulation and media interpretation. Fix the damn leak already! Focus! Yes, I'm a bit angry.

The Department of Agriculture's Farm Prices data were released as well. Ahead of the Memorial Day holiday, the bond market closed at 2 PM EST.

Corporate News Drivers

Canadian Natural Resources (NYSE: CNQ) split 2:1 at the market close. EPS reports include Golar LNG Ltd. (Nasdaq: GLNG), Industrie Natuzzi (NYSE: NTZ) and Quality Systems (Nasdaq: QSII). Today's most actives so far included Tower Semi (Nasdaq: TSEMG), CKX, Inc. (Nasdaq: CKXE), Broadway Fin'l (Nasdaq: BYFC), Roberts Realty (AMEX: RPI), Waccamaw Bankshares (Nasdaq: WBNK), Jackson Hewitt Tax Service (NYSE: JTX), First Community Bank (Nasdaq: FCFL), Synthetic Fixed Inc. Securities (NYSE: GJW), ChinaNet Online (Nasdaq: CNET), Towerstream Corp. (Nasdaq: TWER), Arabian American Development (Nasdaq: ARSD), ADVENTRX Pharma (AMEX: ANX), WSB Holdings (Nasdaq: WSB), Netlist (Nasdaq: NLST), Globalstar (Nasdaq: GSAT), Origin Agritech (Nasdaq: SEED), Freddie Mac PRL (NYSE: FRE-PL), Sypris Solutions (Nasdaq: SYPR), GeoGlobal Resources (AMEX: GGR), MGP Ingredients (Nasdaq: MGPI), Seven Arts Pictures (Nasdaq: SAPX), Xinyuan Real Estate (NYSE: XIN), DayStar Technologies (Nasdaq: DSTID), NeuroMetrix (Nasdaq: NURO), Ambac Fin'l Group (NYSE: ABK), DJSP Enterprises (Nasdaq: DJSPW, Nasdaq: DJSP), Blue Coat Systems (Nasdaq: BCSI), Good Times Restaurants (Nasdaq: GTIM), The Allied Defense Group (AMEX: ADG), Ameritrans Capital (Nasdaq: AMTCP), Universal Holding (NYSE: UVV), Beasley Broadcast Group (Nasdaq: BBGI), CFS Bancorp (Nasdaq: CITZ), NYSE: FRE, SureWest Communications (Nasdaq: SURW), ATP Oil & Gas (Nasdaq: ATPG), Oceaneering Int'l (NYSE: OII), Oak Ridge Fin'l Services (Nasdaq: BKOR), Tetra Tech (NYSE: TTI), InfoLogix (Nasdaq: IFLG), Bioanalytical Systems (Nasdaq: BASI), NACCO Industries (NYSE: NC), Bank of Virginia (Nasdaq: BOVA), GenMark Diagnostics (Nasdaq: GNMK), Bridgeline Digital (Nasdaq: BLIN), Tennessee Commerce Bancorp (Nasdaq: TNCC), DRIL-QUIP (NYSE: DRQ) and Riverbed Technology (Nasdaq: RVBD).

Oh, and I told you so!



Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Stocks Rally on Chinese Lip Service

What would you expect China to say about its European debt holdings? Would you anticipate the major Asian lender might put its borrowers in worse position, which would raise the chances of default, by admitting to rumors that it was considering reducing its European debt interests? Well, it was supposedly a Chinese statement of confidence in European debt that lifted stocks Thursday, and so you are banking on false hopes mister market. That's because what China say, China no always do.

"The Greek" earned clients a 23% average annual return over five years as a stock analyst on Wall Street. While writing for Wall Street Greek and others, he presciently predicted the financial crisis and housing and banking failures of the Great Recession. Visit the front pages of Wall Street Greek now to see our current coverage of business news, global financial markets, real estate, shipping, fine art, technical analysis and global affairs.

(Tickers: NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ)

Stocks Rally on Chinese Lip Service

Stocks rallied globally Thursday and into Friday morning in Asia, reportedly on Chinese lip service regarding the country's confidence in its European borrowers. Stocks moved higher in Europe, before US stocks solidified the global deal. Major markets in Europe rallied more than 3%, and the Dow Jones Industrials gained 2.85%. However, China's actions may not perfectly match its lip service. I instead point to Europe's effort to protect its financial system from "too big to fail problems" as the catalyst for the market gains of the past two days. We wrote about this subject in our article "EU Fund for Financial Institutions Helpful." One thing is certain, it was not likely economic data that lifted stocks, since Thursday's reports were soft in our view.

Weekly Jobless Claims

Weekly Jobless Claims declined slightly in the period ended May 22, however, while at 460K, were still unbearable. To make matters worse, the prior week's count was revised 4K higher, to 474K. We reiterate that things are just not getting better for the labor market and it's hard to ignore at this point. This week's measure was 10K higher than economists had forecast (Bloomberg). The four-week moving average moved 2,250 higher, to 456,500. The insured unemployment rate stuck at 3.6%. I see not an ounce of good news in the report, and so it did not likely contribute to Thursday's recovery.

Some Data of Interest

The highest insured unemployment rates in the week ending May 8 were in Puerto Rico (6.2 percent), Alaska (5.9), Oregon (5.4), Nevada (4.9), California (4.8), Pennsylvania (4.7), Wisconsin (4.5), North Carolina (4.4), Montana (4.3), and Connecticut (4.2).

The largest increases in initial claims for the week ending May 15 were in Tennessee (+3,041), Missouri (+2,369), Mississippi (+1,697), Illinois (+1,154), and Arkansas (+851), while the largest decreases were in California (-2,161), Michigan (-2,133), Washington (-1,968), Florida (-1,480), and Oregon (-1,200).

Q1 GDP Revision

When last reported on April 30, first quarter GDP came in at +3.2%, down from Q4's growth rate of 5.6%. In this "preliminary" report, following the "advance" report, GDP was revised lower to +3.0%, versus economists' expectations for an upward revision to 3.5%. Thus, GDP also can not take credit for Thursday's stock surge.

The deceleration in real GDP in the first quarter primarily reflected decelerations in private inventory investment and in exports, a downturn in residential fixed investment, a larger decrease in state and local government spending, and a deceleration in nonresidential fixed investment that were partly offset by an acceleration in PCE and a deceleration in imports.

The Price Index rose 1.1% in the first quarter, excluding food and energy, versus the 0.9% increase expected for Q1 and seen in Q4. Corporate Profits rose 42.7% on a year-to-year basis, versus the 51.8% increase in Q4.

Natural Gas Inventory

For the week ended May 21, the EIA reported natural gas stocks increased by 104 Bcf. Inventory stood 318 Bcf above the five-year average for this time of year, placing it also above the upper limit of the average range.

International & DC News Drivers

Tim Geithner consulted with the Europeans on the debt crisis. Meanwhile, back home, a House Oversight panel hammered Johnson & Johnson's (NYSE: JNJ) on its childrens' Tylenol recall. The issue has been referred to the FDA's crime division.

Corporate News Drivers

Golden Network's High-Frequency Trading Forum took place in New York. Investor meetings took place at Newmont Mining (NYSE: NEM) and Heinz (NYSE: HNZ). Edward's Lifesciences (NYSE: EW) split 2 for 1. Corporate EPS releases arrived from Costco (Nasdaq: COST), Alpha Bank (ATHENS: ALPHA.AT), ATE Bank (ATHENS: ATE.AT), Big Lots (NYSE: BIG), Bio-Reference Labs (Nasdaq: BRLI), Blue Coat Systems (Nasdaq: BCSI), Borders Group (NYSE: BGP), Canadian Imperial Bank of Commerce (NYSE: CM), Columbus McKinnon (Nasdaq: CMCO), Concord Medical Services (NYSE: CCM), Conn's (Nasdaq: CONN), dELiA's Inc. (Nasdaq: DLIA), Diamond Foods (Nasdaq: DMND), Ditech Networks (Nasdaq: DITC), Esterline Tech (NYSE: ESL), FreeSeas (Nasdaq: FREE), Genesco (NYSE: GCO), GigaMedia (Nasdaq: GIGM), Guess (NYSE: GES), H.H. Gregg Appliances (NYSE: HGG), J. Crew (NYSE: JCG), Jackson Hewitt Tax Service (NYSE: JTX), Jade Art (Nasdaq: JADA), Magma Design Automation (Nasdaq: LAVA), Marfin Popular Bank (Frankfurt: JXG.F), Monro Muffler (Nasdaq: MNRO), Movado (NYSE: MOV), Navios Maritime (NYSE: NM), Ninetowns Internet Tech (Nasdaq: NINE), Novell (Nasdaq: NOVL), Omnivision Technologies (Nasdaq: OVTI), QAD (Nasdaq: QADI), Quanex Building Products (NYSE: NX), REX Stores (NYSE: RSC), Royal Bank of Canada (NYSE: RY), SeaChange Int'l (Nasdaq: SEAC), Signet Jewelers (NYSE: SIG), Tate & Lyle (OTC: TATYY), Toronto Dominion Bank (NYSE: TD), Terremark Worldwide (Nasdaq: TMRK), Uroplasty (AMEX: UPI), Versant (Nasdaq: VSNT), XETA Tech (Nasdaq: XETA) and Zarlink Semi (OTC: ZARLF.PK).



Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Will We Be Keynesians?

The debate for the times is over the optimal level of government intervention in economies. This concerns the choice between a monetarist approach, that accepts government intervention only for money supply controls, and the Keynesian one, that strongly favours government intervention in booms and recessions, and regulation throughout the ordinary business cycle.

Will We Be Keynesians?

The latest financial crisis has provoked an outburst of writings, articles and books in the press, in the academia and in other areas all over the world. All of them have predicted some effects with different views. Some of the most powerful economies are coming out of the recession and are giving more and more positive signs of growth. Thus, it is time now to understand what the effects have been and what they will be on both a pragmatic and a theoretical level to manage the economies in the future.

U.S. Treasury Secretary Timothy Geithner and economist Paul Krugman were among the first to give good explanations of the latest financial crisis. In their opinion, the credit crisis that originated the financial crisis was caused by the implosion of the shadow banking system. The shadow banking system consists of intermediaries between lenders and borrowers, which are non-bank financial institutions that lend money in exchange for fees or by exploiting differences in interest rates paid to them by the borrower and paid by them to the lenders. The financial institutions of this system do not accept deposits, so they are not subject to the same regulations of the traditional commercial banking system. For instance, they did not have to keep as much money in the proverbial vault relative to what they borrowed and lent, so they could have a higher financial leverage. They normally borrowed from lenders in liquid (ie. easier to sell) markets, meaning that they would have to frequently repay and borrow again from these lenders. However, they used the funds to lend to corporations less liquid assets (such as derivatives and other financial instruments), such as mortgage-backed securities sometimes called "toxic assets". These assets declined significantly in value as housing prices declined.

In the last decade, the importance of the shadow banking system has significantly increased with flourishing pension funds, hedge funds, investment banks and other non-bank financial institutions. In early 2007, lending through this system slightly exceeded lending through traditional commercial banks. At the same time, home prices declined. At that point the shadow banking system began to not obtain investor funds in exchange for most types of mortgage-backed securities or asset-backed commercial paper, thus it could not provide funds to mortgage businesses. The rest of the story is known to most of us. Because of the global connections of today's financial systems, the effects of this crisis hit most of the world's countries after having provoked a deep financial crisis in the U.S.

Different contrasting measures followed: government interventions with bailouts of financial institutions, stimulus packages in different forms and reduction in pay of executives of certain banks that have been bailed out; the U.S. Federal Reserve and other central banks all over the world intervened to inject money supplies in order to avoid the risk of a deflationary spiral in which higher unemployment rates cause lower levels of consumption.

Some more long-term proposals include financial cushions or capital requirements to all financial institutions, or an expansion of the restrictive regulation applied to the traditional commercial banking system - also to the shadow banking institutions. Furthermore, more avant-gardiste scenarios propose a new post-capitalist system to replace current capitalism in our economic world: this system includes a number of proposals such as socialist economics, cooperative economics (based on the worker cooperative), participatory economics (based on participatory decision making as an economic mechanism to guide the allocation of resources and consumption), technocracy (where decision makers are selected through their knowledge and not their political capital), economic democracy (based on a market economy with a democratic control of firms by their workers) and others.

However, the most realistic debate for the time being is over the optimal level of government intervention in economies. This concerns the choice between a monetarist approach, that accepts government intervention only for money supply controls, and the Keynesian one, that strongly favours government intervention in booms and recessions, and regulation throughout the ordinary business cycle.

In history, economic policy-makers have shown a shift in their preference for one theory to the other. From the end of the Great Depression to the early 1970s, Keynes has inspired economic policies. However, the 1970s oil crisis and the recession that followed gave path to the advancement of monetarism: UK Prime Minister Margaret Thatcher brought monetarism into the British economy after her 1979 election, while Paul Volker at the head of the Federal Reserve brought monetarism into US economic policy. By the mid 1980s, though, both these countries and others abandoned monetarism to progressively switch to "pragmatism": by this theory, neither Keynesian nor monetarist theories were to be constantly followed, but only a reasoned choice at each time based on the specific circumstances. This was the main approach to economic policy in the 1990s and early 21st century.

The recent financial crisis led to a revival of the Keynesian approach in 2008 and 2009 across different countries in the world: on 17 February 2009 the U.S. President approved a plan to combat recession, inspired by the Keynesian theory; the UK Prime Minister and different economists at international financial institutions advocated a coordinated international intervention to face the recession; the Governor of the People's Bank of China proposed to adopt the IMF Special Drawing Rights as a centrally managed global reserve currency. Many books and papers published in 2009 backed the choice of economic policy-makers to move again towards Keynesianism, by comparing certain key indicators such as growth, inflation and unemployment between the Keynesian period (until 1973) and the monetarist and pragmatic period (from 1974 to 2008). Both globally and in various countries, these indicators showed that more advantageous results were obtained in the first period rather than in the second one.

Nevertheless, many people also criticized the revival of Keynesian ideas, often arguing that government interventions will be effective in the short run but will induce greater crises in the medium and long term. Despite the criticism, this time Keynesian revival was advanced by economic policy-makers and not by the academia (as was the case 70 years ago). Would this mean that this resurgence will last longer or forever? This is hard to tell since economic evidence may lead in a few years to a different opinion. What is certain is that government intervention was the only way to save the world from a second great depression, and that has been so far very effective.

In the next issue we will analyze a pragmatic case of a country that has recently faced serious problems in its system… Wait and see!



Relevant Tickers: NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, Nasdaq: NDAQ, NYSE: ICE, Nasdaq: SERAX, Nasdaq: SERBX, Nasdaq: SERCX, Nasdaq: SERNX, Nasdaq: FEUFX, Nasdaq: FEEEX, Nasdaq: FAEAX, Nasdaq: FBEAX, Nasdaq: FIEUX, Nasdaq: FECAX, Nasdaq: IERAX, Nasdaq: XRNEX, Nasdaq: PBEUX, Nasdaq: UEPIX, Nasdaq: UEPSX, Nasdaq: PEUGX, Nasdaq: RYAEX, NYSE: CEE, NYSE: RNE, NYSE: PEF, NYSE: GUR, NYSE: EPV, NYSE: VEA, NYSE: DFE, NYSE: DEB, NYSE: IEV, Nasdaq: ANEFX, Nasdaq: CNGAX, Nasdaq: HNEAX, NYSE: BAC, NYSE: GS, NYSE: AIG, NYSE: WFC, NYSE: MS, NYSE: C, NYSE: DB, NYSE: CS, NYSE: UBS, NYSE: FNM, NYSE: FRE, NYSE: MCG, NYSE: MCO, NYSE: TD, NYSE: PNC, NYSE: STD, AMEX: GLE, NYSE: BCS, NYSE: GLD, NYSE: XLE, NYSE: XLF, NYSE: BJV, NYSE: SZI, NYSE: BPD, NYSE: IEL, NYSE: PBN, NYSE: CGW, NYSE: LVL, NYSE: FRI, NYSE: PBP, NYSE: RSU, NYSE: RMM, NYSE: REA, NYSE: RFL, NYSE: RHM, NYSE: RTG, NYSE: RSW, NYSE: RMS, NYSE: REC, Nasdaq: PDOWX, Nasdaq: XDPOX, Nasdaq: XDPDX, Nasdaq: NDUAX, Nasdaq: NDUBX, Nasdaq: IDJAX, Nasdaq: NJCRX, Nasdaq: UDPIX, Nasdaq: UDPSX, Nasdaq: UWPIX, Nasdaq: RYLDX, Nasdaq: RYIDX, Nasdaq: RYCWX, Nasdaq: ONEQ, Nasdaq: QCLN, Nasdaq: QQEW, Nasdaq: QQXT, Nasdaq: QTEC, Nasdaq: NASDX, Nasdaq: NDXKX, Nasdaq: POTCX, Nasdaq: DXQSX, Nasdaq: DXQLX, Nasdaq: FNCMX, Nasdaq: INQAX, Nasdaq: MOTAX, Nasdaq: XQQQX)

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

EU Fund for Financial Institutions Helpful

A combination of a positive revision to the OECD's economic forecast and an EU effort to put together a fund for the orderly unwinding of troubled financial institutions helped stocks start the day okay on Wednesday.

"The Greek" earned clients a 23% average annual return over five years as a stock analyst on Wall Street. While writing for Wall Street Greek and others, he presciently predicted the financial crisis and housing and banking failures of the Great Recession. Visit the front pages of Wall Street Greek now to see our current coverage of business news, global financial markets, real estate, shipping, fine art, technical analysis and global affairs.

(Tickers: NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, Nasdaq: NDAQ, NYSE: ICE)

EU Fund for Financial Institutions Helpful

The EU has the right idea, as it directly mitigates global market concerns. The Europeans are putting together a fund to mitigate EU financial institutional troubles in an orderly manner. I view this concern about European financials as the most important catalyst of recent market decline. Thus, we were pleased to see the EU taking steps to thwart potential future problems at its banks. We are also looking towards the OECD report as a starter today, or rather the keeper, after yesterday's late day surge in US shares. Asia kept pace today, with the NIKKEI 225 moving up 0.66%. European markets enjoyed the news too, as the ESTX 50 moved up 1.68%. As we approached the close in New York though, the major indices all dropped into the red.

EU Fund for Financials

Basically, an EU official proposed levying a bank tax to help fund a pool to protect against failing financial institutions that may be too big to fail. The biggest banks are of course found in Germany, France and the usual elite places, so the majority of nations should push the new regulation through. At first glance, it seems even European banks are for it! Gee, I wonder why...

Remember how US banks suddenly liked government intervention when the walls started caving in? I fear EU bank support might offer signal into what is to come soon, the failure of major European institutions. We were talking run on banks last night, with my friend the trader from the West Side mentioned below, but our discussion was focused on Greece.

OECD Makes Nice

The Organization for Economic Co-operation and Development (OECD) published its economic outlook this morning. The OECD revised its 2010 GDP forecast for OECD countries to +2.7%, from +1.9%, and published new expectations for 2011 at +2.8%, up from 2.5%. This supported stocks that were looking for a ledge to push higher from today, after yesterday's effort at rise.

However, the OECD hedged a bit, and warned that overheating emerging markets and sovereign debt concerns presented risks to economic stability. The OECD, World Bank etc. all seem to repeat the obvious and adjust forecasts that are off to begin with. Their reports make for better catch-up reads than they work for aiding prescient investment bids.

Based on the OECD report, European markets are most fragile, with GDP projected to rise 1.2% this year and 1.8% in 2011. Be careful though, because when some of Europe's divergent markets fall back into recession, the OECD will adjust this lower and it will do users of the data little good. The group's projection for the US is for 3.2% growth in both 2010 and 2011. I think the odds of growth sticking at a steady pace in 2011 is low, and the forecast is the least risky that one might make. So be careful...

The OECD restated some of the things we've written here, though not recently; for instance, it looks to China and India and other emerging markets to help the broader global economy out of trouble. While that's the case, the vital and robust growth out of emerging Asia also raises the volatility of GDP globally. Boom and bust cycles thus become more likely and more dramatic...

New Home Sales

New Home Sales benefited from the deadline for first time homebuyers to lock in their relative tax deductions. Sales jumped 14.8% to an annual pace of 504K, well above the revised March pace of 439K (which was also up sharply from February). More importantly, sales well-exceeded the economists' consensus view for 425K. Even though it was well understood that the April pace of sales was powerfully moved by a rush to get the $8K+ tax benefit, the importance of the actual change itself still helped markets higher this morning.

I suspect the fact that new home inventory dropped to 5 months, the lowest level in decades, played a big role in supporting the stock market surge this morning (though it's not represented in the Dow's chart). However, remember that inventory is measured by the current sales pace, which may be inflated due to the tax incentive.

No surprise: the median price of a new home was 9.5% lower than last year's level. Sales activity was hottest in the Midwest (+31.6%) and West (+21.7%), with some growth seen in the South (+10.8%) and none in the Northeast (0.0%). That information differed with what we've seen in the existing home market in the Northeast (a lot less open land here).

Mortgage Activity

Dampening most of the enthusiasm from New Home Sales was the fact that while they were hot in April, they are not now. The Mortgage Bankers Association's Weekly Applications Survey for the period ending May 21 showed Purchase Activity dropped 3.3%, to the lowest level since April 1997. The prior week's data, covering the period ended May 14, produced a Purchase Index collapse of 27.1%. This is where you can see the impact of the concluding tax incentive. The MBA theorized that the incentive pulled activity from May into April. The big question is, what will happen after a few weeks pass, and the tax incentive plays no role whatsoever?

As long rates stuck low, refinance activity continued to prove robust. Contracted rates on 30-year and 15-year fixed rate mortgages were 4.8% (from 4.83%) and 4.25% (from 4.19%), respectively. That led the Refinance Index 17% higher. Refinance activity moved to 72.2% of all mortgage activity, up from 68.1% in the prior week. Of course, as we explained last week and again in our weekly copy, low rates are the result of increased demand for treasuries; that is thanks to European troubles and capital finding its way to "safety."

Durable Goods Orders

Durable Goods Orders are often volatile due to the high price tags of these items, and thus the data can easily stray far from consensus estimates. April's Durable Goods Orders were reported up 2.9%, well ahead of the economists' consensus forecast for 1.5%. This was off of a prior month revised level that marked no change, versus the initially reported decline of 1.3% in March (so the bar was raised).

The bad news was found in New Capital Goods Orders excluding aircraft and defense, which fell 2.4%. This is the best measure for the real longer term economic outlook, since these items have long production times and are ordered well in advance of final delivery. Without a positive feeling from businesses for the outlook, these orders will not occur. April's change marked a significant turn in trend, therefore, in my view.

Transportation skewed the numbers significantly in April, so that when excluding the segment, new orders actually fell by 1.0%. Transportation orders increased by 16.1%, because of the serious cost of aircraft and after a 13.7% drop in March. When excluding defense but including transportation, new orders jumped 3.4%. Shipments of goods were up 1.4%, and inventories increased 0.7%. Still, the general impression garnered from the Durables Report does not seem the reason for early market rise this morning. Rather, it likely contributed to its reconsideration.

Oil Inventory

For the week ending May 21, oil inventory increased by 2.4 million barrels while gasoline decreased by 0.2 million. Both oil and gasoline remained above the upper limit of the average range for this time of year. The summer driving season officially begins this weekend, and so gasoline demand should be on the rise. Recent dips in gasoline prices may thus offer some opportunity on the long end. Oil prices recovered ground today, rising 3.9% on the nearest WTI Crude contract to about $71.43.

I have to give credit to seasoned trader Steve Koufakis, who I accepted a few beers from last night as we watched the Phils get destroyed by the Mets (to which I rebut, there's always September...). Steve was all over the long oil trade, and was emphatic about the impact the Gulf spill would have on deep water offshore drilling over the next six months or more. He said, "we still need oil," as he made sure I understood how cheap it was now. BTW: Steve also thinks euro weakness will have a negative impact on New York City real estate. I agree that New York tourism has got to take a hit this summer, and so the commercial market seems to find no support through summer.

Treasury Secretary Timothy Geithner stopped over in London before his return from Asia. He will be doing his best to restore European market confidence. Meanwhile, the SEC proposed a new rule today to better light the audit trail of all securities. The SEC hopes this will make it easier to understand strange market happenings like the "flash crash" of May 6.

At 4:15 PM, Richmond Federal Reserve Bank President Jeffrey Lacker will speak on the topic of financial regulation at a conference at the Institute for International Economic Policy in Washington.

In corporate news, analysts meetings occurred or are underway for Newell Rubbermaid (NYSE: NWL), Arrow Electronics (NYSE: ARW), Thermo Fisher Scientific (NYSE: TMO), Northern Trust (Nasdaq: NTRS), and Yahoo! (Nasdaq: YHOO). The National Bank of Greece (NYSE: NBG) reports earnings results today. The Ira Sohn investment conference kicked off in New York, while Finra starts its annual conference. Trade lockup curbs expire on ArvinMeritor (NYSE: ARM), while Tessco (Nasdaq: TESS) splits 3:2.

The day's earnings schedule includes 99 Cents Only (NYSE: NDN), AFC Enterprises (Nasdaq: AFCE), American Eagle Outfitters (NYSE: AEO), Apollo Investment Corp. (Nasdaq: AINV), Avago Tech (Nasdaq: AVGO), Bank of Montreal (NYSE: BMO), BluePhoenix Solutions (Nasdaq: BPHX), Brown Shoe Co. (NYSE: BWS), Charm Communications (Nasdaq: CHRM), Codexis (Nasdaq: CDXS), Diana Shipping (NYSE: DSX), Dress Barn (Nasdaq: DBRN), Fred's (Nasdaq: FRED), Hoku Scientific (Nasdaq: HOKU), Jamba Juice (Nasdaq: JMBA), Jo-Ann Stores (NYSE: JAS), LTX-Credence (Nasdaq: LTXC), NetApp (Nasdaq: NTAP), Rosetta Genomics (Nasdaq: ROSG), Rue21 (Nasdaq: RUE), Semtech (Nasdaq: SMTC), Sigma Designs (Nasdaq: SIGM), Solarfun Power (Nasdaq: SOLF), Sycamore Networks (Nasdaq: SCMR), Synovis Life Tech (Nasdaq: SYNO), Telvent (Nasdaq: TLVT), Toll Brothers (NYSE: TOL), Trintech (Nasdaq: TTPA), VeriFone Holdings (NYSE: PAY), Vimpel-Communications (NYSE: VIP) and Zale Corp. (NYSE: ZLC).



Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

European Bank Worries Burn Stocks Globally

Today's Coffee

Worries about the condition of European banks contributed to increasing concerns about stocks globally.

"The Greek" earned clients a 23% average annual return over five years as a stock analyst on Wall Street. While writing for Wall Street Greek and others, he presciently predicted the financial crisis and housing and banking failures of the Great Recession. Visit the front pages of Wall Street Greek now to see our current coverage of business news, global financial markets, real estate, shipping, fine art, technical analysis and global affairs.

European Bank Worries Burn Stocks Globally

The data day started overseas today as expected, but it came from off the schedule of events. While we thought Fed Chairman Bernanke's address in Tokyo on central bank accountability might impact trading, it was instead concern about the European banking system that started stocks lower. Before it was over, Asia and Europe were down about 3% a piece. US stocks are 1% lower at the hour of publishing, and Greece is tied with North Korea 2 - 2 in a mixed effort for the Greek side into the second half.

ICSC Weekly Sales

Our knickers got all up in a bunch due to our excitement about this week's same-store sales data. That's because last week's report out of the International Council of Shopping Centers (ICSC) and Goldman Sachs (NYSE: GS), covering the week ended May 15, showed a sharp downturn in sales that was blamed on the weather. Week-to-week sales fell 2.5% in the period, and year-over-year growth moderated sharply to 2.9%. We were looking for verification this morning, to see whether the drop-off was on a non-recurring factor or whether there is real cause for concern.

Well as it turns out, there's real cause for concern! For the May 22 closing period, sales fell another 0.8% off last week's lower level. Furthermore, year-over-year growth slipped to 1.3%, an importantly slow pace. What gives? Could the market mayhem of the last couple weeks and European chaos be keeping shoppers home and hoarding cans of corn? This marks two weeks of horrible and deteriorating data on shopping activity.

Consumer Confidence

The Conference Board's latest Consumer Confidence Index conflicted with the ICSC data. The measure of consumer sentiment marked its third consecutive monthly gain, as the index reached 63.3, versus the 57.7 mark set in April. The reading also surpassed the economists' consensus forecast, which was looking for 59.0 (based on Bloomberg's survey).

Within the index, the Present Situation Component moved higher to 30.2 from 28.2. However, the big news was found in the Expectations Index, where high hopes took that measure to 85.3, up from 77.4. This is all kind of hard to believe, unless you remember how polarized the US population can be. Well anyway, the Conference Board said Americans feel more positive about business and labor market conditions, if you're buying it.

Home Prices

S&P Case Shiller published its Home Price Index for the month of March today. March's data showed continued year-over-year price appreciation, as the 10-city index saw prices edge higher by 3.1%. The 20-city composite recorded price increase of 2.3%, continuing a trend that has lasted a year now.

Given recent stock market alarms and overseas worries, alongside ongoing unemployment in the States and the end of the First-Time Homebuyers Tax Credit, a second drop-off in home prices seems possible (maybe as much as 10%). That said, continued population growth and reduced inventory levels (ex-shadow inventory of lender occupied foreclosure properties) have our real estate expert looking to the current market as a buying opportunity.

National home prices are back to their spring 2003 levels, according to the data devils, but recent months' activity show an end to trend. The report showed that 13 of 20 MSA's covered posted price declines in March, over February. The National Composite fell 3.2% in Q1, versus Q4 of 2009. Thus, it seems clear to me that without tax incentive, the housing market is going to have a tough time fending for itself.

The FHFA House Price Index showed a 0.3% price increase in March. However, FHFA indicates March prices fell 2.2% compared to prior year sales. I like to pay attention to the National Association of Realtors data, which is more timely than FHFA and S&P. The NAR reported Monday that home prices rose across a majority of its markets. In fact, the median price of an existing home rose 4% in April, matched against the prior year count. FHFA's data only measures homes with mortgages purchased or securitized by Fannie Mae (NYSE: FNM) or Freddie Mac (NYSE: FRE); while that was once a big portion of the nation's mortgages, it's still important.

Investor Confidence

State Street (NYSE: STT) posted its Investor Confidence Index for the month of May today. Not surprisingly, May's index slipped sharply to 88.2, from 99.4 in April. The reading was as high as 107.4 in March. It's clear that the concern sparked in Europe has spread well now into North American investors' mindset. However, Asian investor confidence improved 6.8 points, to 101. European confidence declined 3.5 points to 92.2, while North American confidence declined 5 points to 98.3. A measure below 100 signifies a general aversion to risk.

Washington Market Drivers

The US House of Representatives votes today on a plan to raise taxes on investment management companies. This is the kind of thing that makes me miss Ronald Reagan. St. Louis Federal Reserve Bank President James Bullard gives a speech on "The Road to Economic Recovery Following the Financial Crisis," to the European Economics and Financial Centre in London.

International Activity

The trouble started today in Asia, where the NIKKEI 225 fell 3.1% and Hang Seng fell 3.5%. Misery extended into European trading, where the FTSE 100 moved lower 2.5% and the DAX fell 2.3%.

Corporate Drivers

On the corporate slate, share-offering lock-up periods conclude for China Advanced Construction Materials (Nasdaq: CADC), Owens Corning (NYSE: OC) and Penn Virginia (NYSE: PVA). Catch the analyst meetings at Flextronics (Nasdaq: FLEX), McAfee (NYSE: MFE) and Petrobras (NYSE: PZE). The day's earnings schedule includes reports from AutoZone (NYSE: AZO), Convio (Nasdaq: CNVO), Cracker Barrel Old Country Store (Nasdaq: CBRL), DSW, Inc. (NYSE: DSW), Dycom Industries (NYSE: DY), Flowers Foods (NYSE: FLO), HEICO (NYSE: HEI), Israel Chemicals (OTC: ISCHF.PK), Ituran Location & Control (Nasdaq: ITRN), Ixys Corp. (Nasdaq: IXYS), Medtronic (NYSE: MDT), Netezza (NYSE: NZ), Palm Harbor Homes (Nasdaq: PHHM), Partner Communications (Nasdaq: PTNR), Pointer Telocation (Nasdaq: PNTR), Salary.com (Nasdaq: SLRY), Sanderson Farms (Nasdaq: SAFM), Shiloh Industries (Nasdaq: SHLO), Sociedad Quimica y Minera S.A. (NYSE: SQM), TIVO, Inc. (Nasdaq: TIVO), Tivoli (Nasdaq: TVLI), Trina Solar (NYSE: TSL), TTI Telecom (Nasdaq: TTIL) and WSP Holdings (NYSE: WH).



Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

This Week: Greek Banks Report Results

This week's economic schedule includes a second look at GDP, a wishful check of jobs and Treasury Secretary Timothy Geithner's Asia/ Europe tour. Can't miss news also includes the Personal Income & Outlays data and investor and consumer confidence measures. Finally, several Greek banks report earnings this week, potentially raising concern about the state of Europe's banking system.

"The Greek" earned clients a 23% average annual return over five years as a stock analyst on Wall Street. While writing for Wall Street Greek and others, he presciently predicted the financial crisis and housing and banking failures of the Great Recession. Visit the front pages of Wall Street Greek now to see our current coverage of business news, global financial markets, real estate, shipping, fine art, technical analysis and global affairs.

(Tickers: NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, Nasdaq: NDAQ, NYSE: ICE)

Greek Banks Report Results This Week

With the National Bank of Greece, Marfin Popular Bank, Alpha and ATE all reporting results this week, Greece and Europe might go back into spin cycle. Back Stateside, we will get another look at first quarter GDP, but the market will be more concerned with Personal Outlays data.

Monday

Overseas news should start the day's trade at home Monday. Federal Reserve Chairman Bernanke and Treasury Secretary Geithner are in China for high level economic talks. Let's hope they did not take their laptops... Markets are closed in Canada, Switzerland, Greece and a few others.

Back home in the good old USA, the Securities and Exchange Commission (SEC) and the US Commodity Futures Trading Commission (CFTC) examine May 6th's "flash crash" and offer suggestions on how to avoid a recurrence.

At 10:00 AM, look for April's Existing Home Sales data. Barron's says economists are looking for an April gain, due to the expiring First-Time Homebuyers Tax Credit. Bloomberg's survey of economists seems to concur, as the consensus forecasts the annual pace of sales will have improved to 5.6 million, versus March's 5.35 million sales pace.

April's end only marked the deadline to enter into contract for a home sale though, while Existing Home Sales measures sales closures. The deadline for closure comes in June. Therefore, while there may be some rise in April's data, I expect gains to continue to show themselves in the next few months' data.

Sony (NYSE: SNE) and Samsung (OTC: SSNLF.PK) CEOs are scheduled to meet. Analysts meetings are scheduled for BHP Billiton (NYSE: BHP), Petrohawk Energy (NYSE: HK) and Harris (NYSE: HRS). Earnings are due for American Metal & Technology (Nasdaq: AMGY), Angeion (Nasdaq: ANGN), Campbell Soup (NYSE: CPB), China Shenghuo Pharma (AMEX: KUN), ChinaEdu (Nasdaq: CEDU), Document Capture Technologies (Nasdaq: DCMT), Donaldson (NYSE: DCI), Eastern Light Capital (AMEX: ELC), Flint Telecom Group (Nasdaq: FLTT), Gladstone Investments (Nasdaq: GAIN), Image Metrics (Nasdaq: IMGX), ImaRx Therapeutics (Nasdaq: IMRX), Internet Gold (Nasdaq: IGLD), Invensys (OTC: IVNSY.PK), Lattice (Nasdaq: LTTC), Longtop Fin'l Tech (NYSE: LFT), Manhattan Pharma (Nasdaq: MHAN), Orsus Xelent Tech (AMEX: ORS), PHI Group (Nasdaq: PHIE), Phillips Van-Heusen (NYSE: PVH), Radient Pharma (AMEX: RPC), Senetek plc (OTC: SNTKY.PK), Top Image Systems (Nasdaq: TISA), UQM Tech (AMEX: UQM), Vermillion (Nasdaq: VRML) and Yingli Green Energy (NYSE: YGE).

Tuesday

The data day will start overseas again, with Fed Chairman Bernanke addressing a Tokyo grouping on central bank accountability.

It will be interesting to see this week's data from the International Council of Shopping Centers (ICSC). Last week's report, covering the week ended May 15, showed a sharp downturn in sales that was attributed to cold weather. Week-to-week sales fell 2.5% in the period, and year-over-year growth moderated sharply to 2.9%. This week's data should provide verification of whether it was a one-time non-recurring factor that stalled activity, or whether there's cause for concern.

At 9:00 a.m., S&P Case Shiller produces its Home Price Index for the month of March. February's data showed continued year-over-year price appreciation, as the 10-city index saw prices edge higher by 1.5% on an adjusted basis. However, over the last two periods measured, price recovery has come back into question. The 10-city seasonally adjusted index posted a 0.1% sales rise in February, but fell 0.6% when excluding the adjustment. Given recent stock market alarms and overseas worries, alongside ongoing unemployment in the States, some experts are pointing toward a second drop in prices of perhaps 10%. I have to concur that with the First-Time Homebuyers Tax Credit being pulled, and the environment still soft, price decline seems highly possible in the months ahead. In a previous article, I noted that the trend line seemed to indicate that normalized price levels might be a bit lower - while support could hold here. That said, continued population growth and reduced inventory levels (ex-shadow inventory of lender occupied foreclosure properties) have our real estate expert looking to the current market as a buying opportunity.

The FHFA House Price Index is due Tuesday as well, at 10:00 a.m. Both of these data tenders look too far back to be of much use, and so I like to pay attention to the National Association of Realtors data. The NAR reported Monday that home prices rose across a majority of its markets. In fact, the median price of an existing home rose 4% in April (this is relevant), matched against the prior year count. FHFA's data only measures homes with mortgages purchased or securitized by Fannie Mae (NYSE: FNM) or Freddie Mac (NYSE: FRE); while that was once a big portion of the nation's mortgages, it's still important.

At 10:00 a.m., the Conference Board will report on Consumer Confidence. The measure of consumer sentiment recovered in April, after an early year slip. However, given recent global market meltdown, there's a chance economists could be wrong with their consensus forecast for a gain to 59.0 (based on Bloomberg's survey). April's watermark is 57.9.

Also at 10:00 a.m., look for State Street's (NYSE: STT) Investor Confidence Index for the month of May. Not surprisingly, April's report recorded a drop in investor confidence sparked by the contagious affects of Europe on North American and Asian investors. April's index fell below the 100 break-point, sitting at 99.7, versus March's revised 107.4. A measure below 100 signifies a general aversion to risk.

The US House of Representatives votes on a plan to raise taxes on investment management companies. This is the kind of thing that makes me miss Ronald Reagan. St. Louis Federal Reserve Bank President James Bullard gives a speech on "The Road to Economic Recovery Following the Financial Crisis," to the European Economics and Financial Centre in London.

On the corporate slate, share-offering lock-up periods conclude for China Advanced Construction Materials (Nasdaq: CADC), Owens Corning (NYSE: OC) and Penn Virginia (NYSE: PVA). Catch the analyst meetings at Flextronics (Nasdaq: FLEX), McAfee (NYSE: MFE) and Petrobras (NYSE: PZE). The day's earnings schedule includes reports from AutoZone (NYSE: AZO), Convio (Nasdaq: CNVO), Cracker Barrel Old Country Store (Nasdaq: CBRL), DSW, Inc. (NYSE: DSW), Dycom Industries (NYSE: DY), Flowers Foods (NYSE: FLO), HEICO (NYSE: HEI), Israel Chemicals (OTC: ISCHF.PK), Ituran Location & Control (Nasdaq: ITRN), Ixys Corp. (Nasdaq: IXYS), Medtronic (NYSE: MDT), Netezza (NYSE: NZ), Palm Harbor Homes (Nasdaq: PHHM), Partner Communications (Nasdaq: PTNR), Pointer Telocation (Nasdaq: PNTR), Salary.com (Nasdaq: SLRY), Sanderson Farms (Nasdaq: SAFM), Shiloh Industries (Nasdaq: SHLO), Sociedad Quimica y Minera S.A. (NYSE: SQM), TIVO, Inc. (Nasdaq: TIVO), Tivoli (Nasdaq: TVLI), Trina Solar (NYSE: TSL), TTI Telecom (Nasdaq: TTIL) and WSP Holdings (NYSE: WH).

Wednesday

Treasury Secretary Timothy Geithner stops over in London before returning from Asia. He will be doing his best to restore European market confidence. Keeping with international happenings, the Organization for Economic Co-operation and Development (OECD) publishes its economic outlook. Back home, the SEC might propose a new rule for audit trails on all securities.

In the pre-market, look for the regular mortgage activity report from the Mortgage Bankers Association. Last week's data, covering the period ended May 14, produced a sharp dropoff in activity. The Market Composite Index decreased 1.5%, but the headline index does not tell the whole story. Long rates collapsed as interest intensified for US Treasury securities (on European demise). Average contracted rates on 30-year and 15-year fixed rate mortgages fell to 4.83% (from 4.96%) and 4.19% (from 4.32%), respectively. As a result, the Refinance Index increased 14.5%.

The big news was found in the Purchase Index, which collapsed 27.1% to the lowest level since May of 1997. This is where you can see the impact of the concluding tax incentive. The MBA theorized that the incentive pulled activity from May into April. The big question is, what will happen after a few weeks pass, and the tax incentive plays no role whatsoever?

Durable Goods Orders are due for the month of April at 8:30. Given decent April numbers out of ISM, and the New York and Philly Feds, economists are forecasting more growth in Durables for April. February Durables rose 3.7% in March when excluding transportation, and that followed a February gain of 2.1% ex-transportation. Economists forecast durables rose 1.5% in April.

New Home Sales will be reported for April at 10:00 AM. March sales increased 26.9% ahead of the deadline for tax incentive. April sales are forecast to gain as well, to an annual pace of 425K, versus March's rate of 411K.

The EIA reports on Petroleum Status at 10:30 AM. Last week's report for the period ending May 14, showed crude oil inventory rose by 0.2 million barrels. Total motor gasoline stocks decreased by 0.3 million barrels, but both crude oil and gasoline remained above the upper limit of the average range for this time of year.

At 4:15 PM, Richmond Federal Reserve Bank President Jeffrey Lacker will speak on the topic of financial regulation at a conference at the Institute for International Economic Policy in Washington.

In corporate news, analysts meetings are scheduled for Newell Rubbermaid (NYSE: NWL), Arrow Electronics (NYSE: ARW), Thermo Fisher Scientific (NYSE: TMO), Northern Trust (Nasdaq: NTRS), and Yahoo! (Nasdaq: YHOO). The National Bank of Greece (NYSE: NBG) reports earnings results today. The Ira Sohn investment conference kicks off in New York, while Finra starts its annual conference. Trade lockup curbs expire on ArvinMeritor (NYSE: ARM), while Tessco (Nasdaq: TESS) splits 3:2.

The day's earnings schedule includes 99 Cents Only (NYSE: NDN), AFC Enterprises (Nasdaq: AFCE), American Eagle Outfitters (NYSE: AEO), Apollo Investment Corp. (Nasdaq: AINV), Avago Tech (Nasdaq: AVGO), Bank of Montreal (NYSE: BMO), BluePhoenix Solutions (Nasdaq: BPHX), Brown Shoe Co. (NYSE: BWS), Charm Communications (Nasdaq: CHRM), Codexis (Nasdaq: CDXS), Diana Shipping (NYSE: DSX), Dress Barn (Nasdaq: DBRN), Fred's (Nasdaq: FRED), Hoku Scientific (Nasdaq: HOKU), Jamba Juice (Nasdaq: JMBA), Jo-Ann Stores (NYSE: JAS), LTX-Credence (Nasdaq: LTXC), NetApp (Nasdaq: NTAP), Rosetta Genomics (Nasdaq: ROSG), Rue21 (Nasdaq: RUE), Semtech (Nasdaq: SMTC), Sigma Designs (Nasdaq: SIGM), Solarfun Power (Nasdaq: SOLF), Sycamore Networks (Nasdaq: SCMR), Synovis Life Tech (Nasdaq: SYNO), Telvent (Nasdaq: TLVT), Toll Brothers (NYSE: TOL), Trintech (Nasdaq: TTPA), VeriFone Holdings (NYSE: PAY), Vimpel-Communications (NYSE: VIP) and Zale Corp. (NYSE: ZLC).

Thursday

Tim Geithner remains in Europe to consult with the Europeans on the debt crisis. Meanwhile, back home, a House Oversight panel reviews Johnson & Johnson's (NYSE: JNJ) childrens' Tylenol recall.

Weekly Jobless Claims are due as usual at 8:30 AM Thursday. For the week ended May 15, Jobless Claims jumped 25K, to 471K, ringing alarm bells across Wall Street. Things are just not getting better for the labor market and it's hard to ignore at this point, with jobs bleeding away week to week.

When last reported on April 30, first quarter GDP came in at +3.2%, down from Q4's growth rate of 5.6%. In this "preliminary" report, following the "advance" report, economists expect an upward revision to 3.5% (makes sense to me due to Easter, and could be better than this). The hope is that the upward adjustment will be driven by a fix to sales, not prices. The Price Index is seen increasing 0.9%, like it was reported the first time. Corporate Profits data is reported simultaneously.

For the week ended May 14, the EIA reported natural gas stocks increased by 76 Bcf. Inventory stood at 308 Bcf above the five-year average for this time of year, placing it also above the upper limit of the average range.

Golden Network's High-Frequency Trading Forum takes place in New York. Investor meetings are scheduled at Newmont Mining (NYSE: NEM) and Heinz (NYSE: HNZ). Edward's Lifesciences (NYSE: EW) splits 2 for 1. Corporate EPS releases arrive from Costco (Nasdaq: COST), Alpha Bank (ATHENS: ALPHA.AT), ATE Bank (ATHENS: ATE.AT), Big Lots (NYSE: BIG), Bio-Reference Labs (Nasdaq: BRLI), Blue Coat Systems (Nasdaq: BCSI), Borders Group (NYSE: BGP), Canadian Imperial Bank of Commerce (NYSE: CM), Columbus McKinnon (Nasdaq: CMCO), Concord Medical Services (NYSE: CCM), Conn's (Nasdaq: CONN), dELiA's Inc. (Nasdaq: DLIA), Diamond Foods (Nasdaq: DMND), Ditech Networks (Nasdaq: DITC), Esterline Tech (NYSE: ESL), FreeSeas (Nasdaq: FREE), Genesco (NYSE: GCO), GigaMedia (Nasdaq: GIGM), Guess (NYSE: GES), H.H. Gregg Appliances (NYSE: HGG), J. Crew (NYSE: JCG), Jackson Hewitt Tax Service (NYSE: JTX), Jade Art (Nasdaq: JADA), Magma Design Automation (Nasdaq: LAVA), Marfin Popular Bank (Frankfurt: JXG.F), Monro Muffler (Nasdaq: MNRO), Movado (NYSE: MOV), Navios Maritime (NYSE: NM), Ninetowns Internet Tech (Nasdaq: NINE), Novell (Nasdaq: NOVL), Omnivision Technologies (Nasdaq: OVTI), QAD (Nasdaq: QADI), Quanex Building Products (NYSE: NX), REX Stores (NYSE: RSC), Royal Bank of Canada (NYSE: RY), SeaChange Int'l (Nasdaq: SEAC), Signet Jewelers (NYSE: SIG), Tate & Lyle (OTC: TATYY), Toronto Dominion Bank (NYSE: TD), Terremark Worldwide (Nasdaq: TMRK), Uroplasty (AMEX: UPI), Versant (Nasdaq: VSNT), XETA Tech (Nasdaq: XETA) and Zarlink Semi (OTC: ZARLF.PK).

Friday

Unlike last week, Friday is littered with economic reports you might miss as you prepare for the long weekend. Leading off in the pre-market, look for the Personal Income and Outlays Report for April at 8:30. All signs are for a more moderate pace of Consumer Spending in April, given the Easter impact on other economic measuring sticks. However, Retail Sales were relatively solid in April across most categories. Economists peg consumer spending at +0.2% for April, and the figure looks Kosher to us as well. March's consumer spending measured +0.6%.

Personal Income is seen increasing 0.5%, versus the 0.3% month-to-month increase in March. The gain in March came mostly in the service sector, and may have benefited from tax filing preparations and even census activity. Since that was likely the case, a similarly robust increase might be expected in April as well. Get this, emergency unemployment insurance boosted the "other" category by $12 billion (annually adjusted).

At last reading, Midwestern business activity was gaining robustly. We will get the latest look at the Chicago Purchasing Managers Index Friday morning at 9:45 AM. April's reading of the index gained to its highest mark since April 2005. The index rose five points to 63.8, and was characterized by broad gains. Even employment marked its fourth month of growth, while Order Backlogs and Supplier Deliveries neared ten-year highs. However, Prices Paid also accelerated to their highest level since September 2008. You know we are watching this!

Given the recent moderation of expansion in New York and Philly, we might expect Chicago's May reading to slip a bit. However, the Chicago PMI measures both manufacturing and non-manufacturing, and so is not perfectly comparable. Economists do still expect the pace of expansion to moderate a bit to 62.0 in May.

Consumer Sentiment will be reported at 9:55 AM. The Reuters/University of Michigan measure comes days after the Conference Board's Report and so expectations should be swayed by that result. The feeling is that ongoing unemployment and the recent test to stocks could skew this latest measure of consumer mood lower. Economists forecast the end of May measurement will stick at 73.3, the same as at mid-month.

The Department of Energy review of the Deepwater Horizon oil spill is due today. At 3:00 PM, look for the Department of Agriculture's Farm Prices data. Ahead of the Memorial Day holiday, the bond market will close at 2 PM EST.

Canadian Natural Resources (NYSE: CNQ) will split 2:1 at the market close. EPS reports include Golar LNG Ltd. (Nasdaq: GLNG), Industrie Natuzzi (NYSE: NTZ) and Quality Systems (Nasdaq: QSII).



Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Offshore Oil Exploration & Drilling Debate

Topic of Debate

After witnessing the extent of damage just one failure can cause, we were wondering how you feel about Offshore Oil Exploration and Drilling these days. Join our latest debate, by clicking through the "Discuss" button below.

There are not many disasters of the magnitude of the current mess in the Gulf of Mexico, but when so much hinges on the success of just one project, it raises the question, is it really worthwhile? The failure of British Petroleum (NYSE: BP) to react swiftly in mitigating the extent of damage also raises concern about how committed the oil industry is in protecting the environment. It does not help things when implicated parties like BP, Transocean (NYSE: RIG) and Halliburton (NYSE: HAL) all seem more concerned about legal vulnerability than clean up and improvement. However, it would be naive to not expect these firms to put up a defensive legal front.

The argument on the other end will surely emphasize energy independence and the need to reduce reliance on foreign oil. We expect offshore oil exploration and development proponents will concede that operation safety needs to be flawless and disaster reaction time and effectiveness needs to be perfectly efficient. The oil industry will highlight a relatively low disaster rate, but when even one disaster causes so much ruin, I think it's clear that operations need to be perfect.

However, when you operate in the sea, most seamen know, you fight an uphill battle. It's virtually impossible to manage all the risks you face in the ocean over the course of years. And as far as energy independence goes, imagine how much damage could be done to us in war time if we fill our shore lines with offshore rigs. How independent would we be then? While offshore oil drilling and exploration is a tempting option, is it really worth the risk? I think it is clear that alternative energy is the best long-term option for the United States, and so we must continue to direct increased funds toward research and development to improve the economic viability of alternative energy options and to add support infrastructure. That is my view! What's yours?

How do you feel about:

Offshore Oil Exploration and Drilling?

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Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Assessing the Stock Market Mess

With all the mayhem last week, we thought we would assess the stock market mess for you today.

"The Greek" earned clients a 23% average annual return over five years as a stock analyst on Wall Street. While writing for Wall Street Greek and others, he presciently predicted the financial crisis and housing and banking failures of the Great Recession. Visit the front pages of Wall Street Greek now to see our current coverage of business news, global financial markets, real estate, shipping, fine art, technical analysis and global affairs.

Assessing the Stock Market Mess

For many passive market followers, the stock market mess last week came as a surprise, but not for Wall Street Greek blog readers. Over past weeks, I have noted the "Holy Resurrection" of an economic recovery, both on these pages and at the daily blog. We have reviewed the many flaws in the supposed improvement. We have discussed the pace of manufacturing recovery, and also its relation to bare bones levels of activity that the growth is being compared against. We have talked about the government crutches supporting economic stability, and have openly wondered if the hobbled economy could still stand once those crutches were pulled away. We have noted the ongoing weakness in the real estate market, and we have duly warned about the incessant bleeding of the labor market. We said a jobless recovery is neither a recovery now nor a sustainable state of affairs. And last week, our technical analyst, Steven Ferguson, with his intricate algorithmic equations and colorful charts, described brilliantly the precipice we stood upon. He warned days before it all went down that something special seemed likely to occur, something ugly… and then it did.

While the Dow gained 1.25% Friday, most of which came in the last few minutes of trading, the broadly followed index lost 4.0% through the week's stock market mess. The Dow Jones Industrials Index is off 9.0% since its April 26 close, as investors reassess the state of global affairs. European unraveling, while a net positive for investment capital fund flows into the US, now has the global investment community reconsidering sovereign risk, global currency valuation and global economic forecasts. Still, the flow of funds into US investments is up sharply, as seen by March's Treasury International Capital Report (TIC) posted recently.

We explained at the blog over recent weeks that the stock market seemed overbought. Put/Call ratios indicated investors were overly bullish, and hedge funds were too far long versus short. Also, investor advisor sentiment was mighty cheery. These were all signs of a stock market vulnerable to a decline should the right catalyst come along. In the end, it seems a confluence of catalysts combined with a "fat finger" gave birth to the latest bearish trade. The factors weighing included heavy austerity measures being implemented in Greece, Spain and Portugal, and rising concerns about a need for similar actions in Ireland, the U.K. and France. Meanwhile, chatter has steadily increased about China risk, and the expanding asset bubbles across the Pacific. Side stories including the ash cloud effects on European and global business, as well as the Gulf of Mexico oil spill's long-term impact on exploration and short-term hit to fisheries did not help the situation.

Basically, the sustainability of global economic recovery is in question. In the US, 9.9% unemployment weighs on the economy, and last Tuesday's data produced a 25K increase in weekly jobless claims to 471K. Manufacturing activity, while still reported expanding, saw a slowdown in pace, based on New York and Philadelphia area surveys. While oil prices fell on a strengthening dollar and global demand concerns, futures contracts a few months out showed no sign of softening. These factors weighed on stocks, and our technical analyst saw something in the trends. Ferguson views 900 on the S&P 500 Index a real possibility, and that mark is 17.3% lower than the index's current value at 1087.69. Now that would be a real stock market mess.



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Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.