ADP Report June 2010

ADP's private employment report for June showed no signs of life today. It's a troubling read heading into Friday's Bureau of Labor Statistics data.

"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: RHI, NYSE: MAN, NYSE: KFY, NYSE: MWW, NYSE: JOB, Nasdaq: JOBS, OTC: GEYH.PK, Nasdaq: CECO, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD)

ADP Report June 2010

Automatic Data Processing (ADP) today reported on the labor market for June. In summary, nonfarm private payrolls were reported increased by 13,000, which while representing the fifth consecutive monthly gain, also fell short of the average growth of 34K over that span. In fact, ADP's chart of monthly labor activity seems to imply a job market double-dip ahead. Job growth, as depicted by ADP, has decelerated over the last two months, and looks to be heading back into contraction mode. ADP's data differs significantly with the Bureau of Labor Statistics (BLS) data in that it excludes the public sector. The BLS report has shown strong job growth over recent months on the temporary hiring of census workers, but that's not evident in ADP's data.

The Details

The details of ADP's report for June show large and small businesses alike inactive in hiring activity. Small businesses (less than 50 employees) shed 1,000 jobs on net, while large businesses (500 or more employees) added only 3,000 jobs in June. It was the group in between, medium-sized firms of between 50 and 499 employees, who picked up the slack in hiring 11,000 folks through June.

Goods-producing industries shed 17K jobs through the month, though the manufacturing sector continued to expand, adding 16K employees. It was instead ongoing weakness in construction that weighed on goods makers, as construction shed 35K jobs through the month. Any gains made through the First-Time Homebuyers Tax Credit, while effective, proved temporary. Natural growth is not yet prepared to take the baton from government stimulated growth, and homebuilders seem to be facing up to that reality in their labor adjustments. (Interests: NYSE: F, NYSE: TM, NYSE: HMC, NYSE: TOL, NYSE: HOV, NYSE: BZH, NYSE: DHI, NYSE: FNM, NYSE: FRE, NYSE: PNC, NYSE: GS, NYSE: MS, NYSE: JPM, NYSE: BAC, NYSE: C, NYSE: WFC)

The service sector, the key driver of American economic activity, added 30K jobs in June. While this report is seasonally adjusted, I have to wonder how much of this growth was due to hiring along America's coastline resort towns. Given the weakness of last year's consumer spending, it seems likely to me that the pick up this year toward normal consumer spending might have allowed for more hiring on the nation's boardwalks than the seasonal adjustment could make up for. Therefore, I'm not at all impressed by the still otherwise soft growth in services. (Interests: NYSE: FUN, NYSE: DIS, NYSE: CUK, NYSE: CUL, Nasdaq: PCLN, Nasdaq: EXPE, NYSE: RCL, NYSE: SIX, NYSE: OWW, Nasdaq: WWON)

Looking Ahead

When reported Friday, economists surveyed by Bloomberg are looking for unemployment to post an increase for June, to 9.8%, from the 9.7% rate reported in May. I agree that it is unlikely the rate will moderate further, as it did in May from 9.9% in April. I concur also that it is more likely the unemployment rate will increase, as economic activity previously supported by government crutch must now make its own way. This premature wish of policy makers now consumed by budget crisis could leave our economy flailing in the harsh dry wind of renewed recession.



Editor's Note: This article should interest investors in Robert Half International (NYSE: RHI), Korn Ferry (NYSE: KFY), Manpower (NYSE: MAN), Monster World Wide (NYSE: MWW), General Employment Enterprises (NYSE: JOB), Global Employment Holdings (OTC: GEYH.PK), Career Education (Nasdaq: CECO), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Citigroup (NYSE: C), J.P. Morgan Chase (NYSE: JPM), Bank of American (NYSE: BAC), Northern Trust (Nasdaq: NTRS), Wilmington Trust (NYSE: WL) and 51job Inc. (Nasdaq: JOBS), UBS (NYSE: UBS), Credit Suisse (NYSE: CS), Deutsche Bank (NYSE: DB), PNC Financial (NYSE: PNC).

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.

Conference Board Reports Sink Stocks

Today's Coffee

Two separate Conference Board Reports served to sink stocks today. Despite covering diverse issues, Conference Board reports on China and US consumers led investors to the exits.

"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, NYSE: BKC, NYSE: DSW, NYSE: JAH, Nasdaq: MSSR, Nasdaq: CTIC, NYSE: GIS, NYSE: ZZ, AMEX: API, Nasdaq: EXFO, Nasdaq: FNBN, NYSE: OMN, Nasdaq: PARL, Nasdaq: UDWK, NYSE: WOR, NYSE: DUK, NYSE: KMX, Nasdaq: SMSC, NYSE: ZEP, Nasdaq: AERO, NYSE: BKS, NYSE: MU)

Conference Board Reports Sink Stocks

Two critical catalysts served to send stocks sharply lower today, and while covering diverse issues, they originated from the same source. The Conference Board produced two reports that each pointed investors toward the door. At the hour of publishing, stocks were down near 3%.

China

The Conference Board, a private research group, revised its April Leading Economic Index for China lower, to growth of 0.3% from the initially reported +1.7%. There was no new data that influenced the report; instead a calculation error was to blame for the sharp change. The error in question was a one-time mistake, and so no revisions to previous data were required. Still, a market that had been enthused by the last reported Chinese LEI now needed to digest this dramatic change in reality.

The Conference Board's China LEI aggregates six effective leading indicators for China's economy, and the Board believes the Index is therefore a valid metric for the measurement and forecasting of the Chinese economy. The market concurs, as evident by its reaction to the change in investor sentiment this morning. Stocks opened gap lower.

Helping stocks on their way lower, an LEI economist further dampened any China driven enthusiasm. As reported by the Conference Board, Bill Adams, resident economist for The Conference Board China Center in Beijing said: "The rising trend of the LEI has been moderating since the middle of last year, suggesting there is no strong basis for assuming accelerating growth. The majority of LEI components have been increasing, but consumer expectations fell in April and new export orders have been weakening for most of the previous six months."

China has been both an indicator of US and global economic demand, and more recently a driver of it, as its own domestic economic growth finds traction. Thus, this home to so many of the world's citizens plays an intensifying and currently critical role in global economic activity. This is to say that market concern is justified. (Interests: Nasdaq: ASIA, Nasdaq: PRASX, NYSE: PUA, NYSE: NWD, Nasdaq: MEAFX, Nasdaq: EBASX, Nasdaq: EVASX, Nasdaq: SOLF, Nasdaq: CSUN, Nasdaq: BIDU)

Consumer Confidence

Speaking of consumer expectations, the Conference Board also released its US Consumer Confidence Index today. What resulted was a surprise for the market and economists alike. June's Consumer Confidence Index fell precipitously to a reading of 52.9, from 62.7 in May. Economists were looking for a reading of 63.3, based on Bloomberg's survey. So where the experts expected growth, we instead discovered horror.

The Present Situation Index fell more than four points, to 25.5. However, the Expectations Index dropped more than 13 points to 71.2. The survey found that views on business conditions and the labor market both declined in June. Moreover, the view for the next six months dropped on these measures as well.

As consumers represent the drivers of the American economy, the rug was pulled out from under the market and its gurus. While Wall Street Greek has pointed to the ongoing weakness in housing and the labor market, as well as declining rates of consumer spending growth against more normal comparables, the gurus on the street have simply chimed the tune of the day. Where we look with an independent lens toward the future, the experts do not place their big salaries in jeopardy by predicting against current trend. So keep reading... (Interests: NYSE: WMT, NYSE: JCP, NYSE: M, NYSE: CHS, NYSE: TGT, NYSE: JWN, NYSE: AEO, NYSE: ARO, NYSE: LTD, Nasdaq: COST)

A decreasing number of economists and strategists will sing the company song as economic data and corporate results begin to reflect a harsh economic reality. We hope you will remember us then, as many of our long time readers remember us when we warned ahead of the financial crisis. Our views against homebuilders and the financial sector proved true, and many of the companies we favored for shorting no longer exist. More recently, we even earned readers a double-digit paper return on Toyota shares (NYSE: TM), with the bottom set at the perfect center of our price target range. In years past, we called the bottom on oil prices to the hour, from which oil rose from the $40s to near $150 a barrel.

We're planning an interesting article now on the two dire economic consequences policy makers must decide between, and we think you will find it interesting, if not terrifying. Stay tuned to The Greek for your financial market insights and more.

The Day's Corporate News Drivers

Oppenheimer's Consumer, Gaming, Lodging & Leisure Conference kicks off, and it highlights presentations from Burger King (NYSE: BKC), DSW, Inc. (NYSE: DSW), Jarden (NYSE: JAH) and McCormick & Schmick's (Nasdaq: MSSR). Look for Cell Therapeutics' (Nasdaq: CTIC) shareholders' meeting and earnings reports from General Mills (NYSE: GIS), Sealy (NYSE: ZZ), Advanced Photonix (AMEX: API), Exfo Electro-Optical Engineering (Nasdaq: EXFO), FNB United Corp. (Nasdaq: FNBN), Omnova Solutions (NYSE: OMN), Parlux (Nasdaq: PARL), US Dataworks (Nasdaq: UDWK) and Worthington Industries (NYSE: WOR). Monday's news included Duke Energy's (NYSE: DUK) presentation at the Duke Energy International Informational Conference. CarMax (NYSE: KMX) held its annual shareholders meeting, and the earnings schedule included news from SMSC (Nasdaq: SMSC), Zep, Inc. (NYSE: ZEP), Aero Grow International (Nasdaq: AERO), Barnes & Noble (NYSE: BKS) and Micron Technology (NYSE: MU).



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.

Relief Rally on the Way?

Technical Analysis Shows Near-Term Relief Rally Potential

Wall Street Greek Technical Analyst Steven Ferguson offers his latest critical analysis of the market. Ferguson has authored a series of research articles on econometrics and programmatic trade. In this latest piece, Ferguson sees the potential for a near-term relief rally. Steven also operates Systemata Corp., a model-based controls design firm.

(Tickers: NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, Nasdaq: MEMKX, Nasdaq: GECMX, Nasdaq: JEVOX, Nasdaq: PEMAX, NYSE: EEM, NYSE: VWO, Nasdaq: VEIEX, Nasdaq: ADRE, Nasdaq: PEBIX, Nasdaq: GMCEX, NYSE: MSF, NYSE: EEV, Nasdaq: REMGX, NYSE: GMM, NYSE: EDZ, AMEX: ETF, NYSE: FEO, NYSE: ESD, NYSE: MSD, NYSE: EMF, NYSE: TEI, Nasdaq: EMIF, NYSE: EFN, NYSE: EMT, NYSE: PCY, NYSE: PXH, NYSE: GMF, NYSE: GUR, NYSE: GML, NYSE: GMM, NYSE: EWX, NYSE: GAF, NYSE: EUF, NYSE: EET, Nasdaq: ABEMX, Nasdaq: AEMGX, Nasdaq: APERX, Nasdaq: PMGAX, Nasdaq: PMCIX, Nasdaq: AOTAX, Nasdaq: AOTCX, Nasdaq: AOTDX, Nasdaq: AEMPX, Nasdaq: AOTIX, Nasdaq: AEMEX, Nasdaq: AAMRX, Nasdaq: AEMFX, Nasdaq: AAEPX, Nasdaq: AEMMX, Nasdaq: ACKBX, Nasdaq: ACECX, Nasdaq: AMKIX, Nasdaq: TWMIX, Nasdaq: NDAQ, NYSE: PIZ, NYSE: PIE, NYSE: PDP, NYSE: DIA, NYSE: SPY, NYSE: NYX, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: IWM, NYSE: TWM, NYSE: IWD, NYSE: SDK, NYSE: ICE, Nasdaq: QQQQ, Nasdaq: NDAQ, NYSE: NYX, Nasdaq: HTOAX, Nasdaq: HTOTX, Nasdaq: HTOBX, Nasdaq: JTCIX, Nasdaq: JTCNX, Nasdaq: JTCAX)

Relief Rally on the Way?

As suggested in our previous article, Monday's close did ultimately foretell the downward pressure on trading action for the entire week. By the end of Friday's session, it seemed major indices might indeed be staring directly down at a 20% drop in the near future. But just when such an outcome seems inevitable in the market, the opposite often occurs! For this reason, we share a complimentary forecast based on intraday data sampled at 15 minute time intervals:



The above forecast is based on spectral analysis of the time series data. While the method underlying the forecast has been unbelievably accurate at times, it is by no means perfect. Indeed, the method works best when the time series is quasi-stationary, which is generally not the case in capital markets, so that this prediction should be viewed for educational purposes only.

To interpret the forecast results, note also the following:

• The forecast is based on the SPY, but is scaled by a factor of 10 so that the value more closely could also represent the S&P 500 nominally


• The forecast period is for sixty 15-min intervals. This works out to be about 2.5 trading days


• Forecasts that fall outside of statistical error bands (such as this one) are usually meaningful


• Based on the forecast, Monday's open should feature major short-covering and a rally to an index high of around 1115 (SPY at $111.28)

From a more traditional view of technical analysis, we also see a charting pattern known as a "falling wedge," which is depicted in the intraday chart below:

• Note the falling trend-line depicted in solid red. This demarcates the top of the bullish falling wedge pattern


• Note that prices broke above the trend-line in early trading on Friday, then "back-tested" as the market closed


• After a successful back-test, the price should rebound as depicted by the upward green arrow above to the pattern target


• Based on the wedge measurements, the pattern target is about 30 points above Friday's close, which is also consistent with the time series forecast

Moreover, it is worth noting that the forecasted relief rally, if it proves accurate, would stop right at the 50 day exponential moving average, shown in Figure 3 below:



Compare the forecast high shown in Figure 1 ($111.28) with the current value of the 50 day EMA, which is $111.24! This suggests the relief rally will be once again stopped in its tracks by the moving average for the index.

Last, from an Elliot Wave perspective, five discrete waves can be counted in the drop from Monday's open. This would suggest that the next wave should provide relief and would likely stop at a Fibonacci retracement of 38%, 50% or 62%. Based on the high and low prices of wave 1 down, a 62% retracement would yield a relief rally high of $110.76.

We may wish to take into account the $0.53 SPY dividend of June 18th, which was distributed one trading day prior to the onset of the downward move. This value adjustment is not explicitly accounted for in the forecast or in the 50 EMA, so it would make sense to adjust the expected retracement accordingly. If we do so, we come up with an adjusted retracement of $111.29!!

All things considered, traders should look for some respite early in the week that follows, with a possible triangular continuation pattern forming by the week's end. However, given the enervated state of the economy, the current, longer-term downtrend and the increased market volatility, a long trade should only be undertaken with stop loss orders in place. And in any case, the drop towards 900 should resume after the holiday weekend, perhaps catalyzed by Friday's non-farm payroll data.



(Relevant Tickers: NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, Nasdaq: MEMKX, Nasdaq: GECMX, Nasdaq: JEVOX, Nasdaq: PEMAX, NYSE: EEM, NYSE: VWO, Nasdaq: VEIEX, Nasdaq: ADRE, Nasdaq: PEBIX, Nasdaq: GMCEX, NYSE: MSF, NYSE: EEV, Nasdaq: REMGX, NYSE: GMM, NYSE: EDZ, AMEX: ETF, NYSE: FEO, NYSE: ESD, NYSE: MSD, NYSE: EMF, NYSE: TEI, Nasdaq: EMIF, NYSE: EFN, NYSE: EMT, NYSE: PCY, NYSE: PXH, NYSE: GMF, NYSE: GUR, NYSE: GML, NYSE: GMM, NYSE: EWX, NYSE: GAF, NYSE: EUF, NYSE: EET, Nasdaq: ABEMX, Nasdaq: AEMGX, Nasdaq: APERX, Nasdaq: PMGAX, Nasdaq: PMCIX, Nasdaq: AOTAX, Nasdaq: AOTCX, Nasdaq: AOTDX, Nasdaq: AEMPX, Nasdaq: AOTIX, Nasdaq: AEMEX, Nasdaq: AAMRX, Nasdaq: AEMFX, Nasdaq: AAEPX, Nasdaq: AEMMX, Nasdaq: ACKBX, Nasdaq: ACECX, Nasdaq: AMKIX, Nasdaq: TWMIX, Nasdaq: NDAQ, NYSE: PIZ, NYSE: PIE, NYSE: PDP, NYSE: DIA, NYSE: SPY, NYSE: NYX, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: IWM, NYSE: TWM, NYSE: IWD, NYSE: SDK, NYSE: ICE, Nasdaq: QQQQ, Nasdaq: NDAQ, NYSE: NYX, Nasdaq: HTOAX, Nasdaq: HTOTX, Nasdaq: HTOBX, Nasdaq: JTCIX, Nasdaq: JTCNX, Nasdaq: JTCAX)

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.

Double-Dip Recession Signs

Today's Coffee

The signs abound this week - the US economy looks poised toward double-dip recession. Weak and weakening economic data piled on against the nascent growth trend, and by the end of the week a revision to Q1 GDP seemed to confirm that stocks are sitting on unsure supports.

"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: ISE, Nasdaq: NDAQ)

Double-Dip Recession

The Dow worked its way lower through the week as a consistent and intensifying message added more and more weight to the back of the market. The economic data flow has been supportive of our forecast for a double-dip recession, if not confirming it. We have been discussing the fundamental reasons for the market to reconsider recent gains for some time now, but early this week, our technical analyst exposed a head and shoulders pattern indicating an imminent downfall. The market did not disappoint either, and this is just the latest bit of prescient forecasting from our expert commentary. We hope you are benefiting.

Detailing the Data

The greatest sign of upcoming double-dip recession was seen in the real estate market this week. Existing Home Sales started the slide, as May's activity fell to an annual pace of 5.66 million, where economists were looking for 6.2 million. The pace of sales was 2.2% below April's rate of 5.79 million units. While the National Association of Realtors (NAR) tried its best to paint it pretty, there's a clear decline showing itself in the absence of tax credit incentive (expired in April). Existing Home Sales measure contracts closings, though, which should benefit from the tax credit through June. Still, sales declined in May; that's bad news, considering they should have come in higher. The NAR attempted to depict May sales levels as "elevated", but the decline from April is more relevant to investors, and so stocks started lower. Inventory of existing homes sit at an 8.3 month supply given May's sales pace, slightly down from 8.4 months in April. Some positive news was found in the price data as well, with 16 out of 20 MSAs showing gains versus year ago levels. The FHFA House Price Index also showed a 0.8% price increase in April over March of this year. Still, the main story was the drop-off in the pace of sales, and it was enough to dominate the tone of trade. (Interests NYSE: BAC, NYSE: WFC, NYSE: PNC, NYSE: TD).

Another sign of double-dip recession, New Home Sales were reported down 32.7% in May versus the month before. The annual pace of sales at 300K, matched poorly against April's rate of 446K. May's activity completely fooled economists, with the consensus estimate sitting far from reach at 400K. These two data points basically raised market awareness regarding a topic we've discussed here often this year. The US economy has been greatly dependent on crutches of support provided by the government, now being pulled away. Meanwhile, unemployment looks anchored, and outside of manufacturing recovery, there's been little to get excited about. And oh by the way, we see manufacturing expansion slowing now also. (Interests NYSE: TOL, NYSE: HOV, NYSE: BZH, NYSE: DHI)

Yet another sign of double-dip recession, ICSC Weekly Same-Store Sales were reported this week down 0.5% week-to-week in the period ended June 19. It's been clear to us that as we move toward normalized absolute sales levels, activity will have trouble making gains in this laboring economy. While sales measured 2.5% above the prior year comparable, this growth rate measure should continue to drift lower in the weeks ahead as comps normalize. (Interests NYSE: M, NYSE: WMT, NYSE: TGT, NYSE: JWN, NYSE: KSS, NYSE: CHS, NYSE: LTD, NYSE: JCP, NYSE: ANN, NYSE: ARO, NYSE: GPS, NYSE: BBY)

Yet another double-dip recession warning bell rang on Thursday when Durable Goods Orders were reported for May. Durable Goods Orders decreased for the first time in six months. Orders dropped off by 1.1%, driven mostly by nondefense aircraft orders but the report offered other reasons for concern as well. Transportation orders fell the most of any component segment, falling 6.9% on the drop-off in high ticket aircraft orders. Excluding defense goods, new orders decreased 1.1%. The most troubling news came from non-defense new orders for capital goods. This segment illustrates business investment spending, an important economic indicator, and it decreased 2.8%. More reason for worry... (Interests NYSE: BA, NYSE: WHR, NYSE: F, NYSE: TM, NYSE: TYC, NYSE: HON)

Okay, so Weekly Jobless Claims improved by 19K over the prior week count when reported this week for the period ended June 19. The problem is that new benefits filers still amounted to 457K, and that's an awful lot people just hitting the unemployment line. Moreover, we've seen no indication of change over a period of years now. There is no real economic expansion beyond growth from the bare bottom activity reached. Also, there is no labor market growth representative of it. When reported next week, census hiring might once again help the nonfarm payroll count, but that is a temporary factor and its time is about up now anyway. A real labor market reading, excluding those temporary jobs, says unemployment is anchored. (Interests NYSE: RHI, NYSE: KFY, NYSE: MAN, NYSE: MWW, Nasdaq: JOBS, NYSE: JOB)

The stock market recovered late on Friday, because Congress pushed through a less intensive restructuring of the financial regulatory rules (the ones that allowed Armageddon, or at least near economic depression). Is that really good news? The market was enthused because it wants to believe people have learned their lessons and won't make those same mistakes again, or because the market is hoping the next batch of Ivy League financial geniuses to be hired by Goldman Sachs (NYSE: GS), J.P. Morgan (NYSE: JPM), Morgan Stanley (NYSE: MS), Citigroup (NYSE: C), Deutsche Bank (NYSE: DB), Credit Suisse (NYSE: CS), etc. will figure a new game to play. Some will say the legislation was too harsh, and it certainly went overboard in some instances... The rally could therefore been indicative of a more expansionary environment that resulted. We'll examine the legislation and get back to you.

The real story Friday was less sexy. First quarter GDP was revised down to +2.7%, from 3.0% at last check and 3.2% on its initial reporting. And what is worse is that what drove the revision was lower personal consumption expenditures. So despite Friday's Michigan Consumer Sentiment reading, the real spending numbers show less enthusiasm.

An increasing number of the so-called financial gurus who spend more time planning their weekends than doing real research (trust me because I've seen it in person) are getting on board the double-dip recession band wagon now. Welcome fellas, and I hope you invite me to the Hamptons in return... Don't worry though folks... when it's time to get off the panic wagon and buy stocks in earnest, we'll be louder than the headless chickens - just like we were in the spring of 2009.



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.

Head & Shoulders Go Mainstream

Technical Analysis

Wall Street Greek Technical Analyst Steven Ferguson offers his latest critical analysis of the market. Ferguson has authored a series of research articles on econometrics and programmatic trade. In this latest piece, Ferguson again sees an ominous Head & Shoulders pattern that portends near-term trouble for traders. Steven also operates Systemata Corp., a model-based controls design firm.

Head & Shoulders Go Mainstream

While many traders may already be familiar with technical analysis as the basis for timing the entry and exit of long or short positions in the stock market, it is also clear that the use of charting patterns, Fibonacci retracements and moving averages is becoming increasingly popular among a wider audience. And even while mainstream media outlets rush to publish more articles on similar topics, Greek readers can rest assured that important emerging trends, whether based on economic data or strictly on stock charts, will never be overlooked.

To that end, it would appear that major indices are now overlooking another precipice and headed for a further downward plunge. Observe the daily chart for the S&P index, which opened up almost 20 points in early trading Monday but closed near the day's low.



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

While the close itself is perhaps a harbinger of future downward movement, the following observations point to upcoming decline as well:

• Note first that yet another Head & Shoulders Pattern has emerged in the S&P as well as in all major indices worldwide. This one is bearish and has a technical target of 900 on the index.


• Note also that a short-lived bounce from the 1050 neckline and above the 200 day moving average (red) has halted at the 50 day moving average (blue). Recall that some institutions observe the 200 day moving average as the basis for segregating bull and bear market conditions.


• Note that the 50 day moving average has begun its decent towards the 200 day moving average. Once the 50 day average is aligned below the 200 day moving average, this signal provides strong confirmation of bear market conditions.


• Note also that daily stochastics, the black and red lines featured at the top of the chart, provide cyclical indication that prices are done topping after closing near the high for many days, and are now likely to resume the downward trend that characterized the month of May.


• Finally, note that prices have recovered 50% of the downward move which began on April 26th at 1220 and ended early June at 1040. The subsequent 90 point bounce has provided a near-perfect 50% Fibonacci Retracement.

While the 13 and 34 week moving averages (not depicted) have not yet realigned to indicate bear market conditions, the current Elliot Wave count suggests that sub-wave 3 down is about to begin. By definition, this move will last longer and move further than sub-wave 1, which constitutes the above described move from 1220 to 1040 and which lasted approximately 30 trading days. This would further imply a nominal downward target of 900, which is also consistent with the Head and Shoulders pattern illustrated in Figure 1.

It is the author's opinion that Wall Street Greek readers should exit any remaining long positions and raise cash under these uncertain market conditions.



Article may interest investors in Nasdaq: MEMKX, Nasdaq: GECMX, Nasdaq: JEVOX, Nasdaq: PEMAX, NYSE: EEM, NYSE: VWO, Nasdaq: VEIEX, Nasdaq: ADRE, Nasdaq: PEBIX, Nasdaq: GMCEX, NYSE: MSF, NYSE: EEV, Nasdaq: REMGX, NYSE: GMM, NYSE: EDZ, AMEX: ETF, NYSE: FEO, NYSE: ESD, NYSE: MSD, NYSE: EMF, NYSE: TEI, Nasdaq: EMIF, NYSE: EFN, NYSE: EMT, NYSE: PCY, NYSE: PXH, NYSE: GMF, NYSE: GUR, NYSE: GML, NYSE: GMM, NYSE: EWX, NYSE: GAF, NYSE: EUF, NYSE: EET, Nasdaq: ABEMX, Nasdaq: AEMGX, Nasdaq: APERX, Nasdaq: PMGAX, Nasdaq: PMCIX, Nasdaq: AOTAX, Nasdaq: AOTCX, Nasdaq: AOTDX, Nasdaq: AEMPX, Nasdaq: AOTIX, Nasdaq: AEMEX, Nasdaq: AAMRX, Nasdaq: AEMFX, Nasdaq: AAEPX, Nasdaq: AEMMX, Nasdaq: ACKBX, Nasdaq: ACECX, Nasdaq: AMKIX, Nasdaq: TWMIX, Nasdaq: NDAQ, NYSE: PIZ, NYSE: PIE, NYSE: PDP, NYSE: DIA, NYSE: SPY, NYSE: NYX, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: IWM, NYSE: TWM, NYSE: IWD, NYSE: SDK, NYSE: ICE, Nasdaq: QQQQ, Nasdaq: NDAQ, NYSE: NYX, Nasdaq: HTOAX, Nasdaq: HTOTX, Nasdaq: HTOBX, Nasdaq: JTCIX, Nasdaq: JTCNX, Nasdaq: JTCAX.

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.

British Austerity

Wrong Way Winston

British austerity measures were announced today, and while the British budget chief says they're fair, we think the details show otherwise. Whether they are or not, extreme fiscal management at times like these is precisely the wrong thing for Winston to do now - as prescribed by Ben Bernanke. Given that the entirety of Europe seems to be engaging in the new fad called austerity, we expect economies to tank across the pond, nationalism to rise and the union to possibly crumble.

"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.

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British Austerity

British Treasury Chief, George Osborne called it "the unavoidable budget". Some have billed the new British measures as the toughest peace-time fiscal management action in UK history. Others compare it to the spending retrenchment of the early Thatcher years. The budget unveils spending cutbacks amounting to $25 billion over the next five years.

Osborne said the cuts would not impact the least privileged (a kind way to say poor), but take a closer look. A good portion of the British budget cuts target welfare spending. For instance, there will be a three-year freeze on benefits paid to parents for raising children. The poor generally have children, and more of them than the too-busy-to-be-bothered nanni hiring upper crust. The costs of raising children is more of a burden to the poor than rich as well, but you cannot ask human beings to not have any children, a gift of life.

The budget also limits subsidies for public housing, and it will employ new qualifications (read more critical) for those receiving benefits due to disabilities. This Osborne chap seems to be speaking out of one end of his mouth and acting with the other. Hey, a blank statement that the poor will not affected will not stop the media from reporting that it does, chap.

In keeping a fair balance to those who pay for British cutbacks, the U.K. will raise its retirement age, squeezing the most it can out of its aged. I guess it's only fair that the grayed and crooked work a little longer for the good of London, and take some more stress off the rich and well-to-dos. So we punish the poor and the old then aye? I guess London is counting on those folks being too feeble and weak to protest. To be fair, people are living longer these days due to advances in medicine, and they are in better shape as well generally. Maybe we can let this one pass.

What can't pass us by is the British move to raise the Value-Added-Tax to 20%, from 17.5%. The value added tax ensures producers and sellers do not simply pass on taxes to customers, without paying anything themselves. Instead, producers and sellers pay a tax, while still passing the increase on to you. Also, this type of tax does not distinguish between rich and poor, and so the poor end up hurting more because of it, since the money they pay represents a greater portion of their income. Winston, you've done it again! How the new British Administration can pass these measures off as supportive of the poor and elderly is bewildering to me.

While Winston raises $16.3 billion through 2015 via welfare cuts, he'll raise just $2.9 billion via a tax on banks (I don't like indiscriminate taxes either, but this is supposedly to insure against future bank related risks - like the ones just seen played out). Okay, he's also raising the capital gains tax, though he is almost apologetic about it, not via his words, but as voiced by his cutting of welfare (it seems to me an appeasing action for the cold-hearted among the rich in my view). The only bit of aid to the elderly that I can find is Winston's promise to state sponsored retirees, providing them with cost of living increases to their pensions. I guess Winston is just protecting his own here; don't forget he'll be a state sponsored retiree some day. Gee, thanks Winston... Also, he said he would "make sure that the measures are fair." Well, thanks again, but actions speak louder than words.

The U.K. wants to avoid crisis, but while not there yet, you might consider less aggressive actions spread over longer time span. Or, you might try being a bit more creative and perhaps original in finding money, instead of hitting up the poor. It's just so cliche'! It's even reminiscent of old school monarchies situated right there in jolly old England. Well, that spurs a thought - perhaps if the king is back, then Robin Hood might return as well.

I'm a buyer into the the Keynesian view that we cannot pull away life support, or rather the bare essentials, from our struggling economy, lest we flirt with depression. But you do not have to take my word for that; just read the statements of Fed Chairman Bernanke over the past three years.



This article should interest investors in the shares of Barclay's (NYSE: BCS), Lloyds Banking Group (NYSE: LYG), Allied Irish Bank (NYSE: AIB), British Airways (NYSE: BAY), BP (NYSE: BP), British Sky Broadcasting (NYSE: BSY), Currency Shares British Pound (NYSE: FXB), DFA United Kingdom Small Company Fund (Nasdaq: DFUKX), iShares MSCI UK (NYSE: EWU), NYSE: BAC, NYSE: JPM, NYSE: GS, NYSE: MS, NYSE: C, NYSE: DB, NYSE: CS, NYSE: UBS, NYSE: STD, NYSE: WFC, NYSE: NBG, NYSE: AIG, NYSE: FNM, NYSE: FRE.

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.

Yuan, Mahmoud, BP and Me

Market Summary

As it turns out, the Chinese yuan and Mahmoud Ahmadinejad make an imperfect combination

"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)

Yuan, Mahmoud, BP and Me

The Chinese Yuan

The absence of US economic reports Monday left the market to international devices. One prominent factor emerged, as China signaled it would allow the yuan to float more freely. Yuan strengthening would be a good thing for US exporter competitiveness, and would also aid Chinese importers with their purchases of raw materials. Thus, basic materials stocks led today's rally that began in Asia and triggered a gap higher open in the US. However, by the end of the day, stocks had given back all of their gains. As Chinese imports become as important or more important to China than its exports, the Chinese will alter their currency policy to suit.

Mahmoud Ahmadinejad

Likely playing a role in the down slide, a US Congressional panel agreed on a set of tough sanctions to be imposed on Iran. The sanctions include the long-threatened penalty on companies that sell refined petroleum, like gasoline, to Iran. With all its oil, Iran is still unable to refine product on its own, and still imports all its gasoline. Iranians already pay a steep price for their gas, and now will have trouble finding it at all. This is the noose the US was hoping to loop around the neck of the Iranian government. Once passed by Congress, it should drive intensified protests and possibly revolution if effectively applied. The President will have some leeway on how tightly the noose is pulled, and so will have an effective bargaining chip to deal with the Iranians.

However, the move also ups the ante to the unpredictable Iranian regime and its radical President Mahmoud Ahmadinejad. The uncertainty that results from this legislative intensification impacts stocks negatively. Iran has threatened time and again to return pain for this level of sanctioning, and now it'll be their move to make. The Iranians already barred two IAEA inspectors from further examining nuclear facilities Monday, accusing them of manipulating data.

Going Nuclear on BP

Speaking of nuclear and oil, the US government sent BP (NYSE: BP) a new invoice for $51.4 million, its latest needs for clean-up expenses. BP also recently agreed to the US government's demand to put $20 billion in escrow toward clean-up efforts, but Anadarko Petroleum (NYSE: APC) held back its share while directing all the blame toward BP. Looks like BP will be digging deep into that account too, since it will not have its relief well drilled until August.

Corporate News Drivers

The day's corporate drivers were led by news that Congress would rein in credit and debit card issuers again by cutting swipe fees they charge retailers for debit card transactions. Financial regulatory reform is going to include this facet. Financials will take a hit on this legislation, especially the ten largest banks in the nation who collect the fees passed on to them by Visa (NYSE: V) and Mastercard (NYSE: MA). Retailers get the gain, as they'll save the fee, but there's no guarantee that savings will be passed on to you in product price markdowns (NYSE: WMT, NYSE: M, NYSE: JCP, NYSE: TGT, NYSE: GPS, NYSE: ARO, NYSE: AEO).

Having already anticipated the move, the big banks were relatively unaffected today (NYSE: JPM, NYSE: BAC, NYSE: C, NYSE: MS, NYSE: GS, NYSE: WFC, NYSE: TD, NYSE: PNC, NYSE: BCS, NYSE: DB). Visa and Mastercard shares rose sharply, as Congressmen working on the legislation said the Fed could not regulate the network fees they charge.

The CEOs of ArcelorMittal (NYSE: MT), United States Steel (NYSE: X) and Nucor (NYSE: NUE) address the audience at a metal market conference running through Wednesday. The day's earnings reports included news from Ennis (NYSE: EBF), GameTech Int'l (Nasdaq: GMTC), Simulations Plus (Nasdaq: SLP), Somanetics (Nasdaq: SMTS), Sonic (Nasdaq: SONC) and Steelcase (NYSE: SCS). Webcasts were presented by Acergy (Nasdaq: ACGY), Biovail Corp. (NYSE: BVF), Corn Products Int'l (NYSE: CPO), Covanta Holding (NYSE: CVA), Exelixis (Nasdaq: EXEL) and Valeant Pharmaceuticals (NYSE: VLX).



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.

Souvlaki Recipe - Lamb Shish Kebab

Summer barbecue season means souvlaki for our family

Greek Cooking Columnist, Pinelopi, offers her favorite Greek family recipes as part of Wall Street Greek's weekend content. Please feel free to share your family's favorite Greek recipe (or near Greek) by submitting them (with a photo and brief description or bio of yourself) to this email address: "recipes @ WallStreetGreek .com". We will very likely publish your recipe and photo. Now please enjoy Pinelopi's lamb souvlaki recipe, which you may know better as shish-kebab.

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The traditional start to the American barbecue season is Memorial Day, though I am sure most Americans fire up the grill much earlier than that. Greek-American tradition has extended Greek families the size of some small nations cooking out as early as Easter, and the object of our desire is lamb. Tomorrow, June 21st, marks the first day of summer, so by now nearly all of us are cooking out. Independence Day is just around the corner, so another big barbecue party is queueing up for our home. I initially authored this article for Memorial Day, and I describe that holiday's scene in our home in the paragraphs that follow. My souvlaki recipe can be found below.

After visiting our loved ones at the cemetery with the offering of prayers and flowers, our family prepares to celebrate the holiday with a good old fashioned barbecue. Our flag is already raised, and whether it is still or waving with the passing of a gentle breeze, it is always a stirring feeling to see. Dad has the watermelons lined up on the kitchen floor, and has given each one a thump to decide the first to be cut and placed to chill. Dad takes Odi (short for Odysseus), our brittany spaniel, out for his morning run. He's been bathed the day before. Odi seems to sense good things are coming today, and becomes his master's shadow, not wanting to miss a thing.

As a puppy, we had no inkling that Odi would grow to become like his namesake. He escapes by climbing over the fence or by sneaking under it to seek his adventures. He runs by the house once or twice, just to see what's happening there, but he never comes in for at least three hours. We cannot know what he has done, where he has been or what he has seen, but he returns spent.

The vegetable garden has been planted since before Mother's Day, and is growing nicely. Our three fig trees have already set tiny figs. Two are the mission figs and one produces white figs. The pear tree is in blossom, as well as the dwarf Meyers Lemon Tree, though it has some lemons growing as well. Our grape vine has a few tiny white grapes showing, and we have already cut some leaves for stuffing (see our future article on stuffed grape leaves).

After a morning coffee, we begin to prepare the food for the grill.

We are making Souvlaki of leg of lamb, also known as shish-kebab!

Souvlaki Recipe - Lamb Shish Kebab

Making souvlakia is a family affair. Many hands get the job done quickly, and the work tends to bring out memories and stories of the past and sometimes present. Perhaps it's because it provides time without worries or stress, since we are all concentrating on the job at hand. For instance, how many of each product did we place on each skewer? Such a simple task can be very relaxing, and may well be the factor that encourages the story telling, which most times creates joy and much laughter.

Cooking brings families together before we even gather around the table. If you would care to hear a suggestion, make a date to cook with someone soon – and then "Kali orexi!" or bon appétit. This is the fruit of your labor.

Ingredients:
(Feeds a large family plus some, and should be enough for 25 to 30 skewers)

• 2.5 pounds of leg of lamb
• 4-5 firm plum tomatoes, or an adequate amount of cherry or grape tomatoes
• 4-5 green peppers
• 1-2 large onions (Dad likes red onions)
• 1.5 pounds of mushrooms (button mushrooms)
• Marinade for the meat:
• ½ cup of pure olive oil (Dad leaves the oil out)
• 1 quart of red wine of your tasting (I like Mavrodafne)
• 2-3 cloves of minced garlic
• 2 table Spoons Oregano
• 2 table spoons of salt (or to taste)
• 1 teaspoon of pepper
• Stir it all up and marinade meat for 1 hour or overnight if you have time

Let's Get to Cooking the Lamb Souvlakia!

1. Place wooden skewers in a pan of water for a half hour so the wood does not burn
2. Cut the lamb into cubes the size of a walnut and place in marinade if not already done
3. Cut the vegetables the same size as the meat
4. If the mushrooms are small, leave them whole; if not, cut them in half
5. Before putting the souvlakia together add the vegetables to the maranade and stir gently
6. Start putting the souvlakia together (start and finish each skewer with meat to keep the souvlaki together):
   * 1 piece of meat
   * 1 tomato
   * 1 meat
   * 1 pepper
   * 1 meat
   * 2 slices of onion
   * 1 meat
   * 1 mushroom
   * 1 meat
7. Cook on the grill, turning occasionally until the meat is cooked through.

Souvlaki Serving Options:

1. With a side order of rice pilaf and a couple tablespoons of Greek yogurt on top or tsatsiki sauce beside (also tzatziki)
2. You can heat pitas and place the souvlaki within it, and add tsatsiki sauce

Kali Orexi!

Relevant tickers include Smithfield Foods (NYSE: SFD), Brasil Foods SA (Nasdaq: BRFS), Tyson Foods (NYSE: TSN), Hormel (NYSE: HRL), Seaboard (NYSE: SEB), Pilgrim's Pride (NYSE: PPC), Sanderson Farms (Nasdaq: SAFM), Industrias Bachoco (NYSE: IBA), Balchem (Nasdaq: BCPC), Zhongpin (Nasdaq: HOGS), Bridgford Foods (Nasdaq: BRID), Sara Lee (NYSE: SLE), Pepsico (NYSE: PEP), Unilever NV (NYSE: UN), Unilever plc (NYSE: UL), General Mills (NYSE: GIS), Kellogg (NYSE: K), Campbell Soup (NYSE: CPB), ConAgra Foods (NYSE: CAG), Mead Johnson Nutrition (NYSE: MJN), J.M. Smucker (NYSE: SJM), McCormick (NYSE: MKC), Green Mountain Coffee (Nasdaq: GMCR), Ralcorp (NYSE: RAH), Del Monte (NYSE: DLM), Corn Products (NYSE: CPO), Flowers Foods (NYSE: FLO), Treehouse Foods (NYSE: THS), Gruma S.A.B. (NYSE: GMK), American Italian Pasta (Nasdaq: AIPC), Diamond Foods (Nasdaq: DMND), J&J Snack Foods (Nasdaq: JJSF), Lance (Nasdaq: LNCE), B&G Foods (NYSE: BGS), Seneca Foods (Nasdaq: SENEB), Smart Balance (Nasdaq: SMBL), Farmer Brothers (Nasdaq: FARM), John B. Sanfilippo (Nasdaq: JBSS), China Marine Food (Nasdaq: CMFO), MGP Ingredients (Nasdaq: MGPI), China Nutrition (Nasdaq: CNGL), Overhill Farms (AMEX: OFI), Omega Protein (NYSE: OME), Key Technology (Nasdaq: KTEC), Tasty Baking (Nasdaq: TSTY), Inventure Foods (Nasdaq: SNAK), Golden Enterprises (Nasdaq: GLDC), Kroger (NYSE: KR), Companhia Brasileiria (NYSE: CBD), Safeway (NYSE: SWY), Delhaize (NYSE: DEG), Whole Foods (Nasdaq: WFMI), SuperValu (NYSE: SVU), Casey's General Stores (Nasdaq: CASY), Ruddick (NYSE: RDK), Weis Markets (NYSE: WMK), Winn-Dixie (Nasdaq: WINN), Blue Square Israel (NYSE: BSI), Ingles Markets (Nasdaq: IMKTA), Village Super Market (Nasdaq: VLGEA), Pantry (Nasdaq: PTRY), Arden (Nasdaq: ARDNA), Susser (Nasdaq: SUSS), QKL Stores (Nasdaq: QKLS), Wal-Mart (NYSE: WMT), Target (NYSE: TGT), Costco (Nasdaq: COST), BJ Wholesale (NYSE: BJ), Coca-Cola Hellenic (NYSE: CCH), OTE Telecom (NYSE: OTE), National Bank of Greece (NYSE: NBG), Darden (NYSE: DRI), Brinker (NYSE: EAT), Dryships (Nasdaq: DRYS), Navios Maritime Partners (NYSE: NMM), Navios Holdings (NYSE: NM), Tsakos Energy Navigation (NYSE: TNP), Genco Shipping (NYSE: GNK), Danaos (NYSE: DAC), Paragon Shipping (Nasdaq: PRGN), Top Ships (Nasdaq: TOPS).

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.

Secret Swiss Bank Accounts Expose Switzerland

Turn your account info in to the IRS or your old pal (wink, nod) at the Swiss bank office will turn you in. The Swiss government today concluded a long drawn-out legislative and legal process, finally allowing and enabling Swiss banks to turn over the names of account holders to international authorities investigating tax evasion.

"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: UBS, NYSE: CS, NYSE: FXF, NYSE: EWL, NYSE: SWZ, Nasdaq: XSWZX, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD)

Secret Swiss Bank Accounts Expose Switzerland

Your favorite secret Swiss banker is turning you in, and if you have ignored the IRS' kind offer to disclose your account information ahead of time, you might find yourself in prison soon. UBS (NYSE: UBS) cut a deal with the US government some time back, through which it agreed to a retribution payment of $780 million to cover its enabling of American tax fraud via Switzerland's secret bank accounts. UBS representatives faced criminal prosecution if they did not agree to talk names, and UBS itself had to weigh the potential loss of its US business, which hung in the balance. In the end, the Swiss sold you out - all you who were using Swiss banks to hide assets from your wives and wealth from your governments.

After the agreement though, the proud Swiss, a nation that has attracted so much banking wealth due to the secrecy of its system, determined the deal illegal. A Swiss court ruled that it violated Swiss law. Thus, the law would have to be altered for the deal to be consummated. Certain Swiss politicians did not like the idea of their nation possibly falling into the cross hairs of the United States, and so took up political debate on the topic. Today's action basically averted a public referendum that would have led Switzerland to cross the line the Americans drew in the sand.

When the deal was first penciled in February of 2009, we wrote "Yesterday's news that UBS would settle with U.S. tax authorities, and in so doing, provide information on U.S. investor funds kept in secret accounts, has effectively destroyed significant value in Swiss bank firms. The secrecy distinction served as a differentiators, providing Swiss banks with a means of drawing excess deposits from rival institutions across borders. That's not to mention the aristocratic appeal of Swiss banking, which mostly resulted from its exclusivity and secrecy."

In March 2009, we added, "Call me crazy, but this looks like a mistake to me! The Swiss have decided to play by the rules, adopting OECD standards on tax evasion. They will offer specific information to tax authorities in cases where convincing evidence is available. Clearly though, that is going to be somebody's opinion to form. The Swiss believe that not sharing information in this limited manner would effectively blacklist them at the OECD and maybe more organizations, and they expect that would threaten their banking system and economy. A great portion of the world's capital is hidden away in Swiss accounts for a reason though, anonymity. I would trade blacklisting to keep that, as it is the elite and exclusive stigma that attracts large depositors, and in some (read many) cases dirty money. I think the Swiss will see a loss of funds now, though many other once discrete banking options are lining up to play by the rules as well. From an idealist's and also honest man's perspective, and not a businessman's, I like the Swiss decision. I just think it's bad business is all, however ironic that may be."

A ton of money already bled out of the Swiss banks ahead of the pending account disclosures. Capital found its way to other similarly secret markets like Luxembourg, Singapore, Cyprus and Dubai. Still, some money surely stuck around, expecting the Swiss government to preserve its banking market appeal. While Switzerland was not the only game in town, it was the one westerners (and easterners for that matter) were most comfortable leaving their billions with.

Switzerland is not a part of the European Union, nor does it use the euro single currency, so we might not see an obvious reason to attribute EU pressure to the decision. The risk of losing the American market is catalyst enough, but recall Germany and France took strong stances against Swiss banking policy as well. Once tax income became scarcer, the Germans wanted their rightful share of monies hidden in Swiss accounts. Losing Europe and the US made the Swiss decision easier, though still painful. I would not be investing in Switzerland or Swiss firms today. Swiss stocks inched higher on the salvation of western business, with both UBS (NYSE: UBS) and Credit Suisse (NYSE: CS) fractionally up, but over the long-term, this hurts the Swiss economy in my view.



Article should also interest investors in Deutsche Bank (NYSE: DB), Banco Santander SA (NYSE: STD), IberiaBank (Nasdaq: IBKC), Barclays (NYSE: BCS), Mitsubishi UFJ Financial (NYSE: MTU), Itau Unibanco Holding (Nasdaq: ITUB), Lloyd's Banking Group (NYSE: LYG), Mizuho Financial (NYSE: MFG), Banco Santander- Chile (NYSE: SAN), Citigroup (NYSE: C), National Bank of Greece (NYSE: NBG), Allied Irish Bank (NYSE: AIB), Credicorp (NYSE: BAP), Westpac Banking (NYSE: WBK), Grupo Financiero Galicia (Nasdaq: GGAL), Banco Latinamericano de Comer (NYSE: BLX), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC), NYSE: FXF, NYSE: EWL, The Swiss Helvetia Fund (NYSE: SWZ), Nasdaq: XSWZX.

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.

Quadruple Witching Hour Rings

Today's Coffee

The quadruple witching hour rings in market volatility, but BP can manage that on its own these days. BP headlines today's wire, as its CEO faces criticism for his dead man talking testimony of Thursday. Meanwhile, a Swiss Parliament action might have tax evaders looking for somewhere to hide from US inspectors.

"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.

Quadruple Witching Hour Rings

It's the Quadruple Witching hour, the day on which contracts for stock index futures, stock index options, stock options and single stock futures (SSF) all expire. Days like these can be volatile for markets, but companies like BP (NYSE: BP) are making enough news for that on their own.

BP Under Pressure

A day after the circus on the Hill, where the latest monkey to walk the tight rope was BP's CEO Tony Hayward, BP just cannot escape its PR beating. This morning, British newspapers are not painting the day's events sympathetically in favor of the "tired" and "savaged" Hayward. In fact, British commentators are referring to Hayward's personality yesterday akin to that of an undertaker. Times reporter Giles Whittell wrote, "Americans say he looks like Mr Bean. Make that Mr Has-been." Just when BP thought things could get no worse, Moody's (NYSE: MCO) downgraded BP's senior unsecured ratings and long-term debt securities to A2. The action followed S&P's (NYSE: MHP) cut from Thursday. Moody's said, "This assessment reflects a substantial upward revision of the estimated size of the leak, the continued failure to bring the leaking Macondo well under control, and the mounting costs and claims for damages." BP shares started the morning sharply higher, and were still up over 1% after the downgrade.

Swiss Parliament Acts Against Account Holders

The Swiss parliament passed legislation today that will allow Swiss banks like UBS (NYSE: UBS), Credit Suisse (NYSE: CS) and others to reveal the names of US and international tax evaders.

Corporate Activity

Internet Capital Group (Nasdaq: ICGE) is holding its annual shareholders meeting today. Share splits include several reverse splits: Aegena Earth & Marine (OTC: AEGZF.OB), Extreme Mobile Coatings (OTC: EMWW.OB), FOREX365 (OTC: FRXT.OB), Geneva Resources (OTC: GVRS.OB). Share offering lockup restrictions expire for Kinder Morgan Energy Partners (NYSE: KMP). Alloy (Nasdaq: ALOY) reports earnings today. International Game Technology (NYSE: IGT) has its dividend ex-date today (pays $0.06).

Biggest Early Gainers

Cowlitz Bancorporation (Nasdaq: CWLZ), Molecular Insight Pharmaceuticals (Nasdaq: MIPI), Astea Int'l (Nasdaq: ATEA), Amylin Pharmaceuticals (Nasdaq: AMLN), Quaterra Resources (AMEX: QMM), Jacksonville Bancorp (Nasdaq: JAXB), Allied Irish Banks (NYSE: AIB), Pro-Dex (Nasdaq: PDEXD), GrayMark Healthcare (Nasdaq: GRMH), Bridgeline Digital (Nasdaq: BLIN), Lucas Energy (AMEX: LEI), Gramercy Capital (NYSE: GKK), Perma-Fix Environmental (Nasdaq: PESI), Goldcorp (NYSE: GG), Entropic Communications (Nasdaq: ENTR), Gulf Island Fabrication (Nasdaq: GIFI), Veeco (Nasdaq: VECO), VisionChina Media (Nasdaq: VISN), Research Frontiers (Nasdaq: REFR), EnviroStar (AMEX: EVI), support.com (Nasdaq: SPRT), Covanta Holding (NYSE: CVA), Rubicon Tech (Nasdaq: RBCN).

Worst Early Losers

Adolor (Nasdaq: ADLR), Valpey Fisher (Nasdaq: VPF), WVS Financial (Nasdaq: WVFC), Banner Corp. (Nasdaq: BANR), GameTech International (Nasdaq: GMTC), Cascade Financial (Nasdaq: CASB), First PacTrust Bancorp (Nasdaq: FPTB), USA Technologies (Nasdaq: USATP), MTR Gaming (Nasdaq: MNTG), Onstream Media (Nasdaq: ONSM), IFM Investments (NYSE: CTC), Wimm Bill Dann Foods (NYSE: WBD).



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.

Spain's Financial Stress Test

Ole!

Spain, while under financial stress, is seeking to employ financial stress tests upon its banks. The action could prove the perfect medicine for what ails Spain, providing investors comfort in the condition of the Spanish banks and potentially alleviating pressure on Spanish borrowing costs.

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Spain's Financial Stress Test

Spain auctioned off long-dated government bonds today. With Spanish yields pumped and bond prices relatively low, and with Spain seemingly still distant from disaster, domestic demand for the new issuance was strong. The Spanish Treasury sold a combined EUR3.479 billion of the 4% April 2020 and 4.70% July 2041-dated government bonds, just slightly short of the upper end of the EUR2.5 billion to EUR3.5 billion range it targeted. It actually received EUR6.83 billion worth of bids for the bonds, so the news was somewhat reassuring this morning.

Still, like Greece, the Spanish government contends against paying high yields for its borrowings which the Europeans tend to blame on speculators. The spread on Spanish government bond yields over German bunds, the euro zone benchmark, Thursday reached their highest levels since the introduction of the euro currency. The average yield on the 10-year bond marked 4.864%, compared with 4.045% at the previous auction in May.

Those who understand market dynamics know that anomalies work themselves out if profit does not follow a trade. So, patience is warranted in Spain and Greece, though definite and creative financial efforts are wise now to secure financial stability, and in turn, bring borrowing costs down. I say creative, because I believe simple direct taxation and budget cuts are ill-timed now and too ambitious; they threaten to do significant damage to the Greek economy, and the same applies to Spain. I reiterate my often-stated belief for the same reason Ben Bernanke professes against such action in the US; it's because it is precisely the wrong action to implement during recession (lessons learned from the Great Depression). I again say, spread out austerity over a longer time span, support your EU brethren, and find more creative ways to restore fiscal responsibility.

Spain is engineering an effort to mitigate its borrowing costs, and it is employing a borrowed idea from the US Federal Reserve's recent history. Germany is boldly pushing its EU partners to publish bank stress test results, which might help to support the Spaniards (considering they want it). We are assuming Greece would rather not know what lies beneath the balance sheets of its local money lenders, though we hear the National Bank of Greece (NYSE: NBG) has diversified risks and might be fine.

It's possible that enough other (i.e. Hungary) nations have something to hide to keep the stress test results from being published in detail. The tests are currently underway, but a previous test led to a vague release of information, rather than the detail that would truly appease the market.

The Europeans just don't get it when it comes to market psychology. Investors will not take a vague reassuring statement seriously. European cluelessness on this topic is what drove Greece to the cliff's edge. The market wants transparency and action! Kudos to the Spaniards for moving forward in this way, but let's see what gets published before we raise their hand in the air. The Spaniards face significant borrowing repayments in July, and high borrowing costs must not persist for Spain to avoid trouble. In case you did not realize it, it is the pressure of the bond market that has Spain and others moving preemptively. Thus, the free market is acting in a favorable manner, pushing financially irresponsible nations to get their act together.



Editor's Note: Article should interest investors in iShares MSCI Spain Index (NYSE: EWP), The Ibero-America Fund (NYSE: SNF), The Ibero-America Fund (Nasdaq: XSNFX), European Equity Fund (NYSE: EEA), Vanguard European Stock Index (Nasdaq: VEURX), Powershares FTSE RAFI Europe (NYSE: PEF), Europe 2001 (NYSE: EKH), S&P Emerging Europe (NYSE: GUR), Ultrashort MSCI Europe (NYSE: EPV), Vanguard Europe Pacific (NYSE: VEA), Wisdomtree Europe SmallCap (NYSE: DFE), Wisdom Tree Europe Total Div (NYSE: DEB), iShares S&P Europe 350 (NYSE: IEV), Morgan Stanley Eastern Europe (NYSE: RNE), DWS Europe Equity A (Nasdaq: SERAX), DWS Europe Equity B (Nasdaq: SERBX), Fidelity Europe (Nasdaq: FEUFX), Fidelity Europe (Nasdaq: FIEUX), ICON Europe A (Nasdaq: IERAX), Pioneer Europe Fund (Nasdaq: PBEUX), ProFunds Europe 30 (Nasdaq: UEPIX), Putnam Europe A (Nasdaq: PEUGX), Rydex Europe 1.25x (Nasdaq: RYAEX).

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