Stock Market Analysis 09-01-10

Stock Market Analysis
Greek Factor: +2

The market got all giddy this morning, thanks to solid economic data out of China that we've well covered in the paragraphs below. However, take note that the ADP labor market data received this morning gives good reason for caution as we near Friday's all important Labor Department release. The "Greek Factor" ranges from +3 to -3, and is a subjective measure of The Greek's view of the market impact of individual and aggregate news and the day's scheduled events.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

(Tickers: Nasdaq: AAPL, NYSE: LMT, NYSE: F, NYSE: RHI, NYSE: KFY, NYSE: MAN, NYSE: MWW, Nasdaq: JOBS, NYSE: JOB, NYSE: GD, NYSE: RTN, NYSE: COL, NYSE: ROP, NYSE: HNZ, NYSE: SAI, NYSE: BF-A, NYSE: BF-B, NYSE: BGP, NYSE: PSS, Nasdaq: EXPR, Nasdaq: AMSWA, Nasdaq: CWST, Nasdaq: CHRS, NYSE: CGA, Nasdaq: FCEL, NYSE: GCO, Nasdaq: GIII, Nasdaq: GLBC, NYSE: GEF, NYSE: HOV, NYSE: IL, Nasdaq: JOYG, Nasdaq: LTXC, Nasdaq: MAGS, Nasdaq: MATK, NYSE: OXM, Nasdaq: TTPA, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ)

Stock Market Analysis

Today's stock market analysis highlights the importance of emerging markets on US trade. China released some reassuring data, and it's carrying trade today. That said, the omen offered by ADP, should not be ignored as we near Friday's DOL release. Meanwhile, a mysterious bit of good news from the manufacturing sector seems curious, but is not important due to the insignificance of the current sector. We'll do our best to cover as many of the reports as we can in detail today, within follow up articles.

China Economic Data
Greek Factor: +2

Here's your market moving factor within today's stock market analysis. Chinese manufacturing rebounded while auto sales gained sharply in August. A world of hope is banking on this news today, as it's why people go gaga over China. A measure of manufacturing showed production and new order activity both gained in August.

The HSBC Purchasing Managers Index, a seasonally adjusted index designed to measure the performance of the manufacturing economy in China, improved to its highest level in three months, at 51.9. Meanwhile, the state-sponsored China Federation of Logistics and Purchasing said its PMI rose to 51.7 in August from 51.2 in July. The gain is not much, and it's only slightly above the economic expansion water-line of 50, but even minor improvements in the world's second largest economy bear watching, especially within its manufacturing sector. They translate into big numbers in this manufacturing behemoth. And HSBC's (NYSE: HBC) data-point adds validity to an otherwise suspect producer of information, the government sponsored form.

Meanwhile, Chinese auto sales only solidified reason for positive feeling this morning. Investors worried a bit when China's Q2 GDP pace eased to 10.3%, from 11.9% in Q1. However, the report this morning from the Cabinet's China Automotive Technology and Research Center, showing August auto sales jumped 56% versus the year ago period, to 1.21 million; that helped restore confidence. If China's double-dip basically amounts to a hiccup, then investors have good reason to cheer. There is hope the US might find demand for its exports in China's domestic marketplace, and US manufacturers like Ford (NYSE: F) have growth markets to get giddy about. This is a worthy positive driver this morning, and could carry the day over the employment data. However, the problem is, we have a scary employment data-point scheduled for the close of the week.

Challenger Job-Cuts Report
Greek Factor: +1

Challenger's Job-Cuts Report came first today in the early AM hours. There was no forecast available, and so we simply compare the rate of job-cuts versus recent history for measurement of its market impact. Challenger, Gray & Christmas reports that announced corporate layoffs amounted to 34,768 in August. Now, the popular press has jumped all over Challenger's press release, hyping the fact that the layoff count was the lowest in over a decade. Last month's report for July showed announced corporate layoffs totaled 41,676, and compared against June's 39,358. Is 35K really that much less than recent months? Obviously, that's rhetorical, and I want to also remind readers that we're talking about August, the slowest month for economic activity in America perhaps, if not July. Just as you likely vacationed this month, so did corporate executives, middle managers and human resource representatives. Let's see how September and October shape up before we get too excited here. And one more thing, less layoffs do not necessarily translate into more hiring, though there certainly should be a relationship between the two. I'll give this a small positive factor this morning, simply because the few people trading this week have clearly jumped on the news in the pre-market. Expect the impact to play no role past the morning trading today. This is not a strong positive economic factor for the long-term.

ADP Private Employment Report
Greek Factor: -2

The market is always more interested in ADP's Private Employment Report. Once again, there is no economists' consensus forecast for the data-point. This data-point is instead compared against forecasts of the Labor Department's data, which will be released Friday. The news from ADP was bad for August, as it showed the private sector is estimated to have shed a net of 10K jobs. That offers a bad omen for Friday's data, where economists expect census worker layoffs to take overall change in employment lower by 80K. July's data was revised lower, now showing an increase of 37K jobs, down from +42,000 at initial report. This is a negative factor, as economists are reportedly looking for a positive figure for private nonfarm payrolls. The impact here seems minimized in early trading, but pay attention to the message this report offers the insightful for Friday.

Mortgage Application Activity
Greek Factor: +1

The Mortgage Bankers Association's Weekly Applications Survey was released in the premarket. This week's report covering the period ended August 27 showed the Market Composite Index of mortgage applications increased 2.7%, versus 4.9% the week before. The latest gains came on the 2.8% increase of the Refinance Index, which benefited from even lower contracted mortgage rates. On average, fixed rate mortgage rates for 30-year and 15-year mortgages fell to 4.43% (from 4.55%) and 3.88% (from 3.91%), the lowest in recorded history (1990). Purchase Applications also showed life this week, rising 1.8%. Be careful of seasonals here, as the unadjusted Purchase Index fell 0.4%. Thus, it would be premature to say we've found a rate level that might inspire some home purchase demand. That said, we have to give this data a positive rating this week, as it's clearly positive.

ISM Manufacturing Index
Greek Factor: +1

ISM's latest manufacturing index for August proved counter to economists' expectations. The pros, and we must admit The Greek, saw this index easing further. Economists were forecasting the index to drop to 53.0, from 55.5 in July. However, ISM reported it improved to 56.3. The only reason I have not offered a more positive rating for the data-point is because of the relative insignificance of today's US manufacturing sector. Sorry Ford friends (NYSE: F).

Construction Spending
Greek Factor: -1

Construction Spending fell 1.0% in July, against consensus expectations for a fall of 0.6%. The only reason this factor is not worse, is because nothing new has been reported. The construction market is full of despair. Activity continues to suffer in the absence of the housing tax incentive, but really due to the sorry state of our economy.

Motor Vehicle Sales
Greek Factor: Important

Motor Vehicle Sales will be reported throughout the day. Economists expect the aggregate level of domestic vehicle sales to run at an annual rate of 8.7 million. That would match July's sales rate, which had increased from June's 8.4 million. Combined light truck and auto sales of domestic and imports gained to 11.5 million in July.

Oil Inventory
Greek Factor: Not Important

At 10:30, look for the EIA's Petroleum Status Report. The latest data covering the period ended August 20 showed crude oil inventories increased by 4.1 million barrels. Total motor gasoline inventories increased by 2.3 million barrels. Both crude and gasoline continued to mark above the average range for this time of year.

Fed Speak
Greek Factor: Important

The Fed speaker of the day will be Dallas Federal Reserve Bank President Richard Fisher, with an address scheduled for 12:30. The Fed's Neighborhood Stabilization Summit kicks off in Washington, as the power mongering independent organization takes on home foreclosures this day.

Corporate Wire
Greek Factor: Important

In corporate news, Apple (Nasdaq: AAPL) will introduce a few more blockbuster new products and services Wednesday in its usual grandiose fashion. Presenting at the Morgan Stanley Global Industrials Conference, Lockheed Martin (NYSE: LMT), General Dynamics (NYSE: GD), Raytheon (NYSE: RTN), Rockwell Collins (NYSE: COL) and Roper Industries (NYSE: ROP). Heinz (NYSE: HNZ) has its EPS conference call.

The EPS schedule includes H.J. Heinz (NYSE: HNZ), SAIC Inc. (NYSE: SAI), Brown-Forman (NYSE: BF-A, NYSE: BF-B), Borders Group (NYSE: BGP), Collective Brands (NYSE: PSS), Express (Nasdaq: EXPR), American Software (Nasdaq: AMSWA), Casella Waste Systems (Nasdaq: CWST), Charming Shoppes (Nasdaq: CHRS), China Green Agriculture (NYSE: CGA), FuelCell Energy (Nasdaq: FCEL), Genesco (NYSE: GCO), G-III Apparel (Nasdaq: GIII), Global Crossing (Nasdaq: GLBC), Greif (NYSE: GEF), Hovnanian (NYSE: HOV), IntraLinks (NYSE: IL), Joy Global (Nasdaq: JOYG), LTX-Credence (Nasdaq: LTXC), Magal Security Systems (Nasdaq: MAGS), Martek Biosciences (Nasdaq: MATK), Oxford Industries (NYSE: OXM) and Trintech (Nasdaq: TTPA). Article matters also to NYSE: RHI, NYSE: KFY, NYSE: MAN, NYSE: MWW, NYSE: JOB, Nasdaq: JOBS, NYSE: F.



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.