Assured Mutual Political Destruction

With the debt ceiling legislation hijacked by a previously unnecessary and now contingent balanced budget debate, each party accuses the other of misguided direction, political shenanigans, and outright lies. The end result is that the government body itself stubbornly holds course toward what looks to me like absolute economic catastrophe and assured mutual political destruction. What would this lead to but further fragmentation of the nation, bifurcation of the classes, intensified hatred of Washington, and the demise of many standing politicians? In other words, chaos rules at the controls of our country, and we have worse to look forward to.

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Assured Mutual Political Destruction

Thanks to the service of Gallup, we know that only about 18% of Americans approved of their government (Congress) in early July, and you can bet your swiftly depreciating dollar that less of our countrymen care for Congress today. President Obama’s approval rating is at its all-time low of 40%, and so Washington seems engaged in a war of attrition. It’s like the DC war cry is “let’s see who survives the lynching and go from there.”

The Democratic Party initially sought compromise which would have included revenue increase through the restoration of upper echelon tax rates that stood under President Bush. As the deadline moved closer, Democratic Party demands backed out of “revenues” and into deep cuts into Republican taboo topics, including the defense budget. Let’s not even talk about the subsidies for the oil companies, lest I throw up. For separate reasons, neither idea has been digestible by the GOP.

With regard to the tax issue, it bothers me that through the power of PR this temporary tax cut put in place by the Bush Administration has morphed into a proposed “Democratic tax hike on small businesses.” You know, there are ways around the issue so that small businessmen bear no burden while the wealthiest among us pay to play in the rich American economic ballpark they have thrived in. We’re not talking about raising taxes, but restoring them to pre-financial crisis levels. These were temporary tax breaks to begin with, which was widely understood by all, so what exactly is the problem now? This is a burden the rich should be willing to bear now (Warren Buffet is), with the economy at risk. Business concepts work in America because we have consumers, but we may soon have conspirators in their stead. You know, baseball is a lot less fun to play in the desert than in a lush green ballpark. Consider that please before you turn the nation into a desert… You know who likes the desert? The snake thrives in the dry hole below the barren ground.

Democrats have stubbornly held onto liberal social treasures, and I’m glad about some of that, because I’ve seen days without healthcare. That is something Canadians never knew, and yet in the “greatest nation on earth,” many Americans have; that’s because they were too poor to afford health insurance but surviving just well enough to be disqualified for Medicaid. Living among these people has allowed me a perspective too many Republicans can’t relate to. Keep in mind that other than being a true blue American, I don’t know what I am anymore politically speaking, so I call myself independent when it comes to party play. If I were ever to rejoin the Republican Party, I would be a reformist (like a Reagan), and if I hitched up with the Democrats, I would be a special old fashioned sort (like JFK) with a lean toward center. What I’m not is certain, and that’s a classic politician; somehow I feel like a lot of you fit into the same description these days. Here’s to Americans and to taking back the power to the people!

There’s an understanding now that some tweaking (or is it gut wrenching) to the entitlement programs is probably necessary to more swiftly bring the budget into balance, and to do so in a lasting manner. Each party is of course wary of disturbing the growing elderly base of the nation, and so the wording around these programs is cunning. They’ll use the words “entitlement programs,” rather than the commonly understood by grandma, “Social Security” or “Medicare.” Each party seeks the high ground, and reassures our seniors that they are not going to pay for our balanced budget. Then they blame the other for being anti-seniors. Let’s face it, it’s the poorer elderly who rely on Social Security, so it’s an issue the Democrats defend and the Republicans are more willing to target for cuts. But it’s probably true that there will be no America as we know it without at least some tweaking that seniors might hardly notice in their daily lifestyle. You know, maybe the retirement age can hack a small increase, or perhaps a minor medication cost hike could be managed? It seems the Republicans sought a bit more under Congressman Ryan’s plan, but political poison has now quarantined it. In fact, the Democrats very likely effectively took out their greatest potential threat in Ryan, the GOP’s young and rising prospect for president, because of his bold but extended and vulnerable reaching.

With regard to the debt ceiling, it would seem that some Americans in the Republican Party are buying into the ignorant and dangerously negligent voices of Congressmen like Jim DeMint and those freshmen Tea Party members elected on frenzy. It has to be either negligence or purely evil intention, one or the other, holding up the debt ceiling legislation; because the result that threatens is a paradigm shift in the effective economics of American capitalism. What is being undermined is the risk-free asset, upon which all value is based. Picture if you will an upside-down pyramid as the global economy, at the point where it touches the earth are U.S. treasury bills, the risk-free asset. It is baked into every security valuation, every interest rate, the bar every corporation has to create economic value over. If we raise that bar, we severely harm all financial securities, the investors/retirees/consumers who own them, the companies at play, and the jobs they manage. That’s not even accounting for the higher cost of borrowing for consumers directly, through the mortgages they finance, the credit cards they drown under, etc.

This nonsense about constitutional amendment to require the federal government to balance its budget the same way the states do may have some merit. However, it should not be tied to the passage of the debt ceiling nor the budget cutting being incorporated with that now. Tea Party Republican members were elected on a promise, that they would not raise taxes but would limit government spending. I say to you, your word is valuable, but not when it stands between right and wrong. It is wrong to drive our economy into a firestorm for the sake of stubbornness PERIOD. The American people are in agreement on this, and those who are not must not comprehend how dramatically life would change as a result of the downgrading of American credit.

I stand much closer to the Democrats on this issue while maintaining my independence, because I cannot make sense of the new found religion of the Republican Party here. We’re talking about the party that took President Clinton’s balanced budget and flushed it down the toilet. Now suddenly, the blame goes to President Obama? Who do you think you are fooling with these lies? Perhaps it’s the majority, but it is not the one who matters.

In the case of the balanced budget and a potential rating agency downgrade, this was a topic that was taboo and not even on the radar screen not too long ago. It was literally brought into the realm of possibility by the conversation of politicians. Now Standard & Poor’s has been so emboldened as to warn of a downgrade even in the event of a debt ceiling hike, if it is in the absence of meaningful budget balancing measures. Politicians brought this issue to the tip of the tongue of every American, and created a political power-point for a group of agencies that have yet to suffer penalty for their significant role in helping to create the MBS and financial crisis to begin with, at least in my view and the view of several Congressional panel members who held inquiry of them when the matter was fresh.

You want to talk about the constitution? Let’s talk about the constitution! Under the 14th Amendment to the Constitution in Section 4, Congress is charged with the responsibility to honor debts incurred by law. And it reads, “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

There’s a war being waged for political opinion, as the influential seek to play on the financial illiteracy of the nation for the sake of constituent support, personal gain and ignorance. The argument is one that employs judgments of negligence, as each party blames the other (as usual), and while doing so puts the very foundation of American finance at risk of undermining. What politicians should consider is the certain result of putting party goals over national interests, and that is in this case the demise of the Republic.



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The Kindness of Strangers

Wall Street Greek's Fine Arts Contributor and New York Stories Columnist Nicholas Zaharakos offers his latest effort; it is "The Kindness of Strangers." This work illustrates how the experiences of childhood influence our adult character and behavior. Above all, it is a story about the power of memory; the sweet as well as the bitter.

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The Kindness of Strangers

Alice Angela Applegate known as “Triple A,” by the other corporate officers was browsing through the half dozen resumes on her desk. As the Controller for Flagship Financial Planning, she intended to add another accountant to her staff in order to assist with special projects. Alice had just about made up her mind to select the young woman graduating this upcoming June from well-regarded Pace University with excellent grades when she got to the last resume.

“Emmanuel Pappas! Manny Pappas! This can’t be!” She took the single sheet of paper to the window as if reading the document by natural light would make more sense out of this odd coincidence. It wasn’t just the name, but also the “numbers,” so to speak, that were adding up, that this was the Manny Pappas of her childhood. The listing of ages for applying for any position in today’s world is definitely prohibited. However his home address was the Bay Ridge section of Brooklyn, where Manny and she had both grown up. By examining the dates of his graduation from Brooklyn College and employment it was easy to figure out that he was her age of forty-five.

Alice had a spacious rosewood paneled corner office on the tenth floor of the old Paramount Building in Times Square. On December 31, 1999, she would be eye level with “The Ball,” dropping to greet the third millennium with a catered office party. She was certainly looking forward to this “mother of all celebrations,” with her husband, two daughters, special friends, and clients. But right now her mind’s eye went back to her unhappy days at the C. Papadopoulos Parochial School.

She was a chubby and light-haired fifth grader named Vassiliki Chronis then. Vassiliki is the Greek equivalent for the American Betty or Alice. Her widowed mother struggled to pay the tuition at the only Greek Orthodox parochial school in Brooklyn at that time. Miss Maniatis had her favorite pupils and Vassiliki wasn’t one of them. Alice could even after all these years, now see herself so clearly as the child who was always left overlooked. She would have only the most minor of roles in the many pageants that the school was noted for. At the Christmas play she would be one of the non-speaking angels. At the dignitary audience filled Oxi Day commemoration she portrayed a silent stretcher-bearer carting offstage a fallen hero. Oxi! Is the Greek word for No! That was Greece’s response to the Italian government’s ultimatum for surrender during World War II. It heralded Greece’s valiancy, sacrifices, and contributions to the ultimate victory of the Allies.

The one time she wasn’t overlooked in the fifth grade brought a rueful flush to Alice’s face. During a Greek language exam, Vassiliki had asked Miss Maniatis if she could be excused to go to the bathroom. The thick-glassed spinster wouldn’t let Alice go despite having granted permission to Maria and Stella earlier.

“Vassiliki, you can control yourself for the remaining 15 minutes!”

Obviously, little Vassiliki couldn’t; Manny Pappas gave her the nickname of pissy pants. He also made it his solemn duty to call her that every chance he got until she graduated from the eighth grade.

“Well Manny Pappas your application for a better paying job is headed for the circular file,” Alice said firmly to herself. “I also see that you’re still using Lotus Spreadsheet, when anyone worth their salt would be utilizing Microsoft Excel by now.” Alice put the resumes to the side as she busied herself for the remainder of the day updating the CEO on the progress of the Y2K compliance committee that she headed.

* * *

If there was one unbreakable rule in the Applegate household it was this; breakfast and supper were sit-down events with all the family members attending. Daughters Ourania and Stephanie were encouraged to talk about anything that was on their minds. Because Jonathan worked out of the high-floored apartment and because he had a flair for cooking, he usually made dinner. This evening he had prepared boneless chicken thighs with crispy roasted potatoes.

“Jonathan, everything is delicious,” Alice smiled appreciatively.

“I used a Thai-Ginger marinade and precooked the potatoes in the microwave before putting them in the oven to brown. I also made extra for your lunch tomorrow.”

Ourania was a freshman and Stephanie was a sophomore at prestigious Stuyvesant High School. They took the subway together to the school located near the World Financial Center downtown. At this point, Ourania hoped to be a veterinarian, and Stephanie wanted to be a writer like her father. Sibling rivalry which had been in remission had again started to escalate.

“Whose turn is it to do the cleanup tonight?” Jonathan asked his daughters.

Stephanie pointed to Ourania.

“It’s not fair! Yesterday you only made a salad and ordered pizza. Stephanie hardly had to do anything, now you expect me to scrub pans and clean all the dishes!” Ourania protested.

Stephanie responded by sticking her tongue out at her sister.

“Girls, chill out!” Their mother commanded. “You both get the luck of the draw, whatever your father or I decide to fix for supper is our concern. We don’t ask too much, just that you both help out a little. Besides we eat out often enough.”

Ourania recognizing the finality of her mother’s voice sullenly resigned herself to the cleanup task. Stephanie barely concealed a smirk. Alice wanting the scale to be evenhanded with her daughters spoke up again.

“Stephanie, please make some decaffeinated coffee for your dad and I.”

Jonathan getting in sync with his wife added. “Please put the coffee in travel mugs, we’ll have it in the park when we take Cleo out for her run.”

That did the trick.

“I want to go out too, it won’t take me long to finish,” responded Ourania with newly found enthusiasm.

Not to be left out, “me too,” chimed in Stephanie.

With a knowing nod to each other, Jonathan and Alice moved into the living room with the aging golden retriever, half asleep, lying on the couch unaware of her role in the Applegate family drama. The sound of the belled-leather leash being taken out from the closet would alert her for her evening ritual in Riverside Park. Through the floor to ceiling windows Alice studied the orange sun setting across the Hudson River as she held hands with Jonathan. This was one of those times when she had the peaceful and yet powerful feeling that she somehow could see forever.

* * *

Alice closed the door of her office to enjoy yesterday’s leftovers. She made it a point to limit lunch with the other corporate division heads to once a week. She considered that sufficient enough to maintain proper lines of casual communication. Alice actually preferred to use this hour to be alone and quietly seek new and unique perspectives on work. It was Jonathan who suggested this meditative approach as a means of finding the best solution to any of life’s problems and issues.

It gave Alice a warm glow to think about last night. Her daughters had paired off. Ourania tossed a stick a little ahead of Cleo. Stephanie chatted with her father about how his historical novel was progressing. Alice was content to witness this tableau as she strolled slightly behind. The late May evening breeze was refreshing. They reached the community garden with a plethora of flowers blooming which was the turning back point. Ourania and Stephanie were given permission to hang out at the Barnes & Noble on Broadway and 82nd Street until ten o’clock. Jonathan and Alice leashed Cleo for the walk back to the apartment.

Alice held the last bit of potato up, reluctant to finish a Tupperware lunch that in her opinion the 21 Club couldn’t come close to. Besides it was potatoes that in a large way gave her, her first start in the world of business. C. Papadopoulos School let out at 3pm. Young Vassiliki waited in George’s Coffee Shop for her mother to pick her up to go home together. Panagiota Chronis worked as a seamstress until 5pm. Vassiliki would nurse a plate of French Fries and a Coke at the counter until then. She could sense that George was somewhat annoyed at a seat being occupied for so long with so little money to show for it. She tried to make herself as inconspicuous as possible by keeping her head in a book. One day, George was adding a check out loud.

“Bowl of clam chowder $1.00, roast beef sandwich $2.50, cup of coffee 50 cents, and rice pudding 75 cents. That’s $3.75.”

“It comes to $4.75!” Vassiliki spoke up in a voice that didn’t quite sound like her own.

George at first gave her an angry look, and then he rechecked his figures. “You’re right little girl!” After he corrected the bill and rang up the right amount he came over to Vassiliki and chuckled. “Well, I almost gave somebody a bargain today.”

Again, Vassiliki piped up without thinking. “You did, if the string on the clam finally broke.”

George put one hairy hand to his chest and slapped the counter with the other as he roared with laughter. “Well, little school girl, if you’re so smart you can sit at that booth and enter my petty cash receipts into this book.” He placed a bound green book with numerous bills and receipts sticking out of it on the tabletop.

Vassiliki never had to pay for her French Fries and soda or anything else from that day on. She enjoyed adding numbers into the ledger and double-checking that they balanced to the total amount of all the bills. George’s accountant, Sam Rosen thanked her for being so neat and meticulous. When she turned fourteen, she started to work for him on Saturdays and after school during tax season. He encouraged her to go onto college and treated her like she was one of his own children. It was around them that she got a more sophisticated view of the world. It was Sam’s daughter Rebecca who introduced her to Jonathan on a blind date to the Metropolitan Museum.

Reminiscing about how far she had come in her life would always lead Alice back to her mother. It had been seven years since she had passed away. Vassiliki was the only child that Panagiota had conceived at 41-years-old, after many years of trying. Alice was grateful that her mother had lived long enough to see her so well established. Her mother took such joy and pride in a lifestyle that she never had a possibility of attaining for herself. Alice had to go through her mother’s things after she had died; in a neat bundle she found every Birthday, Christmas, and Mother’s Day card that she had ever given her. There was one more thing that Alice didn’t know about until then. On top, in her mother’s unmistakable neat script was a thank you letter that she had written to the Philoptochos Society (Friends of the Poor). It was thanking them for helping her to meet the tuition at the C. Papadopoulos School. It was returned to her with this unsigned note written on the bottom. “If someday you are able to show kindness to somebody else that would be wonderful and more than payment enough.”

* * *

Alice was confident that the interview had gone well. There were no misunderstandings that the staff accountant position was a challenge. There was a one-year probationary period. She also had made it clear that some extra hours were required, and that there were expectations of keeping up with technology and skills of the day. When it was over they stood up to shake hands,

“Thank you, Ms. Applegate for this opportunity.”

“Well, Mr. Pappas,” she replied without a hint of any prior recognition. “I believe in giving people a chance; that’s how I got here.”



SEE MORE OF NICK'S SHORT STORIES HERE

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Boeing and ArcelorMittal (NYSE: BA, NYSE: MT) – A Closer Look Post Data

We’re playing catch-up… Wednesday’s earnings review highlighted reports from Boeing, ArcelorMittal, Delta Airlines, WellPoint, General Dynamics, Northrop Grumman and P.F. Chang’s China Bistro. The report that follows highlights the news and outlook for Boeing and ArcelorMittal.

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.

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Boeing and ArcelorMittal (NYSE: BA, NYSE: MT) – A Closer Look Post Data

Boeing
After a gap open Wednesday and a strong spike, the stock closed only fractionally higher. Boeing (NYSE: BA) shares were up more significantly through Friday midday trading though. Boeing reported better results than expected, enthusing and expanding its shareholder base. The company posted a turnaround in its commercial aircraft unit and also offered better guidance for its defense and aerospace business. But with higher fuel costs pressuring its commercial aircraft customers and tightening sovereign budgets pressuring its defense unit, we express caution. The stock is well off its May highs though and looks to have a solid technical support. Still, it’s the fundamental business I’m worried about moving forward. It’s most recent PEG ratio looks to be about 1.5, before adjustment for recent results, and is based on a long-term growth outlook of about 11.6%. Next year’s growth looks solid enough to support the stock, and given the company’s reinforcing guidance, the stock looks safe to hold over the short-term. However, I would not be adding to positions based on my concern that orders should slacken in a deteriorating global economic environment that seems probable in my macro view.

ArcelorMittal
The world’s largest steel maker now, ArcelorMittal (NYSE: MT) responded to investor concerns sparked by United States Steel (NYSE: X) and AK Steel (NYSE: AKS) Tuesday regarding current softness. MT said demand from China and U.S. automakers would pick-up the soft quarter so that the issue would not bear out into trend. Traditionally, automakers tend to close factories for a few weeks in the summer for maintenance work, and the Japanese shock also played a role in the temporary dip. As a result of the disaster though, new construction demand from Japan should support the steel market moving forward, especially for Japanese companies like Nippon Steel. Chinese consumption is seen increasing about 8.5% through 2011. Of course, ArcelorMittal and all the steelmakers are threatened by the debt debacle in the U.S. and further deterioration in Europe, and so I cannot be gung ho on steel nor MT today. The stock’s long-term chart also offers protection against short side risk though, and its valuation at a 0.5 PEG ratio is not particularly unappealing either. It’s the kind of cyclical idea that could take off on a good US debt deal that takes debt-downgrade risk off the table, but today the issue is still up in the air. The stock has been down all week and but is seeking stability today.

Others reporting earnings Wednesday: 1st United Bancorp (Nasdaq: FUBC), A.H. Belo (NYSE: AHC), Acco Brands (NYSE: ABD), Acura Pharmaceuticals (Nasdaq: ACUR), Acxiom (Nasdaq: ACXM), Adolor (Nasdaq: ADLR), Advance America Cash Advance (NYSE: AEA), Aegerion Pharmaceuticals (Nasdaq: AEGR), Aetna (NYSE: AET), Affymetrix (Nasdaq: AFFX), Aflac (NYSE: AFL), Akamai (Nasdaq: AKAM), Alere (NYSE: ALR), Alexandria Real Estate (NYSE: ARE), Allegheny Technologies (NYSE: ATI), Alliance Holdings (Nasdaq: AHGP), Alliance Resource Partners (Nasdaq: ARLP), Ambassadors Group (Nasdaq: EPAX), Amdocs (NYSE: DOX), American Railcar (Nasdaq: ARII), AmeriGas Partners (NYSE: APU), Ameriprise (NYSE: AMP), Amkor (Nasdaq: AMKR), Annaly Capital (NYSE: NLY), ArcelorMittal (NYSE: MT), Audiocodes (Nasdaq: AUDC), Autonation (NYSE: AN), AvalonBay Communities (NYSE: AVB), Bemis (NYSE: BMS), BMC Software (NYSE: BMC), Boeing (NYSE: BA), BOK Financial (Nasdaq: BOKF), Boyd Gaming (NYSE: BYD), Britton and Koontz Capital (Nasdaq: BKBK), BroadVision (Nasdaq: BVSN), Cabot Oil and Gas (NYSE: COG), CB Richard Ellis (NYSE: CBG), Churchill Downs (Nasdaq: CHDN), Citrix Systems (Nasdaq: CTXS), Cliffs Natural Resources (NYSE: CLF), CNO Financial (NYSE: CNO), Coherent (Nasdaq: COHR), ConocoPhillips (NYSE: COP), Costar Group (Nasdaq: CSGP), Covance (NYSE: CVD), Crocs (Nasdaq: CROX), Crown Castle Int’l (NYSE: CCI), Delta Airlines (NYSE: DAL), Diebold (NYSE: DBD), Dow Chemical (NYSE: DOW), Dr. Pepper Snapple (NYSE: DPS), Energizer (NYSE: ENR), Equifax (NYSE: EFX), Everest Re (NYSE: RE), Famous Dave’s (Nasdaq: DAVE), First of Long Island (Nasdaq: FLIC), Flowserve (NYSE: FLS), Fox Chase Bancorp (Nasdaq: FXCB), General Dynamics (NYSE: GD), General Maritime (NYSE: GMR), Global Crossing (Nasdaq: GLBC), Green Mountain Coffee (Nasdaq: GMCR), Hanger Orthopedic (NYSE: HGR), Hospira (NYSE: HSP), Iberiabank (Nasdaq: IBKC), International Shipholding (NYSE: ISH), Lam Research (Nasdaq: LRCX), Level 3 Communications (Nasdaq: LVLT), Lithia Motors (NYSE: LAD), Merck (NYSE: MRK), Morningstar (Nasdaq: MORN), Navios Maritime (NYSE: NMM), Northrop Grumman (NYSE: NOC), Oceaneering Int’l (NYSE: OII), Owens-Illinois (NYSE: OI), P.F. Chang’s China Bistro (Nasdaq: PFCB), Praxair (NYSE: PX), RailAmerica (NYSE: RA), RightNow Technology (Nasdaq: RNOW), Safeguard Scientifics (NYSE: SFE), SAP (NYSE: SAP), Sealed Air (NYSE: SEE), Service Corp. (NYSE: SCI), Shutterfly (Nasdaq: SFLY), Stericycle (Nasdaq: SRCL), Sturm Ruger (NYSE: RGR), Superior Energy (NYSE: SPN), Teradyne (NYSE: TER), Teva Pharmaceuticals (Nasdaq: TEVA), THQ (Nasdaq: THQI), Tupperware Brands (NYSE: TUP), USA Mobility (Nasdaq: USMO), Visa (NYSE: V), Wellpoint (NYSE: WLP), Whole Foods Market (Nasdaq: WFM), Wyndham Worldwide (NYSE: WYN) and more.

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.

Fed Beige Book Release 07-27-11

The following is the Summary section of the Federal Reserve's Beige Book release from July 27, 2011 at 2:00 PM EDT. At the bottom of this report you will find a link to click through to see the entire report, including the data shared by each Federal Reserve Bank.

Prepared at the Federal Reserve Bank of Philadelphia and based on information collected on or before July 15, 2011. This document summarizes comments received from businesses and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.

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Fed Beige Book Release

Summary

Reports from the twelve Federal Reserve Districts indicated that economic activity continued to grow; however, the pace has moderated in many Districts. The six Districts nearest the Atlantic seaboard reported a slowdown in activity since the previous Beige Book report; activity was little changed in the Atlanta District and unchanged or slightly improved in the Richmond District. Of the other six Districts, the Minneapolis District reported political and weather-related disruptions that temporarily slowed growth, and the Dallas District slowed to a moderate pace of growth. The remaining four Districts continued to grow modestly. The previous Beige Book reported a slower growth rate for four Districts, seven Districts growing at a steady pace, and one District with faster growth.

Consumer spending increased overall, with modest growth of nonauto retail sales in a majority of Districts. Falling gasoline prices throughout most of this reporting period may have encouraged a pickup in shopping trips and some additional spending since the previous Beige Book. Price pressures from food, energy, cotton, and other supplier inputs continued to squeeze retail margins. Auto sales slowed a little since the previous Beige Book, with inventories still lean due to Japanese supply chain disruptions. The summer tourism season has started off stronger than last year in most areas unaffected by severe weather.

Activity among nonfinancial service sectors improved overall in most Districts. Of the five Districts reporting on transportation services, volumes were mostly up. Manufacturing activity expanded overall, with two Districts growing at a somewhat faster rate since the last Beige Book, many Districts reporting steady or slowing growth, and two Districts reporting little change. Among firms reporting on near-term expectations, the manufacturing outlook remained generally optimistic, but capital spending plans were somewhat more cautious.

Most residential real estate activity was little changed and remained weak, although construction and activity in the residential rental market continued to improve since the previous Beige Book. For six Districts, activity in the nonresidential real estate market has improved slightly for specific submarkets, although conditions generally remained weak across all twelve Districts. Since the last Beige Book, overall loan volumes have increased in three Districts, decreased in two Districts, and were relatively flat, often with mixed trends across the banks' portfolios, in five Districts. Credit quality was steady or improving.

Drought conditions and severe flooding adversely affected large portions of the seven Districts that reported on their agricultural sectors. Districts that reported on their energy and mining sectors continued to note strong growth for most energy-related products but some weakness in coal production.

Although most Federal Reserve Districts observed modest hiring increases, labor market conditions remained soft. Wage pressures continued to be subdued for all but a few specific occupations in some Districts. Price pressures moderated somewhat in many Districts, although some firms indicated that they were able to pass on some cost increases to their customers.

Consumer Spending and Tourism
Consumer spending increased overall in most Districts since the last Beige Book. The New York, Cleveland, Chicago, Minneapolis, and Dallas Districts indicated modest growth of nonauto retail sales, and the Philadelphia and Kansas City Districts noted relatively strong growth. Retailers in the Boston, Richmond, Atlanta, and San Francisco Districts reported mixed results across product lines, while St. Louis District retailers reported slowing sales. Stronger sales in some New York City stores were attributed to tourism, while one large mall in western New York credited Canadian shoppers as the source. A major Philadelphia District retailer suggested that increased shopping trips and a greater willingness to spend were due to lower gas prices since the last Beige Book. Inventory levels were not a strong concern. Contacts from half of the Districts noted upward pressure from supplier prices--cotton was often mentioned--and other non-labor inputs, especially food and energy. Some retailers were able to pass through some cost increases, but for many, especially restaurants, profit margins were squeezed. Restaurant contacts in the Atlanta and Kansas City Districts still managed to report strong sales.

Reports of auto sales were mixed across Districts and varied by vehicle make, with most Districts indicating that dealer inventories were lean primarily due to lingering supply disruptions for Japanese vehicles and parts. Auto dealers in the Kansas City District cited strong sales despite reduced incentives and credited, in part, continued low interest rates and tornado damage. The Chicago District noted lower sales in June as incentives decreased and showroom traffic declined, followed by improved sales in early July. The New York, Philadelphia, Richmond, Atlanta, St. Louis, Dallas, and San Francisco Districts noted varying degrees of lower sales stemming from Japanese supply constraints. Strong demand for smaller vehicles and used cars continued in several Districts. The Cleveland District described dealers' outlook as cautious due to uncertainty about gas prices, the economy, and vehicle availability.

Tourism activity strengthened in most Districts as the summer season got underway. The Richmond District reported that bookings along the Mid-Atlantic coast were comparable to the 2010 season, despite last year's increase from additional vacationers who were avoiding the Gulf Coast oil spill. The New York, Atlanta, and San Francisco Districts also reported increased tourism. Tourism was also up in parts of the Kansas and Minneapolis Districts, except for destinations adversely affected by drought, heavy rains, flooding, and Minnesota's state government shutdown.

Nonfinancial Services
Growth of nonfinancial services advanced further during this Beige Book period for the Districts overall. The Boston, St. Louis, Minneapolis, Dallas, and San Francisco Districts reported the strongest advances. The Philadelphia and Richmond Districts reported slight improvements, while activity in the New York District flattened. Respondents remained optimistic about growth over the next three to six months in the Boston, New York, Philadelphia, Minneapolis, and Dallas Districts. However, the New York District's contacts were less optimistic than they were when polled for the previous Beige Book. High-tech firms in the Kansas City District expressed an optimistic outlook and planned to increase capital spending.

Among the five Districts that reported on transportation services, freight transport shipping volumes in the Cleveland District, port activity in the Richmond District, and intermodal cargo volumes in the Dallas District expanded somewhat. The Kansas City District also reported increased activity, while Atlanta District firms indicated that their domestic volumes of freight and parcels were slowing somewhat.

Manufacturing
Manufacturing activity expanded overall, with two Districts reporting somewhat stronger growth since the last Beige Book, many Districts reporting steady or slowing in growth, and two Districts reporting little change. Auto production in the Cleveland District rose moderately, as supply disruptions caused by events in Japan diminished. The Kansas City District also reported a rebound in manufacturing activity from a low level in the prior survey period, while activity at high-tech firms expanded further. Foreign demand for metal fabrication and overall demand for semiconductors and other technology products contributed to slightly faster growth rates in the San Francisco District. Manufacturers in the Chicago, St. Louis, and Minneapolis Districts reported continued growth at a relatively steady pace from the previous reporting period. The Chicago District cited a rebound in auto production and strong demand for heavy trucks and equipment.

Growth continued among manufacturers in the Boston and Dallas Districts as well; however, results were more mixed. Contacts in the Boston District cited stronger growth for products related to foreign demand, non-luxury consumer goods, and clients addressing deferred maintenance needs. Softer growth was reported by firms delivering consumer luxury goods, and products or services to the small business, banking, and government sectors.

Manufacturing firms in the Philadelphia, Richmond, and Atlanta Districts reported somewhat slower rates of growth overall. However, the Philadelphia District reported a lull early in the period, followed by resumption of a slow rate of growth in early July, while the Richmond District reported moderate gains, which stalled in early July. Manufacturing firms in the New York District reported a pause in growth throughout the period.

Manufacturing firms' expectations of future activity were optimistic in the Boston and Philadelphia Districts, although Boston's firms were less positive than in the previous Beige Book, and Philadelphia's firms were more positive. Firms in the Boston District indicated limited plans for capital spending, while firms in the Philadelphia, Cleveland, Chicago, and Dallas Districts maintained plans for capital spending at prior levels. Fewer firms in the Cleveland District were reporting delays to project starts for their capital spending plans.

Real Estate and Construction
Residential real estate sales in almost all Districts were little changed from the last Beige Book. Activity edged up in the Richmond, Atlanta, and Minneapolis Districts. Of the Districts reporting on home prices, most said that they were flat or declining. The Boston and Richmond Districts reported steady prices; the Philadelphia and Atlanta Districts reported that prices were steady to down slightly; and the Kansas City and New York Districts reported that prices were down. Increasing inventories of unsold homes in the Boston, New York, and Kansas City Districts have restrained building in the single-family housing sector. Residential construction activity overall was mixed, though it increased in the Minneapolis District. Since the previous Beige Book, construction and activity in the residential rental market have continued to improve in the New York, Chicago, Dallas, and San Francisco Districts.

Nonresidential real estate activity improved somewhat in the Boston, Philadelphia, Cleveland, Chicago, St. Louis, and Dallas Districts. The Chicago District reported strong demand for industrial facilities, particularly from the automotive sector. The Philadelphia District reported improvements in terms of lower vacancy rates for office space, industrial space, and apartments; the Chicago District reported generally lower vacancy rates. The New York, Richmond, Atlanta, Minneapolis, Kansas City, and San Francisco Districts all reported generally weak activity in nonresidential real estate. Construction in the Minneapolis District stalled in areas because of flooding and unavailability of state building inspectors due to the Minnesota state government shutdown. Health care and apartment construction was a bright spot for the Atlanta District. Activity was weak in the Kansas City District, but firms that supply construction materials reported increased sales and stable prices. San Francisco reported stable but high vacancy rates in many parts of the District.

Banking and Finance
Reports of loan demand were more mixed than in the previous Beige Book. The New York, Richmond, and Chicago Districts reported overall increases in loan demand but from different sources. Commercial and industrial loans accounted for the growth in the New York District, while consumer loans accounted for the growth in the Chicago District. Loan growth in the Richmond District was driven by consumer lending, real estate loans for apartments, and commercial loans for larger companies. Total loan volume decreased in the St. Louis and Kansas City Districts, reflecting decreases in real estate lending and individual loans in St. Louis and reductions in consumer installment, commercial real estate, and commercial and industrial loans in Kansas City. The Philadelphia, Dallas, and San Francisco Districts reported relatively little overall change in loan volume, while the Cleveland and Atlanta Districts reported mixed results. Outside of banking, the San Francisco District indicated increased investment activity by venture capital firms and higher levels of IPO activity.

Credit conditions have changed little since the previous Beige Book. Banks in the New York, Cleveland, Richmond, Chicago, and Dallas Districts reported that credit quality was flat or somewhat improved. Bankers in the Richmond, Atlanta, Chicago, Dallas, and San Francisco Districts noted that competition among lenders for high-quality borrowers was squeezing banks' margins and lowering the cost of capital for those borrowers. Bank contacts in the New York, Atlanta, Chicago, Kansas City, and San Francisco Districts indicated that credit standards were mostly unchanged at tight levels, but the Cleveland District heard a few reports of easing standards for good borrowers.

Agriculture and Natural Resources
Severe drought conditions adversely affected parts of the Atlanta, Kansas City, Dallas, and San Francisco Districts, causing low crop yields, complete crop losses, wildfires, and loss of grazing land in many areas. The Kansas City, Dallas, and San Francisco Districts reported that ranchers had culled herds or placed cattle on feed lots in response to poor pasture conditions, despite higher feed lot costs that trim their margins. Meanwhile, the Chicago and Minneapolis Districts noted that flooding had caused millions of acres to go unplanted. The Atlanta District reported that rain brought relief to some stressed pastures and crops, but farm labor shortages had impaired Georgia's fruit and vegetable production. The St. Louis District reported fair or better conditions for corn, soybean, sorghum, rice, and cotton crops, plus an increase from 2010 in its winter wheat production. Kansas City reported good or better conditions for corn and soybean crops. Agricultural prices were mixed since the last report, with the Chicago and Minneapolis Districts reporting lower cattle and wheat prices, while soybean and dairy prices were up. Chicago also reported higher prices for hogs.

Activity in the energy sector remained strong. Shale exploration increased in the Atlanta and Cleveland Districts. The Cleveland District also reported little change in the production of oil, natural gas, or coal, despite rising demand for coal. The St. Louis District reported higher coal production than the prior year. The Minneapolis District reported continued strong mining activity and mixed plans for wind farms and biodiesel. The Kansas City District reported expanded drilling activity and higher ethanol production but weak coal production. The Dallas District also reported strong drilling activity, and the San Francisco District reported strong activity for metal mining, along with oil and gas extraction.

Employment, Wages, and Prices
Labor market conditions remained soft in most Federal Reserve Districts. Employment, especially among temporary hiring agencies, improved in the Richmond District in recent weeks. Modest hiring increases, often within specific sectors such as advertising in the Boston District and manufacturing in the Cleveland District, contributed to modest overall employment gains. Small gains were also noted in the St. Louis, Minneapolis, and Dallas Districts. The New York, Philadelphia, and Chicago Districts reported a slowdown in the pace of hiring activity. A staffing firm in the Chicago District reported a decline in billable hours.

Wage pressures remained subdued in most Districts and for most occupations. For the overall labor market, the Philadelphia, Cleveland, Richmond, Kansas City, Dallas, and San Francisco Districts reported limited wage pressures. Wage pressures or wage increases were characterized as modest or moderate by the Atlanta, Chicago, Minneapolis, and San Francisco Districts. Boston District contacts reported wage growth between 3 percent and 5 percent in consulting and advertising. In addition, contacts in the Kansas City District reported labor shortages and wage pressures in the retail sector and for many occupations in the high-tech, energy, and transportation sectors, while the San Francisco District reported continued wage pressures for specialized information technology workers.

Price pressures seemed to have moderated somewhat, although some firms reported being able to pass on some rising costs. Overall, input price pressures appeared to have fallen modestly. Input price increases remained elevated in the Philadelphia, Chicago, Minneapolis, and Kansas City Districts. Meanwhile, the Boston, Cleveland, Atlanta, and San Francisco Districts reported moderation in input price pressures relative to the previous Beige Book. For the most part, firms' ability to pass on price increases remained mixed. A few Districts reported some sectors being able to pass on rising prices, such as the retail sector in the Chicago District and service-sector firms in the Dallas District.

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Article should interest investors in SPDR Dow Jones Industrial Average (NYSE: DIA), SPDR S&P 500 (NYSE: SPY), PowerShares QQQ Trust (Nasdaq: QQQ), ProShares Short Dow 30 (NYSE: DOG), ProShares Ultra Short S&P 500 (NYSE: SDS), ProShares Ultra QQQ (NYSE: QLD), NYSE Euronext (NYSE: NYX), The NASDAQ OMX Group (Nasdaq: NDAQ), Intercontinental Exchange (NYSE: ICE), E*Trade Financial (Nasdaq: ETFC), Charles Schwab (Nasdaq: SCHW), Asset Acceptance Capital (Nasdaq: AACC), Affiliated Managers (NYSE: AMG), Ameriprise Financial (NYSE: AMP), TD Ameritrade (Nasdaq: AMTD), BGC Partners (Nasdaq: BGCP), Bank of New York Mellon (NYSE: BK), BlackRock (NYSE: BLK), CIT Group (NYSE: CIT), Calamos Asset Management (Nasdaq: CLMS), CME Group (NYSE: CME), Cohn & Steers (NYSE: CNS), Cowen Group (Nasdaq: COWN), Diamond Hill Investment (Nasdaq: DHIL), Dollar Financial (Nasdaq: DLLR), Duff & Phelps (Nasdaq: DUF), Encore Capital (Nasdaq: ECPG), Edelman Financial (Nasdaq: EF), Equifax (NYSE: EFX), Epoch (Nasdaq: EPHC), Evercore Partners (NYSE: EVR), EXCorp. (Nasdaq: EZPW), FBR Capital Markets (Nasdaq: FBCM), First Cash Financial (Nasdaq: FCFS), Federated Investors (NYSE: FII), First Marblehead (NYSE: FMD), Fidelity National Financial (NYSE: FNF), Financial Engines (Nasdaq: FNGN), FXCM (Nasdaq: FXCM), Gamco Investors (NYSE: GBL), GAIN Capital (Nasdaq: GCAP), Green Dot (Nasdaq: GDOT), GFI Group (Nasdaq: GFIG), Greenhill (NYSE: GHL), Gleacher (Nasdaq: GLCH), Goldman Sachs (NYSE: GS), Interactive Brokers (Nasdaq: IBKR), INTL FCStone (Nasdaq: INTL), Intersections (Nasdaq: INTX), Investment Technology (NYSE: ITG), Invesco (NYSE: IVZ), Jefferies (NYSE: JEF), JMP Group (NYSE: JMP), Janus Capital (NYSE: JNS), KBW (NYSE: KBW), Knight Capital (NYSE: KCG), Lazard (NYSE: LAZ), Legg Mason (NYSE: LM), LPL Investment (Nasdaq: LPLA), Ladenburg Thalmann (AMEX: LTS), Mastercard (NYSE: MA), Moody’s (NYSE: MCO), MF Global (NYSE: MF), Moneygram (NYSE: MGI), MarketAxess (Nasdaq: MKTX), Marlin Business Services (Nasdaq: MRLN), Morgan Stanley (NYSE: MS), MSCI (Nasdaq: MSCI), MGIC Investment (NYSE: MTG), NewStar Financial (Nasdaq: NEWS), National Financial Partners (NYSE: NFP), Nelnet (NYSE: NNI), Northern Trust (Nasdaq: NTRS), NetSpend (Nasdaq: NTSP), Ocwen Financial (NYSE: OCN), Oppenheimer (NYSE: OPY), optionsXpress (Nasdaq: OXPS), PICO (Nasdaq: PICO), Piper Jaffray (NYSE: PJC), PMI Group (NYSE: PMI), Penson Worldwide (Nasdaq: PNSN), Portfolio Recovery (Nasdaq: PRAA), Raymond James (NYSE: RJF), SEI Investments (Nasdaq: SEIC), Stifel Financial (NYSE: SF), Safeguard Scientifics (NYSE: SFE), State Street (NYSE: STT), SWS (NYSE: SWS), T. Rowe Price (Nasdaq: TROW), Visa (NYSE: V) and Virtus Investment Partners (Nasdaq: VRTS).

Basic Shelter May Soon be Unaffordable

With the dastardly debt deadline less than a week away now, interest rates are poised to climb significantly higher on a dime should a major rating agency determine to cut the American sovereign debt rating. Yet, in the latest reported week, mortgage activity declined. Mortgage brokers and other real estate professionals are missing an important opportunity to get mortgages refinanced and nonchalant home buyers into favorable mortgage contracts while they still last, because basic shelter may soon be unaffordable for the average American.

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.

Relative tickers: NYSE: BAC, NYSE: GS, NYSE: MS, NYSE: WFC, NYSE: TD, OTC: FMCC.OB, OTC: FNMA.OB, NYSE: PNC, NYSE: JPM, NYSE: BBT, NYSE: CIT, NYSE: BKU, Nasdaq: UBSI, NYSE: BK, Nasdaq: MBFI, NYSE: AF, NYSE: NYB, Nasdaq: HCBK, Nasdaq: PBCT, Nasdaq: FNFG, Nasdaq: CFFN, Nasdaq: WFSL, Nasdaq: ISBC, Nasdaq: NWBI, Nasdaq: STSA, NYSE: OCN, NYSE: FBC, NYSE: PFS, Nasdaq: COLB, Nasdaq: KRNY, Nasdaq: BRKL, Nasdaq: DCOM, Nasdaq: FFIC, Nasdaq: DNBK, OTC: FCNCA.PK, NYSE: SNV, Nasdaq: UBSI, Nasdaq: HMPR, Nasdaq: WSBC, Nasdaq: CHCO, Nasdaq: SASR, OTC: FCBN.OB, Nasdaq: SCBT, NYSE: WL, Nasdaq: WSFS, Nasdaq: SBSI, Nasdaq: STEL, Nasdaq: UBSH, Nasdaq: EGBN, Nasdaq: FBNC, Nasdaq: ABCB, Nasdaq: TBBK, Nasdaq: FCBC, Nasdaq: CCBG, Nasdaq: FISI, Nasdaq: NKSH, Nasdaq: CZNC, Nasdaq: CHFN, Nasdaq: SBCF, Nasdaq: TIBB, Nasdaq: AMNB, Nasdaq: UCBI, Nasdaq: MBRG, Nasdaq: HBOS, Nasdaq: ZION, Nasdaq: EWBC, NYSE: CYN, NYSE: BOH, Nasdaq: SIVB, Nasdaq: WABC, Nasdaq: CATY, Nasdaq: UMPQ, Nasdaq: GBCI, Nasdaq: PCBC, Nasdaq: PACW, NYSE: WAL, OTC: FBAK.OB, Nasdaq: FIBK, Nasdaq: NARA, Nasdaq: WCBO, Nasdaq: TCBK, Nasdaq: TBNK, Nasdaq: WCBO, Nasdaq: BMRC, Nasdaq: HAFC

Basic Shelter May Soon be Unaffordable

The Mortgage Bankers Association (MBA) reported Wednesday that mortgage activity fell 5% in the period ending July 22nd. Contracts tied to the purchase of a home declined 3.8% from the immediately preceding week, while mortgage refinancing applications dropped 5.5%. The decline in refinancing occurred even while mortgage rates remained attractive. Contracted rates on average 30-year and 15-year fixed rate mortgages inched higher to 4.57% (from 4.54%) and 3.67% (from 3.66%), respectively.

This lackadaisical activity in the mortgage market is reflective of the slow going housing market now, but it’s also indicative of idle real estate professionals. Those pros are missing an important opportunity to generate business now, and more importantly, to get people into affordable contracts while they still last.

If a default occurs on American credits, or if Standard & Poor’s (NYSE: MHP) or Moody’s (NYSE: MCO) downgrades American credits, Treasury rates will increase and rates will rise across the board. That means mortgage rates too… Far too many Americans are in variable rate contracts or are in position to buy a home today but are sitting on the sideline idle due to fear. It’s unfortunate that this frozen state is exactly what makes them vulnerable today, because inaction will price many out of the ability to buy a home should events proceed as they appear poised to today.

One of the few assets I would want to own in an economic depression is the shelter provided by an owned home. The basic necessities must be accounted for, and those include shelter, food and water. If the economy deteriorates as it should in the scenario that is growing in probability, that situation brought on by Washington’s debt debacle, then it will get much harder for many Americans to even afford rent. So, even if home prices were to drop further on decreased demand, which is certainly likely in a harder economic environment, at least many would be able to better endure it within a home. As a renter, you are dependent on your landlord’s compassion in desperate times, but as a home owner, you can rent out space to afford your home in tough times.

Say what you will about scare tactics, but in this case if real estate professionals were to employ them responsibly (in other words, to simply warn folks about imminent rate rise), it might actually do some important good for a good many Americans. The interest rates we see today should not exist for much longer, even if Washington somehow circumvents a debt downgrade.

In the positive growth scenario, we also see rising rates, as global economic growth driven by the expanding emerging markets drives scarcity in commodity resources. In this case, inflation should feed through the system, in my view. Thus, I feel compelled to share what I believe is helpful information with those who can take advantage of it now, renters who can afford a home now but may not be able to if/when rates rise.



Editor's Note: Article should interest investors in Bank of America (NYSE: BAC), Freddie Mac (OTC: FMCC.OB), Fannie Mae (OTC: FNMA.OB), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), Toronto Dominion (NYSE: TD), BB&T (NYSE: BBT), CIT (NYSE: CIT), Bank United (NYSE: BKU), First Citizens (OTC: FCNCA.PK), Synovus (NYSE: SNV), United Bankshares (Nasdaq: UBSI), Hampton Roads Bankshares (Nasdaq: HMPR), WesBanco (Nasdaq: WSBC), City Holding (Nasdaq: CHCO), Sandy Spring (Nasdaq: SASR), First Citizens (OTC: FCBN.OB), SCBT Financial (Nasdaq: SCBT), Wilmington Trust (NYSE: WL), WSFS Financial (Nasdaq: WSFS), Southside Bancshares (Nasdaq: SBSI), Stellar One (Nasdaq: STEL), Union First Market (Nasdaq: UBSH), Eagle Bancorp (Nasdaq: EGBN), First Bancorp (Nasdaq: FBNC), Ameris (Nasdaq: ABCB), The Bancorp (Nasdaq: TBBK), First Community (Nasdaq: FCBC), Capital City (Nasdaq: CCBG), Financial Institutions (Nasdaq: FISI), National Bankshares (Nasdaq: NKSH), Citizens & Northern (Nasdaq: CZNC), Charter Financial (Nasdaq: CHFN), Seacoast Banking (Nasdaq: SBCF), TIB Financial (Nasdaq: TIBB), American National (Nasdaq: AMNB), United Community (Nasdaq: UCBI), Middleburg Financial (Nasdaq: MBRG), Heritage Financial (Nasdaq: HBOS), Zions Bancorp (Nasdaq: ZION), East West Bancorp (Nasdaq: EWBC), City National (NYSE: CYN), Bank of Hawaii (NYSE: BOH), SVB Financial (Nasdaq: SIVB), Westamerica (Nasdaq: WABC), Cathay General (Nasdaq: CATY), Umpqua (Nasdaq: UMPQ), Glacier Bancorp (Nasdaq: GBCI), Pacific Capital (Nasdaq: PCBC), PacWest (Nasdaq: PACW), Western Alliance (NYSE: WAL), First National Alaska (OTC: FBAK.OB), First Interstate Bancsystem (Nasdaq: FIBK), Nara (Nasdaq: NARA), West Coast (Nasdaq: WCBO), TriCo (Nasdaq: TCBK), Territorial (Nasdaq: TBNK), Washington Banking (Nasdaq: WCBO), Bank of Marin (Nasdaq: BMRC), Hanmi (Nasdaq: HAFC), PNC Bank (NYSE: PNC), J.P. Morgan Chase (NYSE: JPM), United Bankshares (Nasdaq: UBSI), Bank of New York Mellon (NYSE: BK), MB Financial (Nasdaq: MBFI), Astoria Financial (NYSE: AF), New York Community (NYSE: NYB), Hudson City (Nasdaq: HCBK), People’s United (Nasdaq: PBCT), First Niagra (Nasdaq: FNFG), Capitol Federal (Nasdaq: CFFN), Washington Federal (Nasdaq: WFSL), Investor’s Bancorp (Nasdaq: ISBC), Northwest Bankshares (Nasdaq: NWBI), Sterling Financial (Nasdaq: STSA), Ocwen (NYSE: OCN), Flagstar (NYSE: FBC), Provident (NYSE: PFS), Colombia Banking (Nasdaq: COLB), Kearny (Nasdaq: KRNY), Brookline (Nasdaq: BRKL), Dime Community (Nasdaq: DCOM), Flushing Financial (Nasdaq: FFIC), Danvers (Nasdaq: DNBK).

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.

Consumer Confidence Rose but Much has Changed

Consumer Confidence rose in July according to the Conference Board, but the Index was measured on July 14th, when America still expected its representatives in Washington to act responsibly. I have a feeling if the survey were taken today, it would return a significantly different result.

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.

Relevant Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE.

Consumer Confidence Rose but Much has Changed

The Conference Board Index, produced through a survey by The Nielsen Company, showed an improvement in July, to 59.5, up from 57.6 in June. Economists didn’t venture far from the prior month’s mark, perhaps a sign of uncertainty among the forecasters, as they set the bar at 57.0.

The reading was mostly higher, though marginally so, due to expectations for the next six months, not due to the current situation. And Lord knows, if the “current situation” were representative of July 26th (the midnight hour), well then we might be looking at a fractional result. The Present Situation Index fell to 35.7 from 36.6, and the Expectations Index gained ground to 75.4 from 71.6.

The component measure covering survey respondents’ views of current business conditions offered an intriguing result that perhaps reflects the broader divide that seems to be developing in the nation. The number of Americans seeing better opportunity and deteriorated opportunity both increased, illustrating a polarization of views. With regard to employment, those seeing an improved employment environment remained at an extremely low level, while the number of folks finding jobs harder to get increased to an even more significant number.

In conclusion, the absolute level of the Consumer Confidence Index is bad enough to begin with, so the small change for the better should be discounted. Secondly, the date of measurement and its distance from the current date matter this time around. That said, depending on what happens between August 2nd and now, and contingent upon the wisdom and restraint of S&P (NYSE: MHP) and Moody’s (NYSE: MCO), August’s index measure could be wildly higher or reflective of the Apocalypse, in this analyst’s view.

Article interests investors in: S&P Retail ETF (NYSE: XRT), Wal-Mart (NYSE: WMT), Pier 1 Imports (NYSE: PIR), Ethan Allen (NYSE: ETH), Hooker Furniture (Nasdaq: HOFT), Home Depot (NYSE: HD), Lowes (NYSE: LOW), Apple (Nasdaq: AAPL), Best Buy (NYSE: BBY), The Limited (NYSE: LTD), Chicos (NYSE: CHS), Ann Taylor (NYSE: ANN), The Gap (NYSE: GPS), Macy’s (NYSE: M), JC Penney (NYSE: JCP), Nordstrom (NYSE: JWN), TJX Company (NYSE: TJX), Kohls (NYSE: KSS), Costco (Nasdaq: COST), Target (NYSE: TGT), Wet Seal (Nasdaq: WTSLA), Hot Topic (Nasdaq: HOTT), American Eagle Outfitters (NYSE: AEO), Aeropostale (NYSE: ARO), Abercrombie & Fitch (NYSE: ANF), Saks (NYSE: SAK), Tiffany (NYSE: TIF), Talbots (NYSE: TLB), Lumber Liquidators (NYSE: LL), Builders Firstsource (Nasdaq: BLDR), Fortune Brands (NYSE: FO), Leggett & Platt (NYSE: LEG), Tempur-Pedic International (NYSE: TPX), Acuity Brands (NYSE: AYI), La-Z-Boy (NYSE: LZB), Select Comfort (Nasdaq: SCSS), Sleepy’s (NYSE: ZZ), Furniture Brands (NYSE: FBN), Natuzzi (NYSE: NTZ), Sears (Nasdaq: SHLD), Dillard’s (NYSE: DDS), Bon-Ton (Nasdaq: BONT), Cost Plus (Nasdaq: CPWM), Baker’s Footwear (Nasdaq: BKRS.OB), Bebe Stores (Nasdaq: BEBE), The Buckle (NYSE: BKE), Cache (Nasdaq: CACH), Casual Male (Nasdaq: CMRG), Cato (Nasdaq: CATO), Christopher & Banks (NYSE: CBK), Citi Trends (Nasdaq: CTRN), Collective Brands (NYSE: PSS), Destination Maternity (Nasdaq: DEST), Dress Barn (Nasdaq: DBRN), DSW (NYSE: DSW), Finish Line (Nasdaq: FINL), Footlocker (NYSE: FL), Gymboree (Nasdaq: GYMB), Guess (NYSE: GES), J. Crew (NYSE: JCG), Jones New York (NYSE: JNY), Jos. A Banks (Nasdaq: JOSB), New York & Co. (NYSE: NWY), Men’s Wearhouse (NYSE: MW), Syms (Nasdaq: SYMS), The Children’s Place (Nasdaq: PLCE).

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.

Don't Sweat Softer New Home Sales

New Home Sales were reported lower in June, but I suggest you not read too much into the report. Sales were expected to be slow, and the new home market is seen lagging broader recovery. That said, there was also plenty of good news for those willing to read the report or Wall Street Greek.

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.

Relative tickers: Nasdaq: ITIC, NYSE: BAC, OTC: FMCC.OB, OTC: FNMA.OB, NYSE: GS, NYSE: MS, NYSE: WFC, NYSE: TD, NYSE: SRS, NYSE: URE, NYSE: IGR, NYSE: XIN, Nasdaq: RYHRX, Nasdaq: TRREX, NYSE: TOL, NYSE: HOV, NYSE: DHI, NYSE: BZH, NYSE: LEN, NYSE: KBH, NYSE: PHM, NYSE: NVR, NYSE: GFA, NYSE: MDC, NYSE: RYL, NYSE: MTH, NYSE: BHS, NYSE: SPF, NYSE: MHO, AMEX: OHB, NYSE: VNQ, NYSE: PNC, NYSE: JPM, Nasdaq: HOFT, NYSE: ETH, NYSE: PIR, NYSE: WSM, NYSE: HD, NYSE: LOW, AMEX: VAZ, AMEX: NKR, AMEX: MZA, AMEX: NXE, AMEX: NFZ, Nasdaq: XNFZX, Nasdaq: FSAZX, Nasdaq: AVTR, NYSE: AIV, NYSE: EQR, NYSE: AVB, NYSE: UDR, NYSE: ESS, NYSE: CPT, NYSE: SNH, NYSE: BRE, NYSE: HME, NYSE: MAA, NYSE: ELS, NYSE: ACC, NYSE: CLP, Nasdaq: AGNC, NYSE: SUI, NYSE: AEC, NYSE: PMT and AMEX: TWO, NYSE: SPG.

Don't Sweat Softer New Home Sales

New Home Sales ran at an annual rate of 312K in June, down just slightly from May’s revised rate of 315K. Economists surveyed by Bloomberg had been forecasting for a sales pace between 309K and 342K, with the consensus sitting at 321K. Thus, the report was relatively disappointing, but the data effectively shows no change in activity nonetheless. While that was also less than enthusing, it was expected, as the new home market is especially burdened by the heavy inventory of distressed properties on the market and held by banks in so-called shadow inventory.

Distressed property inventory has driven down home prices generally, and put a good number of relatively new properties for sale below replacement cost or the price of a new home. Given the prudent management of most large better-capitalized builders and the capital-strapped positions of the smaller ones; and most importantly a generally light demand for housing in an uncertain economic environment, new home sales are not going to lead the real estate recovery. However, just as I’ve recently written, housing is on the road to recovery in a broader sense.

A closer inspection of the data shows June sales softness in the Northeast (-16%) and West (-13%) was partly offset by strength in the Midwest (+9.5%) and South (+3.4%). Good news was also seen in housing inventory, which showed that despite the slower pace of sales, new home inventory fell to 6.3 months from 6.4 months supply in May. The number of homes for sale continues to ease, which is a necessary pain to find solid support for the next growth market for new homes. At this level of activity, when new home demand revives, it should be akin to a big blue fish taking a hook - there’s no doubt about it when it happens.

More good news was found in the home price data. The median price of a new home increased 5.8% in June, to 235,200. The average price of a new home increased 1.8% to 269K. And while the quick-to-print popular press and investors are crying over S&P Case Shiller data for May that shows year-over-year price decline, they’re missing year-over-year price increase seen in June via this report. It’s pretty substantial too, with the median price of a home up 7.2% on a year-to-year basis.

So in conclusion, I suggest readers and real estate players not lose any sleep over June’s New Home Sales Slippage. All your nightmares should be about our Congress’ potential failure to raise the debt ceiling before a major rating agency downgrades American credit. I even continue to favor homebuilder shares for long-term investment, as when recovery is clearly seen, the stocks should outperform the broader market. However, I must continue to qualify these recommendations and forecasts on the passage of debt ceiling legislation and the maintenance of the AAA rating for the United States. A scenario that includes a failure to do so is one wildly different than most living Americans can ponder in my view.

Editor's Note: Article should interest investors in Investors Title (Nasdaq: ITIC), Bank of America (NYSE: BAC), Freddie Mac (OTC: FMCC.OB), Fannie Mae (OTC: FNMA.OB), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), Toronto Dominion (NYSE: TD), UltraShort Real Estate ProShares (NYSE: SRS), Ultra Real Estate ProShares (NYSE: URE), ING Clarion Global Real Estate Income Fund (NYSE: IGR), Xinyuan Real Estate Co. (NYSE: XIN), Rydex Real Estate Fund H (Nasdaq: RYHRX), T. Rowe Price Real Estate Fund (Nasdaq: TRREX), Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV), D.R. Horton (NYSE: DHI), Beazer Homes (NYSE: BZH), Lennar (NYSE: LEN), K.B. Homes (NYSE: KBH), Pulte Homes (NYSE: PHM), NVR Inc. (NYSE: NVR), Gafisa SA (NYSE: GFA), MDC Holdings (NYSE: MDC), Ryland Group (NYSE: RYL), Meritage Homes (NYSE: MTH), Brookfield Homes (NYSE: BHS), Standard Pacific (NYSE: SPF), M/I Homes (NYSE: MHO), Orleans Homebuilders (AMEX: OHB), Vanguard REIT Index ETF (NYSE: VNQ), PNC Bank (NYSE: PNC), J.P. Morgan Chase (NYSE: JPM), Hooker Furniture (Nasdaq: HOFT), Ethan Allen (NYSE: ETH), Pier 1 Imports (NYSE: PIR), Williams Sonoma (NYSE: WSM), Home Depot (NYSE: HD), Lowes (NYSE: LOW), Nasdaq: XNFZX, Nasdaq: FSAZX, Avatar Holdings (Nasdaq: AVTR), Apartment Investment & Management (NYSE: AIV), Equity Residential (NYSE: EQR), Avalonbay Communities (NYSE: AVB), UDR Inc. (NYSE: UDR), Essex Property Trust (NYSE: ESS), Camden Property Trust (NYSE: CPT), Senior Housing Properties (NYSE: SNH), BRE Properties (NYSE: BRE), Home Properties (NYSE: HME), Mid-America Apartment (NYSE: MAA), Equity Lifestyle Properties (NYSE: ELS), American Campus Communities (NYSE: ACC), Colonial Properties (NYSE: CLP), American Capital Agency (Nasdaq: AGNC), Sun Communities (NYSE: SUI), Associated Estates (NYSE: AEC), PennyMac Mortgage (NYSE: PMT), Two Harbors (AMEX: TWO), Simon Property Group (NYSE: SPG).

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.

The Debt Ceiling Debate

Fringe groups on each side of the political spectrum, but especially The Tea Party, are holding America hostage, while sensible voices who understand the importance of America’s perfect sovereign debt rating desperately seek to restore common sense.

It is my view that at this late date, the debt ceiling had better be raised to avoid near-term default, and that active efforts continue to establish adequate budget measures to restrain the now interested Standard & Poor’s and Moody’s (NYSE: MHP, NYSE: MCO). By the way, it really bugs me that now that this issue is on the tongue of every American, the agencies suddenly determined America’s debt position was of great short short-term importance and warn of ratings change even with a new ceiling. The levity of such a change is not well understood, especially by the agencies who horrifically rated Mortgage-Backed Securities ignorant of the potential for home price decline, driving a booming MBS market and playing key role in creating the financial crisis.

I want to know your opinion on this highly important debt ceiling issue and balanced budget measures. Please feel free to range widely across these topics. With a week to go before America defaults and life as we know it perhaps expedites its transformation into something far less appealing, tell us where you stand on:

The Debt Ceiling Debate

DEBATE TOPICS ARCHIVE

Article should interest investors in Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), State Street (NYSE: STT), Janus (NYSE: JNS), T. Rowe Price (Nasdaq: TROW), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM), Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX), Kelly Services (Nasdaq: KELYA), SPDR Dow Jones Industrial Average (NYSE: DIA), SPDR S&P 500 (NYSE: SPY), PowerShares QQQ Trust (Nasdaq: QQQ), ProShares Short Dow 30 (NYSE: DOG), ProShares Ultra Short S&P 500 (NYSE: SDS), ProShares Ultra QQQ (NYSE: QLD), NYSE Euronext (NYSE: NYX), The NASDAQ OMX Group (Nasdaq: NDAQ), Intercontinental Exchange (NYSE: ICE), E*Trade Financial (Nasdaq: ETFC), Charles Schwab (Nasdaq: SCHW), Asset Acceptance Capital (Nasdaq: AACC), Affiliated Managers (NYSE: AMG), Ameriprise Financial (NYSE: AMP), TD Ameritrade (Nasdaq: AMTD), BGC Partners (Nasdaq: BGCP), Bank of New York Mellon (NYSE: BK), BlackRock (NYSE: BLK), CIT Group (NYSE: CIT), Calamos Asset Management (Nasdaq: CLMS), CME Group (NYSE: CME), Cohn & Steers (NYSE: CNS), Cowen Group (Nasdaq: COWN), Diamond Hill Investment (Nasdaq: DHIL), Dollar Financial (Nasdaq: DLLR), Duff & Phelps (Nasdaq: DUF), Encore Capital (Nasdaq: ECPG), Edelman Financial (Nasdaq: EF), Equifax (NYSE: EFX), Epoch (Nasdaq: EPHC), Evercore Partners (NYSE: EVR), EXCorp. (Nasdaq: EZPW), FBR Capital Markets (Nasdaq: FBCM), First Cash Financial (Nasdaq: FCFS), Federated Investors (NYSE: FII), First Marblehead (NYSE: FMD), Fidelity National Financial (NYSE: FNF), Financial Engines (Nasdaq: FNGN), FXCM (Nasdaq: FXCM), Gamco Investors (NYSE: GBL), GAIN Capital (Nasdaq: GCAP), Green Dot (Nasdaq: GDOT), GFI Group (Nasdaq: GFIG), Greenhill (NYSE: GHL), Gleacher (Nasdaq: GLCH), Goldman Sachs (NYSE: GS), Interactive Brokers (Nasdaq: IBKR), INTL FCStone (Nasdaq: INTL), Intersections (Nasdaq: INTX), Investment Technology (NYSE: ITG), Invesco (NYSE: IVZ), Jefferies (NYSE: JEF), JMP Group (NYSE: JMP), Janus Capital (NYSE: JNS), KBW (NYSE: KBW), Knight Capital (NYSE: KCG), Lazard (NYSE: LAZ), Legg Mason (NYSE: LM), LPL Investment (Nasdaq: LPLA), Ladenburg Thalmann (AMEX: LTS), Mastercard (NYSE: MA), Moody’s (NYSE: MCO), MF Global (NYSE: MF), Moneygram (NYSE: MGI), MarketAxess (Nasdaq: MKTX), Marlin Business Services (Nasdaq: MRLN), Morgan Stanley (NYSE: MS), MSCI (Nasdaq: MSCI), MGIC Investment (NYSE: MTG), NewStar Financial (Nasdaq: NEWS), National Financial Partners (NYSE: NFP), Nelnet (NYSE: NNI), Northern Trust (Nasdaq: NTRS), NetSpend (Nasdaq: NTSP), Ocwen Financial (NYSE: OCN), Oppenheimer (NYSE: OPY), optionsXpress (Nasdaq: OXPS), PICO (Nasdaq: PICO), Piper Jaffray (NYSE: PJC), PMI Group (NYSE: PMI), Penson Worldwide (Nasdaq: PNSN), Portfolio Recovery (Nasdaq: PRAA), Raymond James (NYSE: RJF), SEI Investments (Nasdaq: SEIC), Stifel Financial (NYSE: SF), Safeguard Scientifics (NYSE: SFE), State Street (NYSE: STT), SWS (NYSE: SWS), T. Rowe Price (Nasdaq: TROW), Visa (NYSE: V) and Virtus Investment Partners (Nasdaq: VRTS).

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.