Time to Buy Real Estate

If you can afford to invest in it now, it’s time to buy real estate. Housing may never be more affordable again in most markets. Mortgage rates are at record lows and based on a recent report, home prices are on the rise again. So, for those who have a safe store of wealth, strong job security and are not living in their own home yet, I suggest investing in real estate now. Those who are a bit better off, might wisely add income earning property to their portfolios. Even as the economy slows anew, threatening to stymie real estate demand, I see other factors that could price real estate out of bounds for most Americans in the future.

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.

Buy Real Estate

The Federal Reserve’s efforts to stop the bleeding in housing and rejuvenate the critical sector have combined with international issues to drive U.S. interest rates down. Mortgage rates seem to strike a new record low each week, though the impact to housing demand has been diffused by ongoing economic sluggishness. Yet, those who can afford to buy a home should not let the inability of others affect their decision making now, or risk missing an opportunity to secure unprecedented low fixed mortgage rates.

Tuesday, S&P Case Shiller reported a 0.9% increase in its seasonally adjusted 20-city composite index for May. The increase followed a 0.7% surge in April. Economists were looking for a 0.5% price rise, with the range of forecasts stretching from 0.0% to 0.8%. The result therefore exceeded not only the consensus of forecasts but the entire range. And growth was widespread too, with 20 of 20 MSAs recording price rise in May. Also, on an unadjusted basis, both the 10-city and 20-city composites noted 2.2% increases.

These two factors, low rates and rising prices, should be drawing those interested in home purchase into the market. However, Bank of America (NYSE: BAC) just reported it funded 3.6% less residential mortgage loans in its second quarter. The nation’s major mortgage lenders, like BofA, Wells Fargo (NYSE: WFC) and Citigroup (NYSE: C), are burdened though by claims of mortgage security holders and insurers that improprieties effected faulty loans, and thus infected pools of securities. BofA and others are finding Fannie Mae (OTC: FNMA.OB) passing more loans back to them as a result. Until this pressure eases, the banks are going to be less free to lend, but that shouldn’t stop you from applying for a mortgage loan if you can qualify.

The news of many Americans gravitating to rentals, with vacancy rates on the decline, should neither scare those who can afford to buy a home to seek one. Billionaire Warren Buffet, Chairman and CEO of Berkshire Hathaway (NYSE: BRK-B), along with other market mavens have advised investors to buy into fear, and I advise the same now for those who can afford a house and qualify for a loan.

It seems seasonal spring sales strength has eased, with the latest New Home Sales and Existing Home Sales paces declining at last reporting. Major homebuilder shares have taken a hit recently as a result, with the SPDR S&P Homebuilders (NYSE: XHB) feeling more heat Tuesday, declining 2.1%. Individual homebuilder shares were struck even harder, with PulteGroup (NYSE: PHM), Ryland Group (NYSE: RYL), Toll Brothers (NYSE: TOL) and Hovnanian (NYSE: HOV) down between 1.7% and 2.9% Tuesday. I’ve been adamant about selling the cyclical homebuilder stocks ahead of the economic softness I see ahead. But buying real estate is not synonymous with buying homebuilder stocks.

Despite my concern that the softening economy must impact the real estate sector, I like real estate for investment now. I even believe the S&P Case Shiller data might soon reverse again, especially with the latest release of foreclosure property; and yet I still say buy real estate. I expect mortgage rates to decline further near-term, and yet I favor buying real estate now. Why? It’s because prices and rates are good enough now, and what lies ahead scares the heck out of me.

I see a real chance for a state of affairs where mortgage rates are too high for most of us to afford or to qualify for auto, home and other loans. I see dollar dilution and fiscal fallout, and possibly other external factors, leading U.S. treasury yields and other interest rates much higher. So rather than wait for potentially better housing affordability in the near-term, I recommend real estate now for those who can still afford it.

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.

It’s Consumer Spending I’m Worried About

Three consumer related economic data points reached the wire this morning, and one of them is especially concerning to me. Because of what is leading the market lower today, I believe they are playing a key role in the declines in the SPDR S&P 500 (NYSE: SPY), SPDR Dow Jones Industrial Average (NYSE: DIA) and the PowerShares QQQ (Nasdaq: QQQ) today (aka the market). Unfortunately, the popular press has not noticed, due to their preoccupation with one specific data point that served to divert their attention today.

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.

Consumer Spending Matters

Getting right to the meat of the matter, its consumers I’m concerned about, and their spending patterns that trouble me. It’s the reason the consumer discretionary sector is leading the market lower today – the Consumer Discretionary Select Sector SPDR (NYSE: XLY) -0.7% and the shares of major consumer dependents, Amazon.com (Nasdaq: AMZN) -1.9% and Wal-Mart (NYSE: WMT) -0.2%, are down today.

At 8:30 AM EDT this morning, the government published the Personal Income & Outlays Report for the month of June. Personal spending was unchanged in June, despite price rise including and excluding food and energy, so without synthetic skew. Do you hear me? Consumers stopped their spending growth. Economists had forecast just a 0.1% increase for June, with the range of views extending from 0.0% to 0.3%, according to Bloomberg’s survey. So, the spending data came in at the low end of economists’ expectations. Those same economists are warning their in-house sector strategists about that information today, and eventually, your broker at Merrill Lynch (NYSE: BAC) will get the news to you with a change in their recommended stocks away from your old favorite consumer stocks like Apple (Nasdaq: AAPL) (I like Apple here) and into defensive ideas like Procter & Gamble (NYSE: PG) (but I like defensive names too). This data is a tangible measure of consumer spending, and one that everyone who matters watches. It’s the most important reason for stocks to sell off this morning.

The other bit of important news found in the report, as far as I’m concerned, is the Core PCE Price Index, the Fed’s favored inflation measure. It was forecast to rise 0.2% in the latest period, and it showed prices rose 0.2% excluding food and energy. The headline price measure, the PCE Price Index, also rose 0.1%, against expectations for the same. The most important information to gleam from here is that price change played an insignificant role in the spending patterns of consumers. So consumers really did stop spending – be afraid recession watchers, be very afraid.

Directly from the Report:
Real PCE -- PCE adjusted to remove price changes -- decreased 0.1 percent in June, in contrast to an increase of 0.1 percent in May. Purchases of durable goods increased less than 0.1 percent, in contrast to a decrease of 0.4 percent. Purchases of nondurable goods decreased 0.4 percent, in contrast to an increase of 0.2 percent. Purchases of services decreased less than 0.1 percent, in contrast to an increase of 0.1 percent.

And the news gets worse… Last month’s consumer outlays data was revised to reflect a decrease of 0.1% in consumer spending, which was a downgrade from the previously reported “no change” for May. So we have two months of consumer stall. Do you remember what I always tell you comes before recession? It’s the slowing and stopping of our behemoth of an economy, and that’s what is depicted here.

Now, the reason the market has not picked up on this important news yet is because of the day’s Consumer Confidence Index, which is an intangible measure of consumers versus the aforementioned tangible measure. The Conference Board’s Consumer Confidence Index release featured a headline that read, “…Consumer Confidence Increases After Four Consecutive Declines.” Unfortunately, that headline led fast writing reporters to focus on what seems important information. They are mistaken!

The Confidence Index rose in July, to 65.9, from a revised 62.7 in June. Economist had been looking for the index to fall to 61.5 in this latest check. Debunking this is relatively easy friends, as the Present Situation Index actually declined in July, while the Expectations Index leapt forward. The Director of Economic Indicators at the Conference Board, Lynn Franco, wisely stated, “… consumer confidence is not likely to gain any significant momentum in the coming months." She cautioned readers from the exact misunderstanding they digested anyway. If you examine the report, you find that the index sits at a historically depressed state, and really reflects a bad mood.

The third data point is relevant because it is tangible and because it is current. The International Council of Shopping Centers (ICSC) reported weekly same-store sales fell 1.7% in the week ending July 28. That was probably affected by weather, but the year-to-year sales pace, measured at +1.8% this week, continues to depict a pace of sales growth not exceeding inflation. The Core PCE Price Index increased 1.8% year-to-year in June. This means that my advice recently to be selective in your retail investment decisions continues to play true. Ideas like J.C. Penney (NYSE: JCP) and Sears (Nasdaq: SHLD) remain out of my favor, while I direct you to discounters like Dollar Tree (Nasdaq: DLTR), eBay (Nasdaq: EBAY) and Wal-Mart (NYSE: WMT).

This is just the latest in a series of recession signals found in regular economic data and corporate news over recent weeks. We are tracking them here, so simply continue to follow my feed through Wall Street Greek for my ongoing analysis of critical economic data points.

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.

What a Wall Street Week!

It’s a blockbuster week, full of powerful news catalysts that could move the market. From the Federal Reserve’s monetary policy announcement to the European Central Bank’s try at it, to Friday’s Employment Report and the ISM Manufacturing Index; the week will not lack market catalysts. Through it all, a still swamped earnings schedule keeps things lively as well. Your weekly schedule of economic, corporate and other market drivers brought to you by Wall Street Greek below.

Monday
Yet another regional manufacturing data point indicated trouble Monday, with the Dallas Federal Reserve Bank’s posting of its Manufacturing Survey results. The bank’s General Business Activity Index dropped to negative 13.2 in July, after climbing to positive territory in June (+5.8). It was the measure’s lowest reading in 10 months, and followed a slew of other regional warnings over recent weeks.

Overseas, Greek politicians gathered to find places to save money in their 2013 and 2014 budgets.

The corporate wire had important earnings from Active Power (Nasdaq: ACPW), Acxiom (Nasdaq: ACXM), Advanced Energy (Nasdaq: AEIS), Advent Software (Nasdaq: ADVS), Aegion (Nasdaq: AEGN), Allison Transmission (Nasdaq: ALSN), American Financial Group (NYSE: AFG), Amerisafe (Nasdaq: AMSF), Ames National (Nasdaq: ATLO), Anadarko Petroleum (NYSE: APC), Anadigics (Nasdaq: ANAD), Aqua America (NYSE: WTR), Armstrong World Industries (NYSE: AWI), Arrow Electronics (NYSE: ARW), Asiainfo Linkage (Nasdaq: ASIA), Asset Acceptance (Nasdaq: AACC), Astex Pharmaceuticals (Nasdaq: ASTX), Avid Technology (Nasdaq: AVID), BCD Semiconductor (Nasdaq: BCDS), BNC Bancorp (Nasdaq: BNCN), Boardwalk Pipeline (NYSE: BWP), CafePress (Nasdaq: PRSS), Cal-Maine (Nasdaq: CALM), CapitalSource (NYSE: CSE), Capitol Federal Financial (Nasdaq: CFFN), Celadon (NYSE: CGI), Cirrus Logic (Nasdaq: CRUS), CIT Group (NYSE: CIT), CNA Financial (NYSE: CNA), Cognex (Nasdaq: CGNX), Community West Bancshares (Nasdaq: CWBC), Compass Minerals (NYSE: CMP), Comstock Resources (NYSE: CRK), Corporate Executive Board (Nasdaq: EXBD), Danaos (NYSE: DAC), Dendreon (Nasdaq: DNDN), Diebold (NYSE: DBD), DSP Group (Nasdaq: DSPG), Eastman Chemical (NYSE: EMN), Elecsys (Nasdaq: ESYS), Enbridge Energy Management (NYSE: EEQ), First Connecticut Bancorp (Nasdaq: FBNK), First Financial (Nasdaq: THFF), Fiserv (Nasdaq: FISV), Flowserve (NYSE: FLS), Forest Oil (NYSE: FST), Franklin Resource (NYSE: BEN), General Cable (NYSE: BGC), German American Bancorp (Nasdaq: GABC), Gladstone Investment (Nasdaq: GAIN), Greenlight Capital Re (Nasdaq: GLRE), Heartland Financial (Nasdaq: HTLF), Herbalife (NYSE: HLF), Hertz Global (NYSE: HTZ), HF Financial (Nasdaq: HFFC), HFF (NYSE: HF), Hologic (Nasdaq: HOLX), HomeStreet (Nasdaq: HMST), Humana (NYSE: HUM), Independent Bank (Nasdaq: IBCP), Integrated Device Technology (Nasdaq: IDTI), Jacobs Engineering (NYSE: JEC), Kadant (NYSE: KAI), Kona Grill (Nasdaq: KONA), Lincoln Electric (Nasdaq: LECO), Loews (NYSE: L), Lufkin Industries (Nasdaq: LUFK), magicJack Vocaltec (Nasdaq: CALL), Martha Stewart (NYSE: MSO), Masco (NYSE: MAS), Meadowbrook Insurance Group (NYSE: MIG), Mercury General (NYSE: MCY), Monolithic Power (Nasdaq: MPWR), National Financial Partners (NYSE: NFP), NewMarket (NYSE: NEU), Northeast Utilities (NYSE: NU), Old National Bancorp (NYSE: ONB), Old Point Financial (Nasdaq: OPOF), Osiris Therapeutics (Nasdaq: OSIR), Partnerre (NYSE: PRE), Pathfinder Bancorp (Nasdaq: PBHC), Peapack-Gladstone Financial (NYSE: PGC), Plum Creek Timber (NYSE: PCL), PMC-Sierra (Nasdaq: PMCS), Pope Resources (Nasdaq: POPE), Provident Financial (Nasdaq: PROV), Quaker Chemical (NYSE: KWR), RealD (NYSE: RLD), Roper Industries (NYSE: ROP), Rudolph Technologies (Nasdaq: RTEC), Seagate Technology (NYSE: STX), State Bank Financial (Nasdaq: STBZ), Suffolk Bancorp (Nasdaq: SUBK), Summit State Bank (Nasdaq: SSBI), Sunshine Heart (NYSE: SSH), Superior Energy (NYSE: SPN), Texas Roadhouse (Nasdaq: TXRH), TFS Financial (Nasdaq: TFSL), TGC Industries (NYSE: TGE), THL Credit (Nasdaq: TCRD), Tim Participacoes (NYSE: TSU), TriMas (NYSE: TRS), Unilife (Nasdaq: UNIS), UniPixel (Nasdaq: UNXL), UNS Energy (NYSE: UNS), USA Mobility (Nasdaq: USMO), Vector Group (NYSE: VGR), Vertex Pharmaceuticals (Nasdaq: VRTX), Virtusa (Nasdaq: VRTU), W&T Offshore (NYSE: WTI), Wausau Paper (NYSE: WPP), Westmoreland Coal (NYSE: WLB), Wpcs International (Nasdaq: WPCS) and others.

Tuesday
The big FOMC meeting kicks off Tuesday and should dominate market discussion until the monetary policy release Wednesday.

The report that interests me most Tuesday is the Personal Income & Outlays Report for June. Personal spending disappointed last month, when consumer spending was unchanged. Economists forecast just a 0.1% increase for June, with the range of views extending from 0.0% to 0.3%, according to Bloomberg’s survey. Consumer confidence has been feeling the heat this summer, and so this tangible measure of spending is important. Personal income is expected to have risen by 0.4%. The Core PCE Price Index, the Fed’s favored inflation measure, is forecast to rise 0.2% in the latest period.

The S&P Case Shiller Home Price Index is due for report Tuesday before the market open. The group’s 20-city composite index surged 0.7% on a seasonally adjusted basis in April, marking the third straight month of price increase. Economists are looking for a 0.5% price rise for May. Foreclosures have been reported on the increase more recently, as regular sales have tracked off, so things may change when the report catches up to the present.

The International Council of Shopping Centers (ICSC) reports on weekly same-store sales in the pre-market Tuesday. Last week’s report showed sales rose by 1.0% in the week ending July 21. On a year-over-year basis, sales were up 3.3%, marking a pickup from the prior period. Redbook reports as well, and last week showed a 1.3% sales increase for the same period.

The Employment Cost Index will be reported for the second quarter this morning. After increasing 0.4% in the first quarter, employment costs are seen 0.5% higher in Q2. Given the employment situation, there remains a headwind against employment cost rise along with all other price increase.

The very important Chicago Purchasing Managers Index (PMI) will offer an important look at the state of manufacturing in the Chicago area. After marking a 33-month low in May, the index edged higher in June to a mark of 52.9 on the Business Barometer Index. Economists see slippage in July to a mark of 52.5, but I am concerned we could see worse, given what’s been developing in other parts of the nation. The economists’ consensus range extends as low as 49, with 50 delineating between contraction and expansion.

The Conference Board’s Consumer Confidence Index is set for 10:00 AM EDT reporting. Last week, the Michigan/Reuters sentiment measure inched higher to 72.3. The Conference Board’s take last time around offered a second month of decline. The Confidence Index fell to 62.0 in June, down from 64.4 in May. Economists see the index falling to 61.5 in this latest check.

The State Street (NYSE: STT) Investor Confidence Index is due at 10:00 AM as well. Last month’s report produced an improvement in confidence as the index increased 7 points. Investors in North America added to risk holdings, with the regional index up 5.7 points. Needless to say, I expect the environment to change in the months ahead.

The latest monthly Agricultural Prices Report reaches the wire at 3:00 PM EDT Tuesday. The report shows the prices received by farmers through the month. Thus, it should be interesting to see the effects of the latest drought conditions in parts of the country.

The corporate earnings schedule has Acorda Therapeutics (Nasdaq: ACOR), Aetna (NYSE: AET), Affymetrix (Nasdaq: AFFX), Allstate (NYSE: ALL), Archer Daniels Midland (NYSE: ADM), Arthur J. Gallagher (NYSE: AJG), Atmel (Nasdaq: ATML), Bankrate (Nasdaq: RATE), Black Box (Nasdaq: BBOX), BMC Software (NYSE: BMC), Career Education (Nasdaq: CECO), CBRE Group (NYSE: CBG), Coach (NYSE: COH), Con-way (NYSE: CNW), Cummins (NYSE: CMI), Denny’s (Nasdaq: DENN), Dentsply (Nasdaq: XRAY), Digital River (Nasdaq: DRIV), DineEquity (NYSE: DIN), DreamWorks (NYSE: DWA), Dynamic Materials (Nasdaq: BOOM), Ecolab (NYSE: ECL), Edison Int’l (NYSE: EIX), Electronic Arts (NYSE: EA), Entergy (NYSE: ETR), Female Health (Nasdaq: FHCO), FMC Corp. (NYSE: FMC), Fresh Del Monte (NYSE: FDP), Frontier Communications (NYSE: FTR), GAIN Capital (Nasdaq: GCAP), Genworth Financial (NYSE: GNW), Geron (Nasdaq: GERN), Hanesbrands (NYSE: HBI), Harris Corp. (NYSE: HRS), Harsco (NYSE: HSC), Headwaters (NYSE: HW), Heartland Payment Systems (NYSE: HPY), Holly Energy Partners (NYSE: HEP), Kulicke & Soffa (Nasdaq: KLIC), LCA-Vision (Nasdaq: LCAV), Life Technologies (Nasdaq: LIFE), LIN TV (NYSE: TVL), Liquidity Services (Nasdaq: LQDT), Louisiana Pacific (NYSE: LPX), Marathon Petroleum (NYSE: MPC), Market Leader (Nasdaq: LEDR), Martin Marietta Materials (NYSE: MLM), MDC Holdings (NYSE: MDC), NiSource (NYSE: NI), Northeast Bancorp (NYSE: NBN), Oil States International (NYSE: OIS), ONEOK (NYSE: OKE), Optimer Pharmaceuticals (Nasdaq: OPTR), Papa John’s (Nasdaq: PZZA), Peet’s Coffee (Nasdaq: PEET), Pfizer (NYSE: PFE), Pioneer Natural Resources (NYSE: PXD), PolyOne (NYSE: POL), Polypore (NYSE: PPO), Public Service (NYSE: PEG), QEP Resources (NYSE: QEP), RenaissanceRe (NYSE: RNR), Revlon (NYSE: REV), Sun Healthcare (Nasdaq: SUNH), Take-Two Interactive (Nasdaq: TTWO), Techne (Nasdaq: TECH), The Chefs’ Warehouse (Nasdaq: CHEF), Goodyear (NYSE: GT), TRW Automotive (NYSE: TRW), Tyco Int’l (NYSE: TYC), United States Steel (NYSE: X), Valero Energy (NYSE: VLO), WebMD (Nasdaq: WBMD), Yandex (Nasdaq: YNDX) and Zebra Technologies (Nasdaq: ZBRA).

Wednesday
What a day, with so many heavy hitting data points reaching the wire. The headliner will be the Federal Reserve’s FOMC Monetary Policy Statement, scheduled for 2:15 PM EDT release.

The second most important report on the day, in my view, will be the ISM Manufacturing Index. Last month, this index went underwater, indicating contraction in the manufacturing sector. We penned our article, “The Report that Changed Everything,” in response. This month, economists are looking toward an improvement, with the consensus forecast set above water, at 50.1, versus the 49.7 mark set in June. Since ISM, we’ve seen regional index after regional index deteriorate, showing signs of recession. Thus, this report could prove interesting. Markit will post its PMI Manufacturing Index as well, at 9:00 AM.

The first of the monthly employment reports reaches the wire Wednesday morning with Challenger Gray & Christmas’ Job-Cuts Report. In June, job cuts dropped to a 13-month low. Announced corporate layoffs were down 39%, to 37,551.

ADP’s Private Employment Report reaches the wire at 8:15 AM. Last month’s report showed ADP’s estimate for private employment growth was off a bit. The company estimated private employment increased by 176K in June, but the Employment Situation Report showed private employment actually rose by 84,000. This month, economists’ are looking for ADP to show a 120K private employment increase. Interestingly, economists see the Employment Situation Report showing a 110K increase for the same data point, based on Bloomberg’s survey.

Motor vehicle makers Ford (NYSE: F), General Motors (NYSE: GM) and others will be reporting their sales for July. Domestic vehicle sales are expected to again post growth, with the annual pace of sales seen rising to 11.0 million, up from 10.8 million in June. However, total vehicle sales are expected to decrease to a pace of 14.0 million, from 14.1 million in June.

The Mortgage Bankers Association (MBA) reports its Weekly Applications Survey again Wednesday. Despite record low rates, though, increases in mortgage applications tied to the purchases of homes have not shown life. While we are on real estate, Construction Spending will be reported at 10:00 AM. Economists see spending increasing 0.5%, after it rose 0.9% in May.

EIA’s Weekly Petroleum Status Report is due for release at 10:30 AM. Last week’s report covering the period ending July 20 showed crude oil inventories increased 2.7 million barrels, and were above the upper limit of the average range for this time of year. Total motor gasoline stocks increased by 4.1 million barrels, but were in the lower half of the average range for this time of year.

The corporate earnings schedule has news from Alamo Group (NYSE: ALG), Allergan (NYSE: AGN), Amdocs (NYSE: DOX), Amerigroup (NYSE: AGP), ArthroCare (Nasdaq: ARTC), Automatic Data Processing (NYSE: ADP), Avis Budget Group (NYSE: CAR), Avon Products (NYSE: AVP), BOK Financial (Nasdaq: BOKF), Booz Allen Hamilton (NYSE: BAH), Box Ships (NYSE: TEU), Burger King (NYSE: BKW), Cal Dive (NYSE: DVR), Comcast (Nasdaq: CMSCA), DaVita (NYSE: DVA), Devon Energy (NYSE: DVN), Diana Containerships (Nasdaq: DCIX), Dollar Thrifty (NYSE: DTG), Dominion Resources (NYSE: D), El Paso Electric (NYSE: EE), Energizer (NYSE: ENR), First Solar (Nasdaq: FSLR), FTI Consulting (NYSE: FCN), Garmin (Nasdaq: GRMN), Genco Shipping (NYSE: GNK), Green Mountain Coffee (Nasdaq: GMCR), Harley-Davidson (NYSE: HOG), Hillenbrand (NYSE: HI), Hospira (NYSE: HSP), Huntsman (NYSE: HUN), Hyatt Hotels (NYSE: H), Intercontinental Exchange (NYSE: ICE), Intrepid Potash (NYSE: IPI), Jamba (Nasdaq: JMBA), Johnson Outdoors (Nasdaq: JOUT), LeapFrog (NYSE: LF), MAKO Surgical (Nasdaq: MAKO), Marathon Oil (NYSE: MRO), MasterCard (NYSE: MA), Metlife (NYSE: MET), Murphy Oil (NYSE: MUR), Onyx Pharmaceuticals (Nasdaq: ONXX), Overseas Shipholding (NYSE: OSG), Owens Corning (NYSE: OC), Prudential Financial (NYSE: PRU), R.R. Donnelley (NYSE: RRD), Radian Group (NYSE: RDN), Speedway Motorsports (NYSE: TRK), Sturm Ruger (NYSE: RGR), Tesoro (NYSE: TSO), Tetra Tech (Nasdaq: TTEK), The Boston Beer Co. (NYSE: SAM), The Hanover Insurance (NYSE: THG), The Hartford Financial (NYSE: HIG), Time Warner (NYSE: TWX), Transocean (NYSE: RIG), Unum Group (NYSE: UNM), Vonage (NYSE: VG), Weight Watchers (NYSE: WTW), Williams Cos. (NYSE: WMB), Yelp (Nasdaq: YELP) and more.

Thursday
All eyes will be on Europe Thursday, as the European Central Bank (ECB) sets its monetary policy. Look for the release in the morning followed by a press conference.

Retailers report monthly Chain Store Sales Thursday. By that time, though, we will have had good preparation for news. Retail sales slumped a couple weeks ago, and this week’s consumer confidence and personal spending data will have primed the market this week. Also, the Bloomberg Consumer Comfort Index fell last week to -38.5, and will be reported again Thursday morning.

Weekly Initial Jobless Claims have been a hot mess in July, due to adjustments to the data for plant closings that proved hard to predict. Maybe this week’s news will offer some new insight. You would expect layoffs to be light in the heat of summer, but with several economic data points showing employer discomfort with their labor counts, maybe not. Last week’s report showed claims fell 35K, to 353K.

Factory Orders will be reported at 10:00 AM. Orders rose 0.7% in May, and economists expect 0.7% growth in June too, according to Bloomberg. Economists will be keenly attuned to the report, considering the direction manufacturing appears to be heading in lately.

The EIA reports on natural gas inventory at 10:30 AM. The last report covering the week ending July 20 showed inventory increased by 26 Bcf, rising to 435 Bcf above the five year average for this time of year.

The corporate wire has news from Activision Blizzard (Nasdaq: ATVI), adidas AG (ADS.DE), AllianceBernstein (NYSE: AB), Ameren (NYSE: AEE), AIG (NYSE: AIG), American Science and Engineering (Nasdaq: ASEI), Apache (NYSE: APA), Apartment Investment and Management (NYSE: AIV), Autobytel (Nasdaq: ABTL), Aveo Pharmaceuticals (Nasdaq: AVEO), Becton Dickinson (NYSE: BDX), Blue Nile (Nasdaq: NILE), BNP Paribas (BNP.PA), Cadence Pharmaceuticals (Nasdaq: CADX), Calamos Asset Management (Nasdaq: CLMS), Cardinal Health (NYSE: CAH), CBS Corp. (NYSE: CBS), Checkpoint Systems (NYSE: CKP), Cigna (NYSE: CI), Diana Shipping (NYSE: DSX), DIRECTV (NYSE: DTV), Duke Energy (NYSE: DUK), Eagle Materials (NYSE: EXP), FEI Co. (Nasdaq: FEIC), Fluor (NYSE: FLR), Fortress Investment Group (NYSE: FIG), Furniture Brands Int’l (NYSE: FBN), General Motors (NYSE: GM), Gentiva Health (Nasdaq: GTIV), Gibraltar Industries (Nasdaq: ROCK), Haemonetics (NYSE: HAE), Henry Schein (Nasdaq: HSIC), hhgregg (NYSE: HGG), Hornbeck Offshore (NYSE: HOS), IDACORP (NYSE: IDA), Kellogg (NYSE: K), Kenneth Cole (NYSE: KCP), Kodiak Oil & Gas (NYSE: KOG), Kraft Foods (NYSE: KFT), Kratos Defense and Security (Nasdaq: KTOS), LinkedIn (Nasdaq: LNKD), Main Street Capital (Nasdaq: MAIN), MasTec (NYSE: MTZ), MGIC Investment (NYSE: MTG), Mohawk (NYSE: MHK), Molycorp (NYSE: MCP), Monster Worldwide (NYSE: MWW), National Fuel Gas (NYSE: NFG), Ocwen Financial (NYSE: OCN), OfficeMax (NYSE: OMX), Parker Drilling (NYSE: PKD), Parker Hannifin (NYSE: PH), PerkinElmer (NYSE: PKI), Pinnacle West Capital (NYSE: PNW), Pitney Bowes (NYSE: PBI), Progressive (NYSE: PGR), Quanta Services (NYSE: PWR), Radio One (Nasdaq: ROIA), Reis (Nasdaq: REIS), ResMed (NYSE: RMD), Rowan (NYSE: RDC), SBA Communications (Nasdaq: SBAC), SCANA (NYSE: SCG), Scripps Networks (NYSE: SNI), Sealed Air (NYSE: SEE), Sempra Energy (NYSE: SRE), Spectra Energy (NYSE: SE), Sunoco (NYSE: SUN), Sunrise Senior Living (NYSE: SRZ), The Clorox Co. (NYSE: CLX), Time Warner (NYSE: TWC), ValueClick (Nasdaq: VCLK), World Wrestling Entertainment (NYSE: WWE), Zipcar (NYSE: ZIP) and more.

Friday
It’s all about the Employment Situation Report Friday. The news was bad in June, but not terrifying. Still, the market will be anxious enough about July’s report. Unemployment stuck at 8.2% in June and economists seeing it staying there in July too. Nonfarm Payrolls are expected to edge up to 100K for July, though, which is better than June’s 80K increase. This data could make or break the market for the next few weeks or longer, and so is worth all the attention. Unfortunately, I see labor deteriorating in the months ahead.

The Monster Employment Index (MEI) takes back seat to the government data, and is released in the early AM. The MEI measures online job search activity and so is an important measure of labor, though I haven’t found it insightful outside of its anecdotal play.

ISM reports its Non-Manufacturing Index at 10:00 AM, with expectations set for a slight decline to 52.0, from 52.1 in July. This report is more important than ISM’s manufacturing data, because 90% of the American economy is driven by the service sector.

The corporate earnings schedule has news from Procter & Gamble (NYSE: PG), Viacom (Nasdaq: VIAB), NYSE Euronext (NYSE: NYX), The Washington Post (NYSE: WPO), EOG Resources (NYSE: EOG) and Agrium (AGU.TO). Look also for earnings from Alliant Energy (NYSE: LNT), Allianz SE (ALV.DE), Artio Global Investors (NYSE: ART), Assisted Living Concepts (NYSE: ALC), Beazer Homes (NYSE: BZH), Buckeye Partners (NYSE: BPL), Cowen Group (Nasdaq: COWN), Dresser-Rand (NYSE: DRC), Elster Group (NYSE: ELT), Entercom Communications (NYSE: ETM), EPAM Systems (Nasdaq: EPAM), Exelis (NYSE: XLS), Exide Technologies (Nasdaq: XIDE), Federal Signal (NYSE: FSS), First Federal of Northern Michigan Bancorp (Nasdaq: FFNM), Gartner (NYSE: IT), Gray Television (NYSE: GTN), GSE Holdings (NYSE: GSE), Health Net (NYSE: HNT), Immunogen (Nasdaq: IMGN), ITT (NYSE: ITT), IXYS Corp. (Nasdaq: IXYS), Lightbridge (Nasdaq: LTBR), Marlin Business Services (Nasdaq: MRLN), Novavax (Nasdaq: NVAX), PNM Resources (NYSE: PNM), RBC Bearings (Nasdaq: ROLL), Royal Bank of Scotland (NYSE: RBS), Shenandoah Telecommunications (Nasdaq: SHEN), Sirona Dental (Nasdaq: SIRO), Telephone & Data Systems (NYSE: TDS), Tsakos Energy Navigation (NYSE: TNP), UIL Holdings (NYSE: UIL), Wellcare Health Plans (NYSE: WCG) and WGL Holdings (NYSE: WGL).

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.

Bernanke Vs. Economy

The direction of the market today and moving forward will be determined by which factor the market views more critical. Will it be the prospect of new creative stimulus employed by the Federal Reserve Chairman, Ben Bernanke, or will it be the ominous slowing of GDP growth.

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.

Bernanke Vs. GDP

At the hour of publishing here, I can only state expectations for economic growth of 1.2% for the second quarter, the slowest pace in a year, according to economists surveyed by Bloomberg. The range of views extends from 0.9% to 2.4% on a real basis, and represents a significant slowdown from the first quarter’s similarly slowing pace of 1.9%. The American economy is a big ship, and before she can stop or turn, she must slow. Well, the slowing is starting to get real for investors, and so all eyes are keyed on the pilot’s quarters.

Some say the efforts and the economic guidance of the Federal Reserve have helped to stave off a second great depression, and others argue that the efforts of the Fed are fruitless, and in fact lead us into bigger mess, ala the stock market and real estate bubbles of the last two decades. The next bubble appears to be in U.S. treasuries, but if that one blows, well then it all might be over. If interest in U.S. treasuries disappears, the depression that follows will be rivaled by no other time in U.S. history, in my view. In that case, with the dollar devalued, perhaps only gold will draw interest. Gold has in fact been my favorite investment idea for nearly 10 years now, and the performance of the SPDR Gold Trust ETF (NYSE: GLD) reflects the direction toward the disastrous end I just depicted.

I’ve been arguing that the Fed is out of bullets for five years now. What it has been fighting with is band-aids, but the wound has not healed behind its temporary cover. As a result, I see confidence in the Fed chief fading. You can see rally in the SPDR S&P 500 (NYSE: SPY), SPDR Dow Jones Industrials (NYSE: DIA) and the PowerShares QQQ (NYSE: QQQ) in anticipation of Fed speak. Still, when we look ahead, we see a cliff’s edge getting closer and closer. Our pace seems to slow at times, and it seems we might turn at times, but it’s all an illusion, because we continue to head toward that cliff.

Regarding cliffs, the Fed Chief rightly points to fiscal policy for the medication the economy and the market needs to heal. And as the “fiscal cliff” approaches, our doctors continue to quarrel about how the surgery should be performed. Americans should be demanding of their Congressmen today to resolve the issues that will otherwise be pushed forward to the midnight hour.

Fear of the fiscal cliff is keeping businesses and individuals from planning and spending today, and it will increasingly cause trepidation for stocks. We cannot expect our banks to do anything but sure up capital, and so they do. Yet, in Congress, our leaders prefer to criticize Bank of America (NYSE: BAC) and J.P. Morgan (NYSE: JPM), and to interrogate them on the issues that have plagued them recently. That is fine; but also fertilize the ground with sound fiscal policy and give them the tools to fuel economic growth. Otherwise, our nation’s greatest companies will suffer, because Europe and China will not be enough nor able to sustain them. So, General Electric’s (NYSE: GE) goods will find fewer buyers and Wal-Mart’s (NYSE: WMT) prices will not be cheap enough. The evidence of this is clear by the latest quarterly performances of Starbucks (Nasdaq: SBUX), McDonald’s (NYSE: MCD) and Yum! Brands (NYSE: YUM), which each disappointed investors due to shortfalls in their Chinese business.

So, in the battle royal pitting the latest GDP data against the Fed champion, GDP must win. Our only responsibility is to make him into a good champion.

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.

What's Moving Stocks

Stocks were trading much higher Thursday, with the SPDR S&P 500 (NYSE: SPY), SPDR Dow Jones Industrial Average (NYSE: DIA) and the PowerShares QQQ (NYSE: QQQ) each gaining upward of 1.5% at the start of trading. The market is increasingly looking toward Federal Reserve Chairman Bernanke to usher in new stimulus next week. Also, this morning ECB Chief Mario Draghi said, “the bank would do whatever it takes to preserve the euro.” That sent European shares much higher today, with the iShares S&P Europe 350 Index (NYSE: IEV) up 3.3% this morning. The market got some extra help domestically from supportive Weekly Jobless Claims data. GDP is still on the slate for tomorrow, and will be approached with fear and trembling. Nothing can stop a bad GDP data point from sinking stocks, and that thought should temper enthusiasm by the close today.

Wall Street Drivers

US Economic Drivers
Weekly Initial Jobless Claims were reported down 35K to 353K in the period ending July 21, but don’t get too excited just yet. The last few weeks’ data offered a low figure on a seasonal adjustment against plant closings that didn’t happen, and I suspect this week, plant shutdowns that did happen without the adjustment. So, even as the DOL says to look at the four-week moving average, which was down 8,750, to 367,250, I say that figure is probably also mistaken. In the weeks ahead, I’m expecting jobless claims to once again rise above 400K.

Durable Goods Orders were reported up 1.6%, but once again, temper your enthusiasm. When excluding transportation, which includes high-ticket items that skew the data, durable orders fell 1.1%. Economists were looking for a 0.6% increase on the top line and 0.2% increase ex-transportation; the news is in the latter miss. When excluding defense, new orders fell 0.7%, which is more bad news. The Industrial Select Sector SPDR (NYSE: XLI) is higher by 1.7% along with the broader market at the hour of scribbling here, given the top line growth and other drivers. It’s probably a good time to bet on the gain going away now.

The Pending Home Sales Index was reported lower for June, down to a mark of 99.3, from 100.7 (revised) in May. The index is a forward looking indicator for existing home sales, because it measures contract signings. The data adds on to the month’s mostly bad housing data, with the pace of New Home Sales slipping in its latest reporting as well. The SPDR S&P Homebuilders (NYSE: XHB) is up 2.1% so far today on the broader drivers and a solid report from PulteGroup (NYSE: PHM).

The Bloomberg Consumer Comfort Index deteriorated in the period ending July 22nd, to its lowest mark in two months. The consumer measure fell to negative 38.5, from minus 37.9 last week. Wal-Mart (NYSE: WMT), the nation’s retailer, and the Consumer Discretionary Select Sector SPDR (NYSE: XLY) are up against the news on the broader macroeconomic drivers.

The Kansas City Federal Reserve Bank Branch reports on the state of the region’s manufacturing sector at 11:00 AM ET. We recently noted the infection spreading across the manufacturing sector, another warning sign for our recession watch. Economists surveyed by Bloomberg see the Kansas City measure rising to a mark of 4, from 3 in June.

The EIA reports today on Natural Gas Inventory. Last week’s report showed natural gas in storage increased by 28 Bcf, placing stocks 470 Bcf above the five-year average for this time of year. The glut grows, and the United States Natural Gas (NYSE: UNG) fund is up 1.1% anyway.

Corporate Drivers
Overnight, Zynga (Nasdaq: ZNGA) was the big news maker, reporting EPS results short of analysts’ estimates. ZNGA is off 40% Thursday after posting a penny per share in adjusted earnings, five cents short of analysts’ expectations based on Yahoo Finance data. That led investors to also reconsider Facebook (NYSE: FB) ahead of its own earnings report at the close today, with FB shares down 6% at this hour.

Thursday’s earnings reports and consensus estimates for the current quarter follow.

COMPANY & TICKER	QUARTERLY EPS EST.
3M (NYSE: MMM)	$1.65
Agco (NYSE: AGCO)	$1.80
Alaska Air (NYSE: ALK)	$1.51
Alcatel-Lucent (NYSE: ALU)	$0.00
Alkermes (Nasdaq: ALKS)	$0.16
Amazon.com (Nasdaq: AMZN)	$0.02
AmerisourceBergen (NYSE: ABC)	$0.69
Amgen (Nasdaq: AMGN)	$1.54
Amkor (Nasdaq: AMKR)	$0.13
AstraZeneca (NYSE: AZN)	$1.36
Ball Corp. (NYSE: BLL)	$0.87
Barrick Gold (NYSE: ABX)	$0.93
BJ’s Restaurant (Nasdaq: BJRI)	$0.32
BorgWarner (NYSE: BWA)	$1.37
Boston Scientific (NYSE: BSX)	$0.10
Cash America (NYSE: CSH)	$0.97
Celgene (Nasdaq: CELG)	$1.18
Cerner (Nasdaq: CERN)	$0.55
Chelsea Therapeutics (Nasdaq: CHTP)	-$0.19
Chubb (NYSE: CB)	$1.13
Clearwire (Nasdaq: CLWR)	-$0.31
Coinstar (Nasdaq: CSTR)	$1.17
Colgate-Palmolive (NYSE: CL)	$1.33
Dana Holding (NYSE: DAN)	$0.50
Dow Chemical (NYSE: DOW)	$0.64
Dr. Pepper Snapple (NYSE: DPS)	$0.82
Dunkin’ Brands (Nasdaq: DNKN)	$0.33
Expedia (Nasdaq: EXPE)	$0.71
Exxon Mobil (NYSE: XOM)	$1.95
Facebook (NYSE: FB)	$0.12
Goldcorp. (NYSE: GG)	$0.41
Healthsouth (NYSE: HLS)	$0.36
International Paper (NYSE: IP)	$0.46
Kimberly-Clark (NYSE: KMB)	$1.28
KLA-Tencor (Nasdaq: KLAC)	$1.31
McGraw-Hill (NYSE: MHP)	$0.76
Mead Johnson (NYSE: MJN)	$0.77
MetroPCS (NYSE: PCS)	$0.21
Navios Maritime (NYSE: NMM)	$0.30
New York Times (NYSE: NYT)	$0.13
Noble Energy (NYSE: NBL)	$0.94
Nutrisystem (Nasdaq: NTRI)	$0.32
Occidental Petroleum (NYSE: OXY)	$1.60
Potash Corp. (NYSE: POT)	$1.02
Quality Systems (Nasdaq: QSII)	$0.35
Raytheon (NYSE: RTN)	$1.22
Safeguard Scientifics (NYSE: SFE)	-$0.25
Sonic Foundry (Nasdaq: SOFO)	$0.12
Sprint Nextel (NYSE: S)	-$0.40
Starbucks (Nasdaq: SBUX) Starbucks Gift Card	$0.45
Tellabs (Nasdaq: TLAB)	$0.00
Tenneco (NYSE: TEN)	$0.97
Hershey (NYSE: HSY)	$0.61
VCA Antech (Nasdaq: WOOF)	$0.46
VistaPrint (Nasdaq: VPRT)	$0.22
Vulcan Materials (NYSE: VMC)	$0.06
Waste Management (NYSE: WM)	$0.52
World Acceptance (Nasdaq: WRLD)	$1.50

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.