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The Wall Street Greek blog is the sexy & syndicated financial securities markets publication of former Senior Equity Analyst Markos N. Kaminis. Our stock market blog reaches reputable publishers & private networks and is an unbiased, independent Wall Street research resource on the economy, stocks, gold & currency, energy & oil, real estate and more. Wall Street & Greece should be as honest, dependable and passionate as The Greek.



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Wednesday, February 29, 2012

A Plea for Greece, Europe and Us All

Greek flagIn April 2010 I authored a concerned and prescient plea entitled, Greece News & My Disgust, within which I penned such wisdom as: "The current plan inspired by Greece's big brothers is not feasible. It will only open up black markets, torch the streets of Athens and lead more Greek wealth to leave the country." My prediction did not end there unfortunately, and I hope it is never fulfilled, because I said, "It will only usher in a radical government to replace the current."

Orthodox iconsOur 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: DB, NYSE: STD, Nasdaq: ITUB, NYSE: UBS, NYSE: WBK, NYSE: LYG, NYSE: BCS, NYSE: CS, NYSE: AIB, NYSE: BLX, NYSE: NBG, NYSE: RY, NYSE: BFR, NYSE: IRE, NYSE: BMO, NYSE: CM, NYSE: ING, NYSE: C.

A Plea for Greece



The rating agencies are correct about Greece. The nation of my forefathers will default on its debts, despite all the latest efforts of the Greek government and the EU. It’s a shame that a bleak end seems inevitable for Greece, given the great sacrifices of the Greek people. Yet, it’s only inevitable because of the blind, bullheaded nature of thinking leading governments today, including in Greece and across Europe. I’ll be offering several creative ideas for legislators that should be digestible to most of them, yet will likely be ruled out because of their out-of-the-box nature, and due to the hard work that would be involved in implementing them. It’s much easier to sign on to pay and pension cuts, until the people will have no more of it, at which point pain is returned to sender, and perhaps earned due to disconnection and ignorance.

Fitch downgraded Greece last week to a level predicting default and S&P cut the Greek Republic this week to a mark indicating “select default”. The rating agency actions were despite the Greek government’s efforts to reduce the country’s debt burden and to cover its current principal and interest payments via troika payout. Greece took the strides necessary for it to assure it could survive through its latest deadlines, but that will not be enough in the end, because they are also undermining themselves with increasingly deeper austerity. Greece will effectively force its private debt holders to swallow a deep cut in the value of their loans through legislation. That move in itself is indicative of default, but remained an option for the already understood to be unreliable sovereign debtor.

When they naively promised not to issue any new austerity measures last year, government representatives Venizelos and Papademos showed a lack of economic foresight that matched poorly against the technocrat label of the latter. That said, judging by the poor excuses passing for economic plans prevailing across the spectrum of decision makers today, the two have plenty of company in poor judgment. Venizelos simply accepts the prevailing option offered up by the majority of intermingled and politically corrupted economic minds, but Papademos should know better.

Our leaders, globally, look to me increasingly like blind mice traversing through a field of big cats. Yet, I fear an overhaul of them would only usher in more ignorant minds with more dangerous courage. For some sad reason, the European actors in the Greek tragedy were surprised when they bumped into revised lower Greek economic activity which left debt levels short of agreed upon watermarks for aid delivery. In Mid-February, fourth quarter GDP fell short of expectations, cut to a level indicating contraction of 7.0% in Greece, down from 5.0% contraction in Q3.

A surprise to the blind rodents, the decimation of the Greek economy was of course exacerbated by austerity, which was something that I warned my followers would happen from day one. Perhaps the captains on the hollow hill will not overlook my advice planned for publishing over the weeks ahead, through which I will offer a series of lifesaving strategies for Greece, Europe and the global economy. I hope I will at least be able to communicate my ideas well enough for them to reach a few ears that might help make a difference. If not, perhaps I’ll come home to clean house.

lambades lambathes Greek wedding candles EasterGreece will certainly default, because the trajectory plotted by its pilots is flawed. Greek navigators from the famed island of my descent would see that what Europe and Greece have done is negligently plan a path that fails to compensate for all factors. It is as if they have plotted a critical course without compensating for the gremlin wind. Thus, we continue to find ourselves obscenely off-course. Now that Germany and a few other mini-members have promised their constituents that no new aid will be issued to Greece, the destination is determined and it is the bottom of the Mediterranean Sea. Though some see the latest promises as political, and so easily undone when the surprise of unmet fiscal goals and uncovered debt expenses resurface after elections across Europe and Greece this year. If that is the case, like Venizelos, they will open their mouths, shrug their shoulders and pass a new tranche of aid as fires fury at their feet.

Without creative thinking, including the ideas I will present shortly to whoever will listen (including the few important ears attendant to me in Greece and Greek-America) Greece will certainly default. With that, spreads will certainly widen for the Portuguese, Spanish, Italians and probably the rest of the previously considered to be untouchables. So whoever is in political office post elections might do better to reconsider political ploys to remain there, because a burning seat is worse than no seat. At the same time, the abandonment of Greece is not the optimal direction for Europe, and may even work more in favor of Greece when Europe fails anyway.

"What I suggest is to save Greece, but by helping Greece to save itself rather than to starve itself."

What I suggest is to save Greece, but by helping Greece to save itself rather than to starve itself. Since the global market is clearly intertwined, it is in the global interest to put the best minds to work developing creative and immediately value-adding strategies into effect. My first suggestion will be one that will require global consideration and approval. For the sake of the globe, I hope it is seriously considered and employed. Stay tuned…

The Default Disaster Missed by Markets

Unless creative ideas are embraced, Greece, Europe and probably the global economy will disintegrate, for related though separate reasons. Given my lack of confidence today in our global leadership, I would shy far from celebrating the stocks of Greece, Europe and even the United States to a lesser extent, if not the world. The argument is only solidified by the Iran trigger, which I’ll soon have more to say about. So the high flying Global X FTSE Greece 20 ETF (NYSE: GREK), up 13.7% since inception, though down 12% since my recent warning, should move even lower. Likewise, European shares, contaminated by where the EU’s terrible trajectory will take them, are likewise threatened. The iShares S&P Europe 350 Index ETF (NYSE: IEV) is up roughly 11% through February, and slightly higher since my sell call. This is because European investors could initially view the prospect of a Greek exit from the euro-zone as a positive, but I expect they will be wrong. The Vanguard European ETF (NYSE: VGK) is also up roughly 12% year-to-date, and a bit higher since the February 7th based call. Deutsche Bank (NYSE: DB) shares are up roughly 24% year-to-date on, dare I say, on a premature vision for European recovery. Reflecting capital flows and prospective hope, American financials like Citigroup (NYSE: C) shares are also up about 28% this year. Reiterating, I see these latest capital gains at risk, though at varying degrees and on perhaps different timing, based on the above detailed economic reasoning.

Article is relevant to Deutsche Bank (NYSE: DB), Banco Santander (NYSE: STD), ITA (Nasdaq: ITUB), UBS (NYSE: UBS), Westpac Banking (NYSE: WBK), Lloyds Banking Group (NYSE: LYG), Barclays (NYSE: BCS), Credit Suisse (NYSE: CS), Allied Irish Bank (NYSE: AIB), Banco Latinamericano (NYSE: BLX), National Bank of Greece (NYSE: NBG), Royal Bank of Canada (NYSE: RY), BBVA Banco Frances (NYSE: BFR), The Bank of Ireland (NYSE: IRE), Bank of Montreal (NYSE: BMO), Canadian Imperial Bank of Commerce (NYSE: CM), ING Groep (NYSE: ING), Citigroup (NYSE: C).

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.

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Tuesday, February 28, 2012

Does the Durables Data Predict Trouble?

predictThe latest in the stew of mixed economic data came in a spoiled Durable Goods Orders Report Tuesday. What it may say about the economy should be concerning, and might contribute to that turn in stocks I’ve been anticipating would accompany this year’s market comprehension of new economic trouble.

futuristOur 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 Industrials Sector Shares: NYSE: BA, NYSE: RTN, NYSE: DGI, NYSE: GY, NYSE: GD, NYSE: GR, NYSE: NOC, NYSE: HON, NYSE: LMT, NYSE: COL, NYSE: LLL, NYSE: ERJ, Nasdaq: FLIR, Nasdaq: BEAV, NYSE: TDG, NYSE: SPR, NYSE: CAE, NYSE: ATK, NYSE: HXL, NYSE: TGI, NYSE: ESL, NYSE: MOG-A, NYSE: HEI, NYSE: TDY, NYSE: CW, Nasdaq: CVCO, NYSE: SKY, Nasdaq: NOBH, Nasdaq: PHHM, NYSE: MHK, Nasdaq: IFSIA, NYSE: AIN, NYSE: UFI, NYSE: ITW, NYSE: TYC, NYSE: CMI, NYSE: KUB, NYSE: IR, NYSE: DOV, NYSE: ITT, NYSE: FLS, NYSE: PLL, NYSE: DRC, NYSE: SPW, NYSE: GDI, NYSE: IEX, Nasdaq: NDSN, NYSE: GGG, NYSE: ATU, Nasdaq: MIDD, NYSE: ABB, NYSE: ETN, NYSE: NJ, NYSE: ROK, NYSE: AME, NYSE: RBC, NYSE: TMB, Nasdaq: WGOV, NYSE: CAT, NYSE: DE, NYSE: CNH, Nasdaq: JOYG, Nasdaq: BUCY, Nasdaq: AGCO, NYSE: EMR, NYSE: PH, NYSE: ROP, NYSE: PNR, NYSE: WM, NYSE: RSG, Nasdaq: FAST, NYSE: VMC, NYSE: MDU, NYSE: MLM, NYSE: OC, NYSE: VAL, NYSE: PCP, NYSE: X, NYSE: RS, NYSE: NVR, NYSE: DHI, NYSE: PHM, NYSE: TOL, NYSE: HOV, NYSE: CRH, NYSE: CX, NYSE: EXP, NYSE: FLR, NYSE: MDR, Nasdaq: FWLT, NYSE: ICA, NYSE: SWK, NYSE: TKR, NYSE: KMT, NYSE: LUK, NYSE: MAS, NYSE: WY, NYSE: PWR, NYSE: CBI, NYSE: EME, NYSE: SNA, NYSE: TTC, NYSE: GM, NYSE: F.

Durable Goods Orders Predict Doom?



Durable Goods Orders were reported down 4.0% for January, the steepest month-to-month decline in three years. That’s how the popular press is telling the story today, but truth be told, the decline follows three consecutive monthly increases, including December’s 3.2% rise. Taken in that context, the slip in January would not seem so bad. However, that’s not the context I believe will prove material to investors through the year. This decline may indicate the beginning of a new trend, one in which slumping European consumption of American exports and rising gasoline prices weigh on our vulnerable economy. Indeed, durable goods orders look ahead, and if they offer a clear perspective this time, the insight is troubling.

The 4.0% decline in durables matched against economists’ expectations for a more modest 0.7% drop. Durable Goods Orders vary widely due to the big ticket prices attached to airplanes and other transportation goods. Because of this, the tally takers screen out transportation and also defense goods to get a smoother read of general business and consumer driven economic activity. When transportation orders are removed from the January data, new orders still decreased 3.2%, compared to a 2.1% increase in December. Excluding defense, new orders also decreased 4.5%, so any way you cut it, orders declined.

That said, there was one notable synthetic driver of January’s decline in ordering activity, but its affects also lifted the three months that preceded January. A tax-incentive intended to drive capital goods purchases at cautious businesses expired at the end of the year in 2011. Its expiration drove a burst of acquisitions into the close of 2011, but in its absence, January misfired. I would expect more of the same in the months ahead.

Lower confidence in a March decline would be kindled by a nascent trend of last minute buying among managers. The last few tough years exhibited cautious purchasing patterns due to the uncertain economic environment. The result led managers to refrain from spending capital until they were certain of its availability, perhaps to best manage capital against working capital needs and debt obligations or to manage earnings in an uncertain environment. So, they end up making all their purchases in the last month of each quarter. Well that’s March this quarter.

Closer inspection of the durables data shows Non-Defense Capital Goods Orders fell precipitously, dropping 6.3% in January. This data point in particular is indicative of the expiration of the tax-incentive for businesses to acquire capital goods. I am finding many optimists noting this point, while leaving out the fact that Q4 2011 benefited greatly from a rush of businesses taking advantage of the expiring incentive. I believe that a smoothing of the fourth quarter of 2011 and the first quarter of 2012 will offer much less reasoning to believe in economic recovery. For informational purposes, I note the month’s weakness extended to Manufacturing (-5.8%), Primary Metals (-6.7%), Machinery (-10.4%), Computers and Related Products (-10.1%), Transportation (-6.1%) and Defense Aircraft and Parts (-5.6%).

Those ignoring what could be a shift from Q4 2011 to Q1 2012 are basing their view on some recently contradicting data. I even heard one gentleman expert guest on Bloomberg Radio say that we should take the Durables Report with a grain of salt, due to the evidence he’s seen in other reports lately. I would suppose he is speaking to the improvements seen in several Regional Federal Reserve Branches’ manufacturing surveys. This Tuesday, for instance, the Richmond Fed published its report showing its index rose to a mark of 20 in February, up from 12. Monday, the Dallas Fed’s index improved to 17.8, up from 15.3. Last week, the Kansas City Fed’s report showed improvement to a reading of 13, from 7. The week before that, the New York Fed’s index gained to 19.53, its best reading in over a year. The Philadelphia Fed’s index also gained to 10.2, up from 7.3. It’s hard to argue against such broad reaching data.

Since the regional indexes are measuring February, versus the January Durables data point reported Tuesday, I can understand why the majority of institutional investors seem to be discounting it today. The broad equity indexes were all higher Tuesday on the news. The SPDR S&P 500 ETF (NYSE: SPY), SPDR Dow Jones Industrial Average (NYSE: DIA) and the PowerShares QQQ Trust Series (NYSE: QQQ) had all etched gains from their morning starts on the news. Looking forward, economists surveyed by Bloomberg see the ISM Manufacturing Index, which is the national measure, gaining to a mark of 54.6, from 54.1 in January. Based on the regional data, it would appear it may even be understated.

Despite the generally positive report, industrial sector ETFs were lower. I surveyed the Focus Morningstar Industrials ETF (NYSE: FIS), Vanguard Industrials ETF (NYSE: VIS), PowerShares Dynamic Industrials ETF (NYSE: PRN), noting that each was in the red while the broader indexes were in the green through morning trade Tuesday. That was certainly due to the importance of the transportation and defense sector stocks within the group. Other leaders like Caterpillar (NYSE: CAT) and General Electric (NYSE: GE) were fractionally higher.

The important wisdom investors must discern today, considering current data, is what it may say about tomorrow. It takes some daring to venture out in a different direction than the trend says to, and so you will hardly ever hear a Wall Street voice sounding out against the tide, except perhaps in the rare cases of brazen genius or foolishness. I continue to look towards the factors that should prove important and detrimental to economic activity this year, including European demise and gasoline price rise. Europe cannot be written off, not just for the 20% of American exports sold into the deteriorating marketplace, but for the risk it poses to the entangled American financial institutions and other multinationals doing business there. Then there’s the third point, call it the third rail even, because it’s the one Wall Streeters will never touch. The exogenous factor many call unpredictable, which is of course predictable, but just not so for financial focusers. It is the Iran trigger, the event to top all events of the last 25 years, if not longer. It threatens to disrupt not only oil flow, but global trade, and it is greatly misunderstood and underestimated by the market today.

For these reasons, people like me will point to the Durables Report as supportive of a bearish argument, which it is in absolution anyway. February seems to offer hope given the regional data points, but if it should fall short, it would be that much more damaging. So while stocks may rise today and even into March, the Ides of that mythical month draw near, and with tangible risk factors full of sharp tentacles.

This article should interest investors in Boeing (NYSE: BA), Raytheon (NYSE: RTN), Digital Globe (NYSE: DGI), GenCorp (NYSE: GY), General Dynamics (NYSE: GD), Goodrich (NYSE: GR), Northrop Grumman (NYSE: NOC), Honeywell (NYSE: HON), Lockheed Martin (NYSE: LMT), Rockwell Collins (NYSE: COL), L-3 Communications (NYSE: LLL), EMBRAER (NYSE: ERJ), FLIR Systems (Nasdaq: FLIR), BE Aerospace (Nasdaq: BEAV), TransDigm (NYSE: TDG), Spirit Aerosystems (NYSE: SPR), CAE (NYSE: CAE), Alliant Techsystems (NYSE: ATK), Hexcel (NYSE: HXL), Triumph Group (NYSE: TGI), Esterline Technologies (NYSE: ESL), Moog (NYSE: MOG-A), Heico (NYSE: HEI), Teledyne (NYSE: TDY), Curtiss-Wright (NYSE: CW), Cavco (Nasdaq: CVCO), Skyline (NYSE: SKY), Nobility Homes (Nasdaq: NOBH), Palm Harbor Homes (Nasdaq: PHHM), Mohawk Industries (NYSE: MHK), Interface (Nasdaq: IFSIA), Albany International (NYSE: AIN), Unifi (NYSE: UFI), Illinois Tool Works (NYSE: ITW), Tyco International (NYSE: TYC), Cummins (NYSE: CMI), Kubota (NYSE: KUB), Ingersoll-Rand (NYSE: IR), Dover (NYSE: DOV), ITT Corp. (NYSE: ITT), Flowserve (NYSE: FLS), Pall (NYSE: PLL), Dresser-Rand (NYSE: DRC), SPX (NYSE: SPW), Gardner Denver (NYSE: GDI), IDEX (NYSE: IEX), Nordson (Nasdaq: NDSN), Graco (NYSE: GGG), Actuant (NYSE: ATU), Middleby (Nasdaq: MIDD), ABB (NYSE: ABB), Eaton (NYSE: ETN), Nidec (NYSE: NJ), Rockwell Automation (NYSE: ROK), Ametek (NYSE: AME), Regal Beloit (NYSE: RBC), Thomas & Betts (NYSE: TMB), Woodward Governor (Nasdaq: WGOV), Caterpillar (NYSE: CAT), Deere (NYSE: DE), CNH (NYSE: CNH), Joy Global (Nasdaq: JOYG), Bucyrus (Nasdaq: BUCY), Agco (Nasdaq: AGCO), Emerson Electric (NYSE: EMR), Parker Hannifin (NYSE: PH), Roper Industries (NYSE: ROP), Pentair (NYSE: PNR), Waste Management (NYSE: WM), Republic Services (NYSE: RSG), Fastenal (Nasdaq: FAST), Vulcan Materials (NYSE: VMC), MDU Resources (NYSE: MDU), Martin Marietta Materials (NYSE: MLM), Owens Corning (NYSE: OC), Valspar (NYSE: VAL), Precision Castparts (NYSE: PCP), United States Steel (NYSE: X), Reliance Steel (NYSE: RS), NVR (NYSE: NVR), DR Horton (NYSE: DHI), Pulte (NYSE: PHM), Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV), CRH (NYSE: CRH), CEMEX (NYSE: CX), Eagle Materials (NYSE: EXP), Fluor (NYSE: FLR), McDermott International (NYSE: MDR), Foster Wheeler (Nasdaq: FWLT), Empresas ICA (NYSE: ICA), Stanley Black & Decker (NYSE: SWK), Timken (NYSE: TKR), Kennametal (NYSE: KMT), Leucadia National (NYSE: LUK), Masco (NYSE: MAS), Weyerhaeuser (NYSE: WY), Quanta Services (NYSE: PWR), Chicago Bridge & Iron (NYSE: CBI), EMCOR (NYSE: EME), Snap-on (NYSE: SNA), Toro (NYSE: TTC), GM (NYSE: GM) and Ford (NYSE: F).

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

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Thursday, February 23, 2012

An Awkward Pause Before Further Labor

awkward pauseLast week, many rejoiced about the dip in Weekly Jobless Claims, which fell to 351K (revised from 348K), a level not reached in almost four years. The latest data, reported Thursday, showed the weekly count of unemployment benefit filers stuck at that same relatively low mark. Something is certainly afoot, given that the four-week moving average dropped as well, and for the sixth straight week. When the moving average coincides with the weekly data, we can no longer attribute the decline to passing factors like the Super Bowl skew or President’s Day. That said, I suggest the latest decline in jobless claims is a passing fad, an awkward pause, until renewed economic softness impedes what might have been real traction in our economy.

investorOur 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.

Just an Awkward Pause



Jobless claims were unchanged in the period ending February 18, and the four-week moving average dropped by 7,000, to 359,000. The advanced seasonally adjusted insured unemployment rate was unchanged at 2.7% in the period ending February 11, after declining a tenth of a percentage point the week before. Finally, the total number of people claiming benefits in all programs, including the benefits extension program, fell by 178,619 in the period ending February 4, to 7.5 million. That might be wonderful news, except for the fact that many of our long-term unemployed are simply running out of benefits rather than finding new work.

Still, labor numbers have been improving across metrics, and some of those gains must be real. Unemployment was most recently reported improved for the month of January, falling to 8.3%. Indeed, even despite all the usual suspects that make the employment report suspect, some improvement is undeniable.

However, let us not forget that employment is usually a lagging indicator of economic conditions. My concern now is that the economy is turning for the worse, while employment is still gaining from previous economic strides and off extreme unemployment levels.

What we have to look forward to now is recession developing or already occurring in Europe, where 20% of American exports are sold. Meanwhile, even the Chinese economy looks to be softening, as its most important buyers are suffering. Some would say Europe is already affecting the American economy. Yet, even in Europe, it seems investors have not adequately discounted the scenario, with the iShares S&P Europe 350 Index (NYSE: IEV) up 15.7% since a December 19 trough. So why would we expect U.S. investors to give credence to our call? Well, because we see a few moves ahead, and because we’re patient. The SPDR Dow Jones Industrial Average (NYSE: DIA) is up 6.4% on the year through February 22, 2012.

American economic data has already begun to show signs of softening, with a wide variety of reports revealing the ugly economic truth. Housing data has missed expectations of late, leaving high flying housing stocks without support. Though even after dipping the last few days, the SPDR Series Trust Homebuilders (NYSE: XHB) is up 56% since its October 3, 2011 trough, after adjustment for dividends and splits.

Gasoline prices are on the rise due to escalating tensions with Iran, where war seems more likely to bust out than not today. Consumer spending must come under pressure as a result of this critical consumption factor’s drive higher. Yet the SPDR Select Sector Fund – Consumer Discretionary (NYSE: XLY) is 27% inflated since October 3, 2011. The retailers are noting mixed results, but in aggregate, they are disappointing forecasters. Followers of mine have been shorting them on the whole along with the homebuilders, and I expect will be rewarded for their early anticipation of the move. The SPDR S&P Retail ETF (NYSE: XRT) is 31% inflated since October 3, 2011.

Individual corporations are reporting mixed results, but disappointments at important economic drivers including Wal-Mart (NYSE: WMT), Ford (NYSE: F), Kohl’s (NYSE: KSS), Dell (Nasdaq: DELL), Amazon.com (Nasdaq: AMZN) and Sears (Nasdaq: SHLD) are notable. In such circumstances, as our vulnerable economy faces new and serious headwinds, it seems clear to me that wisdom favors an inevitable new stumble for the economy, followed by the lagging labor market.

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.

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Wednesday, February 22, 2012

Support Disintegrates for Housing Stocks

house for saleLast week, we authored an article attributing the weekly decline in mortgage activity to the Super Bowl, and the tendency of Americans to celebrate the day like a holiday. We argued that, as with many three-day weekends, this would leave inadequate adjustment to business activity around the day. However, mortgage activity dropped again last week, for the period through February 17. Since the period fell between the Super Bowl and President’s Day, something more than anomaly is leading mortgage activity lower. This report, in fact, offers more evidence of the stall I’ve been warning about for housing, and so the hopeful support tenuously holding up the industry’s shares is now disintegrating rapidly.

great investorOur 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.

Housing Stocks Follow Our Lead Lower



The Mortgage Bankers Association’s Market Composite Index fell 4.5% in the week ending February 17. This week, the main driver of the dip in mortgage activity was a drop in refinancing, with the Refinance Index down 4.8%. There was some creep higher in mortgage rates, but not across the spectrum of mortgage loan sizes and types. I also do not see the creep in rates as enough to stymie activity. The effective rates on jumbo and conforming 30-year mortgages both edged slightly higher, while effective rates for 15-year mortgages and 5/1 ARMS also inched upward. Only 30-year FHA sponsored loans saw effective rate decrease, but the change was also insignificant.

The previous week’s driver of decline was a notable decline in the Purchase Index, or loans tied to the acquisition of properties. We were looking for a like, though opposing rise this week, as the period matched against the Super Bowl inclusive week. Yet, the Purchase Index fell again, this time by 2.9% on a seasonally adjusted basis. Before adjustment, the Purchase Index did improve, but only by 1.4% against the prior week. The gain fell short of making up for the 7.6% decline the week before, so we have to take note. That’s because other data has continued to warn of a stall in housing, which we covered in detail in our recent study of the sector.

Indeed, the latest data reported today seems to confirm that concern. The four-week moving average of the MBA’s Market Composite Index, which would weed out anomalous factors, is down 0.3%. The moving average for the Purchase Index is off a greater 3.21%. The latest data, also reported Wednesday morning, showed Existing Home Sales running at a drag of an annual pace of 4.57 million in January. The rate was up from December, but only after December’s revision dramatically lower, to 4.38 million (from 4.61 million). January’s pace was also short of the consensus view of economists, which was set at 4.69 million according to Bloomberg.

Toll Brothers (NYSE: TOL) missed expectations this week, contributing to a second guessing of homebuilder shares finally. We suggested investors sell short homebuilder shares earlier this year, and have been questioning the strength of a housing recovery based on macroeconomic developments that should stall global economic growth.

The SPDR Series Trust Homebuilders ETF (NYSE: XHB) is off about a percentage point at the hour of scribbling here, and looks to be ready to follow the path I’ve laid out for it now. Individual homebuilders are giving back greater ground, especially those which are in the most precarious of positions. The shares of Hovnanian (NYSE: HOV) and Comstock (Nasdaq: CHCI), two companies I suggested would lead my list lower, are off 0.7% and 3.6%, respectively. K.B. Home (NYSE: KBH), PulteGroup (NYSE: PHM) and D.R. Horton (NYSE: DHI) are off between 1% and 4%. It seems that investors are now agreeing with my argument against the industry, and so support should disappear swiftly for these stocks near-term. I would continue to sell the industry’s shares as their nascent recovery is undermined by fundamental macro-driven drivers.

Article should interest investors in Savings & Loan stocks including Alaska Pacific Bankshares (OTC: AKPB.OB), Allied First Bancorp (OTC: AFBA.OB), Astoria Financial (NYSE: AF), AMB Financial (OTC: AMFC.OB), Ameriana Bancorp (NasdaqCM: ASBI), Anchor Bancorp Wisconsin (Nasdaq: ABCW), Bancorp of New Jersey (AMEX: BKJ), Bank Mutual (Nasdaq: BKMU), BankAtlantic (NYSE: BBX), BankFinancial (Nasdaq: BFIN), Banner (Nasdaq: BANR), BCSB Bancorp (Nasdaq: BCSB), Beacon Federal (Nasdaq: BFED), Berkshire Hills (Nasdaq: BHLB), Blackhawk Bancorp (OTC: BHWB.OB), Blue River Bancshares (OTC: BRBI.OB), Bofi (Nasdaq: BOFI), Broadway Financial (Nasdaq: BYFC), Brookline (Nasdaq: BRKL), Brooklyn Federal (Nasdaq: BFSB), Camco Financial (Nasdaq: CAFI), Capitol Federal (Nasdaq: CFFN), Carver (Nasdaq: CARV), Cecil Bancorp (OTC: CECB.OB), Center Financial (Nasdaq: CLFC), Central Federal (Nasdaq: CFBK), Chicopee (Nasdaq: CBNK), Citizens South (Nasdaq: CSBC), CKF Bancorp (OTC: CKFB.OB), Clarkston Financial (OTC: CKFC.OB), Clifton Savings (Nasdaq: CSBK), Close Brothers (OTC: CBGPY.PK), Columbia Banking (Nasdaq: COLB), Consumers (OTC: CBKM.OB), Dime Community (Nasdaq: DCOM), Enterprise (Nasdaq: EBTC), ESB Financial (Nasdaq: ESBF), ESSA Bancorp (Nasdaq: ESSA), Eureka Financial (OTC: EKFC.OB), FedFirst Fin’l (Nasdaq: FFCO), FFD Fin’l (Nasdaq: FFDF), FFW (OTC: FFWC.OB), First Bancorp of Indiana (OTC: FBPI.OB), First Bancshares (Nasdaq: FBSI), First Capital (Nasdaq: FCAP), First Clover Leaf (Nasdaq: FCLF), First Defiance (Nasdaq: FDEF), First Federal Bancshares of Arkansas (Nasdaq: FFBH), First Financial Holdings (Nasdaq: FFCH), First Independence (OTC: FFSL.OB), First Investors Fin’l Services (OTC: FIFS.PK), First Niagara (Nasdaq: FNFG), First Robinson (OTC: FRFC.OB), First Security Group (Nasdaq: FSGID), First South (Nasdaq: FSBK), Flagstar (NYSE: FBC), Flatbush Federal (OTC: FLTB.OB), Flushing Financial (Nasdaq: FFIC), Greene County (Nasdaq: GCBC), HF Financial (Nasdaq: HFFC), HMN Fin’l (Nasdaq: HMNF), Home Bancorp (Nasdaq: HBCP), Home Federal (Nasdaq: HOME), HopFed (Nasdaq: HFBC), Hudson City (Nasdaq: HCBK), Indiana Community (Nasdaq: INCB), Investors Bancorp (Nasdaq: ISBC), Jacksonville Bancorp (Nasdaq: JXSB), Jefferson Bancshares (Nasdaq: JFBI), Kaiser Federal (Nasdaq: KFFG), Kearny Fin’l (Nasdaq: KRNY), Kentucky First Federal (Nasdaq: KFFB), Lake Shore Bancorp (Nasdaq: LSBK), Louisiana Bancorp (Nasdaq: LABC), LSB Fin’l (Nasdaq: LSBI), Malvern Federal (Nasdaq: MLVF), Meridian Interstate (Nasdaq: EBSB), Meta Fin’l (Nasdaq: CASH), NASB Fin’l (Nasdaq: NASB), Naugatuck Valley (Nasdaq: NVSL), New England Bancshares (Nasdaq: NEBS), New Hampshire Thrift (Nasdaq: NHTB), New York Community (NYSE: NYB), North Central Bancshares (Nasdaq: FFFD), Northeast Community (Nasdaq: NECB), Northwest Bancshares (Nasdaq: NWBI), OceanFirst (Nasdaq: OCFC), Ocwen (NYSE: OCN), Oneida (Nasdaq: ONFC), Park Bancorp (Nasdaq: PFED), Parkvale Fin’l (Nasdaq: PVSA), Pathfinder Bancorp (Nasdaq: PBHC), People’s United (Nasdaq: PBCT), Provident Community (Nasdaq: PCBS), Provident Fin’l (Nasdaq: PROV), Provident Fin’l Services (NYSE: PFS), Provident New York (Nasdaq: PBNY), Prudential Bancorp of PA (Nasdaq: PBIP), PSB Holding (Nasdaq: PSBH), Pulaski Fin’l (Nasdaq: PULB), PVF Capital (Nasdaq: PVFC), QC Holding (Nasdaq: QCCO), River Valley Bancorp (Nasdaq: RIVR), Riverview Bancorp (Nasdaq: RVSB), Roma Fin’l (Nasdaq: ROMA), Salisbury Bancorp (AMEX: SAL), SI Financial (Nasdaq: SIFI), Southern Missouri (Nasdaq: SMBC), Sterling Fin’l (Nasdaq: STSA), Teche Holding (AMEX: TSH), TF Fin’l (Nasdaq: THRD), Timberland Bancorp (Nasdaq: TSBK), United Community (Nasdaq: UCBA), United Community Fin’l (Nasdaq: UCFC), United Fin’l Bancorp (Nasdaq: UBNK), Valley Fin’l (Nasdaq: VYFC), Washington Federal (Nasdaq: WFSL), Waterstone Fin’l (Nasdaq: WSBF), Wayne Savings (Nasdaq: WAYN), WSB Holdings (Nasdaq: WSB) and WVS Financial (Nasdaq: WVFC).

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.

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Tuesday, February 21, 2012

This Week Keyed on Europe, Housing Data and Retailer EPS

stock market scheduleThe holiday shortened week following President’s Day will present data keying on Greece and European resolve, new housing and economic metrics, and also several key company earnings reports from important retailers. See our entire preview for this week's stock market schedule below.

wall street tradersOur 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.

This Week



The most significant data point this week affecting U.S. markets will most likely be foreign born. Given the weight of the European decision on whether to move forward with the second bailout package for Greece or not, and the unknowns that accompany the abandonment of Greece, the step towards bailout achieved Tuesday is an important support for stocks. However, there remains a ways to go and a process to see through before the issue is cleared. If over time the Europeans determine that their efforts, which will likely be their last according to the Germans, would not be enough for Greece, there is a chance they might allow Greece to fail and decide to do so as early as March.

On the economic data front, the week presents several housing data points that are covered later in this report. Tuesday will offer the Chicago Fed’s National Activity Index, and this latest report will cover the month of January. February’s report showed significant improvement in the index, as it shifted to +0.17 in December, from -0.46 in November. That said, the index’s three-month moving average stayed negative while gaining to -0.08. Thus, Tuesday’s report offers an opportunity for some confirmation that economic growth has in fact shifted to a level that is above average historically. The gains last month were helped by improvements in production and employment data.

The week will have a lot to say about housing, after last week’s news on housing starts and mortgage activity offered little to celebrate. I wrote about the housing industry in great depth last week, and I suggest readers review that work. This week brings data on Existing and New Home Sales. The Existing Home Sales report reaches the wire Wednesday morning. Economists surveyed by Bloomberg see the annual pace of sales rising modestly to 4.69 million in January, up from 4.61 million in December. That’s no blockbuster improvement, but even the optimists aren’t looking for significant gains until spring. New Home Sales are seen improving to an annual pace of 315K, according to economists, up from 307K. Again, not the robust growth that housing stock enthusiasts will need to keep the gains compiled since October safe.

Investors will be interested in the Consumer Confidence Index from the University of Michigan/Reuters on Friday. Doubt has been building in consumers since the latest months’ retail sales data was reported. Economists surveyed by Bloomberg are only looking for a small improvement to a mark of 73.0 this month, up from 72.5 at last check.

Last week’s improvement in jobless claims, taking the weekly tally to its lowest point in near four years, will have many keen to see the latest check. The four-week moving average also improved last week, but just slightly to 365,250. The weekly count was just 348K; economists are looking for 355K this week.

With gains in the Philly and Empire State Manufacturing Indexes reported last week, investors will be looking for follow through from the Kansas City Fed’s report.

The week will also offer important earnings reports Tuesday from Wal-Mart (NYSE: WMT), Home Depot (NYSE: HD), Barnes & Noble (NYSE: BKS), Boyd Gaming (NYSE: BYD), Cheesecake Factory (Nasdaq: CAKE), Chesapeake Energy (NYSE: CHK), Chiquita Brands (NYSE: CQB), Cracker Barrel (Nasdaq: CBRL), Danaos (NYSE: DAC), Genco Shipping (NYSE: GNK), Intuit (Nasdaq: INTU), Kraft Foods (NYSE: KFT), Macy’s (NYSE: M), Medtronic (NYSE: MDT), Nabors (NYSE: NBR), RadioShack (NYSE: RSH), Saks (NYSE: SKS) and Steven Madden (Nasdaq: SHOO). Wednesday’s reports include Analog Devices (NYSE: ADI), Angie’s List (Nasdaq: ANGI), Boston Beer (NYSE: SAM), Chicos (NYSE: CHS), Dollar Tree (Nasdaq: DLTR), DryShips (Nasdaq: DRYS), Eaton Vance (NYSE: EV), Express Scripts (Nasdaq: ESRX), Fluor (NYSE: FLR), Garmin (Nasdaq: GRMN), Hewlett Packard (NYSE: HPQ), Jack in the Box (Nasdaq: JACK), Limited Brands (NYSE: LTD), Lithia Motors (NYSE: LAD), Mannkind (Nasdaq: MNKD), MGM Resorts (NYSE: MGM), Papa John’s (Nasdaq: PZZA), Sturm Ruger (NYSE: RGR), Toll Brothers (NYSE: TOL), Yandex (Nasdaq: YNDX) and Zale (NYSE: ZLC). Thursday’s news includes Checkpoint Systems (NYSE: CKP), Chicago Bridge & Iron (NYSE: CBI), Coeur d’Alene Mines (NYSE: CDE), Crocs (Nasdaq: CROX), Deckers Outdoors (Nasdaq: DECK), Dish Network (Nasdaq: DISH), Dynamic Materials (Nasdaq: BOOM), Echostar (Nasdaq: SATS), First Solar (Nasdaq: FSLR), Foster Wheeler (Nasdaq: FWLT), Gap (NYSE: GPS), Gramercy Capital (NYSE: GKK), Healthsouth (NYSE: HLS), Hormel Foods (NYSE: HRL), Kindred Healthcare (NYSE: KND), Kohl’s (NYSE: KSS), MetroPCS (NYSE: PCS), Mohawk Industries (NYSE: MHK), Molycorp (NYSE: MCP), Navios Maritime (NYSE: NM), Nordson (Nasdaq: NDSN), Officemax (NYSE: OMX), Safeway (NYSE: SWY), Target (NYSE: TGT), Teekay (NYSE: TK), TiVo (Nasdaq: TIVO), Trina Solar (NYSE: TSL), WebMD (Nasdaq: WBMD), West Marine (Nasdaq: WMAR) and World Wrestling Entertainment (NYSE: WWE). Friday’s earnings highlight Alpha Natural Resources (NYSE: ANR), Bluefly (Nasdaq: BFLY), Dillard’s (NYSE: DDS), Endo Pharmaceuticals (Nasdaq: ENDP), EW Scripps (NYSE: SSP), Interline Brands (NYSE: IBI), J.C. Penney (NYSE: JCP), Newmont Mining (NYSE: NEM) and several others.

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.

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Friday, February 17, 2012

Renter Nation

renter nationHousing hounds will likely snarl at my take of the latest Housing Starts data, but the truth must be told. While housing starts gained ground in January, that ground was overwhelmingly taken through the construction of multi-family projects upon it. If the investment community thinks a renter nation is a healthy nation, well then it has been misled.

real estateOur 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: ACC, Nasdaq: AGNC, NYSE: AIV, Nasdaq: AMTG, NYSE: ARR, NYSE: AEC, NYSE: AVB, NYSE: BRE, NYSE: CPT, NYSE: CCG, NYSE: CLP, NYSE: CYS, NYSE: EDR, NYSE: ELS, NYSE: EQR, NYSE: ESS, NYSE: HTS, NYSE: HME, OTC: MRTI.PK, NYSE: MAA, Nasdaq: NYMT, NYSE: PMT, NYSE: PPS, NYSE: SNH, NYSE: SUI, NYSE: TWO and NYSE: UDR.

A Renter Nation



Housing Starts, reported Thursday for the month of January, gained by 1.5% over December and ranked 9.9% above January 2011. However, single-family housing starts, which are typically seen as the key measure of housing health, actually fell 1.0% against December. The growth highlighted by the headlines was all found in multi-family units of 5 or more, where construction increased by 14.4%. A shift towards a renter nation is not indicative of a healthy atmosphere by most means. There’s just one driver we view healthy for multi-family growth, and that’s driven by demographics. Our aging nation is aiding the growth of the senior housing industry, as seen in the long-term chart of the Senior Housing Properties Trust (NYSE: SNH).

Still, we suggest that it is precisely the shift in the economic situation of a great many Americans and the shift in the lending environment, which has severely damaged the prospects of home ownership in America. Some of that change is of course for good reason, with no more liar loans issued and “no credit, no problem” guarantees made any longer. Higher scrutiny and regulation of the industry was of course a necessity after the alleged negligence (by several Congressmen at minimum) of the rating agencies. Standard & Poor’s (NYSE: MHP) and Moody’s (NYSE: MCO) regularly rated mortgage backed securities investment grade, due to the diversification provided by investment pools. Unfortunately, they missed the possibility of broad real estate value decline across the nation and also did not account for the bubble blowing, greed driven business that was happening at some financial institutions in the qualification of borrowers.

martyrika martirikaBill Clinton’s revival of the American dream of home ownership has hit a serious snag today. Indeed, home ownership is on the decline after peaking in 2004 at 69.2%. It’s been falling over recent years, due to the financial crisis & resultant foreclosures, economic recession & resultant unemployment and the changed financing environment around real estate. In the fourth quarter of 2011, home ownership was measured at 66.0%, and that was down from Q3’s 66.3%.

Given the latest trend reported in the Housing Starts data over recent months, it appears home ownership will deteriorate further. While the popular press was touting it, and the stock market was celebrating Housing Start growth of 1.5% in January, we were pointing out the 1.0% decline in single-family property starts. While single-family activity is up 16.2% against the low bar set in January of 2011, single-family construction permits are up only 6.2% against the prior year. On the contrary, permits filed for multi-family units are up 61% against the prior year period. Take heed my fellow citizens, because the American dream is at stake.

In the zero sum game where many are suffering, some are getting richer. While the shares of residential real estate REITs had their issues through the crisis, and have traded choppy over the last six months, the last year’s trading has most of the largest players clear in the green. Market Cap leaders Equity Residential (NYSE: EQR) (+11.6%), AvalonBay Communities (NYSE: AVB) (+18.3%), American Capital Agency (Nasdaq: AGNC) (+24%), UDR, Inc. (NYSE: UDR) (+10.9%) and Essex Property Trust (NYSE: ESS) (+27%) are all sharply higher over the trailing twelve month period, adjusted for dividends and splits. The same goes for homebuilders over recent months, though we take issue there. The apartment managers should continue to benefit from America’s shift towards a renter nation. Though, given the ongoing economic issues plaguing our country, we wonder how many of those new renters are up-to-date on their rent. That said, net-net, gains still favors rental property managers.

This article should interest investors in residential REITs like American Campus Communities (NYSE: ACC), American Capital Agency (Nasdaq: AGNC), Apartment Investment and Management (NYSE: AIV), Apollo Residential Mortgage (Nasdaq: AMTG), ARMOUR Residential REIT (NYSE: ARR), Associated Estates Realty (NYSE: AEC), AvalonBay Communities (NYSE: AVB), BRE Properties (NYSE: BRE), Camden Property Trust (NYSE: CPT), Campus Crest Communities (NYSE: CCG), Colonial Properties Trust (NYSE: CLP), CYS Investments (NYSE: CYS), Education Realty Trust (NYSE: EDR), Equity LifeStyle Properties (NYSE: ELS), Equity Residential (NYSE: EQR), Essex Property Trust (NYSE: ESS), Hatteras Financial (NYSE: HTS), Home Properties (NYSE: HME), Maxus Realty Trust (OTC: MRTI.PK), Mid-America Apartment Communities (NYSE: MAA), New York Mortgage Trust (Nasdaq: NYMT), PennyMac Mortgage Investment Trust (NYSE: PMT), Post Properties (NYSE: PPS), Senior Housing Properties Trust (NYSE: SNH), Sun Communities (NYSE: SUI), Two Harbors Investment (NYSE: TWO) and UDR (NYSE: UDR).

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.

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Thursday, February 16, 2012

Homebuilder Shares and Housing Review

real estate market researchThe general view of housing is decidedly positive heading into the 2012 spring selling season… as usual. It is positive compared to other recent spring selling seasons as well, but not by much, given the generally speculative hoping that occurs among industry participants around this time of year. The mood among homebuilders is also improved, though notably depressed still on an absolute basis. That is because the industry metric measures the small, under-capitalized, poorly performing construction outfits alongside the large, well-capitalized, publicly traded industry leaders. Still, many publicly traded, large builders like D.R. Horton (NYSE: DHI) and K.B. Home (NYSE: KBH) have been posting increases in orders of varying degrees over a low set bar, though cancellations persist. These factors, helped by capital flow drivers (tax driven mostly), have many stock market players quite frenzied, with homebuilders’ shares among market leaders. The SPDR Series Trust Homebuilders ETF (NYSE: XHB) is up roughly 62% since the industry trough on October 3, 2011, adjusted for dividends and splits. The ETF is up roughly 18% year-to-date, separating itself clearly from the approximate 7.4% increase in the S&P 500 Index. My review here is to take stock of what has given the industry lift to date, and to survey its footing for the months ahead.

top stock analystOur 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.

Housing Review



New aggregate industry data has been reaching the wire this week, and it seems to conquer in its message with that of recent weeks. The argument the data makes is clear, and definitely contrary to the performance of homebuilder shares (if you read beyond the headlines), which I argue have benefited as much from unsustainable capital flow drivers as from fundamental improvement in the housing industry. Furthermore, the macroeconomic outlook remains grim and the trend seems to show deterioration. So, I once again argue that sooner or later, at least a portion of homebuilder valuations built largely upon capital flow logic and prospective hope is likely to give way before propelling much further on momentum. I see speculative interests which may view themselves as wise contrarians at risk by result. But this logic extends beyond just homebuilders, to all cyclically sensitive shares that have moved in kind.

Data Review

Homebuilder confidence was touted Wednesday as yet another rally cry for the industry’s shares. The National Association of Home Builders (NAHB) reported the fifth consecutive month of improvement in its Housing Market Index. But while the HMI was climbing to a mark of 29, from 25 in January, it was still sitting deeply under the mark that delineates positive outlook from negative. In fact, while the HMI may be off suicide watch, it remains in a sad, sad state.

Looking at Wednesday’s weekly mortgage application data, I found nothing worth celebrating. The Mortgage Bankers Association’s Market Composite Index only fell by 1.0% in the week ending February 10, 2012 when compared against the preceding week. Refinance activity was up 0.8% for that relative period, but the mortgage applications tied to the purchase of a home fell 8.4%. Believe it or not, though, the weekly decline was probably the result of the Super Bowl, which fell on February 5. More importantly, the Purchase Index was 7.6% short of the mark it set during the same week last year. That comparison is clearly inconsistent with the profits accumulating in the shares of homebuilders in aggregate.

Housing Starts, reported Thursday for the month of January, gained by 1.5% over December and ranked 9.9% above January 2011. Even here, yours truly found reason to argue. You see, single-family housing starts actually fell 1.0% against December. The growth was found in multi-family units of 5 or more, where construction increased by 14.4%. A shift towards a renter nation is not indicative of a healthy atmosphere, though demographics are aiding the growth of the senior housing industry, as seen in the long-term chart of the Senior Housing Properties Trust (NYSE: SNH).

Looking back two weeks at the latest home price data, the Standard & Poor’s Case Shiller Home Price Index showed acceleration of home price decline in November. The data was downright depressing, with 19 of 20 cities experiencing a second consecutive month of price contraction. However, many builders like Lennar (NYSE: LEN) are showing sales price increases alongside volume gains, thanks to differentiation and buyer focus between the lean new home and flooded existing home markets. This is a second fundamental point which is positive for publicly traded builders, and I will not overlook it. It is certainly one tangible reason why homebuilders have attracted capital to date. However, I do not believe it will guard the high beta shares from macroeconomic driven slippage and geopolitical trigger. Perhaps these fundamental factors will contribute to an industry wide beta contraction though, as the industry has strengthened through trial.

A Fundamental Case Exists

Another bit of good news for homebuilders is that their own version of austerity has shaved their inventory and that of the home market, in terms of months to sell through. Furthermore, Realtytrac sees the foreclosure cycle peaked, so the flow of low-priced comparables into the pool of available properties is easing. Still, the industry resource says banks continue to work through their own stock of “delayed foreclosures.” Also, new foreclosures continue to flow only less heavily into the market, given the still difficult labor situation and strained savings of the long-term unemployed.

Better capitalized, large, publicly traded builders are also benefiting from market share gains helped along by the demise of a good number of smaller builders that found themselves over-levered with nowhere to sell at the bust of the bubble. These changes to the composition of the new home construction pie are likely contributing to the the order growth and other gains reported by the likes of Beazer Homes (NYSE: BZH), Toll Brothers (NYSE: TOL) and others. This is a fundamental reason to like home builders over the long run.

Another contributor to growth for the public builders is the low base which today’s activity is rising from. That fact comes through in the cautionary commentary of the executives within the reports referred to herein. The prospect for industry revival through its contraction and given the signs of survival in many of the healthier builders has the most prospective of the bunch gaining more ground, like that seen at Hovnanian (NYSE: HOV) and Comstock (Nasdaq: CHCI). These are the first places I would look to lessen risk, if not outright position short.

In Conclusion

Industry structural change factor aside, I believe these stocks (and other cyclically sensitive sectors like retail stores – which I recently suggested investors short) are going to need ongoing support from the economy to keep capital support. I just see that failing them given signs of new U.S. economic sluggishness, stubborn unemployment on labor market structure issues, European recession and an Iran event likelihood that can no longer be dismissed. The vulnerability of the U.S. economy to costly energy (rising gasoline prices), disruptive geopolitical disorder and significant export softness, given still too high under-employment and too low consumer confidence and business investment leaves cyclical industries in tenuous state.

The chart of the XHB says to me that the latest run up for homebuilders is at a point of reassessment. While the individual corporate reports of the healthiest publicly traded companies should continue to offer general support, many names will disappoint high hopes. Furthermore, the operational results bar has been raised now for these stocks, which increases the likelihood of their falling short of expectations. Given the aforementioned macro weights, cyclical shares should give way. Highest on the hill among those are the recently raised homebuilder stocks, and so I reiterate my call to sell the shares despite the evident driver of structural industry improvement.

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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.

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Tuesday, February 14, 2012

Retailers' Sales Face the Abyss

retail storeNot long ago, Wall Street Greek warned investors to sell short the retail industry. You may not have noticed, as the call came out in the flurry of all the excitement about how great a holiday shopping season we had just concluded. Today, as the government reported the latest Retail Sales data for January, you may still have a chance to join the short side, with the SPDR S&P Retail ETF (NYSE: XRT) only down fractionally in morning trade Tuesday and still fattened 17.7% over the last 52-weeks by its superficial stride. Meanwhile, the SPDR Select Sector Fund - Consumer Discretionary ETF (NYSE: XLY) is up 9.5% over the last 52 weeks, both after adjustment for splits and dividends.

doomsday economistOur 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.

Retailers' Sales Growth Slowing



The Census Bureau reported Retail Sales increased 0.4% on a seasonally adjusted basis in January, but that was short the economists’ consensus view for a 0.7% gain, based on Bloomberg’s tally. Meanwhile, the government revised December down to no change, cut from the previously noted inching upward by 0.1%. A glance at the top line data seems to show much of the weakness derived from the auto sector, as sales ex-auto improved 0.7%. That better level was superior to the consensus estimate for a 0.6% increase. However, ex-auto sales benefited from a downward adjustment to the December sales rate, which was dropped down to -0.5%, from the -0.2% previously noted. The shares of U.S. auto makers Ford (NYSE: F) and General Motors (NYSE: GM) are off on this news, down 0.7% and 1.2%, respectively in early trade Tuesday.

With the latest pressure applied by rising gasoline prices, many will be interested in the trend ex-gasoline and autos. On this line, sales improved 0.6%, and the December rate was also ratcheted higher to +0.6% from no change previously reported. With regard to rising gasoline prices, we do better to realize that this factor contributes to all consumer spending sooner or later. Thus, if we focus on the current satisfactory figure, we ignore an inevitable decline in spending that will more closely match with stock market performance moving forward. As pressure continues on tension tied to escalating Iranian event risk, gasoline prices should keep their support. It’s one of the reasons the west has shied away from attacking Iran in the first place, given the economic vulnerabilities of North America and Europe. Gasoline prices impact the savings and spending of most Americans, especially those who spend the most, the employed. Furthermore, this factor will certainly impact the spending of the under-employed hanging on the fringe of solvency.

While the retail sales pace seems to be slipping, optimists will note that the pace of retail sales was still up 5.8% from January 2011. Excluding autos, the year-over-year sales pace improved 5.5, but take note that gasoline station sales were up 7.4% on significantly higher gas prices. This fact seems to help nobody, given the shares of The Pantry (Nasdaq: PTRY) are off 23% over the trailing 52 week period.

Sales at Building Materials & Garden Equipment and Supplies Dealers were up 8.1%, but before celebrating a housing revival, realize that prices are up on these commodities as well. Still, this may help to explain the 26% 52-week share gain of Home Depot (NYSE: HD).

Food Services and Drinking Places saw an 8.2% year-to-year gain, and this sector is certainly a destination of consumer discretionary funds. Yet, a sampling of several restaurant stocks shows a wide variety for the palate. Darden Restaurants (NYSE: DRI) shares are up approximately 3.2% over the last 52-weeks through February 13, adjusting for dividends and splits. Meanwhile, the shares of Brinker International (NYSE: EAT) have done much better, rising 14.9%.

What concerns us today is the current trend, or rather, answering the question, “Is consumer spending slowing.” The answer is not so clearly discovered, considering the ongoing shift to discount and online retailers, which offer an economically strapped nation a better option. General Merchandise Stores saw sales gain 2.0% in January, but Department Stores marked only a 1.0% increase. Clothing Stores marked no change in January, while Electronics & Appliance Stores marked a 0.5% increase, thanks no doubt to innovation in the space and the drive of Apple (Nasdaq: AAPL), Amazon.com (Nasdaq: AMZN) and others. Non-store Retailers, or the catalog and internet salesmen, saw a 1.1% sales decline in January, but I suspect inadequate seasonal adjustment here, given the holiday push and market share gains.

There is no doubt that an innovative retail sector squeezed all it could from the American consumer this past shopping season, but I suspect consumers remain on suicide watch. Thus, I see this latest trend of slowing retail sales continuing to slug along given the weight of old pains like stubborn unemployment and dragging domestic confidence, and new stresses like that I see from an Iran event. Therefore, I reiterate my late 2011 suggestion that investors short the retail sector, as this latest economic data is only supportive of my economic argument. The Ugly Economic Secret is indeed out.

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.

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Monday, February 13, 2012

Inflation or Deflation? Doomsday Either Way!

inflation doomsday deflationFor the past two years I have mentioned a bubble will form in an asset class. I was not sure which asset class, but I suspected basic materials and agricultural commodities. I believe I have identified the next bubble to be imploded: the United States Debt. A $1.5 trillion deficit for the next annual budget is unsustainable. A storm is coming! An enormous financial storm that has the potential to change our way of life forever; a tsunami to clean the slate and re-balance the economy! Some things have already brutally corrected such as the Real Estate Market in the Sand States. Some are going to like the soft commodities such as cotton. Nothing will ever be the same again. There are decisions to be made, choices to make, plans to formulate. It is not time to be scared; it is time to be prepared! It is time to implement inflation protection.

Relative tickers: NYSE: DIA, NYSE: SPY, Nasdaq: QQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, Nasdaq: NDAQ, NYSE: ICE, Nasdaq: ETFC, Nasdaq: SCHW, Nasdaq: AACC, NYSE: AMG, NYSE: AMP, Nasdaq: AMTD, Nasdaq: BGCP, NYSE: BK, NYSE: BLK, NYSE: CIT, Nasdaq: CLMS, NYSE: CME, NYSE: CNS, Nasdaq: COWN, Nasdaq: DHIL, Nasdaq: DLLR, Nasdaq: DUF, Nasdaq: ECPG, Nasdaq: EF, NYSE: EFX, Nasdaq: EPHC, NYSE: EVR, Nasdaq: EZPW, Nasdaq: FBCM, Nasdaq: FCFS, NYSE: FII, NYSE: FMD, NYSE: FNF, Nasdaq: FNGN, Nasdaq: FXCM, NYSE: GBL, Nasdaq: GCAP, Nasdaq: GDOT, Nasdaq: GFIG, NYSE: GHL, Nasdaq: GLCH, NYSE: GS, Nasdaq: IBKR, Nasdaq: INTL, Nasdaq: INTX, NYSE: ITG, NYSE: IVZ, NYSE: JEF, NYSE: JMP, NYSE: JNS, NYSE: KBW, NYSE: KCG, NYSE: LAZ, NYSE: LM, Nasdaq: LPLA, AMEX: LTS, NYSE: MA, NYSE: MCO, NYSE: MF, NYSE: MGI, Nasdaq: MKTX, Nasdaq: MRLN, NYSE: MS, Nasdaq: MSCI, NYSE: MTG, Nasdaq: NEWS, NYSE: NFP, NYSE: NNI, Nasdaq: NTRS, Nasdaq: NTSP, NYSE: OCN, NYSE: OPY, Nasdaq: OXPS, Nasdaq: PICO, NYSE: PJC, NYSE: PMI, Nasdaq: PNSN, Nasdaq: PRAA, NYSE: RJF, Nasdaq: SEIC, NYSE: SF, NYSE: SFE, NYSE: STT, NYSE: SWS, Nasdaq: TROW, NYSE: V and Nasdaq: VRTS.

Phoenix Arizona real estate agent brokerThe economy is slowing quickly and signs are mounting that deflation of assets, both financial and some commodity assets may be underway. As I have mentioned previously, bad to toxic commercial paper held by many financial institution was transferred to the balance sheet of the Federal Reserve, the FDIC, the Treasury, or absorbed by other government sponsored entities such as Fannie Mae (OTC: FNMA.OB) or Freddie Mac (OTC: FMCC.OB). These bad assets coupled with ballooning entitlement programs, especially those targeted to an aging population, have produced an untenable situation which probably will resolve itself soon and unpleasantly. There are only two paths: Default or Re-Organization of the debt, which may be accomplished under different scenarios, none of them pleasant. Or a globally orchestrated attempt to devalue further the U.S. Dollar and inflate the value of all hard assets and re-pay old debt with much cheaper, probably extremely cheaper, dollars.

The raising of the debt ceiling has bought the US some time, about 12 months and counting. The projections for repayment include a growing economy of close to 3% GDP, robust employment adding jobs and higher tax revenue; these rosy projections likely will not be met. There are many possible catalysts capable of initiating a decline, ranging from a sovereign default in the Euro Zone to an attempt to replace the US Dollar as the reserve currency of the world, or simply by the slowing of the business cycle, which is currently underway. With the economy vulnerable to an economic or political shock, growth is slowing perceptively and government growth projections are certainly suspect. As the economy slows or worse, sustains a shock, prices on the world market will tumble dramatically. The worldwide recovery has been very beneficial to commodities; prices of iron ore, copper, coal, oil, natural gas, cotton, and sugar have all soared over the last three years as well as many industries related to them including pipelines, railroads, and heavy equipment makers to name a few.

These industries will experience hardship as supplies increase due to lessening demand, and as prices that had so reliably risen begin to fall. Income vehicles that derive their dividends from the sale of commodities such as Natural Gas, Oil, Coal, the Master Limited Partnerships, will suffer both price and income corrections. This decline will spread and perhaps feed on itself causing risk assets to decline precipitously. As the commodity markets decline, the Dow, S&P, and Nasdaq will also drop, affecting the spending habits of most of the population spreading from a financial correction to an economic correction; a recession or worse will be underway. As risk avoidance accelerates, the asset class that will benefit most, contrary to many current pundits, will be the US Dollar and long-term US Treasuries. Long bonds will not only deliver dependable income, but rise in value; Agency, Mortgage-Backed, Municipal (both insured and uninsured) will suffer as state and local government revenues drop jeopardizing payment of their obligations and as the ability of the insurance companies to cover losses is questioned. The federal government will have limited ability to rescue cash strapped states, counties, and cities, and jobs will be at risk again.

The coming slowdown will be evident soon. As the economy slows, the US Dollar will rise, exacerbating the decline in commodities as prices are expressed in dollars; and risk assets and asset-backed currencies such as the Australian and Canadian Dollar lose value due to slackening demand for their mineral and forest products. U.S. bonds especially long term securities will initially benefit tremendously as the markets perceive Treasuries as a “Safe Harbor”. Negatively correlated ETF's will soar in value as the stock markets suffer on reduced earnings estimates; a recession is probable with global implications.

Past economic slowdowns have been blunted and a few times averted by Federal Reserve and US Treasury action: reducing interest rates and expanding the balance sheet. This will be vastly different as rates are already as low as they can possibly go; while the dollar is the reserve currency of the world, the Fed can print money and buy US Treasuries; the current deficit will curtail the ability of the US Government to add stimulus and lower taxes as revenues from taxes will be dramatically reduced. Government spending will be limited and possibly reduced further curtailing economic activity. The debt will become extremely burdensome as government revenues are earmarked for interest repayment and entitlement programs. The usual remedy of deficit spending to spark the economy will not be available as the worldwide slowdown diminishes the Emerging Markets’ surplus cash flow that has been used to fuel the US debt binge. The Federal Reserve will become the last defense of the economy and will print more money and add more debt. Deflation should result with the ensuing decline in most asset classes. As wealth evaporates and debt becomes extremely burdensome, governments across the world will hold coordinated meetings in an attempt to address the financial crisis.

Bondholders BEWARE; this will be a SIGNPOST to sell and take the enormous profits that have probably been made and re-position a portion in gold. There will probably be an attempt to restructure all of the debt, first addressing sovereign debt held by nations across the globe; the trillions of dollars held by China and Japan may be repaid or restructured at 20-30% of value. The Federal Reserve balance sheet of printed money may be completely eliminated, and the toxic debt held by Fannie Mae and Freddie Mac will be at risk of severe discount as their status as a government entity is attacked and their debt repudiated. Likewise municipalities will attempt to restructure to sustainable levels. Havoc will ensue!

Should the US attempt to re-structure debt, the status as the World's Reserve Currency will be jeopardized and perhaps lost. There will be talk of a world currency and a World Central Bank. If commodity prices were to be expressed in Yuan or the Euro, then virtually all goods in the US will skyrocket as our currency devalues. Without the status as the reserve currency, almost everything manufactured will become much more expensive; the once mighty manufacturing base of the US is now offshore. Wheat and corn, livestock, vegetables, and all prepared foods will jump in price; a one dollar menu is not the same as a one euro menu.

This possible scenario comes with the possibility to profit handsomely. The initial stages will require the identification of the tipping point in the economy. The decision to become defensive is easy by reducing or eliminating security positions to a basically cash position. To become pro-active is much more difficult; recovery rallies might be viewed as an opportunity to add to short positions and accumulate long term US Bonds. If a recession becomes obvious, commodity securities will become cheap for a short period of time. MLPs will yield double-digit dividends. This would become an opportunity as much higher food and energy prices would be just around the corner. Rates would bottom and long-term bonds will have reaped enormous profits, and could be sold to redeploy the capital in the commodity sector.

Precious metals have risen over 700% and are still rising. Perhaps the markets are telegraphing worsening currency conditions or future inflationary expectations. This market may correct some, however, the depressed Real Estate Market will offer tremendous opportunity. Strategic Real Estate offers an income stream to combat deflation, an income stream which is much higher than money market or bond funds, while also offering a tremendous hedge against the equally possible scenario of runaway inflation caused by crisis driven governments pouring liquidity into the markets to stave off an economic collapse. The downside risk to Strategic Real Estate has already been mitigated as this asset class has been deflated and hugely discounted. Further, a steady source of long term tenants is assured as the economy declines and underwater and foreclosed properties are liquidated. In a risk adverse financing environment, new construction projects will be curtailed, further restricting the supply and driving rental demand. With looming economic problems, the burden of over-encumbered “underwater properties” or non-cash flowing real estate need to be liquidated.....NOW!

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).

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.

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Friday, February 10, 2012

Opa Greek Cultural Cruise - Penelope's Diary

Greek dancing on Opa cruiseAs the world focuses on the tragedy of the cruise ship Costa Concordia, I’m packing my bag for the "Opa Greek Cultural Cruise," sailing Feb. 11 from Fort Lauderdale, Fla. We’ll be sailing aboard a splendid new Italian ship, the MSC POESIA. On last year’s cruise we were drilled in life-saving, not once but twice, wearing lifejackets and going to our stations, so kudos to TravelGroup International! The music and entertainment were exceptional, as were my fellow travelers. I hope that all travelers and “Wall Street Greek” readers in particular will enjoy smooth sailing and good memories of this year’s cruise season. I’d like to share the diary with you that I kept on last year’s trip.

Relative tickers: Nasdaq: ASCA, OTC: ARHN.PK, OTC: BYNEF.PK, NYSE: BXG, NYSE: BYD, NYSE: CCL, Nasdaq: CNTY, OTC: CLMDY.PK, Nasdaq: NYNY, NYSE: FLL, OTC: GXYEY.PK, OTC: GBCS.PK, Nasdaq: WOLF, Nasdaq: ISLE, Nasdaq: LACO, NYSE: LVS, NYSE: VAC, Nasdaq: MPEL, NYSE: MGM, Nasdaq: MCRI, Nasdaq: MNTG, AMEX: UWN, Nasdaq: PENN, NYSE: PNK, NYSE: RCL, NYSE: MCS, OTC: TWOC.PK, NYSE: MTN and Nasdaq: WYNN.

"OPA CRUISE" DIARY



travel writerFriday –I arrive in Miami from New York City on a cold March day, wearily dragging my brightly labeled bag, to join two-hundred other Greek-Americans. We’ve signed on for the week-long “Opa” cruise to the Eastern Caribbean aboard the Costa Atlantica, an extravaganza of an Italian ship inspired by film maker Federico Fellini. It’s a glittering world, away from telephones and e-mail, with nothing do but dance, converse (because Greeks take conversation seriously) dine (forget ordinary eating – this is big-time cuisine), swim, catch the sun, and maybe gamble. It’s my second year as an “Opa” adventurer. Magically, my bag’s whisked away to a gem-like cabin with a balcony overlooking the sea. Also awaiting me, my “Opa” card (a handy, on-board credit device), and a blue and white beach bag. I already feel rejuvenated.

Organized by Dr. Cary and Ellen Pantazis as a fund-raiser for the Ocala, Fla. Church, and orchestrated by TravelGroup International’s remarkable Faye Weissblum, the “Opa” trip’s notable for genuine hospitality. No question goes unanswered. No request is ignored. Leaving my cabin, I swiftly walk to the small gaming casino and touch the magical one cent slot machine where last year I won $620.00. We’re still on land. The machine will have to wait.

That night in the Coral Lounge, an elegant grotto with blue walls and white fantasy trees, Greeks from twenty-two states – California to Massachusetts, Utah to Florida -- and the United Kingdom -- gather. The Aegean Duo -- singer and bouzouki player Steve Tavelaris and musician Nick Mouganis tune up, joined by band leader Nick Travelis. Irresistible Greek music fills the air. The dancers move to the floor and the party begins.

Saturday – Decisions, decisions: Greek dancing lessons with Mary Girmis? Fun and games in the Game Room? Swimming? Basking in the sun? Mambo lessons?

I opt for the Rev. Michael Soter’s religious service, a beautiful way to start a sea voyage. Father Soter blends faith with good humor. “My only other cruise was with the military,” he admits with a twinkle. “I think the services we have every day remind people that you can enjoy yourself without losing your spiritual focus.” Despite conducting his service in the Paparazzi Room, surrounded by blow-ups of Anita Ekberg and Marcello Mastroianni in the film La Dolce Vita, with his purple vestment and the chanting of the service participants, authentic Orthodox spirit prevails.

After the prayer service, I head for the Dante Disco, inspired by The Inferno. The dance lessons are heaven, and I meet “Opa” cruisers refreshing their dancing skills. James Teagarden of Dallas, Texas, son of a Greek mother, a young bachelor, says: “I’m already having the time of my life.” Has he met any lovely young Greek ladies? “Not yet,” says Jim. “But it’s early in the cruise.”

Greek music band Opa Cultural cruiseDancing is the heart of the “Opa” cruise, and the music is exceptional. That night in the Coral Lounge, I talk with the AegeanDuo, musician Nick Mouganis and singer and bouzouki player Steve Tavelaris of Rochester, N.Y. (The third music maker is the amazing Nick Travelis, who also has a group called the AegeanDuo…but that’s getting complicated. We’ll catch Travelis later.)

Mouganis, an adjunct professor of Greek mythology, also has an environmental contract business. Steve is in real estate. Says Mouganis: “Business frees us up to take our music seriously.” Both are married with children, and have brought their beautiful wives on board with them. Steve’s wife, Mary, and Nick’s wife, Lynn, are both non-Greeks but speak Greek fluently and have taught their children Greek. We’re impressed!

Together for over thirty years, the men create a unique, authentically Greek sound. Committed musicians, in the 1970’s, Nick went to Greece with his wife and spent eight months collecting and recording folk music. With a repertoire of between 3 and 4 thousand pieces, they tailor their music to their audience. Says Steve: “We make sure that the energy’s there. It gets people up. People will say to me ‘I’m too tired to dance,’ and two hours later say ‘I danced and danced and didn’t want to stop’.”

Sunday – It feels like we’ve been cruising for a week, but it’s only Sunday. It’s time for our first port of call. Although Grand Turk’s fabled for its blue water and sky, today is overcast. Some opt to stay aboard the ship. With two companions, I book a taxi guide. The well-informed Carlos points out Turk’s many churches and the original source of its income – salt, dug out by slave labor. Most food is imported. A pathetic cow, lacking pasture land, drifts through a garbage dump. Fortunately, islanders prosper on the tourist industry. I buy a small pocketbook for a niece. Carlos tells me to bargain but the store proprietor wisely says: “You want it for a gift – so no bargaining.”

Unfortunately, I miss the lecture by Dr. Gary Pantazis on “Greek Pathologists Who Have Saved Countless Lives,” but receive a glowing report from a fellow “Opa” traveler.

And then it’s time for dinner. I’m charmed not only by the many choices on the menu (no wonder Costa plans so many exercise classes), but by my table mates: cousin Dino Smiros, a retired businessman, and his wife Mary, an artist, of Syosset, Long Island; Joanna Pappas, a kindergarten teacher from Long Island; my sister, Helen King, of Madison, N.J.; Dr. Corinne Courpas, an M.D. and her husband, Dr. Anthony Courpas, a pediatrician of Baltimore, Md; and Fay Rellas, a teacher, and her husband, Judge John Rellas, of Naples, Fla. Conversation topics range from the poet Cavafy to whether it’s wise to indulge in five courses every night . Food-wise, I decide to try everything!

After dinner, I head for my favorite one-armed bandit, but it’s been appropriated for the night. I watch yearningly from another machine and lose money, feeling like a lover who’s been betrayed.

But then it’s on to the Coral Lounge, where the main attraction is a show by comedian Jim Dailakis. I take my seat in the second row stoically, and with a mild burp, having just consumed a sublime serving of “gnocci with five cheeses.” In New York, I live on Lean Cuisine and an occasional minute steak, so my palate is in a delightful state of sated shock. As Greek comics go, I believe I’ve seen it all. Are any surprises possible?

From the moment he lands on the stage in a perfect split (he’s studied martial arts since age 15), Dailakis proves himself a show-stopper. A witty, acerbic observer, Dailakis combines Chaplinesque body gesturing with the off-beat observational skill of the late George Carlin. The audience loves his act as he walks the fine line between brazen lampoon and satire. Why do Greeks live so long? “Church aerobics,” says Dailakis, demonstrating the life-giving up and down actions.

Inspired by Al Pacino and Hollywood, Dailakis moved to New York from Perth, Australia fifteen years ago to study acting. “I’m a Greek who couldn’t wait tables, so a friend suggested – you can always make money in comedy. I tried it once or twice, and it took off. I went home to Australia, where I was offered a three-month tour. The three-month comedy tour is still going.” Dailakis, a writer as well as a comic, creates all of his own material. “What makes comedy funny is the truth. When I get a big laugh, I know that I’ve just gone into the audience’s childhood, because we all have the same parents, the same uncles. I love that.“

Dailakis has written a film, All My Friends Are Getting Married, which goes into production this year, and of course, he’ll play a leading role. “It’s about five guys determined to stay single – but one by one they give in. I’m the one who holds out.”

Monday– We dock at Tortola and I rush ashore to explore the island with four companions and our guide Bage. Even with a seat belt, it’s a wild ride. Steep, narrow roads feature hair-raising turns. Dr. Anthony Courpas observes wryly, “In comparison, the Greek mountain roads look like the streets of Paris.”

Tuesday– Land, ho! Catalina Island. Determined to meet “the real people of the Dominican Republic,” I book a tour that visits an air-conditioned cigar factory. Our bumpy jeep then moves through miles and miles and miles of sugar cane. In the middle of cane fields, our guide stops, opens a bottle of rum, pours drinks all around, and sells us hats to help raise funds for school uniforms.

Exhausted, my eye-balls weary from gazing at sugar cane, I half-wish I had gone to the to the lovely beach, but wrong choices form part of cruising. Consider Odysseus and his mythic booboos, including stopping off at Circe’s island where the enchantress turned his men into swine. (Odysseus did rescue them and forged a warm relationship with Circe.)

Back aboard, we’re treated to a wonderful Greek dinner including spanikopita, fish and baklava, followed by cocktails in the Coral Lounge.

Comic Jim Dailakis performs again. He’s only brilliant! Bravo, Jim!

Dancers fill the floor. “Opa”!

Wednesday– Today it’s “Opa” at sea, with a Greek Festival Party by the pool. The entire ship dances to Greek music, and dines on an outdoor buffet of Greek specialties including souvlakia and baklava. “Opa” cruisers feel their kefi in the sunlight.

Between dances, we chat with several “Opa” stalwarts, including Ernie Memphis, famous for his dancing. Ernie and wife Victoria are committed “Opa” cruisers. “We’re already signed up for next year’s cruise,” says Victoria. “The islands are unimportant. We enjoy the people.” Says Ernie: “We never book a fancy room. We say just get us aboard and put us inside next to the engine. This year, Faye called and said we’re upgrading you to a suite, because you deserve it. That was beautiful.”

Dr. Dean Loomis and his wife Toula, skilled dance partners, have been onboard since the first cruise. “It’s wonderful to be Greek for a week,” says Dr. Loomis. After dancing the afternoon away, Dr. Loomis will give a fascinating lecture on “The Spirit of 1776 and 1821: The Legacy of Our Greek American Heritage.”

Miss Senior Greek AmericaWe’re enchanted by Tula Serves, 87, of Canton, Ohio, recently crowned Miss Senior America, 2010-2011. What’s the secret to her vibrant appearance and personality? “A positive attitude,” the former teacher proclaims. After trying out for the Costa Talent Show, Tula performed Whatever Lola Wants with Marlene Dietrich insouciance while flaunting a black feather boa, and was a huge hit.

Thursday– We visit famous Nassau, the Bahamas, and learn that Greeks arrived here shortly after the Revolutionary War. Today they own jewelry shops and restaurants. On to Paradise Island and Atlantis, the 500-million mega resort, creation of Merv Griffin and Donald Trump. An outrageous pink fantasy, it features a huge gambling casino and a justifiably world-famous aquarium.

Hard to believe, but it’s time to pack suitcases, and prepare to disembark tomorrow. Not before talking to the charming Nick Trivelas who has been an integral musical part of every “Opa” cruise. The band leader, bouzouki player and full-time musician, formed a rock ‘n roll band, but Greek music won out. After studying electrical engineering in college, “the music business drew me back.” As for “Opa,” Nick says: “This cruise is so much fun. I love cruising to begin with, and mixing Greek culture in with it is just phenomenal.”

Ellen Pantazis of the Ocala Church and Faye Weissblum of TravelGroup International, have already begun planning next year’s trip. More than forty have already signed on for the cruise!

Ellen’s brainstorming some intriguing new events, but regardless, “What I like most about the cruises is that every year I see my friends. You make new friends. You see friends you had previous years. It’s almost like a little village, a reunion, and there’s a wonderful familiar feeling. You meet a Greek in any area and have these commonalities. That’s what this trip is about.”

On our last night aboard ship, the musicians put away their instruments. They won’t be playing tonight. I pack my suitcase, itemizing all the things I didn’t do: I didn’t swim with the Dolphins! I didn’t go to the beach! I only sat on my balcony for an hour! I never made it to the fancy restaurant on the top deck! I didn’t see all the Greek movies! But I had a wonderful time.

It’s late. I take the elevator down to the small casino. My favorite machine is free. I put in a twenty and win fifty. I’m tempted to play on, and hear the merry jingle of bells, but take my money and run. I won’t push my luck. I’ll save it for next year.

This article should interest investors in resorts and casino operators including Ameristar Casinos (Nasdaq: ASCA), Archon Corp. (OTC: ARHN.PK), Banyan Tree Holdings (OTC: BYNEF.PK), Bluegreen Corp (NYSE: BXG), Boyd Gaming (NYSE: BYD), Carnival (NYSE: CCL), Century Casinos (Nasdaq: CNTY), Club Med (OTC: CLMDY.PK), Empire Resorts (Nasdaq: NYNY), Full House Resorts (NYSE: FLL), Galaxy Entertainment (OTC: GXYEY.PK), Global Casinos (OTC: GBCS.PK), Great Wolf Resorts (Nasdaq: WOLF), Isle of Capri Casinos (Nasdaq: ISLE), Lakes Entertainment (Nasdaq: LACO), Las Vegas Sands (NYSE: LVS), Marriot Vacations Worldwide (NYSE: VAC), Melco Crown Entertainment (Nasdaq: MPEL), MGM Resorts (NYSE: MGM), Monarch Casino & Resort (Nasdaq: MCRI), MTR Gaming Group (Nasdaq: MNTG), Nevada Gold & Casinos (AMEX: UWN), Penn National Gaming (Nasdaq: PENN), Pinnacle Entertainment (NYSE: PNK), Royal Caribbean (NYSE: RCL), The Marcus Corp. (NYSE: MCS), Trans World Corp. (OTC: TWOC.PK), Vail Resorts (NYSE: MTN) and Wynn Resorts (Nasdaq: WYNN).

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.

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