Doomed Without the Fed

Stocks are lower in the U.S. at the open due to another week of mortgage activity pull back on higher mortgage rates and an ADP Private Employment Report data point that missed expectations. It’s not enough yet to see the weak economic data; the Federal Reserve must reassure the market that it is not going to raise rates anytime soon and that it will not be pulling back on asset purchases either, given recent economic data. When that happens, the rally will be restored, but nothing is a given with the terrible economic forecasters at the Fed.

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

Market ETF	June 5 at Open	Year-to-Date
SPDR S&P 500 (NYSE: SPY)	Unchanged	+14.5%
SPDR Dow Jones (NYSE: DIA)	-0.4%	+15.8%
PowerShares (Nasdaq: QQQ)	-0.3%	+11.8%

Economic Events

ADP’s Private Employment Report for May is expected to show private nonfarm payrolls increased by 171K, versus last month’s 119K. Economists expect private nonfarm payrolls, as reported by the government on Friday, to show an increase of 178K jobs, versus the 176K reported last month.

The latest mortgage activity data arrives from the Mortgage Bankers Association Wednesday before the market open. Last week’s report covering the period ending May 24 showed mortgage applications decreased by 8.8%. Applications tied to the purchases of homes increased by 3.0% on a seasonally adjusted basis. The Refinance Index decreased by 12%. Effective mortgage rates increased significantly again, and once again impacted mortgage activity, leading our founder to author The Fed Could Derail the Real Estate Recovery.

Nonfarm Productivity and Costs data will be revised for the first quarter today. Economists see productivity growth sticking at 0.7% for the quarter, after it contracted in the fourth quarter by 1.9%. The Unit Labor Cost increase is expected to stay at 0.5% after increasing 4.6% in Q4.

Factory Orders for April are expected to have increased by 1.4%, after falling by 4.0% in March. This data has shown slower growth since recovering from recession level lows, and so it is now on its own without the benefit of easy comparable data.

After reporting its manufacturing data a few days prior, ISM will publish its Nonmanufacturing Report on Business today at 10:00 AM. ISM’s service segment index is expected to improve to 53.8 in May, from 53.1 in April.

The Federal Reserve issues its Beige Book of regional economic activity at 2:00 PM ET.

Overseas Markets

EUROPE	9:15 AM ET	ASIA/PACIFIC	CLOSE
EURO STOXX 50	-0.9%	NIKKEI 225	-3.8%
German DAX	-0.8%	Hang Seng	-1.0%
CAC 40	-1.0%	S&P/ASX 200	-1.4%
FTSE 100	-1.4%	Korean KOSPI	-1.5%
Greek ASE	-0.2%	BSE India SENSEX	+0.1%

The geopolitical pages have Arab ministers discussing Syria in Cairo, Egypt. United States, Russian and U.N. representatives are discussing the same issue in Moscow. South Korean markets are closed Monday.

Commodity Markets (8:55 AM ET)

WTI Crude	+0.6%
Brent Crude	+0.3%
NYMEX Natural Gas	+0.4%
RBOB Gasoline	+0.3%
Gold Spot	+0.1%
Silver Spot	+0.3%
COMEX Copper	+0.3%
CBOT Corn	-0.6%
CBOT Wheat	+0.1%
CBOT Soybeans	+0.2%
ICE Cocoa	+0.7%
ICE Sugar	+0.7%
ICE Orange Juice Conc.	+0.4%
CME Live Cattle	-0.4%

Look for the EIA’s regular Petroleum Status Report at 10:30 AM ET. Last week’s report covering the week ending May 24 showed crude oil inventory increased by 3.0 million barrels, and remained above the upper limit of the average range for this time of year. Total motor gasoline inventory decreased by 1.5 million barrels but remained in the upper half of the average range for this time of year.

Corporate Events

The corporate wire has shareholder meetings and analyst gatherings at International Flavors & Fragrances (NYSE: IFF), Constellation Brands (NYSE: STZ), Encore Capital Group (Nasdaq: ECPG) and Under Armour (NYSE: UA). The Bank of America Merrill Lynch Global Technology Conference offers presentations by Hewlett-Packard (NYSE: HPQ), Juniper Networks (Nasdaq: JNPR) and Autodesk (Nasdaq: ADSK). The Credit Suisse (NYSE: CS) Future of Payments Conference highlights the presentation of Capital One Financial (NYSE: COF). The Deutsche Bank dbAccess Global Financial Services Investor Conference brings Fifth Third Bancorp (Nasdaq: FITB) to the podium.

The EPS schedule highlights reports from Amerco (Nasdaq: UHAL), Ascena Retail Group (Nasdaq: ASNA), Coldwater Creek (Nasdaq: CWTR), Cyberonics (Nasdaq: CYBX), Francesca’s Holdings (Nasdaq: FRAN), FuelCell Energy (Nasdaq: FCEL), Greif Inc. (NYSE: GEF), Hooker Furniture (Nasdaq: HOFT), Hovnanian Enterprises (NYSE: HOV), Jiayuan.com (Nasdaq: DATE), Layne Christensen (Nasdaq: LAYN), Measurement Specialties (Nasdaq: MEAS), rue21 (NYSE: RUE), Sigma Designs (Nasdaq: SIGM), Streamline Health Solutions (Nasdaq: STRM), Thermon Group (NYSE: THR), Vera Bradley (NYSE: VRA) and VeriFone (NYSE: PAY).

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.