Bernanke, Bad News & Busted Betas

Chairman Bernanke has thus far kept stocks afloat with his stable presence amongst a stable of very self-assured presences, but the data out of the housing sector was disturbing today to say the least. Earnings are playing heavy today as well, so stocks are going to have diluted beta coefficients as they report results. See our detailed economic and other analysis below. For regular unbiased analysis and research visit our stock market blog.

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

Bernanke Balance

Market ETF	July 17, 2013	Year-to-Date
SPDR S&P 500 (SPY)	+0.4%	+18.1%
SPDR Dow Jones (DIA)	+0.1%	+18.3%
PowerShares (QQQ)	+0.3%	+16.0%

Economic Events

ECONOMIC REPORT SCHEDULE
Economic Data Point	Prior Period	Expected	Actual
WEDNESDAY
Housing Starts	928 M (R)	951 M	836 M
Bernanke Testimony	NA	NA
Beige Book	NA	NA
Mortgage Activity	-4.0%	NA	-2.6%
EIA Petroleum Status	-9.9 M		-6.9 M

Chairman Bernanke has thus far kept stocks afloat with his stable presence amongst a stable of very self-assured presences, but the data out of the housing sector was disturbing today to say the least. The annual pace of housing starts was markedly lower in June, and it looks like it will stay that way near-term. That’s because permitting activity for new housing starts was likewise destroyed by the sharp rise of mortgage rates over the last two months. The annual pace of permit issuance fell to 911K, from 985K in May. Now some of this can be explained by a move from the hot spring selling season into the slower summer season, but there is other evidence of a harsh impact from spiking mortgage rates.

We saw it again in the weekly mortgage activity data. The Mortgage Bankers Association’s (MBA) Market Composite Index fell by 2.6% in the latest period. Now, looking more closely at mortgage activity reveals that Purchase Activity, or mortgage applications tied to home purchases, actually increased slightly last week by 1.0%. Mortgage rates hardly budged, and buyers on the fence have incentive to lock in rates now. However, refinance activity was down 4.0% due to the relatively higher level of interest rates today versus months past.

Later today, the release of the Fed’s Beige Book of regional economic indicators could carry some weight, considering that the Fed has stated it will be data dependent. The market will have had its fill of the Fed by the end of the day, and perhaps what has been said has been said. In that case, the market will look to the data, and judging by what we have seen today, it’s not going to be pleased.

Overseas Markets

EUROPE	10:38 AM	ASIA/PACIFIC	CLOSE
EURO STOXX 50	+0.7%	NIKKEI 225	+0.1%
German DAX	+0.8%	Hang Seng	+0.3%
CAC 40	+0.7%	S&P/ASX 200	-0.1%
FTSE 100	+0.5%	Korean KOSPI	+1.1%
Greece ASE	+1.7%	BSE India SENSEX	+0.5%

The day after a general strike shutdown Greece and even its airport for several hours, Greek shares are rising today, likely on supportive lip service from one politician or another.

Commodity Markets (10:22 AM ET)

WTI Crude	-0.0%
Brent Crude	+0.3%
NYMEX Natural Gas	-1.5%
RBOB Gasoline	-0.4%
Gold Spot	+0.3%
Silver Spot	+0.3%
COMEX Copper	-0.8%
CBOT Corn	-1.0%
CBOT Wheat	+0.2%
CBOT Soybeans	-0.1%
ICE Cocoa	+1.2%
ICE Sugar	+0.4%
ICE Orange Juice Conc.	+1.3%
CME Live Cattle	-0.1%

Everyone is watching crude oil and gold these days, given the latest big moves for each. Can oil hold at heightened levels? Well, today’s Petroleum Status Report from the EIA showed yet another significant draw from crude oil inventories; so yes is the answer.

It seems every analyst on the Street is calling for a short-term rally for gold followed by another down leg. If you look at the chart for gold since this time last year, you will understand why. The so-called experts are simply drawing a line following the recent historical trend. I would like to see someone with such a call also call the bottom.

What is the intrinsic value of gold? I argue it is much, much higher than current value, but that does not mean I think the SPDR Gold Series Trust (NYSE: GLD) is the way to get there; over the short-term it will work for you but it’s not the long-term way to go. No, buy physical gold dear friends, because I see an eventual divergence between the GLD and physical gold in our future, when these ETFs break and contribute to our next great crisis. Remember where you heard this first.

Corporate Events

REPORTING EARNINGS
Company	Ticker
WEDNESDAY
Bank of America	NYSE: BAC
Abbott Laboratories	NYSE: ABT
Intel	Nasdaq: INTC
IBM	NYSE: IBM
American Express	NYSE: AXP
U.S. Bancorp	NYSE: USB
Northern Trust	Nasdaq: NTRS
iGATE	Nasdaq: IGTE
Chemical Financial	Nasdaq: CHFC
PNC Financial	NYSE: PNC
Piper Jaffray	NYSE: PJC
Knoll	NYSE: KNL
Bank of New York Mellon	NYSE: BK
First Republic	NYSE: FRC
First Cash Financial	Nasdaq: FCFS
Textron	NYSE: TXT
M&T Bank	NYSE: MTB
Mattel	NYSE: MAT
St. Jude Medical	NYSE: STJ
Union Bankshares	NYSE: UNB
Select Comfort	Nasdaq: SCSS
Preferred Bank	Nasdaq: PFBC
Universal Forest Products	Nasdaq: UFPI
Steel Dynamics	Nasdaq: STLD
Plexus	Nasdaq: PLXS
Albermarle	NYSE: ALB
Boston Private Financial	Nasdaq: BPFH
SLM	NYSE: SLM
RLI	NYSE: RLI
Astoria Financial	NYSE: AF
eBay	Nasdaq: EBAY
CVB Financial	Nasdaq: CVBF
East West Bancorp	Nasdaq: EWBC
Cohen & Steers	NYSE: CNS
Pacific Continental	Nasdaq: PCBK
Greenhill	NYSE: GHL
JAKKS Pacific	Nasdaq: JAKK
Zhone Technologies	Nasdaq: ZHNE
HNI Corp.	NYSE: HNI
Umpqua	Nasdaq: UMPQ
LaSalle Hotel Properties	NYSE: LHO
SanDisk	Nasdaq: SNDK
SuperValu	NYSE: SVU
Cathay General Bancorp	Nasdaq: CATY
Xilinx	Nasdaq: XLNX

MOST ACTIVE STOCKS
BIGGEST GAINERS	% Gain
NRG Yield (Nasdaq: NYLD)	+25%
Leading Brands (Nasdaq: LBIX)	+19%
First Acceptance (NYSE: FAC)	+16%
Energy XXI (Nasdaq: EXXI)	+15%
Meade Instruments (Nasdaq: MEAD)	+15%
AeroVironment (Nasdaq: AVAV)	+15%
Intelligent Systems (NYSE: INS)	+12%
Galectin Therapeutics (Nasdaq: GALTU)	+12%
Organovo (Nasdaq: ONVO)	+10%
UQM Technologies (NYSE: UQM)	+11%
BIGGEST LOSERS	% Drop
ZAGG (Nasdaq: ZAGG)	-15%
InnSuites Hospitality (NYSE: IHT)	-15%
Verastem (Nasdaq: VSTM)	-11%
China Natural Resources (Nasdaq: CHNR)	-10%
CAS Medical Systems (Nasdaq: CASM)	-9%
Timmins Gold (NYSE: TGD)	-8%
Emerson Radio (NYSE: MSN)	-9%
Anchor Bancorp (Nasdaq: ANCB)	-8%
Arrhythmia Research (NYSE: HRT)	-8%
USMD Holdings (Nasdaq: USMD)	-7%

Other Reports for Your Review:

Bernanke’s Testimony is Must-See TV
Ford Rated Strong Buy with 29% Upside

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.