Housing Heals Before Contracting Lethal Infection

Much has been made about the latest increases in new and existing home sales, much too much. Modest increases in activity from dreadfully low levels during a period when seasonality should spur growth is a low-bar leap. Though, I think it is clear based on the data that the housing market is finally overcoming the burden of the bubble. More importantly, though, a storm is gathering over yonder, and the future concerns me more today than this past April can enthuse me. Today’s action in homebuilders and financials, with the SPDR S&P Homebuilders (NYSE: XHB) and Financial Select Sector SPDR (NYSE: XLF) each off more than 1%, seems to say that you finally agree. I’m glad to have you on board Mr. Market; now buckle up.

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

Relative tickers include 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), Hovnanian (NYSE: HOV) and Beazer Homes (NYSE: BZH).

Housing Healing, Facing Infection

New Home Sales were reported Wednesday for the month of April and Existing Home Sales were reported Tuesday for the same span. The XHB caught a breeze on the first report, but was unable to ride the hot air for a second day. The shares of homebuilders Toll Brothers (NYSE: TOL), Ryland Group (NYSE: RYL), PulteGroup (NYSE: PHM), K.B. Home (NYSE: KBH), D.R. Horton (NYSE: DHI) and Lennar (NYSE: LEN) were mixed Wednesday, though housing related shares were mostly lower. Some, like Toll Brothers (NYSE: TOL) benefitted from company specific news. Still, despite the market share driven rise of the like, I say buyer beware, because the macroeconomic environment will sink all cyclical ships. That’s why the modest increases in sales activity in April, while they do show real recovery in real estate, will draw no capital from my store today.

The U.S. Department of Housing and Urban Development reported a 3.3% increase in new home sales in April, but that only brought the annualized pace of sales up to a measly pace of 343K. Granted, that was 9.9% better than the pathetic production of April 2011.

Through years of attrition, the standing inventory of decaying new construction has dwindled, with 146K fresh homes estimated for sale currently, or 5.1 months supply at the current pace of sales. That’s again better than March’s 5.2 months and last April’s 6.7 months store. The pace of sales is finally benefiting from the clearance of the wreckage of the housing bubble (read foreclosed and bank owned property). This view is also supported by a median price increase seen in existing home sales, which arose last month on a better mix of properties sold. That data would indicate that there’s an increasing portion of non-distressed property selling through. The number of new homes for sale is thin against last April’s 174K, so the builders would be nicely positioned now if not for the distressed global macroeconomic environment that is offering contradicting information to the investment decision generally.

Existing Home Sales nearly equaled new home sales in their increase, rising 3.4% in April and 10% against the prior year. Single-family home sales, which for many better reflect the true American home market, rose 3.0% and were 9.9% higher than last year. Inventory was up, but the Chief Economist of the National Association of Realtors (NAR), Lawrence Yun, clarified why. He said that April historically drives and leads the year in homes for sale. This year, April marked a 9.5% increase in homes for sale, to 2.54 million. At the current pace of sales, that represents a 6.6-month supply, up from 6.2 in March.

Fear not (at least not about this), as home price data ensures that the increase was not driven by distressed properties, but by better demand drawing sellers. In fact, shortages have sprung up in the hardest hit areas, like Phoenix, Arizona and Las Vegas, Nevada. The median price of an existing home for sale was pulled higher by all this, rising 10.1% year-to-year, to $177,400. Again, this was due to the better mix of homes for sale, not general price increase, so don’t go betting on a new housing lust because of it. Yet, other data-points also showed a change for the better. All-cash sales fell to 29% of transactions in April, down from 32% in March. Investors accounted for 20% of all purchases, versus 21% in March. And first-time buyers rose to 35% of all purchasers in April from 33% in March. These are all signs of a normalizing and recovering market.

Congratulations real estate market, you’re getting better just as we contract a lethal infection from European trash. It’s like recovering from illness, but contracting a dangerous disease just before your release from the hospital. All this good news about April is enthusing, but the latest data out of the Mortgage Bankers Association shows a slowing of mortgage application activity for home purchases in May, despite record low mortgage rates. Oh, Americans are benefiting from European strife by refinancing and lowering their debt costs, but they’re not buying homes according to the latest data from the MBA. Why do you suppose that is, if all is really hunky-dory? It’s the economy stupid!

I must have said it a million times over the last year, but Mr. Market is finally listening. America sells 20% of its exported goods into Europe, which just barely kept out of formal recession territory in the first quarter. Meanwhile, economic bifurcation has driven political fragmentation, which now threatens to break apart the euro-zone. The first effects of economic contagion have been felt from China to the United States, and our still vulnerable economy seems to be sniffling more and more. It’s precisely the wrong time to start a war, and yet, the pressure is intensifying upon one of the world’s most important suppliers of fuel, which also has the ability to disrupt an even more important spigot. Investors are selling stocks? Go figure!

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.

Consumers Signaling Recession

As retailers report earnings, some are doing well like TJX Companies (NYSE: TJX) and Wal-Mart (NYSE: WMT), while others are doing poorly, like J.C. Penney (NYSE: JCP) and Dollar Tree (Nasdaq: DLTR). Thus, it’s somewhat difficult to discern the shape of consumer spending from the mass of corporate reports. The U.S. economy is in better shape than it was a few years ago, and an improved consumer mood has tracked fading panic over the years. Yet, one tracker of the shopper mood is saying consumers are increasingly uncomfortable again, and all of a sudden. In fact, it could be signaling recession.

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.

Consumers Are Uncomfortable

As the European economy flirts with recession, having just reported flat GDP activity in Q1 after a contraction in Q4 2011, the decisions of Greek voters may be about to unravel the region. Thursday, the ramifications of that highly possible disaster were striking Spanish banks, which faced ratings downgrade by Moody’s (NYSE: MCO). But value destruction probably will not be limited to Europe, especially considering that 20% of American exports sell into the region. We noted an interesting expansion of the trade deficit with Europe earlier this month. We also noted signs of European infection of U.S. business sectors including manufacturing. The region seems to be impacting the global market, with Chinese data softening as well. Greek election chaos and European concerns have now reached the front page of the newspaper, and so American consumers are certainly aware and likely worried about it all.

Thus, it makes sense that the Bloomberg Consumer Comfort Index has dramatically retraced ground from its April 15 high point of minus 31.4. In just a short period of a month’s time, it has consistently deteriorated, reaching negative 43.6 in the just reported week ending May 13. Bloomberg and Langer Research Associates, which compiles the index, said the current mark reflects territory consistent with recessionary periods. So, the Bloomberg Consumer Comfort Index, which is a more regular measure than the Conference Board’s Consumer Confidence Index and the Reuters/University of Michigan Consumer Sentiment Index, may in fact be offering an early signal of recession.

The most recent reading of the Consumer Confidence Index was in April, measuring a period through April 12, and so wouldn’t reflect what we are seeing in the Consumer Comfort measure until it is reported again later in May. The Reuters/University of Michigan Consumer Sentiment Index, reported just last week, marked a four-year high in mid-May. Yet, this latest Consumer Comfort reading dropped to near a four-month low. It’s hard to say why the difference exists between the two indexes without an intimate understanding of the specifics of, and perhaps proprietary information about, the two metrics.

Consumer discretionary shares performed poorly Thursday on the news, with the Consumer Discretionary Select Sector SPDR (NYSE: XLY) down 2.6%. Retailer shares were also lower, with the SPDR S&P Retail (NYSE: XRT) down more than 3.5%. The shares of some retail store operators have taken a beating this week, including J.C. Penney (NYSE: JCP), which missed the Street’s EPS view badly. We recommended investors sell the shares of JCP on a company specific misstep though, not a broad reaching driver. JCP shares were down again Thursday, following a 20% slide Wednesday. Yet, Wal-Mart (NYSE: WMT) was up 4.2% on a strong EPS result, and TJX (NYSE: TJX) gained strongly earlier in the week on its report.

Company specific drivers serve to cloud the message perhaps presciently offered by the Consumer Comfort Index. However, the index was lower than its current point back in the fall of 2011, which was not a recessionary period. It’s my view that the same concern that struck at the hearts of consumers then is bothering them again today, and it is the unsettled state of global affairs. Of course, stubborn unemployment continues to weigh heavily and slowing domestic economic growth has raised new concerns. Still, the old trend of rising fuel prices has since turned, easing some of the pressure that existed then from consumers.

In my view, this Consumer Comfort Index is but one of many subtle signs of tough times coming. When they arrive, it may be late to hedge given the market’s tendency to lead. So consider yourself warned.

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.

European Disease Infecting U.S. Manufacturing

The latest Empire State Manufacturing Survey, produced by the Federal Reserve Bank of New York, indicates a pickup in May manufacturing activity on the surface. Closer inspection always adds color, and in this case, we believe reflects growing concern about the outlook. It also shows a bifurcation developing within the sector, as mixed messages are delivered about the trend of business. We believe the report intimates infection from European markets reaching relative U.S. exporters. Given the data we’ve reported on around the industrial sector and manufacturing and international trade, and based on what we see developing globally, we view the headline improvement as just a blip in a trending dip.

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

Relative tickers include the SPDR Dow Jones Industrial Average (NYSE: DIA), Industrial Select Sector SPDR (NYSE: XLI), BHP Billiton (NYSE: BHP), Vale S.A. (NYSE: VALE), Alcoa (NYSE: AA), General Electric (NYSE: GE), Caterpillar (NYSE: CAT), United Technologies (NYSE: UTX) and UPS (NYSE: UPS).

Europe Infecting U.S.

The market celebrated Tuesday morning’s early release of the Empire State Manufacturing Survey because of the headline index increase. The SPDR Dow Jones Industrial Average (NYSE: DIA) rose to start the day, before other considerations (read Greece) weighed. The Industrial Select Sector SPDR (NYSE: XLI) traded choppy, though higher. Major industrial names including General Electric (NYSE: GE), Caterpillar (NYSE: CAT), UPS (NYSE: UPS) and United Technologies (NYSE: UTX) were each convincingly in the green. The NY Fed’s measure of area business showed its General Business Conditions Index gained to a mark of 17.09, up from 6.56 in April. Bloomberg’s survey of economists pegged the increase at a lesser level of 10.0 based on past performance and other indicators that reflected an uncertain direction.

The sub-index measuring new orders, which is a tangible indicator of how the business environment might be developing, inched higher to 8.3, from 6.5 in April. Shipments, however, were significantly higher, with the component measure rising to 24.1, from 6.4. Price increase has been contributing to gains here and likely continued to do so in May. That said, the indexes measuring both prices paid and received showed some moderation of the increases.

While the data showed overall gain, closer inspection shed light on a sort of bifurcated manufacturing environment. Something is developing, as the gain hid the fact that while many businesses reported improved activity, there was a similar increase in the number of manufacturers reporting less business activity. Even as 40.5% of those surveyed reported better business conditions, a gain over April’s 27.9%, 23.4% reported deteriorated business, versus 21.3% in April. Worse yet, 31.6% of those surveyed saw decreased new ordering activity, versus the 22.7% that said the same in April. That contrasted with the May gain in those who saw improved new ordering, where 39.9% saw improvement versus the 29.2% that said so in April.

The weird changes were fueled by decreasing numbers of managers reporting no change. The divergence of data may be reflective of specific markets served by manufacturers. Perhaps those serving Europe to a greater extent are now seeing decreased business. The latest International Trade Report reflected a wider trade deficit between the U.S. and Europe, which we intimated could be due to decreased European demand for U.S. goods and services. Of course, we now know that Spain is in recession as Greece falls into depression. Trouble seems to be spreading as an ill-timed austerity movement is implemented too aggressively across the euro region.

The NY Fed’s report also showed a perception among manufacturing managers that business conditions might deteriorate over the next six months. The forward looking indicators for General Business Conditions, New Orders, Shipments and Employment all decreased in value. Also, expectations for capital expenditures and technology spending declined. This all portends trouble, as the expert ear on the rail is feeling a bad vibe coming. Ironically, given the expected business slowdown, price increases are seen by manufacturing managers. I see inflation coming too, but I believe it will be selective and dynamic, and will follow nearer term deflation in industrial commodity prices. As a result, I’m not a fan of names like BHP Billiton (NYSE: BHP), Alcoa (NYSE: AA) and Vale S.A. (NYSE: VALE) over the short-term, though I believe scarcity, global demand and a breakdown of global trade, combined with fiat currency devaluation, will eventually drive the price of all materials and goods much higher.

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), 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), 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.

Choppy Seas Indicate a Changing Industrial Tide

This week’s economic data flow for the industrial sector offered a conflicting message. What I’ve learned as a fisherman is that where there are choppy seas there is change. Either the wind is blowing in the opposite direction of the tide or one current is bashing up against another. What matters is that one of the two forces will eventually win, and in this case, I believe it will be the force for change, and for the worse.

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.

Industrial Sector Analysis

The article I authored entitled More Manufacturing Malaise was published the same morning that the trading pit celebrated the positive surprise in the ISM Manufacturing Report. I thought, oh boy, the comments are going to be harsh today. But fear not, because just a day later, with the arrival of another data point, the market is once again in the red with the latest complaints lost to the wind. Of course, the disappointing ADP Private Employment Report contributed significantly to the darkness of the day generally, with the SPDR Dow Jones Industrial Average (NYSE: DIA) down about 0.4% through morning before taking back some ground.

Factory Orders were reported Wednesday morning for the month of March. It seems the forewarning from the prior week’s Durable Goods Orders data was forgotten. Durable orders fell 4.0% in March (revised this week from -4.2%), and even when excluding high-ticket transportation goods, durables orders still dropped 1.1%. March Factory Orders fell 1.5%, contrasting sharply to February’s revised increase of 1.1%. However, economists, with the forewarning, had forecast a decline of 1.6% at the consensus.

The Good
Let’s look at the one key conflict offering strong support for manufacturing. ISM’s Manufacturing Index was reported up to 54.8% in April, from 53.4% in March. The first thing to note is that ISM is measuring a different month (current though) than the factory orders data, but the regional indexes reported by the Federal Reserve Banks have also measured April and have offered conflicting information as well.

The market was enthused Tuesday to see New Orders and Production up, with the two component indexes important for the overall PMI rise. Employment also increased, but we note yet again that this is a lagging indicator for the economy and for segments within it. Contrary to my greatest concern, ISM reported that exports were higher in April, with its export component index up 5 points to 59.0. I expect this was an important cog for the market’s drive higher. However, I continue to foresee issue within the important European market, where 20% of America’s exports are sold into. Also, the effects of European and U.S. economic slowing weigh on the emerging world that supplies it. As the situation is yet developing (Spain only just fell into recession), I expect this measure will deteriorate in the future. Also important to note, prices are on the rise; depending on the reason, this can be a positive or a negative reflection of/for the economy. Of the many commodities measured, only two saw price decline, including natural gas and steel. Finally, qualitative comments taken from survey respondents seem to show mixed business sentiment, though 16 of 18 manufacturing industry respondents reported growth to ISM. It is important to note that the index is really a measure of sentiment, where factory orders data is a direct reflection of activity.

The Bad
Returning to the disappointing Factory Orders data, New Orders were lower by 1.5%, mainly due to durable goods orders, especially in transportation equipment. Durables orders fell 4%, while transportation equipment orders dropped 12.6%. In fact, when excluding transportation, orders were flat overall. Because of the high-ticket nature of transportation equipment, this figure varies greatly and is therefore screened out to allow for a clearer view of general economic activity. However, one could argue that transportation equipment will lead economic trends, given its long lead time to delivery. Purchasing managers in this segment would tend to act more conservatively due to intensified risk. On the positive side of things, non-durable goods orders increased 0.5% in March.

The Ugly
Not alarming, but worth keeping an eye on, inventories are up to their highest level on record. This is of course expected in a growing global marketplace. However, it also makes the monitoring of unfilled order trends that much more important. Those continued to rise, but not at an alarming rate.

Something may be developing in transportation equipment though, given the important increase in the segment inventories at the same time that new orders are declining sharply. Aircraft might be of highest concern, given its closeness to consumer spending and the fact that non-defense aircraft and parts orders declined 47.6% in March. Also, orders for ships and boats were down 8.4%. The order to delivery timeline for these products and the trend noted here might provide some concern for the manufacturers’ shares, including Boeing (NYSE: BA), Trinity Industries (NYSE: TRN), American Railcar Industries (Nasdaq: ARII), Greenbrier Cos. (NYSE: GBX), Navistar (NYSE: NAV) and PACCAR (Nasdaq: PCAR).

In conclusion, one final important point needs to be repeated. New orders of non-defense capital goods excluding transportation declined 0.8% in March. While this followed a 2.8% increase in February, that gain also followed a 3.4% decline in January. This segment is what economists follow most closely for a view to business spending. Also, nondurable goods orders continued to rise. Until these segments soften, the economy should not reside in recession, though the stock market will lead not follow. Early indicators of trouble do exist in my view with regard to durable good order trends and within the transportation segment. Manufacturing continues to be supported by development of the global marketplace and the middle class overseas, but it should neither be immune to the spread of contagion from the important European market nor new issue in the critical U.S. market. The American market remains vulnerable, due to a still hobbled labor situation and the new paradigm defining capital availability in the States post the financial crisis. We’ll continue to keep close inspection of the industrial sector so as not to wind up lost in its choppy seas.

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), 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.

Manufacturing Malaise

Over recent weeks, we’ve been concerned about seepage of European contagion and American consumer constraint infecting the American manufacturing sector. The trend of the latest flow of regional manufacturing measures seems to concur. The Chicago Purchasing Managers Index (PMI) was reported down in April. The survey of business managers fell to a 29-week low reading of 56.2, down relatively sharply from March’s level of 62.2. The details show that production, new orders and inventories were lower. Employment improved but the segment is a lagging economic indicator.

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.

Industrial Softness

Meanwhile, the Dallas Federal Reserve Bank reported its Manufacturing Survey Monday. Manufacturing activity slowed in the important state of Texas, which accounts for 9% of U.S. manufacturing production. The relative production index declined to +5.6 from +11.1 previously. Capacity utilization dropped dramatically, with a quarter of all respondents reporting decreases. New orders and shipments were both flat, reflecting the malaise seen in the Midwest measure. The regional Business Activity Index fell into negative territory in April, and surveyed managers mostly reported a deteriorated outlook.

Tuesday offers the latest Manufacturing Index Report from the Institute for Supply Management. The national measure of manufacturing was disappointing from my perspective last month. This month has economists’ expectations set low, with the Business Activity Index seen marking 53.0, which would be a decrease from March’s 53.4 reading. The range of expectations extends from 52.0 to 54.4, and the trend seems to reflect at best a flattening, stagnant environment, and at worst, the precipice of a cliff’s edge.

Other regional indices have mirrored the morose message conveyed today. Last week, the Kansas City Fed published its manufacturing index, which produced a decline to a reading of 3, down from 9 in March and 13 in February. The bank of Richmond produced an improvement in April, with its regional measure rising to 14 from 7 the month before. However, the more widely followed Philadelphia and New York measures marked declines the week before. Philadelphia’s measure fell to 8.5 from 12.5, and New York dropped to 6.6 from 20 the month before. Each of these continues to reflect economic expansion, but it is generally seen at a slower pace. Most of the indexes are benefiting from rising employment, though this is a lagging economic indicator.

Recent declines in data out of Europe and China have many questioning the support of the global environment, which has been important in times of domestic question. Stocks are down on today’s data, following a market ride set forward by Apple Inc. (Nasdaq: AAPL) and Amazon.com (Nasdaq: AMZN) last week. At the close of trading, the SPDR Dow Jones Industrial Average (NYSE: DIA), SPDR S&P 500 (NYSE: SPY) and the PowerShares QQQ (Nasdaq: QQQ) were each in the red. The Industrial Select Sector SPDR (NYSE: XLI) was off even more, down about 0.9% on the day. Given the trend developing and indicated by the regional manufacturing reports, I think the industrials are lower for good reason, and we advised against them about a month ago. The top ten holdings of the XLI were down big Monday, with General Electric (NYSE: GE) cut 1.0%, United Parcel Service (NYSE: UPS) lower by 0.4%, United Technologies (NYSE: UTX) down 0.4%, Caterpillar (NYSE: CAT) off 1.7%, 3M (NYSE: MMM) ending flat, Boeing (NYSE: BA) down 0.6%, Union Pacific (NYSE: UNP) down 1.3%, Honeywell (NYSE: HON) short 1.0%, Cummins (NYSE: CMI) dropped 2.1% and Emerson Electric (NYSE: EMR) down 0.3%.

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), 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.

Consumer Confidence is Waning

In case you missed it, the week offered several warning signs on the consumer front, with two data points indicating that consumers may go into lockdown mode soon. A third report showed institutions are exhibiting less confidence in equities and have reduced exposure of late. If confidence is truly waning, too much shouldn’t be expected of the economy or the stock market near-term.

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

Consumer Confidence

Thursday should have served a wakeup call to anyone who had blown off two of the week’s earlier sentiment data points. Bloomberg reported its weekly consumer confidence measure, the Bloomberg Consumer Comfort Index. The regular metric of the consumer mood produced its most precipitous drop in over a year’s time. The index fell to negative 35.8 in the period through April 22nd, down from minus 31.4 the week before. Bloomberg’s tally takers noted drops in the “buying climate” and in the view of household financial wherewithal.

Most certainly, the latest souring of the stock market has played a role in the mood of consumers, given the stake in it most of us have within our retirement accounts. Coincidentally, State Street (NYSE: STT) reported its latest measure of the investor mood this week, and it was consistent with our assessment here. State Street Global Markets published its State Street Investor Confidence Index (ICI) for April, showing its global ICI fell 3.9 points. Interestingly enough, neither North America nor Europe were the driving forces behind the decline, as the respective regional confidence measures fell 0.7 and 0.1 points. Rather, it was Asia that drove the global drop-off, with the Asian component measure falling 7.5 points.

The reason for the lost confidence among Asia’s institutional investors should be disturbing to the rest of the world as well. The latest economic data out of China has offered more evidence of slowing Chinese economic growth. Given that so much of the world is serving Chinese growth now, and noting that the world is likewise greatly served by China-based production, regional concerns reflect upon the world.

Sustained high gasoline prices are almost certainly annoying American consumers as well. Though, average gasoline prices at the pump have been on the decline this month. The U.S. Energy Information Administration reports gas prices continued a good trend into April 23, falling to an average price of $3.87 nationally.

That said, the latest survey by the Conference Board produced just a slight change in the Consumer Confidence Index, with April’s measure declining to 69.2, down from 69.5 in March. Of course, this understates what really happened this month, because March was revised lower from 70.2. Thus, the decline was more significant than reported. Also, economists were looking for a reading of 69.7, a half point more than the realized index.

More telling information can be found in the survey details and it does not offer good news. For instance, while the overall measure of current conditions improved to 51.4 from 49.9, those claiming business conditions were “good” amounted to 15.3% of those tallied. Meanwhile, those claiming business conditions were “bad” rose to 33.5%. The Expectations Index declined to 81.1 from 82.5, as more people expected conditions to deteriorate while those seeing improvement fell in number.

With the latest labor data offering more evidence of deterioration, we found nothing inconsistent in this survey. The number of people describing the process of getting a job as difficult amounted to 37.5%, while those believing jobs were plentiful amounted to 8.4%. The outlook for the job market was mixed, but I anticipate it will deteriorate as the economic situation recesses.

The stock market blew off the bad consumer news Thursday thanks to the Apple earnings high it’s been flying on. While the SPDR S&P 500 (NYSE: SPY) gained 0.7%, the Consumer Discretionary Select Sector SPDR (NYSE: XLY) soared by 1.25%. Likewise, the SPDR S&P Retail (NYSE: XRT) climbed 1.4%, but I would warn sector investors to pay closer attention to the mood of consumers and the flow of economic data, because it offers a different message than that offered by the tech and internet high flyers. Still, given the solid results from Amazon.com (Nasdaq: AMZN) and Zynga (Nasdaq: ZNGA) Thursday afternoon, the trend may continue through the week’s close.

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.

It's Jobsmageddon for the Chumps!

It’s Jobsmageddon! yelped the popular press Thursday when Weekly Initial Jobless Claims were reported. First of all, the change in claims was hardly notable. Secondly, followers of my column were not surprised with the nascent deterioration trend from that “four-year” low the floozy newsies reported just a couple weeks ago. It would seem the herd is catching up to us dear followers, so I hope your bets are in place. Calling, all bets! All bets to the table!

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.

Don't Panic but Place Your Bets

Weekly Initial Jobless Claims were reported at 386K for the week ending April 14. That was more than the consensus expectation for 365K, and the press got to howling. The thing is (the thing reporters do not know) - is that economists hardly make an effort in estimating the weekly claims count, and so the market mostly doesn’t notice the comparison. So smart money could give a damn about what really was just a 2,000 person decline week-to-week in jobless claims from the prior week’s revised count. Granted, the prior week was revised up to 388K from its initial reporting at 380K.

What’s really disturbing our counterparts in the economic debate is that the change in the four-week moving average for jobless claims increased again this week, rising by another 5,500 folks to settle at 374,750. However, settled it most likely is not. You see the trend in economic data, even before this week’s dysfunctional flow, has indicated poorly. Even before the latest reporting of Philadelphia and New York manufacturing malfunction, with each regional index showing a slowing in growth, we were reporting trouble in manufacturing. The Industrial Select Sector SPDR (NYSE: XLI) is off 2.5% since we authored that article.

Prior to this week’s declines in homebuilder sentiment, housing starts, and the pace of existing home sales, we were pounding on the front door against the sector. The SPDR S&P Homebuilders (NYSE: XHB) is off 6.6% from its 52-week peak through the 19th of April. With regard to the labor market, we were pointing out that the employment situation is just not well and would likely get worse despite its temporary fever break. The shares of employment services firms Robert Half (NYSE: RHI), Korn Ferry (NYSE: KFY), Manpower (NYSE: MAN) and Monster Worldwide (NYSE: MWW) were all painted deep red Thursday.

As far as the consumer is concerned, we dissected the numbers and weren’t impressed. We showed you inconsistencies in auto sales data and the fine print behind hot builder supply sales. Thursday, the Consumer Discretionary Select Sector SPDR (NYSE: XLY) and the SPDR S&P Retail (NYSE: XRT) were each off near 1%. Generally, we’ve been warning for quite a while now that it seems the economy is creeping toward recession due to infection from Europe, and with an Iranian trigger cocked and a gun barrel up our throats. It seems the market is finally taking notice, with the latest several weeks’ strife reflected again in declines Thursday in the SPDR Dow Jones Industrial Average (NYSE: DIA), the SPDR S&P 500 (NYSE: SPY) and the PowerShares QQQ (Nasdaq: QQQ).

So forgive me for rolling my eyes and casting complaint as the media and market finally take notice of what I’ve been farting into the wind for weeks. Even though it stinks (the economy) I’ve recommended a few long-term ideas as an angle to deflect the darkness. We talked up five investments for a Mega Million Jackpot, including gold on a deep down day. The SPDR Gold Shares (NYSE: GLD) were in the green Thursday by the way. Also, we saw a catalyst driving a move in Chinese microcaps and, separately, we showed you two stories where value had been added through company specific events. Marley, my assistant editor and dear dog-friend just said, if he could, “What more can you do Pops?” All I can do is keep talking and hope you tell your friends about what you hear here. In the meantime, you had better hurry and get your bets to the table. Calling all bets? Calling all bets!

Article should interest investors in Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX), Kelly Services (Nasdaq: KELYA), CDI Corp. (NYSE: CDI), Cross Country Healthcare (Nasdaq: CCRN), On Assignment (Nasdaq: ASGN), AMN Healthcare Services (NYSE: AHS), Barrett Business Services (Nasdaq: BBSI), Hudson Highland Group (Nasdaq: HHGP), StarTek (NYSE: SRT), RCM Technologies (Nasdaq: RCMT), VirtualScopics (Nasdaq: VSCP), American Surgical (OTC: ASRG.OB), Medical Connections (OTC: MCTH.OB), iGen Networks (OTC: IGEN.OB), St. Joseph (OTC: STJO.OB), General Employment Enterprises (NYSE: JOB), Total Neutraceutical (OTC: TNUS.OB), TeamStaff (Nasdaq: TSTF), Stratum (OTC: STTH.PK), Purespectrum (OTC: PSRU.OB), Corporate Resource Services (OTC: CRRS.OB), Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM).

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.

You Better Check Yourself Post Alcoa

Alcoa (NYSE: AA) started off the earnings season for the Dow Jones Industrials in a surprisingly positive manner. Analysts were generally looking for revenues of $5.77 billion at the mean, and Alcoa reported $6.0 billion. It represented 1% top line growth against the prior year and fractional growth over the fourth quarter, which was impressive given a 9% drop in realized aluminum prices year-to-year. The stock was up 5.4% after hours Tuesday as a result, and the Industrial Select Sector SPDR (NYSE: XLI) was plus 0.7% post the close. Operational expectations were at the opposite end of the spectrum, as evidenced by Alcoa’s 2.9% decline Tuesday, before reporting its results, and by the XLI’s 2% fall.

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.

Temper Enthusiasm Post Alcoa

Before we get too excited about the quarterly result, though, I think we would be wise to consider the creep of global economic deterioration as the quarter progressed. While economic recession remains suspect, proclaiming all’s well on Alcoa’s news may likewise be premature. Indeed, I think it is. And even if it weren’t, Iran is about to happen, but that is supposedly not forecastable according to Wall Street. Yet, Iran just imposed “counter sanctions”, cutting off petroleum exports to starving Spain and Greece, and threatened to cut off Italy and Germany before the west’s own sanctions take effect in early July. It’s clear, at least to me, that the situation is finally coming to a head, with a powder keg now tightly squeezed between American warships and the Iranian coastline, just waiting for its spark.

Alcoa’s earnings per share also exceeded expectations, with income from continuing operations reaching $0.10 a share, against analysts’ consensus expectations for a loss of $0.04, based on Yahoo Finance’s tally. Still, you’ll find those looking to extract from Alcoa’s results pointing more to revenues than earnings, as they better reflect industry fundamentals. As we move down the income statement to the bottom line, Alcoa’s results increasingly reflect its gained efficiencies of operation.

Some would inspect Alcoa’s market segment revenues against the prior year, but the prior quarter comparison should better reflect the changes in economic health we are beginning to see, barring seasonal influences. In that regard, Alcoa saw industrial product growth of 14%, 13% increased demand from automotive, 11% more from packaging, with commercial transportation revenues up 11%. Alcoa and other materials players certainly have global development going for them as an offset against regional cyclical swings.

I would have to manufacture a negative interpretation of these numbers, as they were impressive and surely the reason for the stock’s rise after hours. But how well do they capture what could be developing in manufacturing, as seen in recent data review. How well do they reflect apparent European recession contagion into our market? How well do they reflect consumer concerns and the timid employment situation? How well do they measure the nascent stumble in housing? I say not well, and so I warn investors and econo-watchers to temper their enthusiasm today.

The shares of major industrials and the broader market look to break their slide Wednesday, and it is welcomed here but not expected to hold long based on my economic observations. Caterpillar (NYSE: CAT), Deere & Co. (NYSE: DE), General Electric (NYSE: GE), General Motors (NYSE: GM) and the SPDR Dow Jones Industrial Average (NYSE: DIA) are all looking higher by a point or more Wednesday morning. It may serve as a blessing for some with a nose to the change I smell, a chance to take capital back.

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), 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.

The Labor Market is Not Well

Last Thursday, when the Weekly Jobless Claims data was reported, I was stunned by one major television network’s world news program’s reporting of job creation. They pointed to the relatively low new unemployment claim filings as a sign that jobs were being created. It was flawed, because new layoffs are not perfectly tied to new hiring. I find it karmic that just one day later, the monthly Employment Situation Report showed soft net job additions for the month of March. Indeed, the truth is, Main Street is not well. As a result, stocks generally, and the stocks of employment services firms Robert Half (NYSE: RHI), Korn Ferry (NYSE: KFY), Manpower (NYSE: MAN) and Monster World Wide (NYSE: MWW), continued their slide from last week again Monday.

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.

Labor Market

Last week offered a slew of employment data that provide us an opportunity to take good measure of the labor market. Most notably of all data points was of course the Employment Situation Report. March’s publishing showed that nonfarm private payrolls rose by 120,000 jobs on net, which was about half the prior three months’ average of +246K. Most importantly, that’s not really enough to keep the unemployment rate improving. It did improve, though, in March by a tenth of a percentage point, to 8.2%. However, that gain came on the unfortunate loss of 333K people from the labor force. You can fall out of the labor force for many reasons, like retirement for instance. However, I expect too many of America’s long-term unemployed have exhausted their extended weekly unemployment benefits, and are increasingly dropping off the radar.

Some 5.3 million Americans have been unemployed for more than 27 weeks, representing 42.5% of the total unemployed pool. The number of Americans working part-time for economic reasons, meaning they would prefer full-time jobs, decreased by 447K in March. I do not believe these part-timers got lucky and found full-time work; rather, I expect they are on the leading edge of layoffs and portend trouble for the economy. The 34,000 job shedding in the retail trade would seem to say the same thing.

The latest reporting of announced corporate layoffs by Challenger, Gray & Christmas indicated something else on the headline. According to the firm, planned layoffs dropped 27% in March, to a 10-month low of 37,880. The thing is, though, that the most important employers in America are small businesses; and their activities are harder to capture. Small business confidence has been on the rise in recent months, but has remained at historically low levels. The National Federation of Independent Business measure of the group is due on April 10.

March was also the lowest of the three months of the first quarter in terms of layoff announcements. The quarter itself, however, marked a 9.4% increase in announced firings versus the prior year period. Year-to-date data indicates the most weakness in consumer products, transportation and now call centers, which are clearly economically sensitive sectors. T-Mobile contributed a bunch to March call center contribution, as did Verizon Wireless (NYSE: VZ), Wells Fargo (NYSE: WFC) and QVC. An interesting contrast to 2011 and indicated by both reports, the public sector was less of a factor in March. Still, Challenger warns that significant cuts are likely at both the federal and local government levels this year.

In conclusion, I want to stress and reiterate that I believe the economic situation will deteriorate near-term, rather than improve as many believe. This forecast is what drives my jobs view, and what keeps me attuned to leading indicators. Recent economic data, including several reports from China and Europe, offer good reason for concern for the global economy to which we are tied. Indeed, recent expansionary efforts from China also point to an internal understanding of an important disruption. Government action, opening up markets for foreign investment, helped spur some excitement around Chinese firms of late, but the action was likely the result of trouble within. U.S. data around manufacturing, consumers and housing have all offered a suspect odor, and the stench of Europe threatens as well. Thus, I continue to favor investments with a long-term flavor, including the recently weakened gold as a hedge against trouble.

Article should interest investors in Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX), Kelly Services (Nasdaq: KELYA), CDI Corp. (NYSE: CDI), Cross Country Healthcare (Nasdaq: CCRN), On Assignment (Nasdaq: ASGN), AMN Healthcare Services (NYSE: AHS), Barrett Business Services (Nasdaq: BBSI), Hudson Highland Group (Nasdaq: HHGP), StarTek (NYSE: SRT), RCM Technologies (Nasdaq: RCMT), VirtualScopics (Nasdaq: VSCP), American Surgical (OTC: ASRG.OB), Medical Connections (OTC: MCTH.OB), iGen Networks (OTC: IGEN.OB), St. Joseph (OTC: STJO.OB), General Employment Enterprises (NYSE: JOB), Total Neutraceutical (OTC: TNUS.OB), TeamStaff (Nasdaq: TSTF), Stratum (OTC: STTH.PK), Purespectrum (OTC: PSRU.OB), Corporate Resource Services (OTC: CRRS.OB).

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.

Euro Land is Doomed - Achilles Heel of Globalization

One of the classic landmarks of the Great Depression was the tendency to protect local and national markets from competition. This protectionist behavior resulted in retaliatory actions escalating the issues and resulting in poorer economics for all. The sovereign leaders of Europe are publicly attempting to keep the markets open to free trade, which will facilitate the economies of all and support the struggling peripheral countries. The heads of the 17 Euro nations are working to keep the debt from imploding and destroying the European Union; with each positive announcement, stock markets around the world rise in anticipation of a lasting solution; privately, things may be different.

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, NYSE: GREK, NYSE: VGK.

The Achilles Heel of Globalization

All entities work first on their own behalf, and then for the benefit of others. As much as a private citizen may want a strong European Union and the benefits of association, the fact remains that all will be pro-active in assuring the survivability of their own market, their own business, and their own personal welfare. The possibility of peripheral nations exiting the European Union and the complications that action would entail will eventually be the end of globalization.

Major manufacturers depend on their suppliers to provide the ingredients for production; an unreliable supplier or a supplier that is perceived to be possibly unreliable will be replaced. The natural tendency is to bring the supporting plants to the home country or use businesses within their own country, thus mitigating any disruptions. The industrial giants of Germany and France and general economics will cause the downfall of their weaker neighbors, unraveling the work of the central governments. Greece, Spain, Portugal, and Italy are at tremendous risk; the global banks, insurance companies, and pension funds that have bought their sovereign debt are at risk, and that jeopardizes the entire Globe. The five top banks in the US have Credit Default Swap (CDS) exposure on an even higher magnitude insuring the debt threatening the financial structure of our economy. Investors cannot assess the risk/reward ratio for existing investments; new investments in plants and equipment that stimulate jobs will be postponed until clarity returns. This hesitancy is natural and will cause a downward spiral in economic activity, ensuring a deep and long European recession; it will have a ripple effect across all borders.

Reduced trade with Europe cannot be beneficial to any of the economic zones of the world. The developing economies around the world owe their prosperity to selling goods to the developed countries. Resource rich countries such as Australia and Canada owe their prosperity to selling raw materials to the developing nations, and the US has plants and suppliers outside of the US - notably in China and the Pacific Rim countries. Everything and everyone is interconnected; if a disruption occurs, look for increased protectionism and tariffs along with rising nationalism. An economic slowdown will bring social unrest in the distressed markets, further compounding the tendency to repatriate factories and suppliers back into the home market and exasperating the situation. Globally, bankers, investors, and manufacturers that have made plans on expansion and continued growth with debt obligations will feel the slowdown first. Revenues will be reduced and will result in cost cutting; then employment reductions, further causing social unrest; then non-payment of loans; and finally in the failure of the project and/or total default. A contraction appears to be unavoidable, but there are prudent preparations to consider.

Income and debt level will be paramount to surviving this coming downturn. The savers of the world have been devastated by the historically low interest rates. Savings accounts, CD’s, Municipal Bonds, and US Treasuries, the haven for the retired and conservative investors, have been eviscerated. Pension funds and insurance companies requiring a yield component have been forced to search for much riskier investments to achieve just marginal returns to service distribution requirements. These conservative vehicles may have assumed much more risk than previously thought. Annuities, pensions, insurance policies may be at risk if there is a sovereign default in Europe, unknown to and far away from Main Street America. These are the vehicles in which the retired and elderly often depend along with Social Security; they may be at grave risk. Income enhancing securities such as MLP’s and high yield investment need to be reviewed and if prudent, positions hedged, reduced, or stop losses instituted. Long-term US Treasuries yield less than 3% currently, but provide a reliable income stream, and as the reserve currency of the world, the dollar should benefit from global disruptions.

The central banks of the world typically react to crisis by injecting liquidity, which will eventually, perhaps in 24-36 months, precipitate inflation, possibly double-digit inflation, which will threaten long-term bonds. The task will be to conserve one’s capital and exit the downturn intact and be able to re-position capital when the bottom has been reached. In a reduced revenue and yield environment, payments must be eliminated or reduced to coincide with reduced income in order to conserve capital. Typically a downturn will last 13-26 months, but this one may be longer.

“Underwater” or non-cash flowing Real Estate investments need to be liquidated, preferably via the “short sale” process. Foreclosure typically should be avoided, as the penalty period for obtaining mortgages is reduced using the short sale. If the timing is perfect, the waiting period could coincide with the downturn, and capital could be re-allocated to properties, as long-term inflation may follow the downturn as the liquidity injected into the economy searches for a home. Strategic real estate opportunities are still available, and more may become available as the downturn unfolds. Strategic properties are typically yielding a passive 5-6% return unleveraged to 8-9% cash on cash, with conservative lending. Currently, strategic real estate is a very favorable investment offering monthly income with the strong potential for revenue growth as well as a huge hedge against any future inflation.

There is a strong possibility of a global recession. A prudent investor needs to be aware and cautious as the traditional sources of income have been eliminated. Long-term treasuries are great in deflation and real estate is great in inflation; both generate the current income needed through a downturn. A combination of both may be advisable, check with your advisor and review the suitability for your portfolio.

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), Global X FTSE Greece 20 ETF (NYSE: GREK) and Vanguard European ETF (NYSE: VGK).

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.

March Madness for Consumers

The close to last week offered up a sour tasting consumer report, and given the slew of related data produced through week, we thought we would take a look at the state of the American consumer today. The latest reporting of consumer confidence put a dent into the roaring market’s rise, with the SPDR Dow Jones Industrials Average ETF (NYSE: DIA) looking tired Friday. What I see in store for retail and the consumer discretionary sector is not as savory as the profits logged year-to-date therein.

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.

March Madness

On the week, we received at least five consumer relevant economic reports, including the Reuters/University of Michigan Consumer Sentiment Index, Retail Sales, Consumer Price Index, Bloomberg Consumer Comfort Index and the ICSC –Goldman Store Sales data. None of it really stymied the market’s rise through the week, with the SPDR S&P 500 Index ETF (NYSE: SPY) gaining 2% through Friday’s close. In fact, I suspect Friday’s reported Consumer Sentiment Index slippage was only partially responsible for the market’s intraday reconsideration of the week’s stock gains; though what’s behind the new consumer view played a major role.

Consumer Sentiment fell by a point, according to the Reuters/University of Michigan survey. The index declined to 74.3, from February’s 75.3, setting early stock action at odds with the week’s trend. The key driver of the slip was inflation expectations, which pulled down the overall expectations component. Rising gasoline prices have consumers worried about how the critical cost might eat into their lifestyles. But, as of now, consumers don’t yet see gasoline prices sticky. When that happens, you have a real problem for this consumer driven economy.

Just a day earlier, the Bloomberg Consumer Comfort Index offered a different perspective. Bloomberg’s weekly measurement of the consumer mood improved to -33.7, from -36.7 the week before. The driver of this change was of course the latest labor market gains, as seen in the nonfarm payroll rise in the Employment Situation Report and in the latest week’s Jobless Claims dive to a four-year low mark.

So just how important have gasoline prices been given the divergence in these two metrics. Clearly, they have been more important over the course of the month than the week. The Consumer Price Index was just reported for February Friday. It showed a 0.4% increase in prices, largely on gasoline (+6%) and overall energy price increase (+3.2%). Excluding food and energy, the Core CPI only edged 0.1% higher, which was less than expected (+0.2%) and less than January’s 0.2% gain. However, if petroleum remains elevated for long enough, the impact could seep into the cost of goods eventually. Granted, “long enough” is probably longer than the world will wait for Iran to comply. Thus, I think you can count on inflation, because war with Iran would only compound on the pressure weighing on petroleum prices.

The latest indicators of consumer spending included two reports published this past week. The International Council of Shopping Centers (ICSC) produced another soft result. The ICSC report showed week-over-week sales growth at 0.7%, with the year-to-year change at just 2.3%. The latest crisis at J.C. Penney (NYSE: JCP) and Sears (Nasdaq: SHLD) offers evidence that capacity remains extended, and there will be winners and losers competing for limited consumer funds.

Retail Sales were reported for February earlier this week, rising 1.1%, a swifter pace than January’s 0.4% gain. Hold your horses though, because gas station sales added a bunch to taint tangible growth. Excluding autos, sales were up 0.9%, and when taking out gasoline and autos, growth managed just 0.6%. That was in line with the economists’ consensus and matched January’s pace. The growth was still impressive to some of us who have been looking for a consumer sector slide. Bite your tongue before berating me for that view, though, because the economic trial I’ve been looking towards appears to be developing.

Investors in the consumer and retail sectors should be happy enough so far this year, with the SPDR Select Sector Fund – Consumer Discretionary (NYSE: XLY) and the SPDR S&P Retail ETF (NYSE: XRT) up roughly 14% and 16%, respectively, through March 16. Yet, I reiterate and renew my warning. Beware the ides of March, for they bring European economic struggle and higher gasoline and energy prices. I expect your labor market support to crack soon enough as a result. I reported recently on the undermining I anticipate for still unsure small business confidence. Much of that should have catalyst in crushed consumer confidence. In conclusion, I remain concerned about the vulnerable economy given the weights upon it and the risks against it.

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.