Retail Sales Lifted by iPhone 5

Retail Sales gained by 1.1% in September, enthusing stocks. The SPDR S&P 500 (NYSE: SPY), SPDR Dow Jones Industrial Average (NYSE: DIA) and the PowerShares QQQ (Nasdaq: QQQ) were each up robustly Monday on the news. The growth in sales offered reassurance about an economy that was recently drawing questions about its health. However, a special factor may have offered a temporary lift for the month and should play a smaller role moving forward - the iPhone 5 introduction. Still, Apple's major product launches are as good as economic stimulus.

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.

The government said Retail Sales rose 1.1% in September, and August was revised higher by three-tenths of a point to +1.2%. At first brush, one would expect the gain came from the significant auto segment or on higher gasoline prices. However, when excluding autos, sales were also up by 1.1%, and when excluding autos and gasoline, sales increased by 0.9%, exceeding economists’ consensus expectations for growth of 0.5%. That’s impressive.

Closer inspection of the data shows that motor vehicle sales increased by a robust 1.3% rate, boding well for automakers Ford (NYSE: F), General Motors (NYSE: GM), Toyota (NYSE: TM), Daimler AG ADRs (OTC: DDAIY.PK), Honda Motors (NYSE: HMC) and Nissan (OTC: NSANY.PK) – some more than others. Auto shares were higher on the day, with Ford and GM lagging their foreign competitors’ gains. Auto sales were already reported for September, and so the gains in these stocks are also attributable to the general message conveyed by the overall sales growth.

Gasoline stations did see above average growth of 2.5% on the month, given the rise of gasoline prices, especially in California. The shares of Pantry Inc. (Nasdaq: PTRY), an important operator of gas station and mini-market stores, are higher by 1.5% on the news. The shares of major oils Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX) are up a half point each on the news, as well as on news that Iran is contemplating causing a large oil spill in the Strait of Hormuz.

The special driver last month was found in sales at Electronics and Appliance Stores, which increased 4.5% over August. The gain was the largest of any segment, and was directly attributable to Apple’s (Nasdaq: AAPL) iPhone 5 introduction on the twelfth of the month. Apple sold five million of its new iPhone just through the first weekend of its availability. This certainly drove traffic into stores other than Apple’s, both at street level and on the web. Best Buy (NYSE: BBY), for instance, should have seen higher foot traffic and likely generated sales of products other than the iPhone as well as on discounted legacy Apple phones and on competitively priced competitor gear.

Sales of non-store retailers, which include catalog but also sellers on the web, increased by 1.8% in September. Though some of these retailers were not selling the iPhone 5, they still benefited from traffic to their sites and on the re-sales of Apple products and the sales of older Apple and competitive products through the month. Thus, the Amazon.com’s (Nasdaq: AMZN) of the world, along with eBay (Nasdaq: EBAY) and others benefited indirectly.

Food & beverage store sales increased 1.2%, likely on price increases in agriculturally based goods. Sellers like Kroger (NYSE: KR), SuperValu (NYSE: SVU) and Wal-Mart (NYSE: WMT) also make a good deal of money from the use of food stamps.

Building material & garden equipment & supplies dealers saw a 1.1% sales increase through September, as the construction industry benefits from the lack of supply of new homes and the building of rental properties to meet the demand of our new “renter nation”.

Sporting goods, hobby, book and music stores saw sales increase 0.8%, likely on seasonal demand related to the start of school. Yet, clothing & clothing accessories stores only saw a 0.6% increase in sales, while general merchandise stores like Wal-Mart (NYSE: WMT), Target (NYSE: TGT) and Sears (Nasdaq: SHLD) only saw a 0.3% increase. Department stores like J.C. Penney (NYSE: JCP) marked a sales decline of 0.2%, as they continue to lose share to discounters and warehouse club stores like Dollar Tree (Nasdaq: DLTR) and Costco (Nasdaq: COST).

Another measure of economic health tied to discretionary spending offered a different message than the electronics stores. Food services & drinking places only marked sales growth of 0.4% in September, offering an ominous perspective on the perhaps short-lived nature of iPhone sales. While the celebration today is understandable, investors should take into account that temporary short-term iPhone boost.

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.

A Crisis of Injustice

I see the media pumping the wire with warnings of a fiscal cliff we all know very well will be legislated away. I ask, what of the unemployment cliff and the forgotten folks falling off of it every single day?

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.

Weekly Jobless Claims was reported effectively unchanged for the latest covered period, but unchanged is synonymous with stagnant, which will lead to a spoiling, as I just reported. The total number of Americans receiving a benefit of some sort, including through the extension program, rose 71,724 to 5.89 million. I wish to remind my loyal readers that this figure has been improving over recent months by attrition as much as economic growth. I expect that a great number of long-term unemployed Americans are simply falling off the unemployment cliff when their benefits run out.

Where do these people go for help after they stop receiving benefits, and what of the 4%+ of Americans who were unemployed before the crisis began? Those people couldn’t find work any better than the people qualifying for the extension program, but they were left to fend for themselves. Those people were the first to foreclosure by Wells Fargo (NYSE: WFC) and friends, and the first to be sued for their debt defaults against our later bailed out banks. Why weren’t they rescued like Bank of America (NYSE: BAC) and Merrill Lynch, or J.P. Morgan Chase (NYSE: JPM) and Bear Stearns. When AIG (NYSE: AIG) and General Motors (NYSE: GM) got handouts, those folks had their cars repossessed and their lives lost without insurance to even cover the cost of their funerals. Instead of sending them checks big enough to cover their trouble, the Bush Administration blindly sent insignificant gifts out to all Americans, rich or poor.

And today, while no longer wanted by most peddlers of Visa (NYSE: V) and MasterCard (NYSE: MA), the likes of Capital One Financial Corporation (NYSE: COF) are luring them back in with 0% interest rates that convert to 23% a few months later. Warren Buffet, of Berkshire Hathaway (NYSE: BRK-B, NYSE: BRK-A), says he’s not sure what he would do if he were poor and had a family to feed. He does not judge those less fortunate than himself, or less gifted in business. So when they rob Wal-Mart (NYSE: WMT) for lack of better sense to sack Saks (NYSE: SKS), they get arrested. As they survive on welfare, the crooks at the rating agencies (based on Representative Kucinich’s description), who rated mortgage-backed securities investment grade deep into the real estate bubble, the bumblers at those firms who effectively ruined millions of lives through that aforementioned negligence, suffered not one arrest. Instead, our jails will fill further with the customers of their business partners, as the assets of Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Goldman Sachs (NYSE: GS) and the rest of the banks that are even bigger now than they were when they were too big to fail fill with the shadow inventory of what use to be homes filled with families.

It’s getting worse dear friends, not better. Kicking the can down the road is more like pushing the snowball up the hill. It will roll back down and smother us all. Please follow me as I seek to do more to level the playing field, and to serve justice and the true American way, the one our forefathers envisioned.



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 Drops to 5-Month Low

After falling precipitously in May, Consumer Confidence fell even further this month, to a 5-month low. The Conference Board’s Consumer Confidence Index declined to 62.0 in June, against economists’ expectations for a monthly reading of 63.5 based on Bloomberg’s survey. The index marked even lower ground than May’s dive to 64.4, revised down from 64.9 at its initial reporting. The reasons should be clear, as economic data points have trended poorly and European issues have raised question about impact to our economy, the financial system and the value of stocks. This strikes Americans where it hurts, their retirement savings accounts. The SPDR S&P 500 (NYSE: SPY) was essentially unchanged on the news, while the more closely tied Consumer Discretionary Select Sector SPDR (NYSE: XLY) was surprisingly higher by more than a half point Tuesday morning. Though the SPDR S&P Retail (NYSE: XRT) was moving lower, as would be expected.

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

Lower confidence has not yet reflected perfectly through to actual consumer spending, though recent retail trade data has been softer. The reason is probably better understood via study of the component measures of the confidence tally. The consumer view of the present situation actually increased in June while expectations for the future declined. The Present Situation Index gained to 46.6 in June, up from 44.9 last month. The Expectations Index, which varies more wildly driven by fear and greed, dropped to 72.3 this month, from 77.3 in May. The absolute value of the index as compared to the Present Situation measure says something about the optimism of Americans with regard to money making hope, while also reflecting their close following of global financial market news.

Yet, it’s not just intangibles that are affecting the views of those surveyed. The latest employment data has been less than enthusing; in fact, most domestic economic data points seem to me to be trending poorly. The question is: will consumers pull back their spending in a more significant manner? Lynn Franco, Director of Economic Indicators at the Conference Board, had something to say about that today:

"Consumer Confidence declined in June, the fourth consecutive moderate decline. Consumers were somewhat more positive about current conditions, but slightly more pessimistic about the short-term outlook. Income expectations, which had improved last month, declined in June. If this trend continues, spending may be restrained in the short-term. The improvement in the Present Situation Index, coupled with a moderate softening in consumer expectations, suggests there will be little change in the pace of economic activity in the near-term."

If you look at the details of the monthly data, the absolute values have continued to reflect a terribly poor situation, while the changes month-to-month are highlighted by the popular press as either great or disastrous news.

• 14.9% of consumers say business conditions are good
• 35.1% say business conditions are bad
• 41.5% say jobs are hard to get
• 7.8% say jobs are plentiful
• 15.5% expect business conditions to improve over the coming six months
• 16.2% expect business conditions to worsen
• 14.1% see more jobs ahead
• 20.6% see fewer jobs
• 14.8% expect their income to increase

The component survey results show a clearly pessimistic feeling about the current situation, which reflects poorly for the economy and consumer spending, in that it could be much better. Certain retailers have benefited and should continue to benefit from such an environment, including especially Dollar Tree (Nasdaq: DLTR), Amazon.com (Nasdaq: AMZN), eBay (Nasdaq: EBAY), Costco (Nasdaq: COST) and Wal-Mart (NYSE: WMT). As far as stock recommendations go, I favor DLTR over the rest for reasons discussed within this report. Keep receiving articles like these by following me at the blog and via email. Thank you.

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.

Fed Statement 06-20-12

As published by the Federal Reserve


Release Date: June 20, 2012

For immediate release
Information received since the Federal Open Market Committee met in April suggests that the economy has been expanding moderately this year. However, growth in employment has slowed in recent months, and the unemployment rate remains elevated. Business fixed investment has continued to advance. Household spending appears to be rising at a somewhat slower pace than earlier in the year. Despite some signs of improvement, the housing sector remains depressed. Inflation has declined, mainly reflecting lower prices of crude oil and gasoline, and longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth to remain moderate over coming quarters and then to pick up very gradually. Consequently, the Committee anticipates that the unemployment rate will decline only slowly toward levels that it judges to be consistent with its dual mandate. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee anticipates that inflation over the medium term will run at or below the rate that it judges most consistent with its dual mandate.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

The Committee also decided to continue through the end of the year its program to extend the average maturity of its holdings of securities. Specifically, the Committee intends to purchase Treasury securities with remaining maturities of 6 years to 30 years at the current pace and to sell or redeem an equal amount of Treasury securities with remaining maturities of approximately 3 years or less. This continuation of the maturity extension program should put downward pressure on longer-term interest rates and help to make broader financial conditions more accommodative. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. The Committee is prepared to take further action as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who opposed continuation of the maturity extension program.

Our Commentary - How the News is Affecting Stocks:

The SPDR S&P 500 (NYSE: SPY) moved immediately lower once the news was announced, but it and the index of the same name pushed into the green shortly afterwards. The SPDR Dow Jones Industrial Average (NYSE: DIA) was similarly lower before rising, and the same result was seen in the PowerShares QQQ (Nasdaq: QQQ). Financials would be expected to be most sensitive to Federal Reserve actions, and the Financial Select Sector SPDR (NYSE: XLF) was tracking the broader indexes. Bank of America (NYSE: BAC) and Citigroup (NYSE: C) were moving in the same manner, but each remained in the green on the day after the report. Important American firms General Electric (NYSE: GE), Exxon Mobil (NYSE: XOM) and retailers including Amazon.com (Nasdaq: AMZN), which we've recently written about, were all doing a bit better than the broader indexes.

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.

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.