Stock Market Primer - EU Protests Set Against Housing Data

It was just yesterday when I was sharing a thought with a Greek-American singer about how Greece has calmed, but she warned me that summer was over and the sun is setting on peace. Her wisdom was timely, as today Greeks took to the streets again on the call of the nation’s two largest unions. Their goal was to protest a new round of cuts demanded by the EU and IMF. Sure enough, European stocks are deeply lower today. And because of protests in Spain, its sovereign bond yields soared today approaching levels that preceded the latest ECB solution. The iShares S&P Europe 350 (NYSE: IEV) is likely heading lower today as a result, though for the U.S., with housing news on the slate, the SPDR S&P 500 (NYSE: SPY) and the SPDR Dow Jones Industrials Average (NYSE: DIA) were holding their ground; the PowerShares QQQ (Nasdaq: QQQ) was edging lower though to start the morning.

International Markets

EUROPE	ASIA
EURO STOXX 50: -2.2%	S&P/ASX 200: -0.3%
Germany’s DAX: -2.0%	Japan NIKKEI 225: -2.0%
France’s CAC 40: -2.3%	Hang Seng: -0.8%
FTSE 100: -1.2%	Shanghai Shenzhen CSI 300: -1.1%
Spain’s IBEX 35: -3.4%	India BSE SENSEX 30: -0.3%
Greece’s ASE: -0.9%	Singapore Straits Times: -0.7%

Economic Data Schedule
After yesterday’s reports on home pricing, even more housing news arrives Wednesday morning, when the New Home Sales Report is released at 10:00 AM. Economists see the annual pace of new home sales improved in August to 380K, up from 372K reported for July. This report is critical for the shares of homebuilders, especially after their latest gains adding on to a rich run for the year. The SPDR S&P Homebuilders (NYSE: XHB) is up 48% year-to-date, after adjustments for splits and dividends.

Adding on to the new home sales data, the Mortgage Bankers Association (MBA) offers its latest on mortgage activity. Last week’s Weekly Applications Survey indicated the Market Composite Index of mortgage activity edged lower by 0.2% for the week ending September 14. This was despite the record low mortgage rates reported for some types of loans. It may still be too soon to look for gains on the latest Fed actions in new data, especially given the holidays through the latest period.

The Energy Information Administration (EIA) offers up its latest Petroleum Status Report at 10:30 AM. Oil prices have been on the decline of late, with focus turning to soft demand on global economic weakness, and assurances of supply by some OPEC stalwarts. However, with major Middle East leaders including the famous figure-head of Iran speaking at the United Nations, oil should find some footing here.

As of 8:30 this morning, the NYMEX Crude Future was down 1.4% to $90.12, Dated Brent Spot was lower by 1.1% to $109.50 and WTI Cushing Spot was down 0.7% to $90.99. The shares of Exxon Mobil (NYSE: XOM) were indicating lower by 0.4% in the early going.

Last week’s data for the week ending September 14, U.S. commercial crude oil inventories increased by 8.5 million barrels. Stores were in the upper limit of the average range for this time of year. Total motor gasoline stocks decreased by 1.4 million barrels; inventory is in the lower half of the average range for this time of year.

Traders will want to be aware of the schedule for stocks in the news today. The highlights Concho Resources (NYSE: CXO) and its presentation at the IPAA OGIS San Francisco. BNP Paribas (OTC: BNPQY) is presenting at the Bank of America / Merrill Lynch Banking & Insurance CEO Conference. The earnings slate has news from Landec (Nasdaq: LNDC), Progress Software (Nasdaq: PRGS), Texas Industries (NYSE: TXI) and Worthington Industries (NYSE: WOR).

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 Manufacturing & Housing Key the Week

The week ahead keys on three points, consumers, manufacturing and housing, just the way we like it. These three factors are playing such important roles in investor decision making these days that they’ll offer some good fodder for debate and discussion, and maybe volatility as well. Obviously, the data will continue to be drowned out by geopolitical chaos and global macroeconomic deterioration. Plus there’s that little yearly lambasting provided by Iran’s President at the United Nations in New York to look forward to, and the accompanying wars and rumors of wars to argue about. Last week, the SPDR S&P 500 ETF (NYSE: SPY) fell fractionally.

The Week Ahead

Monday
Manufacturing data is on tap to start the week with the reporting of the Dallas Fed’s Manufacturing Survey at 10:00 AM EDT. Just last week, we heard from the New York Fed, Philly Fed and we received the Markit PMI Manufacturing Index Flash. Economists surveyed by Bloomberg see the Dallas Fed index improving to +0.5, from -1.6 in August.

Manufacturing Index	Reported	Expected
Empire State Index	-10.4	-2.0
Philly Fed Index	-1.9	-4.0
Markit PMI Index	51.5	51.5

Before the new manufacturing data reaches the wire though, we’ll get a look at the Chicago Fed’s National Activity Index at 8:30 AM EDT. In July, the index improved but remained in tough territory at negative 13, versus minus 15 in June.

At 3:10 PM ET, look for a speech by San Francisco Fed Bank President John Williams, after which he will take questions.

The day’s corporate wire has annual shareholder meetings at General Mills (NYSE: GIS), FedEx (NYSE: FDX), Caterpillar (NYSE: CAT) and Flagstar Bancorp (NYSE: FBC). Look for earnings reports from Lennar (NYSE: LEN), Paychex (Nasdaq: PAYX), Red Hat (NYSE: RHT), pSividia (Nasdaq: PSVD) and Ennis (NYSE: EBF).

Tuesday
Last week offered a slew of housing data, and this week offers a good deal more relative news. At 9:00 AM ET Tuesday, the S&P Case Shiller Home Price Index is expected to show another month of price increase, this time for July. Economists surveyed by Bloomberg see the 20-city composite rising 0.9% on a seasonally adjusted basis. That would follow June’s reported increase of the same. On a year-to-year basis, sales are expected to have grown by 1.2%, following June’s 0.5% increase.

At 10:00 AM, we’ll get the House Price Index from the Federal Housing Finance Agency (FHFA). This index covers single family housing units based on Fannie Mae (OTC: FNMA.OB) and Freddie Mac (OTC: FMCC.OB) data. Economists see this index showing a 0.8% increase in home prices for July. It would follow June’s 0.7% rise.

Another regional manufacturing data point finds the wire Tuesday, with the Richmond Fed’s Manufacturing Index scheduled for 10:00 AM release. Economists see this index continuing to portray a difficult environment, though to a lesser extent; the index is seen improving to negative 4 from negative 9 in August.

The Conference Board reports on Consumer Confidence at 10:00 AM this Tuesday. Economists see this measure of the consumer mood improved from its dramatic 4.8 point drop in August. The consensus view is for improvement to 64.8 in September, up from 60.6. In its absolute state, the figure still reflects poor consumer conditions and trouble for the economy.

State Street (NYSE: STT) reports on Investor Confidence at 10:00 AM. This measure looks at the risk taken by institutional investors. In August, the index fell to 90.0, from 94.0 in July. I would expect the measure to have improved substantially in September, as stocks gained globally on ECB chatter and Fed hopes.

We receive the two regular chain store sales reports every Tuesday morning. Last week the report from the International Council of Shopping Centers (ICSC) showed a negative 2.5% decline in sales week-to-week. On a year-over-year basis, sales only edged up 2.1% for the period ending September 15, which is a negligible change given the rate of inflation. Redbook’s measure of year-to-year chain store sales change showed just a 2.4% increase.

The equity schedule has ONEOK (NYSE: OKE) and LeMaitre Vascular (Nasdaq: LMAT) hosting investors and analysts. Cardium Therapeutics (NYSE: CXM) presents at the Noble Financial Markets Life Sciences Exposition. The earnings schedule highlights Carnival (NYSE: CCL), CalAmp (Nasdaq: CAMP), Copart (Nasdaq: CPRT), FactSet (NYSE: FDS), Jabil Circuit (NYSE: JBL), Lentuo International (NYSE: LAS), Neogen (Nasdaq: NEOG), OMNOVA Solutions (NYSE: OMN), Park City Group (Nasdaq: PCYG), SYNNEX (NYSE: SNX), Synthesis Energy Systems (Nasdaq: SYMX) and Vale Resorts (NYSE: MTN).

Wednesday
Even more housing news arrives Wednesday morning, when the New Home Sales Report is released at 10:00 AM. Economists see the annual pace of new home sales improved in August to 380K, up from 372K reported for July.

The Mortgage Bankers Association (MBA) offers its latest on mortgage activity in the pre-market. Last week’s Weekly Applications Survey indicated the Market Composite Index of mortgage activity edged lower by 0.2% for the week ending September 14. This was despite the record low mortgage rates reported for some types of loans.

The Energy Information Administration (EIA) offers up its latest Petroleum Status Report at 10:30 AM. Oil prices are on the decline of late, with focus turning to soft demand on global economic weakness, and assurances of supply by some OPEC stalwarts. For the week ending September 14, U.S. commercial crude oil inventories increased by 8.5 million barrels. Stores were in the upper limit of the average range for this time of year. Total motor gasoline stocks decreased by 1.4 million barrels; inventory is in the lower half of the average range for this time of year.

The corporate news schedule highlights Concho Resources (NYSE: CXO) and its presentation at the IPAA OGIS San Francisco. BNP Paribas (OTC: BNPQY) is presenting at the Bank of America / Merrill Lynch Banking & Insurance CEO Conference. The earnings slate has news from Landec (Nasdaq: LNDC), Progress Software (Nasdaq: PRGS), Texas Industries (NYSE: TXI) and Worthington Industries (NYSE: WOR).

Thursday
Durable Goods Orders are set for report at 8:30 AM. Economists surveyed by Bloomberg see orders falling 5.0% in August, after rising 4.2% in July. Excluding transportation, orders are seen edging up 0.2%, against a 0.4% decline in July. The timing of transportation orders played a big role in last month’s results as well.

Revised GDP data for the second quarter is due for 8:30 reporting, but economists see the 1.7% growth quoted at last check sticking again Thursday. The GDP Price Index is likewise expected to hold at +1.6%.

Will this be the week? We have been warning that one fateful week, initial jobless claims will breach 400K and impact equities in a meaningful manner. However, this time around economists see claims easing a bit to 376K, from 382K reported last week.

At 9:45 AM, the weekly Bloomberg Consumer Comfort Index offers some complement to the Conference Board report of a couple days earlier. In the week ending September 20, the index gained 1.4 points to negative 40.8.

A busy day for data serves up yet another housing data point at 10:00 AM, when Pending Home Sales is reported for the month of August. Economists see this forward looking measure marking a 0.3% increase, though that is a slower rate of gain than the 2.4% increase reported for July.

One more manufacturing data point finds the wire at 11:00 AM when the Kansas City Fed produces its Manufacturing Index. Economists see the Midwest measure marking 5 in September, down from 8 in August.

The EIA reports on Natural Gas Inventory at 10:30 AM. For the week ending September 14, natural gas inventory increased by 67 Bcf, leaving stores 278 Bcf above the five-year average for this time of year.

The corporate wire has analysts days at Urban Outfitters (Nasdaq: URBN) and Advisory Board (Nasdaq: ABCO). Axcelis Technologies (Nasdaq: ACLS) is presenting to the Craig-Hallum Alpha Select Conference. Earnings reports highlight news from Nike (NYSE: NKE), Accenture (NYSE: ACN), McCormick & Co. (NYSE: MKC), Discover Financial (NYSE: DFS), Micron Technology (NYSE: MU) and Global Payments (NYSE: GPN). Also find reports from Actuant (NYSE: ATU), AZZ (NYSE: AZZ), IDT (NYSE: IDT), Radiant Logistics (Nasdaq: RLGT), S&W Seed (Nasdaq: SANW) and Sealy (NYSE: ZZ).

Friday
Three important reports cap off the week in a meaningful way. The most significant of the three, in my view, comes first with the reporting of Personal Income & Outlays for the month of August. Real spending results offer better insight into consumers than the sentiment indexes which litter the week as well. Economists see personal spending up 0.5% in August, after a 0.4% increase in July. It would be good news if it holds true, but we need to account for price change as well.

The Fed’s favorite inflation gauge is also found in this report. The PCE Price Index is expected to have moved 0.5% higher in August, though on volatile food and energy action. The Core PCE Price Index is expected to have gained only by 0.1%, which compares against its unchanged status in July. Personal income is seen up 0.2%, against a 0.3% increase in July. Salaries and wages have less pressure against them than in recent years past, but caution is likely the current mantra of human resources representatives, given nascent economic sluggishness.

One last manufacturing data point finds the wire at 9:45 AM when the Chicago Purchasing Managers Report comes due. Economists see this report for September holding the Business Barometer Index steady at 53.0.

Keeping with the theme, one more consumer sentiment release closes out the week. The Reuters University of Michigan Consumer Sentiment Index is up at 9:55 AM. Economists are looking for a read of 79.0, versus the 79.2 marked at mid-month. That last reading marked a significant improvement from the time before.

The last trading day of the month offers corporate presentations from Diversified Restaurant Holdings (OTC: DFRH), Gas Natural (Nasdaq: EGAS), Gibraltar Industries (Nasdaq: ROCK), MOD PAC (Nasdaq: MPAC) and Sucampo Pharmaceuticals (Nasdaq: SCMP). Look for earnings from Walgreen (NYSE: WAG), American Greetings (NYSE: AM), Finish Line (Nasdaq: FINL), SinoCoking Coal and Coke Chemical Industries (Nasdaq: SCOK), Tianyin Pharmaceutical (NYSE: TPI) and WSP Holdings (NYSE: WH).

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.

Huge Gains Possible for European Stocks

The debt crisis of Europe is effectively over, thanks to the latest efforts of Mario Draghi and the European Central Bank (ECB), and supported by the all clear given to the European Stability Mechanism (ESM). You can look toward the turn achieved by U.S. stocks in March 2009 for guidance into the huge capital gains possible for European markets now. Of course, some of those gains have already been taken since the bold statement of the ECB chief in late July. The iShares S&P Europe 350 (NYSE: IEV) has charged forward approximately 15% since the July 26 statement, and American banks with ties to global markets are up even more. Yet, European shares and relative securities could have much more to gain. Though, the dynamic risks of the day could also alter the path of Europe from that taken by American stocks post our financial crisis.

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.

In March of 2009, it seemed to most Americans, and especially stock market participants, that all was lost. Yet, in the depths of the financial crisis, and well before economic recovery began, stocks marked bottom. That fateful day, March 3, 2009, was the point of inflection. From that day through the end of 2009 the SDPR S&P 500 ETF (NYSE: SPY) gained roughly 63%.

Obviously, serious obstacles remain which might alter the recovery scenario for Europe. For instance, if war breaks out in the Middle East, involving Iran, Israel, other Middle Eastern nations and global powers, all bets are off. The Iran war factor is neither negligible nor insignificant.

Likewise, political disruption within struggling European nations could alter the path for European shares. For instance, the last elections in Greece reflected the frustration of the Greek people with harsh austerity and almost led to Greece’s withdrawal from the euro zone. The result of such an event could have driven similar change in other PIIGS nations, and taken the euro-zone down a completely different direction. Those risks remain.

Finally, economic deterioration within Europe could spark up concern again. For instance, if the rating agencies, Standard & Poor’s (NYSE: MHP) and Moody’s (NYSE: MCO), downgrade Germany’s sovereign debt rating, that would reignite concern. A warning has already been issued to Germany, and its economy has begun to show cracks.

Another group that should benefit substantially from gains made by Europe are the banks with substantial risk tied to the region and the system. This is why the shares of Citigroup (NYSE: C), Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS) have participated in the latest three months of gains. The shares of Citigroup (C), for instance, are up 32% since July 26; the rest of the group is up similarly. It’s quite ironic that it was Citigroup which sparked the turnaround in American stocks in 2009, when it first reported good news. Other bankers, including Jamie Dimon of JPM, added to the change in tone and stocks never looked back.

In conclusion, I reiterate that while substantial opportunity exists for European and related securities, special dynamic risks could hamper the repeat of what American stocks accomplished in 2009. As always, you are advised to pay close attention to developments and risks, and welcomed to follow my feed which will likewise do so.

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.

Market Faces First Big Test Post Fed Today

Friday offers the first real test for stocks post Federal Reserve action, with five economic reports on the slate. If the data is sour enough, it could throw water on the Fed’s fire, which sent the SPDR S&P 500 (NYSE: SPY) and the SPDR Dow Jones Industrial Average ETF (NYSE: DIA) up 1.5% Thursday, and the PowerShares QQQ (Nasdaq: QQQ) up 1.4%.

The first big report is the Retail Sales Report for the month of August. Economists are looking for top line sales growth of 0.8% in August to match July’s pace. When excluding auto sales, economists see the same pace of 0.8%, also matching July’s pace. However, when excluding autos and gasoline, economists see sales growth of 0.4%, short of July’s 0.9% increase.

The Consumer Price Index (CPI) is set for release, and economists are looking for it to show a 0.6% increase for August. That would mark a sharp contrast from July’s price stagnation. When excluding food and energy prices, the Core CPI is seen increasing 0.2%, versus the 0.1% increase in July.

Industrial Production is expected to have contracted 0.1% in August, versus the 0.6% expansion seen in July. Manufacturing production is seen contracting a greater 0.2%, after growing by 0.5% in July. As a result, economists believe Capacity Utilization will have declined to 79.2%, from 79.4% in July.

The University of Michigan, with Reuters, reports its Consumer Sentiment Index. After the Conference Board’s big slide last week, economists see the Michigan figure dropping as well, to 73.5, from 74.3 at last report.

Business Inventories will be reported, and economists see a July increase of 0.5%. That matches against June’s increase of 0.1%. Just like with the wholesale data earlier in the week, you’ll want to compare the inventory to sales to get a better read of things.

Atlanta Fed President Dennis Lockhart has a speaking engagement at 1:00 PM EDT. It will perhaps offer some closure to the week, filled with Fed decision and a slew of important economic news. The day itself offers a true test for stocks though, as they’ll face data for the first time since the Fed action. My thesis is that over time, ongoing weak data and other factors will overcome false Fed hopes.

Overseas, European finance ministers are meeting in Cyprus, another distressed member of the EU, to discuss the direction of their debt crisis.

As for stocks, the SEC will be reviewing automated trading and how algorithms and anonymity have gone awry. They’ll be figuring out how to back up tricky technology capable of turning over a market. Boeing (NYSE: BA), Lockheed Martin (NYSE: LMT), Republic Services (NYSE: RSG) and Dana Holding (NYSE: DAN) will all be presenting at a Morgan Stanley conference. Tyco International (NYSE: TYC) shareholders will vote on the spinoff of the company’s ADT home and personal security business. Towers Watson (NYSE: TW) has its analysts day, and EPS reports are scheduled for Ossen Innovation (Nasdaq: OSN), Sutor Technology (Nasdaq: SUTR) and WPCS International (Nasdaq: WPCS).

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.

Europe is Finally Supported

Germany’s constitutional court ruled in favor of Germany’s participation in the permanent euro-zone bailout plan and fiscal accord for budget discipline. The European Stability Mechanism (ESM) thus ratified by the court, means Germany’s Chancellor and its President, its Parliament and Court are in accord behind the whole of Europe. Thus, finally, Europe seems to have its supports in place, the sort in which markets can believe in. This has European shares higher today and is also driving our own stocks higher as a result. The SPDR S&P 500 ETF (NYSE: SPY) gapped open higher on the news.

It also appears, at least at this point, that Germany will not stand in the way of the European Central Bank’s (ECB) plans to buy bonds of distressed euro area nations. Some even speculate that the ESM will join in that effort. I believe the ECB was able to gain German favor by promising to sterilize its money supply efforts, and thus keep longer term inflation concerns at bay. Interests inside Germany rightly demanded that any increases in the ESM face new approval from Parliament before the German president can sign off on such capital releases.

Stocks in Europe are celebrating today as a result:

European Indexes	European Index ETFs
EURO STOXX 50: +0.6%	iShares Europe (NYSE: IEV): +0.4%
Germany’s DAX: +0.7%	iShares Germany (NYSE: EWG): +1.0%
France’s CAC 40: +0.5%	iShares France (NYSE: EWQ): +0.7%
FTSE 100: +0.1%	iShares U.K. (NYSE: EWU): +0.3%
IBEX 35: +1.0%	iShares Spain (NYSE: EWP): +1.9%
FTSE MIB: +1.2%	iShares Italy (NYSE: EWI): +1.3%
Athens ASE: +5.3%	Global X FTSE Greece (NYSE: GREK): +6.0%

Finally, Europe seems to have solid supports in place to ease pressure on troubled area bonds. This may mark the end of the crisis phase for Europe, but not the conclusion of economic contraction. That said, stocks can now contemplate recovery, and so trading should trend higher, save for when economic data reaches the wire. The euro should likewise mark near-term bottom here, but I expect another factor will threaten Europe shortly, which I will detail in a near-term article. Stay tuned…

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 All About The Fed This Week

It’s all about the Federal Reserve this week, and its long anticipated September meeting, with expectations set high for Fed action this month. Any failure to act in significant fashion would mark an important let down to markets that have been rising on mostly Fed and ECB hope for the last several months.

Monday
New Consumer Credit data will be published for the month of July at 3:00 PM EDT Monday. Economists surveyed by Bloomberg expect credit expanded by $9.8 billion through the month. In June, credit expanded by $6.5 billion, after expanding by $16.7 billion in May.

Financial services companies including Bank of America (NYSE: BAC) and Unum (NYSE: UNM) will be talking themselves up at a Barclay’s (NYSE: BCS) conference in New York. The Morgan Stanley (NYSE: MS) Healthcare Conference has reports scheduled from McKesson (NYSE: MCK), Watson Pharmaceuticals (NYSE: WPI) and WellPoint (NYSE: WLP). Estee’ Lauder (NYSE: EL) is presenting at the CLSA Investor’s Forum. The earnings slate has news from Astoria Financial (NYSE: AF), Casey’s General Stores (Nasdaq: CASY), Elecsys (Nasdaq: ESYS), Epoch Holding (Nasdaq: EPHC), Farmer Brothers (Nasdaq: FARM), Five Below (Nasdaq: FIVE), Globus Maritime (Nasdaq: GLBS), L&L Energy (Nasdaq: LLEN), Limoneira (Nasdaq: LMNR), Majesco Entertainment (Nasdaq: COOL), Optical Cable (NYSE: OCC), Orchard Supply Hardware (NYSE: OSH), Palo Alto Networks (Nasdaq: PANW), Peregrine Pharmaceuticals (Nasdaq: PPHM), RF Industries (Nasdaq: RFIL), Shuffle Master (Nasdaq: SHFL) and Titan Machinery (Nasdaq: TITN).

Tuesday
September 11th will always be a difficult date for me and so many of you. To be honest with you, I wish it would just pass quickly and peacefully. May those souls rest in peace and those painful memories fade away. Some say “We will never forget,” but truth be told, I wish I could.

The National Federation of Independent Business (NFIB) reports its Small Business Optimism Index for August in the early morning. According to a survey by Bloomberg, economists expect a slight improvement in the small business mood, with the consensus forecast seeing an increase in the index to 91.5 in August, up from 91.2 in July. The range of views extends from 90.0 to 93.0. Based on my observation that small businessmen seem to favor Republicans, I would expect any gain made on Mitt Romney inspired hopes might dissipate at next reporting, based on current presidential polls.

International Trade data for July will be reported at 8:30 AM. The trade deficit shrank in June, on 1.5% lower imports overall and on lower oil prices. Exports edged up 0.9%, benefiting from higher agricultural prices. Economists see the trade deficit widening to $44.3 billion in July, after dropping significantly to $42.9 billion last month.

The International Council of Shopping Centers (ICSC) reports on Weekly Chain Store Sales in the early AM as well Tuesday. Last week’s data showed sales fell 0.4% week-to-week, but was up 3.7% against the prior year period, likely on a back to school push. Redbook had the year-to-year change at 2.5%.

The U.S. Energy Information Administration (EIA) publishes its short-term oil outlook. Oil has been in the cross-hairs, given the interplay of macroeconomic factors tied to demand, Fed stimulus and Iran. The report should be widely followed as a result and for good reason.

The Morgan Stanley Healthcare Conference highlights reports from Merck (NYSE: MRK), Medtronic (NYSE: MDT), Amerisource Bergen (NYSE: ABC) and CVS Caremark (NYSE: CVS). Dell (Nasdaq: DELL) will address a Raymond James conference and Capital One Financial (NYSE: COF) addresses the Barclay’s conference. Addressing investors or analysts, Deutsche Bank (NYSE: DB), Yingli Green Energy (NYSE: YGE) and MetLife (NYSE: MET). The day’s earnings schedule has reports from AEP Industries (Nasdaq: AEPI), Frequency Electronics (Nasdaq: FEIM), General Finance (NYSE: GFN), Globecomm (Nasdaq: GCOM), Hanwha Solarone (Nasdaq: HSOL), Palatin Technologies (NYSE: PTN), RG Barry (NYSE: DFZ) and United Natural Foods (Nasdaq: UNFI).

Wednesday
The long awaited Federal Open Market Committee (FOMC) meeting begins Wednesday morning. You can bet all excitement about the market will be centered around this event and Thursday’s policy statement.

Germany’s constitutional court is mostly expected to vote in favor of Germany’s participation in the permanent euro-zone bailout plan and fiscal accord for budget discipline. Meanwhile, the European Commission (EC) presents its plan for a single banking supervisor. Also, EC President Jose Manuel Barroso will give his state of the union address.

Apple Inc. (Nasdaq: AAPL) is expected to introduce a new Apple iPhone product Wednesday. Our recent work on Apple discussed the pros of an Apple stock split and the argument against an Apple stock split.

We’ll get the latest Import & Export Prices for the month of August at 8:30 AM EDT. Economists expect export prices rose 0.5% in August, equaling the gain reported for July. However, import prices are seen climbing 1.5%, against a 0.6% decrease in July.

Look for the latest Wholesale Trade data release at 10:00 AM. Economists expect wholesale inventories increased 0.4% in July, versus the 0.2% drop in June. You’ll want to compare how inventories match to wholesale sales for a true measure of the state of economic demand.

The Mortgage Bankers Association (MBA) offers its latest Weekly Mortgage Applications Survey as usual Wednesday morning. Last week’s report covering the period ending August 31 showed applications for mortgages declined by approximately 2.5% week-to-week. While the data is reported to be seasonally adjusted, from past experience we would expect the Labor Day inclusive data to miss the mark. Thus, we wouldn’t suggest believing in this week’s reported data too much.

At 10:30 AM EDT, look for the EIA’s latest Petroleum Status Report. Last week’s data covering the period ending August 31st, showed a draw of 7.4 million barrels of crude oil. It’s a trend that has continued for at least a month now, but crude oil inventory is still reported near the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 2.3 million barrels last week, and were in the lower half of the average range for this time of year.

Morgan Stanley’s health conference features Amgen (Nasdaq: AMGN), Agilent Technologies (NYSE: A) and Boston Scientific (NYSE: BSX). Time Warner (NYSE: TWX), CBS (NYSE: CBS), Dell (Nasdaq: DELL) and Qualcomm (Nasdaq: QCOM) will each present at various other conferences. Moody’s (NYSE: MCO), NiSource (NYSE: NI) and Darling International (NYSE: DAR) meet with analysts Wednesday. The earnings schedule has reports from National Technical Systems (Nasdaq: NTSC), Nevada Gold & Casinos (AMEX: UWN), Pall (NYSE: PLL), PMFG, Inc. (Nasdaq: PMFG), Point360 (Nasdaq: PTSX), Spartech (NYSE: SEH), Streamline Health Solutions (Nasdaq: STRM) and TRC Companies (NYSE: TRR).

Thursday
Thursday’s announcement from the Federal Reserve is scheduled for 12:30 PM EDT. At 2:00 PM, the FOMC will release its forecast, and at 2:15 PM, Fed Chairman Bernanke will hold his press conference. Expectations are at least partially built in for an FOMC action like the launch of QE3 or better. Thus, any non-action leaves stocks hanging high and falling fast. A market “high” might last for a bit, but I do not expect it to be too long before economic data piles on the wall of worry, with a peak focused on the fiscal cliff. You might get some insight into what Bernanke will say when Fed Governor Raskin speaks at 1:45 PM in Philadelphia.

The regular Weekly Initial Jobless Claims Report is up for 8:30 AM EDT. Last week’s report pegged claims at 365K, but it was too tightly wrapped around the Labor Day holiday to be meaningful. The monthly Jobs Report confirmed that the economic situation is far from friendly. Economists see claims rising to 370K this week.

The Producer Price Index (PPI) is scheduled for 8:30 release as well, but without the hoopla. Inflation has not been an issue or a near-term concern for most, and certainly has no basis in any of the latest relative data. That said, I am one of the leading voices expressing concern about inflation, which I see as an eventual consequence of central bank actions and unforeseen events (except by me). Economists are looking for a headline PPI rise of 1.4% month-to-month in August, after it inched higher by 0.3% in July. Obviously, the increase will be on energy and agriculture. Thus, the expectation for the Core PPI is for a much more modest increase of just 0.2%. That would follow July’s increase of 0.4% at the core.

Bloomberg’s Consumer Comfort Index, the weekly measure of the consumer mood, is set for its usual 9:45 AM release. This economic data point has deteriorated significantly over recent weeks, excluding the last two periods. It remains in rough territory at negative 46.5, marking its fifth consecutive week of discontent.

The EIA reports on Natural Gas Inventory at 10:30 AM as usual Thursday. Last week’s report for the period ending August 31st showed a net increase of 28 Bcf into storage. That placed gas stores at 329 Bcf above the five-year average.

The monthly Treasury Budget covering the month of August will be reported at 2:00 PM. Expectations are for a deficit of $160 billion, following the deficit of $69.6 billion in July. The range of economists' expectations for August spans from -$175 billion to -$155 billion.

Fashion Week officially starts in New York City.

G-20 finance ministers are gathering in Mexico.

American Express (NYSE: AXP), NVIDIA (Nasdaq: NVDA) and International Paper (NYSE: IP) are addressing investors at various conferences. The day’s earnings schedule has news from Analogic (Nasdaq: ALOG), China Finance Online (Nasdaq: JRJC), Cohen & Steers (NYSE: CNS), Gentium (Nasdaq: GENT), K12 (NYSE: LRN), Lakeland Industries (Nasdaq: LAKE) and Pier 1 Imports (NYSE: PIR).

Friday
We’ll catch no break Friday, with five economic reports on the slate. If the data is sour enough, it could throw water on the Fed’s fire, assuming the Fed sets one. The first big report will be the Retail Sales Report for the month of August, due at 8:30. Economists are looking for top line sales growth of 0.8% in August to match July’s pace. When excluding auto sales, economists see the same pace of 0.8%, also matching July’s pace. However, when excluding autos and gasoline, economists see sales growth of 0.4%, short of July’s 0.9% increase.

The Consumer Price Index (CPI) is set for release at 8:30 AM and economists are looking for it to show a 0.6% increase for August. That would mark a sharp contrast from July’s price stagnation. When excluding food and energy prices, the Core CPI is seen increasing 0.2%, versus the 0.1% increase in July.

Industrial Production, due for report at 9:15, is expected to have contracted 0.1% in August, versus the 0.6% expansion seen in July. Manufacturing production is seen contracting a greater 0.2%, after growing by 0.5% in July. As a result, economists believe Capacity Utilization will have declined to 79.2%, from 79.4% in July.

The University of Michigan, with Reuters, reports its Consumer Sentiment Index at 9:55 AM. After the Conference Board’s big slide last week, economists see the Michigan figure dropping as well, to 73.5, from 74.3 at last report.

Business Inventories will be reported at 10:00 AM, and economists see a July increase of 0.5%. That matches against June’s increase of 0.1%. Just like with the wholesale data earlier in the week, you’ll want to compare the inventory to sales to get a better read of things.

Atlanta Fed President Dennis Lockhart has a speaking engagement at 1:00 PM EDT. It will perhaps offer some closure to the week, filled with Fed decision and a slew of important economic news.

European finance ministers are meeting in Cyprus, another distressed member of the EU, to discuss the direction of their debt crisis.

The SEC will be reviewing automated trading and how algorithms and anonymity have gone awry. They’ll be figuring out how to back up tricky technology capable of turning over a market. Boeing (NYSE: BA), Lockheed Martin (NYSE: LMT), Republic Services (NYSE: RSG) and Dana Holding (NYSE: DAN) will all be presenting at a Morgan Stanley conference. Tyco International (NYSE: TYC) shareholders will vote on the spinoff of the company’s ADT home and personal security business. Towers Watson (NYSE: TW) has its analysts day, and EPS reports are scheduled for Ossen Innovation (Nasdaq: OSN), Sutor Technology (Nasdaq: SUTR) and WPCS International (Nasdaq: WPCS).

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 Offers a Floatie for an Economic Storm

The day’s huge employment situation report offered disconcerting information to the discerning, as a surface level improvement in the unemployment rate proved quite suspect after review of the detail (see my report: Jobs Report Favors Change). Equity futures immediately started to reconsider green territory established before the release of the data, but that didn’t last long. The market then headed decidedly higher, brushing off important economic deterioration in favor of something else.

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.

What is holding equities above water is hope. Specifically, it’s hope that the Federal Open Market Committee (FOMC) will issue a new phase of quantitative easing or some other creative form of policy (ala the ECB) at its announcement next week. Certainly, the bad news today for the economy increases the odds of Federal Reserve action, and the market is betting on that.

The SPDR S&P 500 ETF (NYSE: SPY) was up fractionally through midday Friday, after marking a 2% gain Thursday on the ECB announcement. Shares of cyclical industrials and financials are leading the way higher, with the Industrial Select Sector SPDR (NYSE: XLI) and the Financial Select Sector SPDR (NYSE: XLF) up 0.7% and 1.0%, respectively. Individual leaders included Caterpillar (NYSE: CAT) and Bank of America (NYSE: BAC), up 3.5% and 4.2%, respectively. But is the basis for rise capable of offering more than just hope? If not, it should not be long before the gains just detailed reverse.

Mortgage rates are at record lows, and yet lenders like BofA and J.P. Morgan Chase (NYSE: JPM) aren’t issuing loans at a blockbuster rate at all. In fact, Bank of America has been reining in its loan portfolio, due to the risk it carries. So, lower rates are not likely to help much more, as the key problem is qualifying potential home buyers for a mortgage after the damage done to their credit records through the financial crisis. On top of that, the burden of the current economic environment continues to weigh on all of us, especially the underemployed. And just try getting those who would like to move to take a loss on the real estate they already own. And while the new home market seems to be benefiting today, if you look at the production of large public builders like PulteGroup (NYSE: PHM) and Toll Brothers (NYSE: TOL), their gains have come within a slowly recovering and still vulnerable overall real estate market. Truth be told, gains have been significantly driven by the construction of multi-family projects geared for new rentals.

The real fix can only come with time, and by fiscal change, if not genius to get us out of this mess. My perspective of Washington is that genius is in rare supply, while egos and division are running rampid. Besides, even if Washington had all the answers, our economy would remain burdened by the deterioration of Europe and its impact globally.

Earlier this week, ahead of the announcement that fired up stocks on Thursday, I suggested investors take advantage of the coming rally into the ECB and FOMC announcements. While I stand committed to that today, as stocks continue to make me look smart, I do not believe the rally will last long after the Fed’s announcement is published. That’s because its powder will have been used, or not, and the onslaught of economic data deterioration will continue thereafter. Neither will the bombardment of political criticism stop against the economy and its keepers. Meanwhile, the ECB’s plan still faces a German Constitutional Court threat. Questions will continue to mount regarding just how much impact the central banks can have, and eventually, the tone of conversation might turn to the potential new damage bank actions could have. So, while you have the Fed and ECB to thank for your retained gains today, I think they’ll find themselves thankless soon enough.

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.

Buy Stocks Now Ahead of FOMC & ECB Actions

Over the next several weeks, given the developments at the European Central Bank (ECB) and the U.S. Federal Reserve, traders should take stocks higher. A look at the three month chart shows the impact of deteriorating economic data globally, but daily action indicates trader interest and hope in further central bank assistance. Therefore, heading into what looks like a likely issuance of new quantitative easing from the American central bank and supportive bond purchases from the Europeans, the next several weeks trading have support.

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.


Charts by Yahoo Finance

The 3-month chart of the SPDR S&P 500 Index ETF (NYSE: SPY) shows a flattening of a longer term bullish trend. However, the choppiness in between has mostly been driven by speculation about ECB and U.S. Fed policy action to support. The clearest example of this came when ECB President Mario Draghi strongly stated the ECB would support the euro in late July. That set European stocks on fire, and it came at a time when the region needed some sort of catalyst.



The iShares S&P Europe 350 Index (NYSE: IEV) is up 6.3% since that fateful day. Unfortunately, as time passed, the market began to see that Draghi’s words may not carry with them the will of the euro zone. Bundesbank President Jens Weidmann remains as a key objector, and German Chancellor Angela Merkel declared Germany’s objection to Draghi’s plan today.

The details of the plan are leaking out, but it is expected to be formally presented tomorrow, September 6, 2012. It is thought that the ECB will purchase sovereign short-term bonds of terms of one to three years. While unlimited, those purchases are expected to be offset by sales elsewhere in the system in order to sterilize their impact to euro money supply. That would address my concerns that the central banks of the world, plus factors not yet incorporated into consensus thinking, threaten to make fiat currency worth significantly less over time. Because of the rumored construct of this plan, and assuming it would be approved, the action would ease concerns about the region’s chances of experiencing full recovery. This should lend more support for stocks globally, with a focus on Europe.

Federal Reserve Chairman Bernanke’s Jackson Hole speech last weekend left most market participants (as I see it) feeling more comfortable about the prospect of Fed action in September. I don’t think the rumblings from the GOP convention about Bernanke not being extended an invitation to stay under a Romney administration will serve to keep the independent Federal Reserve from acting in favor of markets and the economy in September. If I was told I would lose my job under certain circumstances, I’m not sure political perception would matter any longer in my decision making. Bernanke has all the more reason to act now in September.

The latest economic data reported yesterday, showing the ISM Manufacturing Index contracted deeper into the red, only demands further action from those who can so flail. The Dow Jones Industrials took a hit on the economic news, but would find support with central bank action as depicted here. The Dow Jones Industrial Average ETF (NYSE: DIA) is higher this morning, after a rough time of it yesterday, and that is likely a sign of what’s to come over the forward few weeks. Hard hit industrial stocks like Caterpillar (NYSE: CAT), General Electric (NYSE: GE) and Deere (NYSE: DE), which fell yesterday, are strongly higher today, I believe on this prospect. So, while the market is lazily returning to its regular speed, you might have an opportunity to set short short-term long bets today. I qualify the buy recommendation to the short short-term, because I see economic results only deteriorating after the central banks act.

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 Mess of Mario Draghi's Own Making

European Central Bank (ECB) Chairman Mario Draghi pulled out of his planned appearance at the Kansas City Fed’s Jackson Hole Symposium this weekend. The ECB chief has been under the spotlight since declaring that the euro would not fail and the ECB would not fail it. His appearances since have been highly heralded, as markets wait for follow through. I warned about his scheduled appearance just yesterday, saying, “The euro is likely to face a test after its recent rally, especially if Mario Draghi can only offer more talk without follow through, as I expect this weekend.” So it would appear that Draghi has taken some age old wisdom to heart, and that would be, “If you don’t have something nice to say, don’t say anything at all.”

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.

Mario Draghi's Mess

“The ECB chief has been under the spotlight since declaring that the euro would not fail and the ECB would not fail it.”

Federal Reserve Chairman Bernanke will address the Jackson Hole crowd, and the world, this Friday morning at 10:00 AM EDT. Seeing as the Fed boss typically plays by the book, he really should not usher in any new Fed policy this week. Rather, he and the rest of the Federal Open Market Committee (FOMC), to which he is bound, will issue policy as prescribed in September following much deliberation and process.

Considering Draghi was scheduled to partake in a panel discussion on Saturday, it would appear that he would likewise not offer much new news. Draghi, like Bernanke, also has a prescribed process to follow and all sorts of other red tape to work through before issuing policy, and especially before launching any new initiative. This makes it highly unlikely that he could do anything more than disappoint the high expectations of the market this weekend. But, he only has himself to blame for the predicament he finds himself in today.

Shaky markets were reassured by his July 26th statement to a London investment conference marking the start of the Olympics. Draghi’s now infamous declaration read, "Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough." Markets mostly focused on the “it will be enough” part, and unfortunately tossed the “within our mandate” portion aside for later chewing. Continuing on an upward trajectory begun in early June, the SPDR S&P 500 (NYSE: SPY) climbed another 3.8% from July 26 through August 28. The SPDR Dow Jones Industrials Average (NYSE: DIA) gained 2.0% and the PowerShares QQQ (Nasdaq: QQQ) has risen 7.9%. Obviously, Draghi has had more influence on the direction of the euro and European shares. You can see the stabilizing impact of Draghi’s statement clearly in the chart of the euro/dollar comparison.


Chart by Yahoo Finance

Draghi’s impact is also prominently behind the more significant gains of European stocks, in comparison to U.S. shares since July 26. The iShares S&P Europe 350 (NYSE: IEV) has gained 7.0% through August 28. ETFs of the hardest hit nations of Europe have done even better; those are the nations that would benefit from ECB purchases of their debt.

ETF SECURITY	CHANGE JULY 26 – AUG. 28
iShares MSCI Spain Index (NYSE: EWP)	+19.6%
iShares MSCI Italy Index (NYSE: EWI)	+15.4%
Global X FTSE Greece 20 (NYSE: GREK)	+11.5%
iShares MSCI France Index (NYSE: EWQ)	+8.9%
iShares MSCI Germany Index (NYSE: EWG)	+8.6%

But since Draghi’s statement, he’s found himself backtracking and qualifying comments. His announcement about missing Jackson Hole to focus on an otherwise busy work schedule was clearly carefully constructed to manage expectations. Spanish yields have expanded since the news broke that he would not appear at the central bank event. However, his reason for not making it, because of workload, implies he’s possibly working on something that might support the euro and the region generally. It’s quite a mess he’s found himself in, and one our own Fed chief does his best to avoid. It is not central bank concern to manage equity market expectations, but stock investors follow closely the words of those who impact the cost of corporate funding. So, wise bankers carefully word every statement so as to keep speculators from reading into anything.

Draghi’s infamous words did exactly the opposite. I suppose the leaders of Europe are happy about that today, since the euro has stabilized, yields have eased, and European equity portfolios have fattened. However, the devils in the game at play will eventually take the candy away and replace it with nails. It’s a game best not entered, and one I’m sure Mario Draghi wishes he did not step into. If this is not yet so, I’m certain that someday he will regret it.

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.