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The Wall Street Greek blog is the sexy & syndicated financial securities markets publication of former Senior Equity Analyst Markos N. Kaminis. Our stock market blog reaches reputable publishers & private networks and is an unbiased, independent Wall Street research resource on the economy, stocks, gold & currency, energy & oil, real estate and more. Wall Street & Greece should be as honest, dependable and passionate as The Greek.



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Wednesday, October 16, 2013

The Diabolical Deadline of the Rating Agencies

pig heaven
Panic artists drummed up fear as September ended and the government shut down. It closed, but the sun rose the next day and stocks stayed put. Then people like me started warning of the debt ceiling deadline, suggesting that it was the true point of no return. But one deadline is at least as potent as that drawn by the U.S. Treasury for October 17th, but more dangerous because of its stealth nature. It is very likely the reason why Congressional leaders convened last Thursday to work towards a short-term solution. It is the deadline vaguely drawn, gray and opaque, the one set down by the credit rating agencies.

critical blogger
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.

You see, with one fell swoop, Standard & Poor’s, of McGraw-Hill (Nasdaq: MHFI), or Moody’s (NYSE: MCO) or Fitch could easily shock the market. If two of the above were to downgrade the sovereign rating of the United States, the effect could be as bad as a default on payments to our creditors, if not worse. The impact would be global too and I expect quite apocalyptic. So I curiously wonder here if that biblical demon of old referred to as the Anti-Christ in the Book of Revelations might in fact be Standard & Poor’s and its fellow rating agencies. Unfortunately, such impossible word play seems to gain disturbing credence when we recall the fact that on March 6, 2009, the market index by the same name stopped at an intraday bottom value of precisely $666. It was the low point of the financial crisis, but was it also meaningful for “the one who has understanding?”

You’ll recall the uproar when S&P downgraded America’s credit rating last year; it was for the very reason I speak of here. Yet, there was no catastrophic impact to our nation’s borrowing capacity or to interest rates. Why is that? Because unless two or more rating agencies cut America’s AAA credit rating, all the mutual funds and other funds bound by charter to own triple-A credits would not have to sell their core holdings of U.S. treasuries; nor those of municipalities which would be overcome by the fall of the parent nation’s rating; nor those of the corporations which run out of the land of the free. Neither would our nation need to offer a more appealing yield to sell debt, and so raise all interest rates and cut the dollar at its knees. But if two rating agencies do act in concert this time around, then we may be done for.

I was not surprised Tuesday to hear Senator Reid warn that the rating agencies were very likely already at work on a plan of action. The Democratic Leader indicated that a downgrade could come as early as Tuesday evening. Indeed, Fitch later warned that it might cut our AAA rating. My friends, if this scenario is about to play out, we as a people should be taking it as seriously as we would nuclear missiles in the air. Actually, I believe we should be taking it even more seriously than we would that nightmarish plot. I would go so far as to call it treasonous to allow this situation to reach the midnight hour, and I would place those at fault into custody for such an inexcusable underestimation of risk. Ignorance is no excuse here; an appropriate anomaly might be a clumsy government representative accidentally hitting the red button. How would he pay for that mistake? Wouldn’t it be too late anyway? If we can stop the failure before it occurs, we should. The President must intervene in this case, and ensure the government does not ruin our nation.

The impact to our economy and to the global economy of an undermining of the reserve currency and of the risk-free rate, the basis of all security value, is worse than a nuke touching down. Interest rates would rise for everyone in America, and for all those people living across the world in nations holding U.S. debt and the dollar as their reserve currency. This covers every developed nation in the world and everyone else as well. Only those nations rich in alternative currencies like gold and silver would benefit from such a global disaster, because as the buying power of the dollar is destroyed, the value of those precious metals, mankind’s natural reserve currency, would rise. This is why today, as the SPDR S&P 500 (NYSE: SPY), SPDR Dow Jones Industrials (NYSE: DIA) and the PowerShares QQQ (Nasdaq: QQQ) fell, the SPDR Gold Trust (NYSE: GLD) and the iShares Silver Trust (NYSE: SLV) gained ground.

The words read, “This calls for wisdom: let the one who has understanding calculate the number of the beast, for it is the number of a man, and his number is 666.” These times call for patience and tolerance from the leaders of this nation and also from the rating agencies. However, from the people, the times call for activity not passivity. I advise every person living in this nation and every global leader to contact those American Congressmen holding up the simple raising of the debt ceiling for the sake of other partisan interests; or better yet, to stand at their doorsteps so that they understand that the levity with which they are handling this matter is intolerable. I am not the only voice who believes the consequences of a failure here may be irreparable for America; nor am I alone in my view that it could also be devastating for civilization. But the time for chatter and debate has passed, and the time for action has come. If no resolution occurs immediately, the President must intervene for the sake of reason.

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.

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Wednesday, September 11, 2013

WEDNESDAY’S MARKET: A Sad Day for America

September 11 9/11 personal experiences
September 11th is always a sad day for me, an eyewitness of the horrible events of that day in downtown Manhattan. It seems I cannot escape the tearful memory, but today as I prayed for the souls of those departed, I included all those departed, even the murderers. Only when we can forgive our enemies can we be free. There’s another reason why this day was a sad one though. President Obama officially backed off his tough talk about Syria last night, and tailored a logical argument for trusting the Russians and their plan to take away Syrian weaponry: At least then we can be sure that al Qaeda will not get a hold of the tyrant’s chemical weaponry. It’s just that I do not trust the Russians at all, nor the Syrian government to give away all of its nasty weapons. Assad will keep most of it, while at the same time receiving a new load of anti-ship missiles from the Russians to fend us off when we get wise. This is a very sad day for America, because today its leaders proved naïve, weak and dangerous in their foreign policy decision making.

A Sad Day for America


Market ETF
September 11
Year-to-Date
SPDR S&P 500 (NYSE: SPY)
+0.2%
+18.8%
SPDR Dow Jones (NYSE: DIA)
+0.7%
+17.0%
PowerShares (Nasdaq: QQQ)
-0.2%
+19.8%

Stocks rose modestly into the close Wednesday on the momentum gained yesterday from the President’s plea. Even so, the Nasdaq was weighed down by Apple’s (Nasdaq: AAPL) decline on analyst downgrades and investor disappointment with the company’s product announcements of yesterday.

Economic Events

ECONOMIC REPORT SCHEDULE

Economic Data Point
Prior Period
Expected
Actual
WEDNESDAY



Wholesale Trade (Inventory)
-0.2%
+0.3%
+0.1%
-Sales
+0.4%

+0.1%
+1.3%

-13.5%



-Crude Oil Inventory
-1.8 M

-0.2 M
-Gasoline Inventory
-1.8 M

+1.7 M

The economic data was light Wednesday, but sassy nonetheless. Mortgage activity data showed the Mortgage Bankers’ Association’s (MBA) Market Composite Index dropped 13.5%. Mortgage application activity declined for both refinancing and home purchases on a combination of factors. First of all, mortgage rates moved higher through the period. Secondly, you cannot expect much business around and after Labor Day weekend, as families are all moved in and ready for the start of the school year by now. While the MBA makes an adjustment for the holiday, it is not adequate; read my follow up article to find out why and how they fail to fully compensate for the holiday.

Otherwise on the day we got the Wholesale Trade data, which showed just a moderate increase in both sales and inventories at the wholesale level. That’s about as dynamic a catalyst for stocks as a rain drop quenches thirst.

Crude oil inventory declined, but that has nothing to do with any filling of the strategic petroleum reserve, as the reporters of this data leave that information out. Gasoline inventory increased substantially as the summer driving season has officially closed now.

Overseas Markets

EUROPE
11:20 AM
ASIA/PACIFIC
CLOSE
EURO STOXX 50
+0.2%
NIKKEI 225
+0.0%
German DAX
+0.4%
Hang Seng
-0.2%
CAC 40
-0.2%
S&P/ASX 200
+0.6%
FTSE 100
-0.2%
Korean KOSPI
+0.5%
Bloomberg GCC 200 Mideast
+0.0%
BSE India SENSEX
+0.0%

International markets continue to celebrate the American reconsideration regarding Syria. While Asia continued to reflect the move due to the time difference in markets, Europe was left drifting.

Commodity Markets (11:05 AM)

WTI Crude
+0.1%
Brent Crude
+0.2%
NYMEX Natural Gas
-1.3%
RBOB Gasoline
-0.5%
Gold Spot
-0.1%
Silver Spot
+0.7%
COMEX Copper
+0.4%
CBOT Corn
+0.0%
CBOT Wheat
-0.3%
CBOT Soybeans
-0.1%
ICE Cocoa
-0.8%
ICE Sugar
+0.5%
ICE Orange Juice Conc.
-2.0%
CME Lumber
-0.3%
CME Live Cattle
+0.3%

The day after President Obama weakly pulls away from making Syria’s diabolical chief pay dearly for his poisoning of woman and children, oil prices are drifting. The rally in gold and silver continues, curiously. Orange juice futures dropped as three tropical depressions threaten the Americas.

Corporate Events

Earnings season has officially fizzled out here at the close of summer and start of September, as evidenced by the light list of reporters this day.

REPORTING EARNINGS
Company
Ticker
WEDNESDAY

Men’s Wearhouse
NYSE: MW
Evolution Petroleum
NYSE: EPM
Vera Bradley
Nasdaq: VRA
Billing Services Group
London: B4S.L

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NanoString (Nasdaq: NSTG)
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Renesola (NYSE: SOL)
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Prospect Global Resources (Nasdaq: PGRX)
-10%
L&L Energy (Nasdaq: LLEN)
-12%
Washington Federal (Nasdaq: WAFDW)
-13%
JP Morgan Double Short US 10 Yr. (Nasdaq: DSXJ)
-12%
Glowpoint (Nasdaq: GLOW)
-10%
Atlantic Coast Federal (Nasdaq: ACFC)
-10%

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.

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Tuesday, September 10, 2013

Investors Celebrate a Fumbling of Foreign Policy

fumbling foreign policy
It seems our government is fumbling its foreign policy these days, as it faces the first crisis it cannot blame on its predecessor administration. President Obama’s indecisiveness is looking to our counterparts overseas as weakness, and to me as well. The statements of our leaders, including the Secretary of State, may have the right tone to them, but the words have been poorly chosen. Is it me, or is calling a military action “unbelievably small” counterproductive to the psychological impact the greatest nation in the world seemed to want to make. Stocks rallied globally today on the possibility that America will not get messy in the Middle East, but I’m not sure we can count on that.

political columnist
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.

Foreign Policy


Market ETF
September 10
Year-to-Date
SPDR S&P 500 (NYSE: SPY)
+0.7%
+18.6%
SPDR Dow Jones (NYSE: DIA)
+0.9%
+16.2%
PowerShares (Nasdaq: QQQ)
+0.5%
+20.1%

Stocks recovered ground Tuesday on hopes that war might be avoided, or is it an “unbelievably small” strike, as it was poorly described by Secretary of State Kerry. Stocks climbed not only in America, but across the world, due to the many wildcards that seemed to be possible with Syria.

Economic Events

ECONOMIC REPORT SCHEDULE

Economic Data Point
Prior Period
Expected
Actual
TUESDAY



94.1
95.0
94.0
-0.6%

+1.5%
-Year-to-Year Pace
+1.8%

+2.3%
+4.7%

+4.6%
3.936 M
3.928 M
3.689 M

The economic data was mostly negative Tuesday. Small businessmen weighed in with a lighter level of optimism than the prior reported month and less than economists expected from them. The weekly sales data reported by the ICSC and Redbook was notably improved, but it was mostly because of the Labor Day weekend comparable. Though on a year-over-year basis, growth was respectable as well. The JOLTS Report showed a lower level of job openings than was expected and significantly less than the prior period count. Judging by last month’s nonfarm payroll figure, it’s not because jobs are being filled, but rather due to less job openings being posted. Also, there is likely a seasonal factor involved here at the end of summer. All in all, this was not a great day from an economic perspective.

Overseas Markets

EUROPE
CLOSE
ASIA/PACIFIC
CLOSE
EURO STOXX 50
+1.9%
NIKKEI 225
+0.5%
German DAX
+2.1%
Hang Seng
+1.0%
CAC 40
+1.9%
S&P/ASX 200
+0.3%
FTSE 100
+0.8%
Korean KOSPI
+0.2%
Bloomberg GCC 200 Mideast
+3.3%
BSE India SENSEX
+3.8%

International markets rallied on the day as the Russian proposal for Syria to deliver its chemical weapons store to their ally was accepted by Syria. I’m not quite sure why the world’s traders believe this is an acceptable or probable result. Obviously, Syria will not turn over its entire store, and obviously the Russians are not trustworthy enough to safe-keep them. President Obama is due to address the American public Tuesday evening at 9:00 PM ET, so we will get an idea about how strong and bright our leadership is, or isn’t.

Commodity Markets (CLOSE)

WTI Crude
-0.2%
Brent Crude
-2.2%
NYMEX Natural Gas
+0.3%
RBOB Gasoline
-2.4%
Gold Spot
+0.2%
Silver Spot
+0.4%
COMEX Copper
+0.4%
CBOT Corn
-0.4%
CBOT Wheat
+0.1%
CBOT Soybeans
+0.2%
ICE Cocoa
+0.6%
ICE Sugar
+1.0%
ICE Orange Juice Conc.
-0.3%
CME Lumber
-0.3%
CME Live Cattle
+0.2%

Oil prices fell back on that same geopolitical release that helped stocks higher. Curiously though, gold and silver held their ground and even gained a bit.

Corporate Events

Earnings season has officially fizzled out here at the close of summer and start of September, as evidenced by the light list of reporters this week.

REPORTING EARNINGS
Company
Ticker
TUESDAY

McDonald’s
NYSE: MCD
Christopher & Banks
NYSE: CBK
AEP Industries
Nasdaq: AEPI
Triangle Petroleum
Nasdaq: TPLM
Lannett Company
NYSE: LCI
Oxford Industries
NYSE: OXM
Unilife
Nasdaq: UNIS
Coldwater Creek
Nasdaq: CWTR
Restoration Hardware
NYSE: RH
Miller Energy Resources
NYSE: MILL

MOST ACTIVE STOCKS
BIGGEST GAINERS
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NanoString Technologies (Nasdaq: NSTG)
+71%
Tower Financial (Nasdaq: TOFC)
+45%
VelicityShares Russia Select DR (Nasdaq: RUDR)
+32%
KiOR (Nasdaq: KIOR)
+25%
Prospect Global Resources (Nasdaq: PGRX)
+24%
SolarCity (Nasdaq: SCTY)
+22%
Performance Technologies (Nasdaq: PTIX)
+20%
Intelligent Systems (NYSE: INS)
+19%
YRC Worldwide (Nasdaq: YRCW)
+18%
Ceres (Nasdaq: CERE)
+17%
BIGGEST LOSERS
% Drop
iPath Long Extended Russell 100 (Nasdaq: ROLA)
-34%
Model N (Nasdaq: MODN)
-32%
Neurocrine Biosciences (Nasdaq: NBIX)
-30%
ChemoCentryx (Nasdaq: CCXI)
-24%
Orbital Corp. (NYSE: OBT)
-17%
USEC (NYSE: USU)
-16%
Associated Banc-Corp (Nasdaq: ASBCW)
-15%
NTS Realty Holdings (NYSE: NLP)
-13%
Direxion Daily Gold Miners Bull (Nasdaq: NUGT)
-12%
HD Supply Holdings (NYSE: HDS)
-11%

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.

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