Stocks Should Drop with Investor Sentiment

The Dow just closed out the best January in 15 years, but the latest investor confidence survey may foreshadow a different sort of February and full 2012. State Street’s Investor Confidence Index declined, driven by European risk reduction, but U.S. investors are the most cautious of all these days. That stands in perfect contradiction to January’s performance.

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.

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Stocks Should Drop with Investor Sentiment

State Street’s (NYSE: STT) survey published Tuesday serves as a sort of confirmation of what I see developing for U.S. markets. The financial company’s measure of investor confidence showed its Investor Confidence Index fell to a mark of 92.4 globally in January, from 94.5 the month before. The decline was mostly driven by Europe, which we recently argued is already affecting the U.S. economy. Investor sentiment across the pond nearly drowned in it, sinking 10.1 points, to a mark of 91.6 in January. The reasons here are clear, as the euro area is near certainly in recession. Greece definitely is, with its GDP sinking in the mid-single digits at last check. But the trouble extends beyond Greece, as evidenced by the broad-ranging set of sovereign debt downgrades by S&P recently. The pain has already been felt across European shares, as the EURO STOXX 50 Price EUR gained 0.5% Tuesday and the iShares S&P Europe 350 Index ETF (NYSE: IEV) gained 0.7%.

Asian investors are apparently feeling a bit better about stocks, with that segment measure up 3.3 points to 96.9 in January’s survey. Still, while the index is sitting below 100, it means even Asian investors are cutting back on risky assets. What troubles me most is what I see developing for U.S. stocks. The Investor Confidence’s North American component index showed the most risk aversion, with a measure of 89.8, down 0.1 from December. The way economic data has been unfolding of late, investor confidence should wane further alongside consumer confidence, which was reported lower Tuesday. In my view, deteriorating data should also turn the tide on the market rally that started in early October 2011. Tuesday’s performance by asset managers seems to agree, with the shares of T. Rowe Price (Nasdaq: TROW), Legg Mason (NYSE: LM), Janus Capital (NYSE: JNS) and Calamos Asset Management (Nasdaq: CLMS) each in the red Tuesday.

State Street’s commentary seems to confer with my view, stating that investors in North America and Europe are maintaining “equity positions that can best be described as defensive.” For as long as the driver of caution was exogenous, despite Europe’s consumption of 20% of U.S. exports, I suppose American stocks could rise. But as the impact of European economic deterioration hits home, and as the ongoing realities within the U.S. economy once again become clear post holiday cheer, I expect further investor confidence deterioration to coincide with real capital damage.

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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 Points to Weakening Economy

The Chicago Purchasing Managers Index carried a clearly negative message Tuesday, with the Institute for Supply Management (ISM) saying, "key aspects of the report pointed towards a weakening economy." While the sector of the American economy remains secondary to services, it still offers insight into the domestic economy.

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.

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Manufacturing Economy Weakening

The Chicago PMI Business Barometer Index dropped to 60.2 this month, from 62.2 in December. It was yet another economic data point leaving economists looking lost. Economists surveyed by Bloomberg were expecting the index to rise to 63.0. More importantly, the decline leaves them to survey whether indeed the economy is slipping into just a slow slug growth rate like the Federal Reserve expects or into a legitimate recession.

The service sector continues to dominate the American economy, and so the manufacturing sector remains secondary today. It also has been buoyed by global demand, and so is an imperfect measure of domestic well-being. Still, however loose a tie manufacturing has to the domestic marketplace, it represents a great hope for many. President Obama, for one, is hopeful America might move forward to restore its industrial base, with a keen eye toward alternative energy. Mitt Romney, who appears set to win the Florida GOP debate, is willing to go a step further to ensure American companies have a better footing with perennially accused trade cheater China. Manufacturing is clearly an important cog for American economic progress. The leaner sector, which clearly benefited from the financial crisis and recession driven restructuring of organized labor contracts like those at General Motors (NYSE: GM) and Ford (NYSE: F), might just have a chance given some of these described actions and other plans for it.

Looking at the Chicago PMI Report, each component measure declined to a less expansionary point, with the seasonally adjusted New Orders Index falling to 63.6, from 67.1 in December. New Orders are of course a critical indicator of the road ahead. Because of the slower pace of ordering, Order Backlogs fell into territory marking economic contraction, with that component index at 48.3 now, from 57.3 in December. The shares of important industrials General Electric (NYSE: GE), Honeywell (NYSE: HON), Caterpillar (NYSE: CAT) and Deere (NYSE: DE) were all in the red Tuesday as a result.

Further inspection of the data shows the Production Index eased to 63.8 from 64.9 in December. The Inventories Index likewise fell to 51.6 from 52.0 in December. Perhaps of greater interest to most, the Employment Index declined to 54.7 from 59.2 in December, showing less propensity to hire among manufacturers. This certainly played a role in the slippage of employment services stocks Tuesday, with Monster Worldwide (NYSE: MWW), Korn Ferry (NYSE: KFY) and Manpower (NYSE: MAN) down approximately 2% to 3% each.

Supplier Deliveries improved, but this only says to me that there exists an environment of less demand. However, Production Material lead time lengthened significantly, which would counter that argument unless production material capacity has been left idle due to slowing demand. I expect there are some seasonal issues at play here, for instance, with regard to irregular maintenance of facilities and plants that may be occurring now.

Further observance of the manufacturing sector is advised now, as it may show the impacts of European strife and the global slowing described, warned of, and expected by the World Bank and IMF, not to mention by yours truly. Wednesday, we’ll receive the ISM Manufacturing Index, which will offer a better national view, where the Chicago PMI measures the Midwest. With regard to ISM’s report for January, economists are once again looking for improvement, with the index seen rising to 54.5, from 53.9 in December. I expect another let down is pending, and that manufacturing is indeed finding a slower growth point for now.

There are all sorts of pressures on the sector, especially within defense, where the U.S. and many other nations are reducing funding. Though shares of Raytheon (NYSE: RTN), Lockheed Martin (NYSE: LMT), Northrop Grumman (NYSE: NOC) and Alliant Techsystems (NYSE: ATK) traded mixed Tuesday. Still, with fewer orders coming to manufacturers from both private and public sectors, it seems the world may take a break from its fantastic global development of the last decade.

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), NVR (NYSE: NVR), DR Horton (NYSE: DHI), Pulte (NYSE: PHM), Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV), 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.

Stocks Gained on Data Tuesday but Questions Remain

Stocks enjoyed lift Tuesday, reportedly on positive news about emerging market manufacturing, with the Dow rising 1.5% on the first trading day of 2012. Chinese and Indian Purchasing Managers Indexes improved in December. I have to raise concern here, though, because the improvement in the Chinese measure was minimal and data out of Europe proved less than enthusing.

Questions Remain for Stocks

A European manufacturing gauge surveying purchasing managers across the 17 member euro area improved in December to 46.9, from 46.4, but continued to show economic contraction while sitting below the 50 mark. The Chinese PMI measure only improved to 50.3 from 49. An Indian PMI measure added support though, as it indicated Indian activity was more significantly improved; the Indian PMI Index rose to 54.2, from 51 in November.

The international news was enough for the market to rise into the American manufacturing data release at 10:00 AM. The Institute for Supply Management (ISM) reported its Manufacturing Index for the month of December gained to 53.9, ahead of the consensus view for a reading of 53.2, according to Bloomberg’s survey. The figure also showed an improved state over November’s index reading of 52.7. I’m still not enthused though, as I look for things to get worse here in 2012, with Europe closing somewhat to U.S. exports. Still, American industrials shares were higher on the day, with the Industrial Select Sector SPDR (NYSE: XLI) up over 2%, and major manufacturers General Electric (NYSE: GE) up 2.5% and Caterpillar (NYSE: CAT) up 3.7%.

Construction Spending data only offered further support for the rally, as it was reported 1.2% higher in November, exceeding economists’ expectations for a 0.5% increase. However, this figure benefited from a revision to the prior month from an increase of 0.8% initially reported to a decrease of 0.2%. There has been an increase in multi-family home construction, which could be the main driver of activity in my view. I do not necessarily see this as a good thing, as home ownership goes by the way side. The shares of builders Hovnanian (NYSE: HOV) and PulteGroup (NYSE: PHM) were up 6.9% and 3.3%, respectively.

The business wire also offered the release of the Federal Reserve’s FOMC meeting minutes for its December 13 meeting. Financial shares reacted well on the day and held high after the 2 PM release, with Bank of America (NYSE: BAC) up 4.3%, Wells Fargo (NYSE: WFC) up 3.2% and J.P. Morgan Chase (NYSE: JPM) higher by 5.2%.

The post holiday corporate earnings wire had a handful of names reporting. Landec (Nasdaq: LNDC) posted at the close of trading and was up 6.9% through the day, and is up more than 4% after hours. Progress Software (Nasdaq: PRGS) also posted at the close, and while it was higher by 2.3% during the day, it dropped more than 8% after hours. Team Inc. (Nasdaq: TISI) posted after hours and was up fractionally during the day and 3.5% after hours.

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 Stocks Lifted by Construction Spending Data

Construction Spending data was reported Tuesday and was embraced and propagated by real estate agents and housing longs. However, your sometimes hated, typically post-profit loved, and always critically analytical blogger here finds good reason to temper enthusiasm. That said, there are interesting trends developing in housing and other construction sectors.

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Construction Spending Rise

Construction Spending was reported 1.2% higher in November, exceeding economists’ expectations for a 0.5% increase. “Woo hoo,” exclaimed the once high flying mortgage broker now working at Home Depot (NYSE: HD) in order to make the electric bill. “Alright,” declared the Ryland Group (NYSE: RYL) sales representative who’s hours have been cut to part-time, and who delivers pizza on the side. “Jump on it,” announced the reporter/stock-picker whose ratings climb on sensationalism.

Yours truly, however, has another view, and considering the unbiased nature of that view, it might be worth noting. Taking a closer look at the economic report produced by the U.S. Census Bureau Tuesday, we find that the growth reported for November benefited tremendously from a revision to the prior month result. Initially noted for 0.8% growth, October’s construction spending was revised significantly downward, now showing a 0.2% decrease in activity. Well, when you cut the base of your growth calculation, you are certain to get better growth than what economists based their forecasts upon.

Now, the shares of homebuilders rallied significantly on the news, with builders Hovnanian (NYSE: HOV) and PulteGroup (NYSE: PHM) jumping 6.9% and 3.3%, respectively. K.B. Home (NYSE: KBH) climbed 3%, while D.R. Horton (NYSE: DHI) and Toll Brothers (NYSE: TOL) rose 2.9% each. Beazer (NYSE: BZH) rose 2.4% and Lennar (NYSE: LEN) edged higher 1.2%.

In the past I’ve noted multi-family home growth, and have warned that it is not a good sign for the economy to generate a nation full of Pottersville renter suckers. However, this report shows good growth in single-family home construction, which was up 1.5% in November, though on a seasonally adjusted basis. In fact, looking at the trend of the past five months we see a generally improving market.

Eventually, new home construction was going to have to improve, driven by lack of supply after a period lasting so long with so little new construction. The population continues to grow, hard working immigrants enter the market on job offers, and home demand creeps higher. What has kept this natural driver from making an impact for so long has been the usual suspects: the foreclosure overhang of existing homes for sale cheaper than new homes; tight lending standards keeping once approvable buyers out of the market; plus a good number of more recent buyers sitting on underwater mortgages. Eventually, though this was going to be absorbed, and perhaps we are starting to see some of that finally. My concern of late, which has affected my view for housing, is a macroeconomic stumbling block I see ahead driving new recession and holding up a housing recovery.

Multi-family construction also increased 1.3% in November, and so Potter’s slums continue to find new suckers. The five-month trend for the multi-family segment is also one depicting increasing demand, though in a less fluid manner. On a year-to-year basis, new single family home construction was up 2.5%, while multi-family projects were up 4.1%. It’s here where you can more clearly see the damage to home ownership in this difficult economic hangover and the beneficiary, the multi-family segment.

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 Still on Suicide Watch

Most of the tally-taking of the holiday shopping season is reporting a joyous occasion marked by the revival of the consumer. This may have been evidenced by the Conference Board’s December reading of its Consumer Confidence Index Tuesday, as it rose to near a post-recession peak. However, I suggest you take a closer look, because you’ll see that the situation remains bleak.

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.

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Consumer Suicide Watch

At 64.5, the Consumer Confidence Index was up a bunch from November’s 55.2 mark. November, not coincidentally, saw the start of holiday shopping deals and also a 15 point surge from October’s 40.9 depressed state. So, it appears consumers’ pseudo-drunken state was the sole source of satisfaction. The same driver was likely behind the general rise in retailer shares over the last half of the year, but we have a warning about that as well, entitled, Sell Consumer Stocks Now, or something like that. Let’s be clear, an index reading 64.5 here does not mark a happy state of affairs, just a better state sadness.

Even Lynn Franco, the Director of the Conference Board Research Center, warned, ”While consumers are ending the year in a somewhat more upbeat mood, it is too soon to tell if this is a rebound from earlier declines or a sustainable shift in attitudes.” I still see mostly bad attitudes where I look. For instance, the Conference Board reports that the number of those surveyed who thought business conditions were good improved all the way up to 16.6%. Those who said business conditions were poor measured a far greater number, at 33.9%, but that was up from 38% the month before. Is this really good news?

Get this, those claiming jobs were plentiful improved to as high as 6.7%, way up from 5.6%. Meanwhile, those who felt like finding employment was difficult in December measured 41.8%, better than November’s 43%. Merry Christmas? Is this really a reason to spread holiday cheer by spending scarce dollars?

Most of the month’s confidence gains came in the expectations portion of the survey. In the past, I’ve warned that investing on this is like putting your money behind a hope and a prayer. Now, I’m the religious sort, but I tend to like to see some evidence of opportunity before investing on it. In the past, confidence gains driven by expectations have been proven easily deflated.

This latest measurement showed the Expectations Index rose to 76.4, up from 66.4. Take note now that the Present Situation Index measured a much lower 46.7, though up from 38.3. Those surveyed who saw business conditions improving over the next six months only increased to 16.7%, up from 13.7%. These gains from the prior month are what you are betting on if you invest on the basis of this month’s data. As you can see, the current state of affairs remains depressed. Of those surveyed, those anticipating improved job opportunities in the months ahead gained to just 13.3%, but that was up from 12.4%. Those who expected fewer jobs numbered a greater 20.2%, but that was improved from 23.8%.

The details of these reports are important, and it remains my pleasure to dissect the data and present it to you in easy reading form so that you may make informed investment decisions based on more than the porous reports of the traffic seeking popular press. The headlines of late have been preoccupied with the apparent positive shift in attitudes and lift in consumer spending, but I still see this economy on suicide watch.

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.

Ho Ho Humbug to your Labor Data Display

I said it last week and I reiterate it today. Ho ho humbug on Jobless Claims! Yet again, the popular press and mainstream business channels pumped the holiday cheer for weekly unemployment benefits. Still, what I suspect my colleagues missed, probably due to too much eggnog over lunch, was that it’s the week before Christmas… and all through the house, nobody is getting fired, except for maybe the mousy little receptionist.

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.

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Ho Ho Humbug!

Weekly Jobless Claims for the week ending December 17 were reported down another 4,000 to 364K. That was off the prior week’s revised figure, which posted marked improvement. However, we noted last week that the holiday season likely played a role in the improvement despite seasonal adjustments. And we noted then, and reiterate now, that even if the labor market were improving, the economic outlook is poised to undermine it once again.

Perhaps because we’ve been scribbling longer than many of the grunts reporting on the subject on Thursday, or maybe just because we care if we’re right or wrong, we noted that this sentimental benefit related to the holiday season existed last year as well. If you’ll recall, the labor market still languished in 2011, and that was during a period of supposed economic growth.

That said, the four-week moving average of jobless claims improved by 8,000 through the period, to 380,250. Again though, the marked improvement from the prior week period combined with the continuation of lower claims levels this week, were the driver. There’s no long-term trend here yet, and I suggest traders wait until mid-January to start buying into a labor market inflection point. Otherwise, ye merry gentlemen may find all your gifts have been lifted by wiser men than ye.

The other great farce found in this regular report is the continuing claims data. This time covering the period ending December 10 (a week lagged), insured unemployment improved by a tenth of a percent to 2.8%. That accounted for 3,546,000 people and an improvement of 79K.

Still, the most unbelievable of the data is in the reported insured unemployment under all programs line, which includes the benefits extension program. According to the DOL, for the period ending December 3, the total number of people claiming benefits in all programs improved by 299,738 and now includes 7,149,769 Americans. This figure in particular has been fluctuating wildly over recent weeks and is highly suspect in my view. If there truly is a drop-off in the number fitting into this poor souls’ pool, I expect it is more likely due to their falling out of the workforce or overrunning their 99 weeks, rather than their finding jobs.

While I probably should feel a little sorry for raining on the holiday party, I in fact do enjoy playing the role of the Grinch here this year. So to all the little Whos in Whoville, I say your joy is unfounded! As a result, any investment flurry inspired by it is confounded! Ho ho humbug to your labor data display.

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.

Job Seekers Believe in Santa Claus

The last few weeks’ jobless claims data almost had me believing in Santa Claus. The weekly applications for unemployment insurance, filed by those who have recently lost their jobs, have trailed off. It’s enough to lead an economist to recalculate, and certainly enough info to give a savvy market strategist something positive to say to disgruntled investors. But, sadly, it’s all just another fairytale – there is no Santa Claus! Sorry to bust the beginning of your bubble...

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.

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Believers in Santa Claus

Weekly unemployment claims for the week ending December 3, 2011, declined 23,000; that’s a lot. But take note dear dreamers, as the claims count was off from a revised prior week figure of 404K. Thus, last week’s count that we all also celebrated for its positive trend, was actually up from the prior week’s 396K measurement. The four-week moving average is still short of 400K, sitting now at 393,250, but it’s close enough to be wary, especially given seasonal influences that might not be properly adjusted for these days.

What I just wrote is controversial because the numbers are seasonally adjusted. However, I argue that due to the dynamic current environment and the degree of unemployment and the state of labor, the seasonal adjustment might not be adequately accounting for what may be a larger percentage of unemployed workers suddenly finding employment in the retail sector than is usual over the historical record. Historical adjustments are not usually dynamic; they’re based on the historical trend which smoothes over the spikes and troughs. That’s fine, but where they can go wrong is when they do not account for changes and situations that do not match the historical record, like today’s unusual environment. Without getting too algorithmic on you, I think I’ve made my point without your needing an aspirin as a result.

The Employment Situation Report for November, published last week, showed that the retail sector added 50,000 new employees on net through the month. I suggest that due to the dynamic environment, retailers were likely running on short staff longer into the start of the holiday shopping season, and have hired in bunches of late. Management of inventory is not the only efficiency gained by technological innovation. Indeed, process improvements stretch to workforce control. Now these points made here are something you’ve not likely read anywhere else, but will read time and again in the future. Please take note when you hear financial gurus quote me on the radio and TV, and complain when “The Greek” gets no credit. It’s happened time and again, but it’s not the fame I want, but the following I deserve for ideas like these. Continuing with the thought, some of the folks who might have applied for unemployment benefits probably passed “Now Hiring” signs on their way there and bypassed the heartache.

Looking at the claims report details, we find the Tooth Fairy isn’t real either. The insured unemployment rate improved by two-tenths of a percentage point, to 2.8%, in the week ending November 26 (reported period). However, those of us who inspect the monthly Employment Situation data know that there have been conspicuous deductions to the workforce. In months and years past, we’ve offered some likely reasons for this trend, including depression and despair.

The unemployment pool is so large and so full of long-term jobless Joes that there’s likely an effect created to this data. As we all know, the holidays can be depressing, especially if you’re not employed. Despair can set in, and while the checks are critical to those receiving them, meeting the requirements of the Department of Labor or the Welfare Department can get tiresome for the tortured among us. Now, in case you were not aware due to a lack of a driver’s license (DMV reference for the slow), government employees aren’t always the most compassionate of people, nor efficient. Thus it’s easy to screw up within the convoluted process of collecting government aid. The workforce count cut we’ve seen recently could be due to this effect. We’ve noted it here before in years past and around this time of year as well.

The total number of Americans claiming benefits of some sort, thus including the unemployment extension program, dropped by an astounding 431,307 in the period ending November 19 (reported today). Look, it may be the anniversary of John Lennon’s passing, and while I am a dreamer, I’m still not a believer in these numbers. You can go ahead and categorize labor data with the story of Santa Claus and the Tooth Fairy. I’m a believer no more.

However, I am a fan of this Saint Nicholas.

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.

BIG NEWS - 11-08-11

Small Business Index, Chain Store Sales, Fed Speak and EPS News

Despite all the action in Europe, which of course has dictated global trade, this report covers the important U.S. domestic economic data and corporate information that reached the wire on Tuesday. Covered within, find summaries of the NFIB Small Business Optimism Index, ICSC Weekly Chain Store Sales, Fed speak from members of the Federal Reserve and a slew of corporate earnings releases.

BIG NEWS

Small Business Confidence
The NFIB’s November Small Business Optimism Index was reported yesterday. The small business sentiment measure improved 1.3 points, to a mark of 90.2, but remained in territory reflecting misery. The NFIB attributed the improvement to “less bad news” in November, and commented on the weakness of this driver.

Closer inspection of the report shows much of the gain came in a component that measures how many businessmen “Expect the Economy to Improve.” That component, however, only signified that fewer people expected the economy to deteriorate, where the majority of opinions lie. The reading for November still compares poorly to recent times, as the year-to-date average for the figure is 91.1. Marking back to the average since January of 2009 (89.1), this latest result is only marginally better.

Chain Store Sales
Weekly same-store sales, as measured by the International Council of Shopping Centers (ICSC), gained another 1.0% in the week ending November 5, 2011. This followed its recovery of 0.7% over the prior week, which offset the preceding decline of 0.8%. On an annual basis, sales rose 2.7% last week, following the 3.0% gain the week before. Thus, taking inflation and population growth into account, you have very little growth in consumer spending indicated.

Fed Speak
A couple of Fed speakers addressed groups Tuesday. Narayana Kocherlakota gave a speech entitled, “Looking Back at Four Years of Federal Reserve Actions.” Charles Plosser discussed, “Strengthening Our Monetary Policy Framework Through Commitment, Credibility and Communication.”

The Securities and Exchange Commission (SEC) held a round table on uncertainty in financial statements. Meanwhile, the New York Society of Security Analysts held a commodities forum.

The corporate wire had the CEO of Oracle (Nasdaq: ORCL), Larry Ellison, testifying about the alleged software theft by SAP (NYSE: SAP). There were analyst meetings by Safeguard Scientifics (NYSE: SFE) and Spectra Energy (NYSE: SE).

The EPS schedule included news from International Game Technology (NYSE: IGT), Rockwell Automation (NYSE: ROK), International Flavors & Fragrances (NYSE: IFF), 1st Century Bancshares (Nasdaq: FCTY), AAON (Nasdaq: AAON), Aastrom Biosciences (Nasdaq: ASTM), Accuray (Nasdaq: ARAY), Acelrx Pharma (Nasdaq: ACRX), Achillion Pharma (Nasdaq: ACHN), Actions Semiconductor (Nasdaq: ACTS), AerCap (NYSE: AER), Alexander & Baldwin (Nasdaq: ALEX), Activision Blizzard (Nasdaq: ATVI), AeroCentury (AMEX: ACY), Aircastle (NYSE: AYR), Alaska Communications (Nasdaq: ALSK), Albany Molecular (Nasdaq: AMRI), Alliance Healthcare (NYSE: AIQ), Allied Healthcare Products (Nasdaq: AHPI), Amarin (Nasdaq: AMRN), Ambient (Nasdaq: AMBT), AMCON Dist. (AMEX: DIT), American Assets Trust (NYSE: AAT), American Electric Tech (Nasdaq: AETI), Amerigas Partners (NYSE: APU), Amdocs (NYSE: DOX), Amerigon (Nasdaq: ARGN), Andersons (Nasdaq: ANDE), Antares Pharma (AMEX: AIS), Blue Nile (Nasdaq: NILE), Caribou Coffee (Nasdaq: CBOU), Central Vermont Public Service (NYSE: CV), China Automotive (Nasdaq: CAAS), China Biologic (Nasdaq: CBPO), China Grentech (Nasdaq: GRRF), China Info Technology (Nasdaq: CNIT), Chindex (Nasdaq: CHDX), Clean Energy Fuels (Nasdaq: CLNE), Cobra Electronics (Nasdaq: COBR), Coca Cola Bottling (Nasdaq: COKE), Compugen (Nasdaq: CGEN), E.W. Scripps (NYSE: SSP), Exide (Nasdaq: XIDE), Fossil (Nasdaq: FOSL), Fuel Tech (Nasdaq: FTEK), Global Cash Access (NYSE: GCA), Globecomm (Nasdaq: GCOM), Hecla Mining (NYSE: HL), Liberty Interactive (Nasdaq: LINTA), Lifetime Brands (Nasdaq: LCUT), Middleby (Nasdaq: MIDD), Miller Industries (NYSE: MLR), Natural Gas Services (NYSE: NGS), Neenah Paper (NYSE: NP), PC Mall (Nasdaq: MALL), Penson Worldwide (Nasdaq: PNSN), Pokertek (Nasdaq: PTEK), Satcon Technology (Nasdaq: SATC), Scotts Miracle Grow (NYSE: SMG), SINA (Nasdaq: SINA), Supreme Industries (NYSE: STS), Take Two Interactive (Nasdaq: TTWO), Universal Panel (Nasdaq: PANL), Weight Watchers (NYSE: WTW), Zebra Technologies (Nasdaq: ZEBR) and many more.

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.

Homebuilder Mood Slightly Less Suicidal

The National Association of Home Builders (NAHB) Tuesday reported its Housing Market Index. The metric is a measure of the mood of homebuilders, and has been mired in the mud where home foundations might otherwise be for years now. The popular press jumped on the news of improvement in the index, but failed to note, except in the details few Americans likely read, that the absolute value of the Housing Market Index is still dreadful.

Our founder, Markos Kaminis, 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: Nasdaq: ITIC, OTC: FMCC.OB, OTC: FNMA.OB, NYSE: SRS, NYSE: URE, NYSE: IGR, NYSE: XIN, Nasdaq: RYHRX, Nasdaq: TRREX, NYSE: TOL, NYSE: HOV, NYSE: DHI, NYSE: BZH, NYSE: LEN, NYSE: KBH, NYSE: PHM, NYSE: NVR, NYSE: GFA, NYSE: MDC, NYSE: RYL, NYSE: MTH, NYSE: BHS, NYSE: SPF, NYSE: MHO, AMEX: OHB, NYSE: VNQ, NYSE: PNC, NYSE: JPM, Nasdaq: HOFT, NYSE: ETH, NYSE: PIR, NYSE: WSM, NYSE: HD, NYSE: LOW, AMEX: VAZ, AMEX: NKR, AMEX: MZA, AMEX: NXE, AMEX: NFZ, Nasdaq: XNFZX, Nasdaq: FSAZX, Nasdaq: AVTR, NYSE: AIV, NYSE: EQR, NYSE: AVB, NYSE: UDR, NYSE: ESS, NYSE: CPT, NYSE: SNH, NYSE: BRE, NYSE: HME, NYSE: MAA, NYSE: ELS, NYSE: ACC, NYSE: CLP, Nasdaq: AGNC, NYSE: SUI, NYSE: AEC, NYSE: PMT and AMEX: TWO, NYSE: SPG.

Homebuilder Mood Slightly Less Suicidal

The NAHB/Wells Fargo Housing Market Index (HMI) improved by four points to a mark of 18 in October. That information alone set the real estate wire on fire Tuesday with news of “good news in housing.” While I’ve been forecasting growth in real estate for the second half of 2011, until noting this year that economic complications would stall the real estate recovery, I must point out that the homebuilder mood is not sanguine; suicidal would be a better description for homebuilders, though perhaps slightly less so this month. You see, the divider between a positive and negative mood is set at an index reading of 50. While my math is not as sharp as it once was, I can say pretty confidently that October’s reading of 18 is still deeply discounted to that break-point.

Now that I’ve made that important point, I have to note why the positive change still matters. It’s because “change,” or delta as mathematicians might refer to it, matters to the stock market. I favor delta myself in decision making, as it is a catalyst for profit in my view. That said, can we really say there’s a spark in housing based on this latest measure of the homebuilder mood? I think not, and even if it were, it would soon be smothered out by an economic situation that is at least less enthusing and possibly even defusing.

Looking more closely at the data, the report shows improvement across most of the spectrum of sub-measures. The HMI’s component measure for current sales activity shows a four point improvement to a mark of 18. The gauge counting prospective buyer traffic rose three points to a reading of 14. Where we really see the most robust change in the data, though, is in expectations. When surveyed regarding where homebuilders saw things going over the next six months, well that resultant component index gained seven points to a mark of 24. So what’s got homebuilders hopeful now?

I think they’re basically buying into the numbers. We’re seeing year-over-year results beating many of last year’s low bar marks. It’s amazing to me that it takes this actuality for people, including homebuilders and many of my readers, to realize it. We’ve been forecasting it since the start of the year here, and I’ve found mostly resistance to my “growth” statements. But what you have to understand is that, one, the base for growth is at a dramatic low point, and that, two, the growth we’re forecasting is nothing to write home about. Yet, it’s growth nonetheless. I suppose the clearing away of the negative trend, or the delta, helps sentiment, however surely it should have been expected.

My view regarding this measure is that its great dependence on the views of smaller builders, which are greater in number and which have suffered more than the larger, publicly traded players, who have easier access to capital, has weighed on it. Thus, it’s been mired in this mud of low-teen readings for months. Whenever it has changed, it’s been mostly due to expectations, not significant changes in real sales activity or traffic.

As we look regionally, we see the largest market of the Northeast stuck at a reading of 15. I suppose that is because of the well developed nature of the region. In the West, the component reading improved by nine points to a mark of 21. The Midwest and South saw increases of four points, to readings of 15 and 19, respectively.

The report and the reporters of the report have noted all the usual suspects behind the absolute low level of confidence, including the weight of foreclosures on appraisal values and competitive properties, and the obstacle of tighter lending criteria. When seeking a reason for the gains made this month on a relative basis, those same scribblers attributed the move to record low mortgage rates. Certainly, the lower rates fall, the more folks qualify for homeownership. Still, the real barriers to this housing recovery are the result of our economic illness, including high unemployment and the hangover we must bear due to our previous housing overindulgences. Therefore, I say temper your enthusiasm until the latest economic stumbling blocks are cleared away.

Stocks of homebuilders reacted to the news just the same, with the shares of Toll Brothers (NYSE: TOL) up 9.9%; Hovnanian (NYSE: HOV) +6.7%; D.R. Horton (NYSE: DHI) +8.5%; Lennar (NYSE: LEN) +7.9%; Beazer (NYSE: BZH) +11.3%; and K.B. Homes (NYSE: KBH) up 8.1% at about two hours ahead of the close.

Editor's Note: Article should interest investors in Investors Title (Nasdaq: ITIC), Freddie Mac (OTC: FMCC.OB), Fannie Mae (OTC: FNMA.OB), 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.

Americans are Losing their Unemployment Benefits

The latest weekly jobless claims data seemed dull enough, however, it masks a troubling situation that could blow up for millions of Americans in 2012. The continued heavy flow into the jobless pool reflects an environment where jobs are still hard to get. With Congress unable to pass the President’s Jobs Bill this week, some 6 million Americans could soon be disconnected from the government aid that has so far sustained them; and an inhospitable labor market awaits them.

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: NYSE: RHI, NYSE: KFY, NYSE: MAN, NYSE: MWW, Nasdaq: KELYA, Nasdaq: JOBS, NYSE: JOB, Nasdaq: CECO, Nasdaq: PAYX, NYSE: ASF, Nasdaq: KFRC, NYSE: TBI, NYSE: DHX, NYSE: SFN, NYSE: CDI, Nasdaq: CCRN, Nasdaq: ASGN, NYSE: AHS, Nasdaq: BBSI, Nasdaq: HHGP, NYSE: SRT, Nasdaq: RCMT, Nasdaq: VSCP, OTC: ASRG.OB, OTC: MCTH.OB, OTC: IGEN.OB, OTC: STJO.OB, OTC: TNUS.OB, Nasdaq: TSTF, OTC: STTH.PK, OTC: PSRU.OB, OTC: CRRS.OB, NYSE: BAC, NYSE: JPM, NYSE: GS, NYSE: C, NYSE: MS, NYSE: WFC, NYSE: TD, NYSE: PNC, NYSE: GE, NYSE: WMT, NYSE: MCD, NYSE: AA, NYSE: AXP, NYSE: BA, NYSE: CAT, Nasdaq: CSCO, NYSE: CVX, NYSE: DD, NYSE: DIS, NYSE: HD, NYSE: HPQ, NYSE: IBM, Nasdaq: INTC, NYSE: JNJ, NYSE: KFT, NYSE: KO, NYSE: MMM, NYSE: MRK, Nasdaq: MSFT, NYSE: PFE, NYSE: PG, NYSE: T, NYSE: TRV, NYSE: UTX, NYSE: VZ, NYSE: XOM, NYSE: DE, NYSE: TIF, NYSE: CO, NYSE: FRO, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ.

Americans are Losing their Unemployment Benefits

For the week ending October 8, weekly jobless claims eased by 1,000, but remained at an unhealthy level of 404K. The four-week moving average illustrates the troubling malaise in labor, as the claims average sits at an even higher 408K. In my view, while the flow of benefits filers sits above the 300K level, it depicts a labor market where the odds are stacked against job seekers. Meanwhile, an increasing number of economists are forecasting either recession or a slower rate of economic growth for 2012, and higher unemployment to complement that.

This past week likely raised the blood pressure of some 6 million Americans who will lose their unemployment extension benefits in 2012 if Congress does not pass new legislation to counter the eventuality. Some 1.8 million Americans are estimated to see their last checks in December or January, according to figures from the National Employment Law Project. Those struggling souls will then be shed, desperate and alone, into a job market that remains inhospitable to them especially, because of their long length of unemployment.

In recent articles, I’ve discussed the erosion out of the insured unemployed pool, which is a phenomenon that I suspect could be engineered, or just the result of a system that is too strict to rule, and disqualifies unemployed Americans from their benefits quickly and cleanly. Over time, strict rule may be what is needed to inspire the unemployment rate to contract more deeply, but I believe that time is not today.

Week after week, we see the insured unemployed count decline. The latest Jobless Claims Report shows that some 55K Americans left in the week ending October 1. With regard to the larger pool of Americans receiving any sort of unemployment benefit under all programs, the number dropped by 39,203 in the week ending September 24, to a still high 6.8 million Americans. Many of these folks are receiving unemployment benefits through the extension legislation which will expire at the close of the year. The expiration of the legislation does not equate to the expiration of benefits to all, as that depends on when each person saw their regular benefits expire.

I should clarify that the failure to pass President Obama’s ambitious American Jobs Act does not mean extension benefits are doomed. Congress is now looking toward the piecemeal passage of components of the Act, which includes the continuation of the extensions program.

The latest Weekly Jobless Claims Report and the trend in jobless claims and in American unemployment should provide the clear evidence needed for legislators to extend the extension program. In my view, politics should not get in the way of this important program for hard working Americans who simply have no opportunity for work. Unless legislators want to see the Occupy Wall Street movement at their office doors, they would be wise to pass it quickly and without political hoopla.

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) and the job creators, 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.

Real Estate Renaissance at Risk Despite Some Good Signs

Keep your eye on the economy and keep your money close to your belt.

Despite increases in mortgage rates last week, mortgage activity still rose and teased us with seemingly sustainable traction. Rising activity with higher rates, though just slightly increased, is but one of several subtle signs of revival to surface over recent months. Clearly, though, all is in flux currently, as the risk of economic shift into recession and the threat of increasing unemployment would surely stall and reverse any real estate renaissance.

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 Nasdaq: ITIC, NYSE: BAC, OTC: FMCC.OB, OTC: FNMA.OB, NYSE: GS, NYSE: MS, NYSE: WFC, NYSE: TD, NYSE: SRS, NYSE: URE, NYSE: IGR, NYSE: XIN, Nasdaq: RYHRX, Nasdaq: TRREX, NYSE: TOL, NYSE: HOV, NYSE: DHI, NYSE: BZH, NYSE: LEN, NYSE: KBH, NYSE: PHM, NYSE: NVR, NYSE: GFA, NYSE: MDC, NYSE: RYL, NYSE: MTH, NYSE: BHS, NYSE: SPF, NYSE: MHO, AMEX: OHB, NYSE: VNQ, NYSE: PNC, NYSE: JPM, Nasdaq: HOFT, NYSE: ETH, NYSE: PIR, NYSE: WSM, NYSE: HD, NYSE: LOW, AMEX: VAZ, AMEX: NKR, AMEX: MZA, AMEX: NXE, AMEX: NFZ, Nasdaq: XNFZX, Nasdaq: FSAZX, Nasdaq: AVTR, NYSE: AIV, NYSE: EQR, NYSE: AVB, NYSE: UDR, NYSE: ESS, NYSE: CPT, NYSE: SNH, NYSE: BRE, NYSE: HME, NYSE: MAA, NYSE: ELS, NYSE: ACC, NYSE: CLP, Nasdaq: AGNC, NYSE: SUI, NYSE: AEC, NYSE: PMT and AMEX: TWO and NYSE: SPG.

Real Estate Renaissance at Risk

The latest sign of real estate life came in this week’s mortgage activity data. Over recent weeks, we’ve also seen the first year-over-year growth in several other housing metrics, qualified of course by the low bar real estate set last year for the recording of growth this year. We’ve been forecasting this eventuality here since the start of the year, and yet, we have been more recently focusing investor attention to undesirable economic developments and the new hurdles they present for all of our nation’s industries, including housing.

For the period ending October 7, 2011, the Mortgage Bankers Association’s (MBA) Market Composite Index improved 1.3% over the week just preceding it. This occurred despite the increases in rates for conforming, jumbo and FHA sponsored loans. Even the nimble refinancing activity improved despite the increase in rates, as the MBA’s Refinance Index also rose 1.3%.

Purchase activity, which measures loan applications for the purchase of homes, is less nimble due to the illiquid nature of real estate and the long-term decision making and investment process that it encompasses. Thus, it was a bit less surprising to see the seasonally adjusted Purchase Index increase 1.2% in the measured period. Supporting a pessimistic view, Purchase Activity was 2.9% short of the prior year period. Keep in mind, though, that the holiday filled September and variation year-to-year offers noise to the measurement.

The portion of refinancings against purchase applications remains out of balance on record low rates, and it stuck at 79.1% in the latest period. Adjustable Rate Mortgage (ARM) share continues to shrink, of course, given the record low rates; it dropped to 6.0% this week, versus 6.4% in the previous week.

As far as rates went, the average contracted rate on 30-year fixed rate mortgages with conforming balances ($417,500 or lower) rose to 4.25%, from 4.18% the week before. The average contracted rate on 30-year fixed rate mortgages with jumbo loan balances rose to 4.59%, from 4.49%. The average contracted rate on 30-year fixed rate mortgages backed by the FHA rose to 4.06%, from 4.05%. Contracted rates on 15-year fixed rate mortgages also increased last week, to 3.53% from 3.49%. On net and on an absolute basis, the rate changes were not very important. However, when considering the state of uncertainty that has existed in the real estate market, it was still enthusing to see increased activity against higher rates, however minimal the increase.

Now that we’ve outlined our enthusiasm with the latest metric in a string of metrics showing stabilization to growth, you can throw all that out the window. Rather, our investment valuation models should now be focused on the macro conditions that will shape all investment decisions and on security sensitivity to that systemic change. In other words, and except in cases of acquisitions of deeply discounted distressed property free of encumbrance, keep your eye on the economy and keep your money close to your belt.

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.

Shelter Threatened by Apocalypse

End of times sentiment weighed on all asset classes last week and is likely to continue to do so this week. Considering the reporting of five housing relevant data points last week, we thought now might be a good time to review the housing market. We sensed a negative tone to the housing newswire last week, but in reality, the data generally came in about as stagnant as always. There was even a tasting of good housing news, though that bright spot was promptly drowned out by a depressed stock market. That said, there is clearly enough reason now to view any recently achieved real estate stabilization as vulnerable, given the many dangers, both external in nature and domestic that threaten all asset classes. Still, I view no other asset currently more important than shelter, which may soon be hard to come by as well.

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.

Shelter Threatened by Apocalypse

Low and behold, five housing relative reports hit the wire last week, but did we learn anything new? The Housing Market Index offered the latest measure of builder sentiment, while Housing Starts produced fresh data on new home construction. The Weekly Applications Survey reflected the most recent levels of mortgage application activity, while the National Association of Realtors offered a fresh take on Existing Home Sales. Finally, home price data reached the wire from the FHFA.

Eschewing data that contains noise in it, we are leaving out mortgage report analysis here. As the mortgage application activity was compared against the Labor Day period that preceded it, we’re not going to review it here due to the noise it contains. And, I’m going to hold off on home price analysis until after the S&P Case Shiller data is reported. Builders have been down and out for years now, and the latest Housing Market Index reflected more of the same feeling. We covered the HMI in an earlier article found here. Let’s take a look now at real activity, which was reflected in the Housing Starts and Existing Home Sales data reported last week.

Noted for its negative points, August Housing Starts declined 5.0% against the revised July figure, dropping to an annual rate of 571K. Data since June has indicated year-over-year growth in many metrics though, but unfortunately, that was not the case in the August Starts data. Starts were 5.8% short of the prior year mark. Housing Permits though, which offer a more forward looking metric for housing activity, increased 3.2% over July, to an annual rate of 620K. And against the prior year, new permits were 7.8% higher. So we could go ahead and list this as a modestly positive to neutral data point for real estate, despite its seeming softness on the headline.

In order to provide a pure view of things, we consider a second perspective. Since this data includes both multi-family and single-family properties, growth could represent increasing demand for rental property, which might not be the best indicator for housing purists. Thankfully, the government breaks out the data. Housing Starts for single-family properties fell by a lesser rate of 1.4% against July and were 2.3% under the prior year. Permits for single-family properties rose 2.5% against July and were 2.0% greater than in August 2010. Basically the single family activity was not as exaggerated as the overall changes were.

National Association of Realtors (NAR) reported on Existing Home Sales for August last week and offered the brightest bit of news for housing. Unfortunately, the bad brew from Europe and ongoing political turmoil in the U.S. drowned it out. Still, August Existing Home Sales climbed 7.7% over July, to an annual rate of 5.03 million. That was also 18.6% higher than the prior year period.

In the past, we’ve discussed just how easy housing growth would be to attain through the second half of 2011, since the bar is set low. However, given what appears to be developing across the globe, including renewed recession with all sorts of Apocalyptic feeling nuances (US credit downgrade and other unspeakables), it would appear the latest floor for housing may be pulled out from under us soon enough. That said, I pray we all find shelter to weather the storm.

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.