Consumer Wisdom Disagrees with Market Speculation

The stock market was inspired by what appears to be a constructive European action and better than expected GDP growth for Q3, but the consumer mood, of which we received three measurements last week, still spells trouble.

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.

Relevant Tickers: NYSE: XRT, NYSE: WMT, NYSE: PIR, NYSE: ETH, Nasdaq: HOFT, NYSE: HD, NYSE: LOW, Nasdaq: AAPL, NYSE: BBY, NYSE: LTD, NYSE: CHS, NYSE: ANN, NYSE: GPS, NYSE: M, NYSE: JCP, NYSE: JWN, NYSE: TJX, NYSE: KSS, Nasdaq: COST, NYSE: TGT, NYSE: WMT, Nasdaq: WTSLA, Nasdaq: HOTT, NYSE: AEO, NYSE: ARO, NYSE: ANF, NYSE: SAK, NYSE: TIF, NYSE: TLB, NYSE: LL, Nasdaq: BLDR, NYSE: FO, NYSE: LEG, NYSE: TPX, NYSE: AYI, NYSE: LZB, Nasdaq: SCSS, NYSE: ZZ, NYSE: FBN, NYSE: NTZ, Nasdaq: SHLD, NYSE: DDS, Nasdaq: BONT, Nasdaq: CPWM, Nasdaq: BKRS, Nasdaq: BEBE, NYSE: BKE, Nasdaq: CACH, Nasdaq: CMRG, Nasdaq: CATO, NYSE: CBK, Nasdaq: CTRN, NYSE: PSS, Nasdaq: DEST, Nasdaq: DBRN, NYSE: DSW, Nasdaq: FINL, NYSE: FL, Nasdaq: GYMB, NYSE: GES, NYSE: JCG, NYSE: JNY, Nasdaq: JOSB, NYSE: NWY, NYSE: JWN, NYSE: MW, Nasdaq: SYMS, Nasdaq: PLCE.

Consumer Wisdom Disagrees with Market Speculation

The Dow Jones Industrials Index was up 3.1% from the close of trading Wednesday through the conclusion of the week. The catalyst was of course the announcement of the planned action in Europe to resolve the Greek debt crisis and to solidify European banks moving forward.

Solid economic results here at home helped the market along as well. GDP was reported up 2.5% for the third quarter, marking a significantly more robust rate of growth than the second quarter’s 1.3% struggle; though GDP benefited from a deteriorated U.S. savings rate. Durable Goods Orders, ex-transportation, were reported up 1.7% in September. On Friday, Personal Outlays (spending) was noted up 0.6% in September, exceeding expectations for a 0.3% increase; though it benefited some from higher prices. Still, the news was mostly perceived to be relatively strong across important economic metrics, and it supported the market’s burst on the European fix.

All that said and done, we received three measures of the consumer mood last week, and none reflected the nascent enthusiasm of stocks. Of course, the measurements were all taken ahead of the news breaks of the week’s catalysts. Still, how much better off are consumers today versus when they were surveyed? I suspect they are still knee deep in it. Furthermore, it’s my belief that Europe might yet implode, and if it does not, it still faces a struggle. In the States, I’ve already outlined the flaws of the economic drivers, and call attention to a still burdensome unemployment rate, unfair trade environment and handicapped capitol. Let’s not forget the rising tide of civil unrest. By the way, did you know Wall Street Greek warned about civil unrest in the U.S. well before the first few protestors gathered in Manhattan?

As far as American consumers see it, the economic situation remains troubled. I’m inclined to believe their opinion more than the speculative market that drove stock prices higher Thursday but failed to build upon the move Friday. Furthermore, too many high flying and recently reliable companies are warning about the road ahead if not failing to satisfy today, with Apple (Nasdaq: AAPL), Netflix (Nasdaq: NFLX), Cree (Nasdaq: CREE), eBay (Nasdaq: EBAY), VMware (NYSE: VMW), Amazon.com (Nasdaq: AMZN) and IBM (NYSE: IBM) letting shareholders down in one way or another this quarter. And while some investors may have forgotten this important fact last week, I remembered that the last Challenger Jobs Report showed a significant number of announced corporate layoffs, and that unemployment and economic growth seemed more likely to deteriorate than to improve based on Goldman Sachs (NYSE: GS) and other economists’ updates of the last several weeks.

Consumers are feeling ill; there’s no doubt about that. Early last week, the Conference Board reported its Consumer Confidence Index dropped dramatically in October, to a mark of 39.8, from a poor base of 46.4 in September. The main components of the index, which comprise the views of the present situation and expectations for the next six months, declined in union. The consumers’ view of the present situation was simply horrible, with the representative index down to 26.3, from 33.3. The Expectations Index collapsed to 48.7, from 55.1, clearly illustrating lost hope. According to Lynn Franco, Director of The Conference Board Consumer Research Center, "Consumer confidence is now back to levels last seen during the 2008-2009 recession.”

Bloomberg reports its Consumer Comfort Index weekly, so it offers a very relevant and fresh view of the consumer mood. Bloomberg’s index fell to minus 51.1 in the week ending October 23, from negative 48.4 the week before. Not only was it the worst reading in a month, but it reflected levels not seen since the Great Recession, which we are supposed by many to have recovered from. Do you notice a recurring theme here yet?

On Friday, the University of Michigan, in conjunction with Thomson Reuters, reported its Consumer Sentiment Index for the close of October. This measure varied from the other two in that it projected improvement. The Michigan Index gained to 60.9, from a sour 57.5 mark at the start of the month. However, it was only up slightly against September’s close, when the index measured at 59.4. The current situation component of this index improved slightly to 75.1, from 74.9, but that’s a negligible change. What was telling was what happened in the expectations component of the index. It improved, yes, to 51.8 from 49.4. However, it improved from a near 30-year low, which was marked at the start of the month. The point is that while the expectations index showed improvement, it was from a historical trough, and those expectations remain at a point reflecting very tough times.

The measures these indexes produce should not be given too much weight for their direction, whether they show improvement or deterioration, but they should be watched closely for absolute value, trend and magnitude of change. The trend of course depicts a more meaningful direction than one month’s change, and the magnitude of change, given a margin of error, matters more than slight directional movements. Of course, the absolute value of all three indexes was poor, despite the differences of the three. What I see in these indexes is a situation that still spells trouble, and given the distance Europe must yet travel to truly survive its crisis, and the soft or tangential drivers of U.S. economic data improvement, I think consumers are wiser today than the market was for one day last week.

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.

Bad Moon Rising in Labor and Economy

There’s a bad moon rising, as seen in the weekly jobs data from the Department of Labor (DOL). Weeks ago, we warned that this economic metric might this time be a leading indicator of recession in such a sensitive labor environment, which characterizes the day. Unfortunately, the latest data seems to support our concerns. And, the number of folks receiving benefits is on the decline nonetheless, making for a bad moon rising of potential civil concern. If politicians continue to prioritize selfish individual and party goals, and do not change the tone of politics to one of unity and progression for the nation’s sake, they risk sending this crisis into a new and more dangerous phase. Mark my words, and do all you can to prevent it, or the images we see of Greek street fires could emanate in the future from Detroit and LA.

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

Bad Moon Rising in Labor and Economy

The DOL reported Weekly Jobless Claims for the week ending September 10 increased by 11,000, to 428K. Last week’s data was even revised higher, to 417K, from 414K. As usual, economists held close to the prior week result in their forecasting for this week, and so a consensus estimate of 412K was off. The trend is clear here now, with the four-week moving average up to 419,500, up 4K this week alone.

As in previous data, the number of insured unemployed decreases more often than it rises of late. In my estimation, this is not the result of improving employment, but because of other issues. Firstly, the long-term unemployed are outlasting their extended unemployment insurance benefits. Secondly, red tape and tight regulation at the street level are likely leading struggling Americans to fall out of qualification for the benefits they are so dependent upon. The government even dares to audit these people and ask for money back, while keeping tax breaks for the richest Americans in place. And thirdly, some folks are finding whatever work they can and leaving their only slightly less valuable benefits behind. My ventures into Harlem and my work with the poor have shown these things to be true.

The insured unemployment rate stuck at 3.0% this last week, but the number decreased by 12K. Of those people receiving a benefit of some sort, including unemployment insurance extensions, the number fell by 25,033, to 7.1 million Americans in the August 27 period. On the surface, this looks like good news, but we know better.

Extended benefits were still available in Alabama, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Washington, West Virginia, and Wisconsin during the week ending August 27. However, how many Americans are nearing their week limit for this long-standing, foreclosure mitigating, welfare preventing, homelessness negating and civil unrest halting assistance?

If we do not either get these long-term unemployed Americans back to work, or keep the money flowing to them, we face increasing likelihood of civil unrest, especially heading into the election season. The unsettling events that are occurring overseas in nations with higher unemployment and longer sitting indigestion, are nearing the realm of possibility in the U.S. as well now. Distaste for Washington is mutating into pure hatred, and what has happened on the fringe, acts of “insanity” by unstable individuals, could then become possible for stable but financially troubled people.

We need to cure this thing today, and politics must change tone to a more progressive message of national unity. Otherwise, the directional and polarizing messages of political parties will incense acts of desperation and push chaos to replace civility in our great nation. Any politician with a true love for his country would prioritize his country now. The tone of political debate must remain civil and the language must be responsibly chosen. Recent words by good men, but poorly chosen, like from union leader James Hoffa over Labor Day, not to mention fringe Tea Party fire-starters, are dangerous. Making a political point is one thing, but telling crowds to “take out” Tea Party “sons of bitches,” as Hoffa did, can start riots. We do not need that spark to kindle the dry wood of dissatisfaction stacked high across America.

As always, I like to provide readers with the data from the most troubled states:

The highest insured unemployment rates in the week ending August 27 were in Puerto Rico (4.4), Pennsylvania (4.2), New Jersey (4.0), California (3.7), Connecticut (3.7), Oregon (3.5), Rhode Island (3.5), Nevada (3.4), Alaska (3.3),and New York (3.2).

The largest increases in initial claims for the week ending September 3 were in Kansas (+1,969), North Carolina (+1,450), Washington (+1,443), New Jersey (+1,324), and Texas (+1,239) while the largest decreases were in New York (-2,854), South Carolina (-2,118), Puerto Rico (-1,611), California (-576), and Virginia (-216).

The stocks of employment relative firms and business services are generally higher today due to their sensitivity to the economy, and given the positive news out of Europe, which has the Dow also higher by 1.6%.

Movement of Labor & Business Services Stocks
Robert Half (NYSE: RHI)	2.1%
Korn Ferry (NYSE: KFY)	1.5%
Monster Worldwide (NYSE: MWW)	2.1%
Manpower (NYSE: MAN)	3.5%
51Job Inc. (Nasdaq: JOBS)	2.1%
Paychex (Nasdaq: PAYX)	3.0%
Kforce (Nasdaq: KFRC)	Unch.
TrueBlue (NYSE: TBI)	1.3%
Dice Holdings (NYSE: DHX)	4.4%
Kelly Services (Nasdaq: KELYA)	1.7%
CDI Corp. (NYSE: CDI)	-0.6%
Cross Country Healthcare (Nasdaq: CCRN)	3.7%
On Assignment (Nasdaq: ASGN)	1.1%
AMN Healthcare Services (NYSE: AHS)	1.4%
Barrett Business Services (Nasdaq: BBSI)	1.4%
Hudson Highland Group (Nasdaq: HHGP)	2.0%
StarTek (NYSE: SRT)	0.6%
RCM Technologies (Nasdaq: RCMT)	1.7%
VirtualScopics (Nasdaq: VSCP)	-0.8%
American Surgical (OTC: ASRG.OB)	Unch.
Medical Connections (OTC: MCTH.OB)	Unch.
iGen Networks (OTC: IGEN.OB)	Unch.
St. Joseph (OTC: STJO.OB)	-8.9%
General Employment Enterprises (NYSE: JOB)	-6.9%
Total Neutraceutical (OTC: TNUS.OB)	Unch.
TeamStaff (Nasdaq: TSTF)	0.5%
Stratum (OTC: STTH.PK)	Unch.
Purespectrum (OTC: PSRU.OB)	Unch.
Corporate Resource Services (OTC: CRRS.OB)	29%
Prices at approximately 3:00 PM EDT

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.

Basic Shelter May Soon be Unaffordable

With the dastardly debt deadline less than a week away now, interest rates are poised to climb significantly higher on a dime should a major rating agency determine to cut the American sovereign debt rating. Yet, in the latest reported week, mortgage activity declined. Mortgage brokers and other real estate professionals are missing an important opportunity to get mortgages refinanced and nonchalant home buyers into favorable mortgage contracts while they still last, because basic shelter may soon be unaffordable for the average American.

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: BAC, NYSE: GS, NYSE: MS, NYSE: WFC, NYSE: TD, OTC: FMCC.OB, OTC: FNMA.OB, NYSE: PNC, NYSE: JPM, NYSE: BBT, NYSE: CIT, NYSE: BKU, Nasdaq: UBSI, NYSE: BK, Nasdaq: MBFI, NYSE: AF, NYSE: NYB, Nasdaq: HCBK, Nasdaq: PBCT, Nasdaq: FNFG, Nasdaq: CFFN, Nasdaq: WFSL, Nasdaq: ISBC, Nasdaq: NWBI, Nasdaq: STSA, NYSE: OCN, NYSE: FBC, NYSE: PFS, Nasdaq: COLB, Nasdaq: KRNY, Nasdaq: BRKL, Nasdaq: DCOM, Nasdaq: FFIC, Nasdaq: DNBK, OTC: FCNCA.PK, NYSE: SNV, Nasdaq: UBSI, Nasdaq: HMPR, Nasdaq: WSBC, Nasdaq: CHCO, Nasdaq: SASR, OTC: FCBN.OB, Nasdaq: SCBT, NYSE: WL, Nasdaq: WSFS, Nasdaq: SBSI, Nasdaq: STEL, Nasdaq: UBSH, Nasdaq: EGBN, Nasdaq: FBNC, Nasdaq: ABCB, Nasdaq: TBBK, Nasdaq: FCBC, Nasdaq: CCBG, Nasdaq: FISI, Nasdaq: NKSH, Nasdaq: CZNC, Nasdaq: CHFN, Nasdaq: SBCF, Nasdaq: TIBB, Nasdaq: AMNB, Nasdaq: UCBI, Nasdaq: MBRG, Nasdaq: HBOS, Nasdaq: ZION, Nasdaq: EWBC, NYSE: CYN, NYSE: BOH, Nasdaq: SIVB, Nasdaq: WABC, Nasdaq: CATY, Nasdaq: UMPQ, Nasdaq: GBCI, Nasdaq: PCBC, Nasdaq: PACW, NYSE: WAL, OTC: FBAK.OB, Nasdaq: FIBK, Nasdaq: NARA, Nasdaq: WCBO, Nasdaq: TCBK, Nasdaq: TBNK, Nasdaq: WCBO, Nasdaq: BMRC, Nasdaq: HAFC

Basic Shelter May Soon be Unaffordable

The Mortgage Bankers Association (MBA) reported Wednesday that mortgage activity fell 5% in the period ending July 22nd. Contracts tied to the purchase of a home declined 3.8% from the immediately preceding week, while mortgage refinancing applications dropped 5.5%. The decline in refinancing occurred even while mortgage rates remained attractive. Contracted rates on average 30-year and 15-year fixed rate mortgages inched higher to 4.57% (from 4.54%) and 3.67% (from 3.66%), respectively.

This lackadaisical activity in the mortgage market is reflective of the slow going housing market now, but it’s also indicative of idle real estate professionals. Those pros are missing an important opportunity to generate business now, and more importantly, to get people into affordable contracts while they still last.

If a default occurs on American credits, or if Standard & Poor’s (NYSE: MHP) or Moody’s (NYSE: MCO) downgrades American credits, Treasury rates will increase and rates will rise across the board. That means mortgage rates too… Far too many Americans are in variable rate contracts or are in position to buy a home today but are sitting on the sideline idle due to fear. It’s unfortunate that this frozen state is exactly what makes them vulnerable today, because inaction will price many out of the ability to buy a home should events proceed as they appear poised to today.

One of the few assets I would want to own in an economic depression is the shelter provided by an owned home. The basic necessities must be accounted for, and those include shelter, food and water. If the economy deteriorates as it should in the scenario that is growing in probability, that situation brought on by Washington’s debt debacle, then it will get much harder for many Americans to even afford rent. So, even if home prices were to drop further on decreased demand, which is certainly likely in a harder economic environment, at least many would be able to better endure it within a home. As a renter, you are dependent on your landlord’s compassion in desperate times, but as a home owner, you can rent out space to afford your home in tough times.

Say what you will about scare tactics, but in this case if real estate professionals were to employ them responsibly (in other words, to simply warn folks about imminent rate rise), it might actually do some important good for a good many Americans. The interest rates we see today should not exist for much longer, even if Washington somehow circumvents a debt downgrade.

In the positive growth scenario, we also see rising rates, as global economic growth driven by the expanding emerging markets drives scarcity in commodity resources. In this case, inflation should feed through the system, in my view. Thus, I feel compelled to share what I believe is helpful information with those who can take advantage of it now, renters who can afford a home now but may not be able to if/when rates rise.



Editor's Note: Article should interest investors in 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), BB&T (NYSE: BBT), CIT (NYSE: CIT), Bank United (NYSE: BKU), First Citizens (OTC: FCNCA.PK), Synovus (NYSE: SNV), United Bankshares (Nasdaq: UBSI), Hampton Roads Bankshares (Nasdaq: HMPR), WesBanco (Nasdaq: WSBC), City Holding (Nasdaq: CHCO), Sandy Spring (Nasdaq: SASR), First Citizens (OTC: FCBN.OB), SCBT Financial (Nasdaq: SCBT), Wilmington Trust (NYSE: WL), WSFS Financial (Nasdaq: WSFS), Southside Bancshares (Nasdaq: SBSI), Stellar One (Nasdaq: STEL), Union First Market (Nasdaq: UBSH), Eagle Bancorp (Nasdaq: EGBN), First Bancorp (Nasdaq: FBNC), Ameris (Nasdaq: ABCB), The Bancorp (Nasdaq: TBBK), First Community (Nasdaq: FCBC), Capital City (Nasdaq: CCBG), Financial Institutions (Nasdaq: FISI), National Bankshares (Nasdaq: NKSH), Citizens & Northern (Nasdaq: CZNC), Charter Financial (Nasdaq: CHFN), Seacoast Banking (Nasdaq: SBCF), TIB Financial (Nasdaq: TIBB), American National (Nasdaq: AMNB), United Community (Nasdaq: UCBI), Middleburg Financial (Nasdaq: MBRG), Heritage Financial (Nasdaq: HBOS), Zions Bancorp (Nasdaq: ZION), East West Bancorp (Nasdaq: EWBC), City National (NYSE: CYN), Bank of Hawaii (NYSE: BOH), SVB Financial (Nasdaq: SIVB), Westamerica (Nasdaq: WABC), Cathay General (Nasdaq: CATY), Umpqua (Nasdaq: UMPQ), Glacier Bancorp (Nasdaq: GBCI), Pacific Capital (Nasdaq: PCBC), PacWest (Nasdaq: PACW), Western Alliance (NYSE: WAL), First National Alaska (OTC: FBAK.OB), First Interstate Bancsystem (Nasdaq: FIBK), Nara (Nasdaq: NARA), West Coast (Nasdaq: WCBO), TriCo (Nasdaq: TCBK), Territorial (Nasdaq: TBNK), Washington Banking (Nasdaq: WCBO), Bank of Marin (Nasdaq: BMRC), Hanmi (Nasdaq: HAFC), PNC Bank (NYSE: PNC), J.P. Morgan Chase (NYSE: JPM), United Bankshares (Nasdaq: UBSI), Bank of New York Mellon (NYSE: BK), MB Financial (Nasdaq: MBFI), Astoria Financial (NYSE: AF), New York Community (NYSE: NYB), Hudson City (Nasdaq: HCBK), People’s United (Nasdaq: PBCT), First Niagra (Nasdaq: FNFG), Capitol Federal (Nasdaq: CFFN), Washington Federal (Nasdaq: WFSL), Investor’s Bancorp (Nasdaq: ISBC), Northwest Bankshares (Nasdaq: NWBI), Sterling Financial (Nasdaq: STSA), Ocwen (NYSE: OCN), Flagstar (NYSE: FBC), Provident (NYSE: PFS), Colombia Banking (Nasdaq: COLB), Kearny (Nasdaq: KRNY), Brookline (Nasdaq: BRKL), Dime Community (Nasdaq: DCOM), Flushing Financial (Nasdaq: FFIC), Danvers (Nasdaq: DNBK).

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.

Gold Should Top $1600 Today but Weaken Friday

I am looking for gold to surmount $1600 Thursday, partly on Moody's (NYSE: MCO) ratings warning for the U.S., but I would sell out of my holdings before the close, as I expect the European bank stress tests to support the euro, and I anticipate American Congressmen will move more quickly now toward raising the debt ceiling.

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: NYSE: GG, NYSE: AEM, AMEX: ANV, NYSE: AU, NYSE: AUQ, AMEX: AZK, NYSE: ABX, AMEX: BRD, Nasdaq: CTHR, AMEX: CGR, OTC: CGCO.PK, NYSE: BVN, Nasdaq: DROOY, NYSE: EGO, AMEX: EGI, AMEX: XRA, NYSE: GFI, AMEX: GRZ, Nasdaq: GORO, OTC: MYNG.PK, AMEX: GSS, AMEX: GBG, NYSE: HMY, NYSE: IAG, AMEX: THM, NYSE: JAG, AMEX: KGN, AMEX: KBX, Nasdaq: KGJI, NYSE: KGC, AMEX: MDW, AMEX: MGH, AMEX: NSU, OTC: NJMC.PK, NYSE: NEM, OTC: NBRI.OB, AMEX: NXG, AMEX: NG, AMEX: RIC, Nasdaq: RGLD, AMEX: RBY, AMEX: SA, AMEX: XPL, AMEX: TRE, OTC: THMG.OB, NYSE: UXG, AMEX: VGZ, OTC: WITM.PK, NYSE: AUY, NYSE: CDE, NYSE: EXK, NYSE: HL, AMEX: MVG, AMEX: MGN, Nasdaq: SSRI, NYSE: SLW, NYSEArca: GLD, NYSEArca: GDX, NYSEArca: SLV, NYSEArca: AGQ, NYSEArca: ZSL, AMEX: GPL, NYSE: SVM, AMEX: PZG, Nasdaq: PAAS, NYSE: AG.

Gold Should Top $1600 Today but Weaken Friday

Wednesday’s move in gold was nothing new, so discount those theorists trying to tie the day’s advance to Federal Reserve Chairman Bernanke’s comments. Yes, the Fed Chief said more quantitative easing or other “untested measures” were possible for a still testy economy, but I would hope you all already knew that. This latest surge in the glittery metal I don’t own enough of is marking close to a 10% two-week gain. So Wednesday’s 1.2% rise to about $1582.20 is but a step in a staircase built on the crumbled architecture of medieval Europe and perhaps a few Blarney Stones.

Gold was not up on the dollar alone, but climbed over the euro too. This is about the demise of fiat currency, watered down by nation states seeking to save sovereign sinners Portugal, Ireland, Italy, Greece and Spain (the PIIGS). This is about the United States’ government growing its debt and deficit to record highs and then threatening default. This is about geopolitical chaos running through the oil rich Middle East and North Africa. This may be about the end of times... or at least the good times.

The gold standard seems to suit Standard & Poor’s (NYSE: MHP) and Moody’s (NYSE: MCO) just fine, with Tuesday’s downgrade of Ireland’s sovereign rating to junk, a move that followed the recent cutting of Portugal. It’s like the rating agencies find a new neck to slit each evening. Wednesday night Moody’s even dared to put the United States on ratings watch, warning that it is becoming more likely that the U.S. could suffer a short-term default on its debt payments.

But, in fact, all that glitters is not just gold. Silver was up near 7% Wednesday as well. Whatever hard asset we price in fiat currency is going to be worth more as those currencies disintegrate. Perhaps the biblical prophecy of loaves of bread going for a year’s salary is not so far off. In parts of Africa it’s already true, and the price of sugar helped to fuel the riots in Tunisia that toppled the government.

So I suppose you’re wondering what The Greek suggests to do in the near-term with regard to gold. I think you’ll be surprised with the answer. While I’m not sure what the Bilderbergers want over the long-term, and while I think traders would like to ride gold over $1600, I also believe Friday’s stress test results from Europe will be mostly good, if not adequate enough to support the euro. I think Wednesday evening’s warning from Moody’s, the shot across the bow, should be enough to cause a good number of Congressmen to crap their pants and raise the debt ceiling. In other words, I’m looking for gold to backtrack before too long, so even though I can feel the end of good times coming, I still say take your profits in gold before Friday, yet perhaps after we hurdle $1600 Thursday.



Article should interest investors in precious metals stocks: Goldcorp (NYSE: GG), Agnico-Eagle Mines (NYSE: AEM), Allied Nevada Gold (AMEX: ANV), AngloGold Ashanti (NYSE: AU), AuRico Gold (NYSE: AUQ), Aurizon Mines (AMEX: AZK), Barrick Gold (NYSE: ABX), Brigus Gold (AMEX: BRD), Charles & Covard (Nasdaq: CTHR), Claude Resources (AMEX: CGR), Commerce Group (OTC: CGCO.PK), Compania Mina Buenaventura S.A. (NYSE: BVN), DRDGOLD (Nasdaq: DROOY), Eldorado Gold (NYSE: EGO), Entrée Gold (AMEX: EGI), Exeter Resource (AMEX: XRA), Gold Fields (NYSE: GFI), Gold Reserve (AMEX: GRZ), Gold Resource (Nasdaq: GORO), Golden Eagle Int’l (OTC: MYNG.PK), Golden Star Resources (AMEX: GSS), Great Basin Gold (AMEX: GBG), Harmony Gold (NYSE: HMY), IAMGOLD (NYSE: IAG), International Tower Hill Mines (AMEX: THM), Jaguar Mining (NYSE: JAG), Keegan Resources (AMEX: KGN), Kimber Resources (AMEX: KBX), Kingold Jewelry (Nasdaq: KGJI), Kinross Gold (NYSE: KGC), Midway Gold (AMEX: MDW), Minco Gold (AMEX: MGH), Nevsun Resources (AMEX: NSU), New Jersey Mining (OTC: NJMC.PK), Newmont Mining (NYSE: NEM), North Bay Resources (OTC: NBRI.OB), Northgate Minerals (AMEX: NXG), NovaGold Resources (AMEX: NG), Richmont Mines (AMEX: RIC), Royal Gold (Nasdaq: RGLD), Rubicon Minerals (AMEX: RBY), Seabridge Gold (AMEX: SA), Solitario Exploration and Royalty (AMEX: XPL), Tanzanian Royalty Exploration (AMEX: TRE), Thunder Mountain Gold (OTC: THMG.OB), U.S. Gold (NYSE: UXG), Vista Gold (AMEX: VGZ), Wits Basin Precious Metals (OTC: WITM.PK), Yamana Gold (NYSE: AUY), Coeur d’Alene Mines (NYSE: CDE), Endeavour Silver (NYSE: EXK), Hecla Mining (NYSE: HL), Mag Silver (AMEX: MVG), Mines Management (AMEX: MGN), Silver Standard Resources (Nasdaq: SSRI), Silver Wheaton (NYSE: SLW), SPDR Gold Trust (NYSEArca: GLD), Market Vectors Gold Miners ETF (NYSEArca: GDX), iShares Silver Trust (NYSEArca: SLV), ProShares Ultra Silver (NYSEArca: AGQ), ProShares Ultra Short Silver (NYSEArca: ZSL), Great Panther Silver (AMEX: GPL), Silvercorp Metals (NYSE: SVM), Paramount Gold and Silver (AMEX: PZG), Pan American Silver (Nasdaq: PAAS) and First Majestic Silver (NYSE: AG).

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.

Latest Days' Real Estate Malaise May Blind Your View of the Housing Turnaround

Be careful or you may end up like the same cattle that got herded into capital loss when the housing bubble burst. The latest days' housing malaise may cause you to miss the housing turnaround now before you.

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: BAC, NYSE: GS, NYSE: MS, NYSE: WFC, NYSE: TD, OTC: FMCC.OB, OTC: FNMA.OB, NYSE: PNC, NYSE: JPM, NYSE: BBT, NYSE: CIT, NYSE: BKU, Nasdaq: UBSI, NYSE: BK, Nasdaq: MBFI, NYSE: AF, NYSE: NYB, Nasdaq: HCBK, Nasdaq: PBCT, Nasdaq: FNFG, Nasdaq: CFFN, Nasdaq: WFSL, Nasdaq: ISBC, Nasdaq: NWBI, Nasdaq: STSA, NYSE: OCN, NYSE: FBC, NYSE: PFS, Nasdaq: COLB, Nasdaq: KRNY, Nasdaq: BRKL, Nasdaq: DCOM, Nasdaq: FFIC, Nasdaq: DNBK, OTC: FCNCA.PK, NYSE: SNV, Nasdaq: UBSI, Nasdaq: HMPR, Nasdaq: WSBC, Nasdaq: CHCO, Nasdaq: SASR, OTC: FCBN.OB, Nasdaq: SCBT, NYSE: WL, Nasdaq: WSFS, Nasdaq: SBSI, Nasdaq: STEL, Nasdaq: UBSH, Nasdaq: EGBN, Nasdaq: FBNC, Nasdaq: ABCB, Nasdaq: TBBK, Nasdaq: FCBC, Nasdaq: CCBG, Nasdaq: FISI, Nasdaq: NKSH, Nasdaq: CZNC, Nasdaq: CHFN, Nasdaq: SBCF, Nasdaq: TIBB, Nasdaq: AMNB, Nasdaq: UCBI, Nasdaq: MBRG, Nasdaq: HBOS, Nasdaq: ZION, Nasdaq: EWBC, NYSE: CYN, NYSE: BOH, Nasdaq: SIVB, Nasdaq: WABC, Nasdaq: CATY, Nasdaq: UMPQ, Nasdaq: GBCI, Nasdaq: PCBC, Nasdaq: PACW, NYSE: WAL, OTC: FBAK.OB, Nasdaq: FIBK, Nasdaq: NARA, Nasdaq: WCBO, Nasdaq: TCBK, Nasdaq: TBNK, Nasdaq: WCBO, Nasdaq: BMRC, Nasdaq: HAFC.

Latest Days' Real Estate Malaise May Blind Your View of the Housing Turnaround

The Weekly Applications Survey, produced by the Mortgage Bankers Association (MBA), today offered bad news on the headline but a mixed message for those interested in a fuller read. I suppose that’s what you have me for...

The Mortgage Bankers Association’s weekly report of mortgage activity showed another decline. Last week’s data produced a decline as well, which came even despite improved mortgage rates. This week, a sharp spike in mortgage rates drove down refinancing activity and the overall metric. We suspect this nascent rising rate trend from a June trough could also be behind last week’s drop in mortgage activity, as the interest rate data are derived by a simple average of contracted fixed rate mortgages. The rise in rates likely began during the prior week period and affected activity then as well. Several resources we surveyed for daily mortgage rate trends turned up short (Freddie Mac (OTC: FMCC.OB)). While a decline in average contracted rates defined the period, where the weekend fell and other factors might still skew activity in a dynamic rate environment.

This week’s reported data reflects the period ending July 1. The MBA’s Market Composite Index fell 5.2% through the week, driven by refinancing fizzle. The Refinance Index declined 9.2%, as mortgage rates spiked higher. Average contracted rates on 30-year and 15-year fixed rate mortgages increased to 4.69% (from 4.46%) and 3.79% (from 3.64%), respectively. For those contemplating mortgage refinancing, that kind of change is a real turn-off.

Here’s the good news for the patient among you:

The MBA’s Purchase Index, which measures mortgage applications tied to the purchase of a home, rose 4.8% against the immediately preceding week on seasonally adjusted basis. Considering the direction of mortgage rates, it would seem there may be some pent-up demand in the housing market chasing rates now. After all, the same change in rates had two different impacts on the two different segments of the market, if it had any impact on the more determined purchasers of homes at all.

There was more good news for real estate enthusiasts found in the year-to-year comparison. The Purchase Index was up 11.7% versus the year ago period. Last week, we saw the Pending Home Sales Index achieve year-over-year growth and home price rise as well; and so we called the bottom for the real estate market. This latest year-over-year trend seen now in many data-points should also show up when second half Existing Home Sales data reach the wire. Recall that the Pending Index measures contract signings, and that closures occur one to two months afterward. This latest mortgage application data seems to offer evidence that housing is finding momentum, because it reflects applications for the purchase of homes sought in late June.

The one caveat we have is that last year’s comparable period now also reflects a deflated market that saw demand drawn forward by the tax-incentive provided by the federal government for first time buyers. Still, I believe natural drivers will allow for housing market growth thereafter. We remind readers that all bets are off if the American government drops the ball on the debt ceiling legislation or even if the euro-zone blows up… or some other catastrophe presents itself. Otherwise, there are natural drivers such as population growth, net job creation and housing affordability that should not be ignored when one gets too comfortable with the latest days’ real estate malaise.



Editor's Note: Article should interest investors in 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), BB&T (NYSE: BBT), CIT (NYSE: CIT), Bank United (NYSE: BKU), First Citizens (OTC: FCNCA.PK), Synovus (NYSE: SNV), United Bankshares (Nasdaq: UBSI), Hampton Roads Bankshares (Nasdaq: HMPR), WesBanco (Nasdaq: WSBC), City Holding (Nasdaq: CHCO), Sandy Spring (Nasdaq: SASR), First Citizens (OTC: FCBN.OB), SCBT Financial (Nasdaq: SCBT), Wilmington Trust (NYSE: WL), WSFS Financial (Nasdaq: WSFS), Southside Bancshares (Nasdaq: SBSI), Stellar One (Nasdaq: STEL), Union First Market (Nasdaq: UBSH), Eagle Bancorp (Nasdaq: EGBN), First Bancorp (Nasdaq: FBNC), Ameris (Nasdaq: ABCB), The Bancorp (Nasdaq: TBBK), First Community (Nasdaq: FCBC), Capital City (Nasdaq: CCBG), Financial Institutions (Nasdaq: FISI), National Bankshares (Nasdaq: NKSH), Citizens & Northern (Nasdaq: CZNC), Charter Financial (Nasdaq: CHFN), Seacoast Banking (Nasdaq: SBCF), TIB Financial (Nasdaq: TIBB), American National (Nasdaq: AMNB), United Community (Nasdaq: UCBI), Middleburg Financial (Nasdaq: MBRG), Heritage Financial (Nasdaq: HBOS), Zions Bancorp (Nasdaq: ZION), East West Bancorp (Nasdaq: EWBC), City National (NYSE: CYN), Bank of Hawaii (NYSE: BOH), SVB Financial (Nasdaq: SIVB), Westamerica (Nasdaq: WABC), Cathay General (Nasdaq: CATY), Umpqua (Nasdaq: UMPQ), Glacier Bancorp (Nasdaq: GBCI), Pacific Capital (Nasdaq: PCBC), PacWest (Nasdaq: PACW), Western Alliance (NYSE: WAL), First National Alaska (OTC: FBAK.OB), First Interstate Bancsystem (Nasdaq: FIBK), Nara (Nasdaq: NARA), West Coast (Nasdaq: WCBO), TriCo (Nasdaq: TCBK), Territorial (Nasdaq: TBNK), Washington Banking (Nasdaq: WCBO), Bank of Marin (Nasdaq: BMRC), Hanmi (Nasdaq: HAFC), PNC Bank (NYSE: PNC), J.P. Morgan Chase (NYSE: JPM), United Bankshares (Nasdaq: UBSI), Bank of New York Mellon (NYSE: BK), MB Financial (Nasdaq: MBFI), Astoria Financial (NYSE: AF), New York Community (NYSE: NYB), Hudson City (Nasdaq: HCBK), People’s United (Nasdaq: PBCT), First Niagra (Nasdaq: FNFG), Capitol Federal (Nasdaq: CFFN), Washington Federal (Nasdaq: WFSL), Investor’s Bancorp (Nasdaq: ISBC), Northwest Bankshares (Nasdaq: NWBI), Sterling Financial (Nasdaq: STSA), Ocwen (NYSE: OCN), Flagstar (NYSE: FBC), Provident (NYSE: PFS), Colombia Banking (Nasdaq: COLB), Kearny (Nasdaq: KRNY), Brookline (Nasdaq: BRKL), Dime Community (Nasdaq: DCOM), Flushing Financial (Nasdaq: FFIC), Danvers (Nasdaq: DNBK).

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 Turnaround has Begun

Over the last few months, I’ve been talking about the imminence of housing growth to a mostly unreceptive audience. Last week, though, one particular data-point reached the wire that is definitely supportive of my argument. The Pending Home Sales Index, which measures contract signings and is therefore an early indicator of activity, marked a level significantly above the prior year result. That year-to-year comparison is what we’ve been looking for in order to mark the bottom on housing. However, we also received news last week indicating that home prices may have reached bottom this spring as well. It may yet be too early for some to accept the housing turn around, but I’ll go ahead and declare it anyway!

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: 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, NYSE: SPG.

Housing Turnaround has Begun

The Pending Home Sales Index rose 8.2% above its April mark, to 88.8 in May. But April was weather hampered and had fallen sharply off from March. Therefore, it was not surprising to see significant sequential month growth in May. What impressed industry watchers, but not the well-informed readers of Wall Street Greek, was that May’s index was 13.4% higher than May of 2010. That year-to-year difference was remarkable, and you could have bet we would remark about it here considering the beating we’ve been taking on our positive real estate market view of late.

May’s positive year-to-year change marked the first such result since April of 2010, when activity benefited greatly from the government tax break for first time buyers. This time around, given no such synthetic catalyst, we’ve got something truly impressive, perhaps even the start of true growth. However, it is notable that last year’s period suffered a bit due to the pull forward effect of that same tax break. May, June and maybe even July’s Pending Home Sales Indices were likely affected as prospective first-time buyers and some others that had been given incentive to enter the market pushed forward their actions a month or more to take advantage of the $8K tax break. Also, housing naysayers would be right to remind us that absolute levels of activity remain extremely low despite the improvement. Yet, we cannot deny that growth is occurring now, and across the nation as well.

The Northeast reported a 4.4% year-over-year improvement in its regional index. The Midwest saw a 17.2% improvement against the prior year. The South was 14.6% higher than a year ago, and the West reported a 13.5% better figure this year. That’s widespread. Markets like Houston, Hartford CT, Minneapolis, Seattle and Indianapolis saw contract signings roughly 30% higher than a year ago.

Contract signings precede closings by 30 to 60 days, so we should soon see at least Existing Home Sales pick up steam in the months ahead. New Home Sales could of course take a bit more time, especially given the number of distressed properties still remaining on the market. However, the real estate pricing data reported last week by Standard & Poor’s Case Shiller, and the week before by the FHFA, seem to show that the trend should now be for inventory drawdown, stabilizing to rising pricing and modest home sales growth. This inevitably will drive new home sales growth as well, and companies like Toll Brothers (NYSE: TOL), D.R. Horton (NYSE: DHI), Hovnanian (NYSE: HOV) and K.B. Homes (NYSE: KBH) should start to reflect that future in their near-term stock movement.

I therefore declare: real estate has bottomed!

This declaration is of course contingent upon there being no new catastrophic economic event, including the non-passage of debt ceiling legislation, downgrading of American credit worthiness, significant rising of interest rates and dropping of stock market valuation. So, get your act together Congress, and don’t push this issue to the midnight hour.



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.

LiveDeal (Nasdaq: LIVE) – Discerning What May Have Driven its 58% Gain

LiveDeal (Nasdaq: LIVE) might be mitigating its delisting issue, or the day's 58% gain may be without solid basis. We explore several possibilities herein, and expect you'll find value in our perspective. LiveDeal (Nasdaq: LIVE) led most shares Wednesday on no corporate news and little sign of reason. Even the message boards were empty of speculation. Thus, the mysterious movement only drew in more capital and perpetuated momentum of the lightly traded microcap stock with few shares outstanding and fewer floating.

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.

LiveDeal (Nasdaq: LIVE) – Discerning What May Have Driven its 58% Gain

Relative Tickers: Nasdaq: GOOG, Nasdaq: BIDU, Nasdaq: YNDX, Nasdaq: LNKD, Nasdaq: AKAM, Nasdaq: ACOM, NYSE: AOL, Nasdaq: ATRN, Nasdaq: ABTL, AMEX: BNX, Nasdaq: BITA, Nasdaq: JRJC, Nasdaq: CCIH, OTC: CLKZ.PK, Nasdaq: EDGR, Nasdaq: DIETD, Nasdaq: GSOL, Nasdaq: HSTM, Nasdaq: HSWI, Nasdaq: INSP, Nasdaq: INXN, Nasdaq: DATE, OTC: KBAS.PK, Nasdaq: LOCM, Nasdaq: LOOK, Nasdaq: LEDR, OTC: MMRF.OB, OTC: PCIR.PK, OTC: QPSA.PK, Nasdaq: REDF, Nasdaq: RENN, OTC: SLNM.PK, Nasdaq: SOHU, Nasdaq: SFUN, Nasdaq: SBAY, Nasdaq: TTGT, Nasdaq: KNOT, NYSE: TST, Nasdaq: TZOO, AMEX: TCX, Nasdaq: VTRO, Nasdaq: WWWW, Nasdaq: WBMD, Nasdaq: YHOO, Nasdaq: YOKU, OTC: ZAOFF.PK, Nasdaq: LIVE, Nasdaq: NGSX, Nasdaq: SCEI, Nasdaq: WFSLW, Nasdaq: NFEC, NYSEArca: TVIX, AMEX: XPO, AMEX: ESA, NYSEArca: CVOL, NYSE: DST, NYSEArca: VZZ, Nasdaq: OVRL, Nasdaq: DHRM, Nasdaq: HOLI, AMEX: ELC, Nasdaq: CMED, Nasdaq: SMRT, Nasdaq: CDTI, Nasdaq: EPOC, Nasdaq: RGDX, Nasdaq: SPMD and Nasdaq: PFED.

The stock closed up 58%, taking it to a technical level it had previously found comfort in. At $4.34 though, the shares still traded well short of their 52-week high of $22.25. Given the stock’s float of just 470K, based on Yahoo Finance data (Nasdaq: YHOO), it wouldn’t take much to move it like it did Wednesday. Institutional holders UBS (NYSE: UBS) and Wells Fargo (NYSE: WFC) recently (March 31, 2011) reported small stakes, though Thomson Financial data at Yahoo seems to show net sales on the institutional level in the quarter before last.

The latest news we could find on the wire was of LIVE’s delisting notification for violating a NASDAQ exchange rule regarding minimum shareholders equity, and so on May 24, 2011 it was given 45 days to show NASDAQ (Nasdaq: NDAQ) how it planned to achieve and sustain compliance. Therefore, perhaps the day’s movement can be explained to be relative to LiveDeal’s near-term ability to meet the NASDAQ’s listing rules. I say this because the shares began downward from $4 on the delisting release on May 24, and have restored the market value lost since that news broke in one day’s trading on Wednesday.

Thus, it would appear that someone is betting on the possibility of this company mitigating its delisting issue. The stock’s activity seems to reflect that driver if we are discerning clearly. My study of the company’s website turned up a bit of a confusing (to me) headline above the newest company press release on its press releases page (which I have saved and notified the company of), which read, “LiveDeal Secures Additional Commitments from Foreign Equity Investors.” There was no date on the press release teaser, leaving me unsure as to whether it was published today. Thus it was confusing to me. I suppose that if you only read that headline, something a prudent investor should never do, you may have misunderstood the page. However, if you clicked through the release underneath that headline, which offered a lead-in that discussed the appointment of the new CEO (onus on the reader to notice), you found a news item detailing the appointment of the new CEO, which is old news. There was no information about a new foreign investment in the release text or leader. Only the headline was confusing if taken in isolation, which any investor should never do! However, I wonder if any did.

I called in to LiveDeal and spoke with the Investor Relations contact, CFO Lawrence Tomsic, and he said the company had not issued any press release Wednesday nor announced any news of new foreign equity investors since the March 25 release last indicating so. He said the company had no comment with regard to the day’s stock movement, and knew of no specific timely reason for the stock’s activity Wednesday.

Because of the possibility of a gunslinging investor potentially acting on incomplete due diligence, the driver of the 58% move in the stock could be without any base, though I cannot be sure; it could also be an independent bet on the company avoiding delisting; or it could be on another issue or theory or other reason. Whatever the case, I perceive risk in holding the shares now after the big gain, while not knowing certainly the true driver and with those possibilities seemingly in the cards.

If the stock is up on a presumed ability to avoid delisting, without any other important news, it would seem the shares would find balance at around $4, where about it traded steadily before the delisting warning. If the stock appreciation was driven by faulty reasoning, then the stock could move back toward where it stood before Wednesday, in my estimation, which was $2.75. In after-hours trading Wednesday, speculators have taken the shares to near $5 (seen on Yahoo Finance), which based on our reasoning here, looks lofty in my view (above $4) if not completely without base given the risks outlined above.

Note: Risk of missing upside also exists if the catalyst for the day's rise is something other than NASDAQ listing violation mitigation but still construed as positive by the market, or if that catalyst exists simultaneously with another, or for many other reasons.

We will continue to explain vaguely understood stock movements as best we can for our readers, so join our mailing list or revisit us regularly. We welcome your requests. Simply submit your stock questions to us via comments to any of our articles or to a button we will establish shortly atop the blog. If the stock is especially active that particular day, or if it is of broad interest otherwise, we will dedicate a post toward answering your question.

Disclosure: The author has no direct or beneficial interest in the shares of or securities relative to LiveDeal (Nasdaq: LIVE) or any other stock mentioned in this article.

The day’s top gainers included LiveDeal (Nasdaq: LIVE), NeurogesX (Nasdaq: NGSX), Sino Clean Energy (Nasdaq: SCEI), Washington Federal (Nasdaq: WFSLW), NF Energy Saving (Nasdaq: NFEC), VelocityShares Daily 2X (NYSEArca: TVIX), Express-1 Expedited Solutions (AMEX: XPO), Energy Services of America (AMEX: ESA), C Tracks Exchange Traded Notes (NYSEArca: CVOL), DST Systems (NYSE: DST), iPath Long Enhanced S&P 500 VIX (NYSEArca: VZZ), Overland Storage (Nasdaq: OVRL), Dehaier Medical Systems (Nasdaq: DHRM), Hollysys Automation (Nasdaq: HOLI), Eastern Light Capital (AMEX: ELC), China Medical (Nasdaq: CMED), Stein Mart (Nasdaq: SMRT), Clean Diesel Technologies (Nasdaq: CDTI), Epocrates (Nasdaq: EPOC), Response Genetics (Nasdaq: RGDX), SuperMedia (Nasdaq: SPMD), Park Bancorp (Nasdaq: PFED).

This article might interest other Internet Information Providers like Google (Nasdaq: GOOG), Baidu (Nasdaq: BIDU), Yandex (Nasdaq: YNDX), LinkedIn (Nasdaq: LNKD), Akamai (Nasdaq: AKAM), Ancestry.com (Nasdaq: ACOM), AOL (NYSE: AOL), Atrinsic (Nasdaq: ATRN), Autobytel (Nasdaq: ABTL), Banks.com (AMEX: BNX), Bitauto (Nasdaq: BITA), China Finance Online (Nasdaq: JRJC), ChinaCache International (Nasdaq: CCIH), Clicker Inc. (OTC: CLKZ.PK), EDGAR Online (Nasdaq: EDGR), eDiets.com (Nasdaq: DIETD), Global Sources (Nasdaq: GSOL), HealthStream (Nasdaq: HSTM), HSW Int’l (Nasdaq: HSWI), InfoSpace (Nasdaq: INSP), InterXion (Nasdaq: INXN), Jiayuan.com (Nasdaq: DATE), Knobias (OTC: KBAS.PK), Local.com (Nasdaq: LOCM), LookSmart (Nasdaq: LOOK), Market Leader (Nasdaq: LEDR), MMR Information (OTC: MMRF.OB), Prime Companies (OTC: PCIR.PK), Quepasa (OTC: QPSA.PK), Rediff.com (Nasdaq: REDF), Renren (Nasdaq: RENN), Salon Media (OTC: SLNM.PK), Sohu.com (Nasdaq: SOHU), SouFun Holdings (Nasdaq: SFUN), Subaye (Nasdaq: SBAY), TechTarget (Nasdaq: TTGT), The Knot (Nasdaq: KNOT), TheStreet.com (NYSE: TST), Travelzoo (Nasdaq: TZOO), Tucows (AMEX: TCX), Vertro (Nasdaq: VTRO), Web.com (Nasdaq: WWWW), WebMD (Nasdaq: WBMD), Yahoo (Nasdaq: YHOO), Youku.com (Nasdaq: YOKU) and Zaio Corp. (OTC: ZAOFF.PK).



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