Sharp Stock Market Sell-Off May Close Out Day

Beware dear friends as there exists a decent chance of a sharp stock market sell-off today. The employment report was about as bad as it gets (against expectations barometer), and with the debt ceiling overhanging the weekend, and Standard & Poor's poised to downgrade America, who would want to go into a weekend holding stocks? The answer is: Not the smart money.

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: JPM, NYSE: WFC, NYSE: BAC, NYSE: UBS, NYSE: NWS, Nasdaq: NWSA, Nasdaq: PSMT, NYSE: GBX, Nasdaq: CRDC, Nasdaq: STEMD, Nasdaq: LOCM, NYSE: NED, Nasdaq: IROQ, Nasdaq: SPU, Nasdaq: CSKI, Nasdaq: ZNWAW, Nasdaq: GENE, Nasdaq: MGYR, Nasdaq: DCTH, Nasdaq: COMV, Nasdaq: MSHL, NYSEArca: RTSA, Nasdaq: TBET, Nasdaq: FPFC, Nasdaq: FFKT, Nasdaq: CYTXW, Nasdaq: BBXT, Nasdaq: BPAX, NYSEArca: ROSA, NYSE: GU, NYSE: ARJ, Nasdaq: XXIA, NYSE: ARX, Nasdaq: SMCG, Nasdaq: SAPX, Nasdaq: CRMBW, AMEX: BMJ, Nasdaq: PSOF, Nasdaq: BORN, Nasdaq: SYMX, NYSE: ALV, Nasdaq: SSFN, NYSE: TRU, Nasdaq: MFNC, NYSE: MEG, Nasdaq: CPSL, NYSE: TRW, Nasdaq: CNET, NYSE: SCR, AMEX: CCF, Nasdaq: FUEL, NYSE: HIL, Nasdaq: BONA.

Sharp Stock Market Sell-Off May Close Out Day

June Jobs Report
Like a bad moon rising, the Employment Situation Report for June produced an ominous warning for traders in the premarket Friday. After yesterday’s ADP Private Employment Report offered hope with its estimate for 157K in private nonfarm payroll growth, the Department of Labor pulled the rug right out from under our feet today. The news dominated the business wire, but we've got it all covered for you here below.

The DOL reported that June’s unemployment rate worsened to 9.2%, up from 9.1% in May. Economists expected the rate to stick at 9.1% in what was clearly a poor period. Many found worse news in the Nonfarm Payrolls number, which indicated just 18K jobs were created on net in June. Again economists were caught off guard with their consensus estimate for a 105K increase in jobs. Private Nonfarm Payrolls were reported up just 57K, against economists’ views for 125K on average (and ADP’s 157K estimate).

Thus, instead of improving from a weak May data point, Nonfarm Payrolls missed in June. May’s weak figure was even revised lower to +25K, from +54K. Average Hourly Earnings also missed forecasts for an increase of 0.2%, remaining unchanged in June. The average workweek likewise declined to 34.3 hours from 34.4 hours. It was bad news all around folks, the perfect poison for an already stressed out situation.

Monster Employment Index (MEI)
Monster World Wide (NYSE: MWW) produces a monthly measure of online job demand. The MEI eased a bit in May, to 143, but it surprisingly recovered in June to a reading of 146. This carries absolutely no weight today, this week, this month or ever. It has been completely muted by the Employment Situation Report. So, we’re going to focus our attention as well.

Wholesale Trade Report
Wholesale Trade data came due at 10:00 AM this morning. Inventories were unfortunately up 1.8%, as sales waned, leaving wholesalers in an unfortunate situation that we expect will also be seen across retail. Wholesalers’ sales were down 0.2% in May against April’s upward revision. The Inventory-to-Sales ratio deteriorated (obviously) to 1.16, but it was only a bit worse than May of 2010 (1.15). Economists had forecast May’s inventories to rise by just 0.7%.

Since economists’ forecasts will need adjustment lower, I expect a situation exists now that has not been worked into lower level market strategists’ and stock analysts’ forecasts as well. If this is more than a temporary issue and if it transcends across American business, this means EPS adjustments to the downside and price target reductions are likely generally speaking, especially for companies without much foreign exposure.

Consumer Credit Report
At 3:00 PM ET, look for the latest Consumer Credit report, this time for May. Economists are looking for a credit expansion of just $4.0 billion, against the April increase of $6.3 billion.

Overseas
German exports were reported higher than economists had forecast for May, a sign that Europe’s most important economy is still somewhat immune to the chaos on Europe’s periphery. That said, a rumor that Italy’s Economy Minister Guilio Tremonti might be about to resign sent Italian bond yields higher and the euro dropping. The minister is under political pressure after pushing through a somewhat light austerity program for Italy that wasn’t popular amongst Italians. Political will is not strong in Italy, and Prime Minister Berlusconi even called Tremonti out as not being a “team player.” However, the ECB Chief in waiting, Italian Mario Draghi said he expects Italian banks to pass the stress test coming on July 15, and that news somewhat settled markets. The euro is also finding help from the American bad news today, with the dollar despised as a result.

Corporate News Wire
News Corp. (NYSE: NWS, Nasdaq: NWSA) is facing heavy scrutiny in the United Kingdom, where Rupert Murdoch is now closing down the scandalous gossip paper, News of the World. While Murdoch says he’s satisfied that his Editor-in-Chief at the paper had no knowledge of cell phone hacking, British Premier David Cameron said he would have accepted her alleged resignation offer. There’s some pressure on News Corp. today, down 4%, because of its many business interests in the United Kingdom, where it may now face higher scrutiny. My opinion here is that Murdoch’s other endeavors in the nation should not be hampered by this news, but investors are hedging their risk today.

A unit of J.P. Morgan (NYSE: JPM) today settled a suit involving civil fraud charges about its alleged rigging of bidding competitions to win business from cities and countries. JPM paid out $228 million to close the case. Bank of America (NYSE: BAC) and UBS have agreed to similar settlements, and JPM has agreed to cooperate with a Justice Department investigation.

Wells Fargo (NYSE: WFC) settled its own Mortgage Backed Securities (MBS) lawsuit today for $125 million, paying a slew of pension funds that lost capital in the financial crisis.

The corporate wire highlights EPS from PriceSmart (Nasdaq: PSMT) and Greenbrier Cos. (NYSE: GBX).

The Day’s Most Active Stocks List:
On the Upside: Cardica (Nasdaq: CRDC), StemCells (Nasdaq: STEMD), Local.com (Nasdaq: LOCM), Noah Education (NYSE: NED), IF Bancorp (Nasdaq: IROQ), SkyPeople Fruit Juice (Nasdaq: SPU), China Sky One Medical (Nasdaq: CSKI), Zion Oil & Gas (Nasdaq: ZNWAW), Genetic Technologies (Nasdaq: GENE), Magyar Bancorp (Nasdaq: MGYR), Delcath Systems (Nasdaq: DCTH), Comverge (Nasdaq: COMV), Marshall Edwards (Nasdaq: MSHL), iPath Short Extended Russell 20 (NYSEArca: RTSA), Tibet Pharmaceuticals (Nasdaq: TBET), First Place Financial (Nasdaq: FPFC), Farmers Capital Bank (Nasdaq: FFKT), Cytori Therapeutics (Nasdaq: CYTXW), BankAtlantic Bancorp (Nasdaq: BBXT), Biosante Pharmaceuticals (Nasdaq: BPAX), iPath Short Extended Russell 10 (NYSEArca: ROSA), Gushan Environmental Energy (NYSE: GU) and Arch Chemicals (NYSE: ARJ).

On the Downside: Ixia (Nasdaq: XXIA), Aeroflex (NYSE: ARX), Millenium India Acquisition (Nasdaq: SMCG), Seven Arts Pictures (Nasdaq: SAPX), 57th Street General Acquisition (Nasdaq: CRMBW), Birks & Mayors (AMEX: BMJ), Pansoft (Nasdaq: PSOF), China New Borun (Nasdaq: BORN), Synthesis Energy Systems (Nasdaq: SYMX), Autoliv (NYSE: ALV), Stewardship Financial (Nasdaq: SSFN), Torch Energy Royalty (NYSE: TRU), Mackinac Financial (Nasdaq: MFNC), Media General (NYSE: MEG), China Precision Steel (Nasdaq: CPSL), TRW Automotive (NYSE: TRW), ChinaNet Online (Nasdaq: CNET), Simcere Pharmaceuticals (NYSE: SCR), Chase Corp. (AMEX: CCF), SMF Energy (Nasdaq: FUEL), Hill International (NYSE: HIL) and Bona Film Group (Nasdaq: BONA).

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.

ADP Report – It’s Like Getting Wrecked on Your Way to the Bachelor Party

I’m not a big fan of the ADP Private Employment Report, however professional and important it is. For me, it’s sort of like getting wrecked on the way to your bachelor party. It spoils the fun for everyone waiting on the DOL data and provides a less satisfying facsimile of what should have been the last night of single life. The memories it leaves only contribute a bitter taste to the wedding that follows. As they gather up their bit of cake, economists and investors won’t even look you in the eye whilst they chuckle amongst themselves about the night that never was. Of course, just like the case of the premature bachelor and his independent satisfaction, we can never know which data point was actually more accurate. After all, this is the government’s data we are comparing ADP’s result to, and the government may or may not be akin to the group of thugs you may call your friends.

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: JPM, NYSE: GS, NYSE: C, NYSE: MS, NYSE: WFC, NYSE: TD, NYSE: PNC, NYSE: STT, NYSE: JNS, Nasdaq: TROW, 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, Nasdaq: PAYX, NYSE: MAN, NYSE: RHI, Nasdaq: JOBS, NYSE: MWW, NYSE: KFY, NYSE: ASF, Nasdaq: KFRC, NYSE: TBI, NYSE: DHX, Nasdaq: KELYA, NYSE: SFN, NYSE: CDI, Nasdaq: CCRN, Nasdaq: ASGN, NYSE: AHS, Nasdaq: BBSI, Nasdaq: HHGP, NYSE: SRT, Nasdaq: RCMT, Nasdaq: VSCP, NYSE: JOB, Nasdaq: TSTF

ADP Report – It’s Like Getting Wrecked on Your Way to the Bachelor Party

Each month, ADP presents its estimate of what the Labor Department will report a day or two later. It’s like a publicly available economist’s estimate, yet the stock market and the popular press anticipate it and react to it as if it were a reflection of an economic reality. If it were perhaps more accurate, or better said - more reflective of the data the government reports (which may or may not be accurate), then it might move the market, but the data has lost its punch over the years, in my view.

Now that we’ve discounted the market impact of the data, we’ll progress to report it to you. Enjoy! ADP published Thursday morning that Private Nonfarm Payrolls likely rose by 157K in June. This is a net estimate of course, as some jobs are lost while others are created. It’s a big number though, given that economists are only looking for the Labor Department’s report to show private nonfarm payrolls rose by 125K in June. It would be good news if we were certain the government’s data could reach the same mark. The problem is that we cannot be certain of anything with regard to these two reports of the same data point (one being an estimate and the other being a possible forgery or more likely a fumble). Relax, we jest of course.

Take last month for instance. ADP reported private nonfarm payrolls likely rose by 38,000, and then the government said two days later that the real number was 83K. Now I realize that an eight and a three are present in each figure, but you would have to be a monkey to see similarity between the two. In its ever diligent fashion, ADP adjusted its estimate for last month to better reflect reality, and so it revised May’s data-point to +36K. Yes, ADP lowered its estimate despite the government data showing a greater degree of job creation than ADP initially estimated. It follows no rhyme nor reason, we know, but it says clearly that ADP is not signing off on the government’s data. So it would appear that ADP values its interpretation higher than the Labor Department while the DOL could care less about what ADP thinks. Which is right? Do you have any darts?

What we know about June so far is that ADP thinks the service sector contributed significantly to job growth, adding some 130K jobs on net. That was three times more than it did in May, and ADP had no problem saying so. The Institute for Supply Management seems to concur, but in an appropriately disjointed fashion. It was just this week, after all, within which ISM reported a decline in its Non-Manufacturing Index (read service sector measure). Declines are not generally good, and neither is this one, but a reading above 50 still marks economic expansion, and ISM marked 53.3 for June. More importantly, ISM’s Non-Manufacturing Employment component Index reached 54.1 (versus 54.0 in May), indicating job additions at a minimum. Both ADP and the government are looking for overall additions, so we suppose you can at least count on that Friday.

The goods producing sector, however, only added 27K jobs in June, according to ADP. That was much improved from the goods sector estimate for a loss of 10K jobs in May. Manufacturing employment was seen adding 24K jobs on net, continuing what appears to be a fragile streak of seven of eight months of growth. The always ailing (or seems so) construction sector lost another 4K jobs in June by ADP’s count. 2.1 million construction jobs have been lost since the industry's employment peaked in January 2007. If you think that’s bad, imagine how many jobs have been lost in construction when including undocumented immigrants. The financial sector, including Wall Street unfortunately, lost 3K jobs in June, allegedly.

Smaller companies continued to provide the jobs according to ADP. Companies with fewer than 50 workers added 88K jobs, with mid-sized firms (50-499) adding 59K. Large companies with 500 or more employees only added 10K jobs according to ADP. I guess in a questionable environment, better to fatten up the balance sheet than to feed some lug’s hungry kid huh?

According to ADP, this type of private sector growth reflects recovery from the spring lull. ADP also advises that the unemployment rate might hold steady or even improve modestly in June based on its view. We’re not sure who is right, but economists surveyed by Bloomberg are looking for the unemployment rate to also hold at 9.1% Friday. I suppose also that in the end the bachelor party doesn’t really matter; it’s the marriage that counts.



Article should interest investors in 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), State Street (NYSE: STT), Janus (NYSE: JNS), T. Rowe Price (Nasdaq: TROW), 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), 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), SFN Group (NYSE: SFN), 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), General Employment Enterprises (NYSE: JOB) and TeamStaff (Nasdaq: TSTF).

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.

Jobless Jive at the Cost of a Sound Bite

I get a little peeved sometimes when I hear a financial journalist twist data for the sake of a sound bite. It’s like this morning when a reporter said jobless claims had improved, implying the economy was simply lovely. I would be fairly certain viewers and listeners could discern reality if not for the Dow’s drive higher, up 0.8% or so today. My perusal through the Labor Department Report seems to support the reporter’s case, however accidentally she may have gotten there. So who’s to say if the latest jobless data offered good or bad news? I suspect 61K Americans have that answer.

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.OB, OTC: PSRU.OB, OTC: CRRS.OB.

Jobless Jive at the Cost of a Sound Bite

Yeah Weekly Jobless Claims improved in the latest reported period ended July 2, but the 14,000 benefits filer decrease only took the weekly claims tally down to 418K. That’s right around the area it’s been meandering about for what seems like an eternity now. I mean that was clearly evident in the four-week moving average, which only improved by 3,000 to 424,750. This is not enthusing news, not in the least.

The insured unemployment rate dropped a tenth of a point in the period ending June 25, to 2.9%. It certainly was good news to see that insured unemployment improved by 43K in that same period, but 3.7 million people are still receiving unemployment insurance checks. If we count all Americans receiving some sort of government aid, including those receiving unemployment insurance through the extension program, well then 7,459,561 million suffering Americans come into the spotlight. Hey though, that’s 61K less than the previous week.

Come to think of it, the drift of this figure lower has been a juicy economic positive over the past few months, which I suppose is only so tasty for an economist’s palette. But I wonder how many of the people falling off this list are simply falling off the radar. And what if this latest pressure about the budget deficit leads Congress to cut off extensions; what if the policing of these benefits has already tightened, leaving Americans high and dry without a job and without any income as well? It would seem that this is possible at the ground level. If this not so savory theory is cooked into the numbers, then the divergence between the unemployed and underemployed should be exaggerated Friday when the Labor Department publishes its latest data.

One thing is certain, extended benefits are still being paid out at least in these states: 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, and West Virginia (during the week ending June 18).

So whether this report is a good one or not is probably not for us to say. Neither can that aforementioned reporter know for sure. Only those 61K Americans no longer receiving checks can tell us what’s going on and exactly how things are. Are you working or are you panicking? Please tell us.

With this data, I always like to provide you with the latest information from the individual states:

The highest insured unemployment rates in the week ending June 18 were in Puerto Rico (4.7), Alaska (4.2), Pennsylvania (4.0), Oregon (3.9), California (3.7), Nevada (3.6), Arizona (3.4), Connecticut (3.4), Illinois (3.4), and New Jersey (3.4).

The largest increases in initial claims for the week ending June 25 were in New Jersey (+6,827), California (+5,375), Massachusetts (+3,816), New York (+2,591), and Connecticut (+2,097) while the largest decreases were in Pennsylvania (-4,974), Puerto Rico (-1,332), North Carolina (-1,316), Georgia (-975) and the Virgin Islands (-927).



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), SFN Group (NYSE: SFN), 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.OB), Purespectrum (OTC: PSRU.OB), Corporate Resource Services (OTC: CRRS.OB).

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.