The Greek's Week Ahead - Holy Week!

The Greek's Week Ahead is the most comprehensive "week ahead" market-moving event planner in existence.
The week ahead will offer a shortened trading period due to Western Christianity's celebration of Good Friday. Speaking of good Fridays, we have had a few doozies over the past several periods. Two weeks ago, the Employment Situation Report sent markets for a spin, and then last week Bear Stearns needed rescue when it could not find counter-parties willing to deal with it. Thank Benjamin, JP Morgan Chase and the New York Federal Reserve played savior and kept Bear liquid, and solvent for that matter.

Unlike Eliot Spitzer, the market was having a relatively decent week until the Bear Stearns emergency. For the week, the Dow closed higher 0.5%, the S&P 500 moved lower 0.4% and the Nasdaq was unchanged. Four-week moving average mutual funds flows continued to show improvement for equity funds, with net inflows averaging $835 million. Still, money funds drew in $18.5 billion in comparison, but this continued a decreasing trend in the level of cash inflow to the sector.
Overseas, every major European market closed lower for the week, except Belgium and also Spain on the heels of its election. Finland dropped the most, down 4.0%. The broad DJ STOXX Index fell 1.2%. In Asia, all major markets fell, with the Indonesian market leading the losers as it collapsed 10.6%. India moved 1.2% lower, Japan 4.35% and Hong Kong 3.5%.
Gold closed the week just under $1,000 per troy ounce, at $999.50. Light sweet crude closed up $5, to $110.21 per barrel. Natural gas finished higher, to $9.87 per mmbtu. The dollar closed weaker to 1.5665 euros.
Before the Bear Stearns blowup... last Friday morning's Consumer Price Index for February seemed just the right fuel for a strong finish to the week when it offered data showing no change in prices. However, as it turns out, the period recorded completely excluded the recent price rise of oil and distillates, like for instance gasoline! Everyone who drives or has seen a newspaper headline over the past month knows that gasoline has marked record territory recently. So, it appears next month's CPI will not be so pleasant.

As usual, the Fed's action to keep Bear alive spurred much debate. It smells of a bailout, and that always draws the ire of free market capitalists. There's a moral hazard to rescuing one company that fails due to its own excessive risk taking. There's a concern this might encourage haphazard risk management at other firms, since there's an understanding that the Fed is there for rescue if necessary.

However, The Greek disagrees with the moral hazard argument, since we view the alternative unacceptable. If not for this and recent Fed action, we expect the American economy would be well on its way now to depression, not just recession, and that stock prices would be much lower.

The Week Ahead

This week offers important barometers of manufacturing sector condition and a timely meeting of the Federal Reserve.

Monday

A new governor takes over in New York and an important area manufacturing barometer will be measured on Monday. The day's Empire State Manufacturing Survey and Industrial Production reports, and the Philadelphia Fed Survey on Thursday, threaten to show manufacturing activity deteriorated. In their last reporting, New York and Philly area manufacturing dropped off sharply. Bloomberg's consensus is looking for a March Empire State General Business Conditions Index level of -6.3. Economists are looking for a February decrease in industrial production of 0.1%, and capacity utilization of 81.3%, which compares to 81.5% in January.

Monday's Treasury International Capital Report will measure foreign demand for long-term U.S. securities in January. December's data showed a decrease in foreign investment demand from the month just prior. Tuesday's State Street Investor Confidence Index will show how Americans feel about the same topic. We expect neither group is very optimistic.
The Current Account for Q4 is due early Monday morning, while the Housing Market Index for March is set for 1:00 PM release.
Monday's most noteworthy earnings reports include Bear Stearns (NYSE: BSC), Conseco (NYSE: CNO), 4Kids Entertainment (NYSE: KDE), AES Corp. (NYSE: AES), Acusphere (Nasdaq: ACUS), Bruker Biosciences (Nasdaq: BRKR), Cosi (Nasdaq: COSI), Excel Maritime Carriers (NYSE: EXM), GeoMet (Nasdaq: GMET), Goldleaf Financial (Nasdaq: GFSI), Houston Wire & Cable (Nasdaq: HWCC), Neurogen (Nasdaq: NRGN), Ocean Power Tech (Nasdaq: OPTT), Perry Ellis (Nasdaq: PERY), Repros Therapeutics (Nasdaq: RPRX), Shuffle Master (Nasdaq: SHFL), Syntroleum (Nasdaq: SYNM), The PMI Group (NYSE: PMI), US BioEnergy (Nasdaq: USBE), Vicor (Nasdaq: VICR) and WCI Communities (NYSE: WCI).

Tuesday

Le Rogue Trader, Jerome Kerviel might be set free by a Parisian Court on Tuesday. Speaking of criminals, some consider recent Federal Reserve action as highway robbery of dollar value. Heading into last Friday, the treasury market had been forecasting that the Federal Open Market Committee would decide on a 50 basis point rate cut (half of a percentage point) this week. However, in the mayhem of Friday morning, rate cut expectations rose to as high as 100 basis points.

More than a handful of economists would rather the Fed not cut rates this time around, considering the further damage it could do to the dollar. There's well-founded concern that in mitigating recession, the Fed might also spur future inflation that could do even more and longer-lasting economic damage. However, we agree that the Fed has to face the challenge at hand first, before looking beyond to a potential problem. The Fed is hopeful prices will naturally find suppression due to decreased domestic demand for goods and services. Globalization, however, threatens to keep the overall supply/demand equation tight, and thus prices high. We expect the FOMC will cut rates by 50 basis points on Tuesday.
The ICSC-UBS Weekly Same-Store Sales results last week surprised on the short side of recent trend. Sales rose only 1.6% last week, year-to-year, while retail sales were reported down 0.6% in February. We estimated that overall sales trends contrasted with same-store sales growth because of mounting store closures and slowing new store openings.
Last week's CPI data proved benign, but February's PPI data is due out on Tuesday morning. Bloomberg's survey shows expectations for headline price increase of 0.4% and a Core PPI rise of 0.2%. February Housing Starts are seen measuring 990K, compared to 1.012 million reported in January. The aforementioned State Street Investor Confidence Index is due at 10:00 a.m.
Tuesday's earnings reports include Adobe Systems (Nasdaq: ADBE), Darden Restaurants (NYSE: DRI), EnergySolutions (NYSE: ES), Gamestop (NYSE: GME), GenTek (Nasdaq: GETI), Goldman Sachs (NYSE: GS), Healthways (Nasdaq: HWAY), Lehman Brothers (NYSE: LEH), Radyne Corp. (Nasdaq: RADN), Somanetics (Nasdaq: SMTS), Tsakos Energy Navigation (NYSE: TNP) and more.

Wednesday
Wednesday brings the regular pre-market Mortgage Bankers' Association reporting of weekly mortgage activity. The Fed's action from early last week was partly intended to bring mortgage rates down. We'll see...
At 10:30, the EIA's Petroleum Status Report gets yet another opportunity to pound common sense into oil prices, but does supply/demand matter when the valuing currency is losing its worth by the minute.
Wednesday earnings reports include China Mobile (NYSE: CHL), General Mills (NYSE: GIS), Morgan Stanley (NYSE: MS), Nike (NYSE: NKE), Avalon Pharmaceuticals (Nasdaq: AVRX), Borders Group (NYSE: BGP), Charming Shoppes (Nasdaq: CHRS), Cintas (Nasdaq: CTAS), CLARCOR (NYSE: CLC), Discover Financial (NYSE: DFS), Emisphere Technologies (Nasdaq: EMIS), Guess (NYSE: GES), Herman Miller (Nasdaq: MLHR), Lindsay Corp. (NYSE: LNN), North American Palladium (AMEX: PAL), Petroleum Development (Nasdaq: PETD), Pinnacle Gas (Nasdaq: PINN), Ross Stores (Nasdaq: ROST), The Marcus Corp. (NYSE: MCS), Ulta Salon, Cosmetics and Fragrance (Nasdaq: ULTA) and more.

Thursday

Welcome to the witching hour, quadruple witching that is. Weekly Initial Jobless Claims are expected to measure 360K, after sticking at 353K last week. Leading Economic Indicators for February is set for Thursday reporting, and will give some further indication of how likely economic contraction is for the first quarter. Bloomberg's consensus is looking for a 0.3% decrease for February.
The Philly Fed Survey, which scared the cheesesteak out of the market last month, is widely expected to sit in negative territory again this time around at -20.0. The EIA Natural Gas Report at 10:30 should again offer bearish data.

Thursday's earnings include Carnival Corp. (NYSE: CCL), FedEx (NYSE: FDX), New York & Co. (NYSE: NWY), CRA Int'l (Nasdaq: CRAI), CryoCor (Nasdaq: CRYO), dELiA's(Nasdaq: DLIA), Genpact (NYSE: G), Global Options (Nasdaq: GLOI), Hellenic Telecommunications (NYSE: OTE), Luby's (NYSE: LUB), Palm (Nasdaq: PALM), Progress Software (Nasdaq: PRGS), Shoe Carnival (Nasdaq: SCVL), The Children's Place (Nasdaq: PLCE), Winnebago (NYSE: WGO), WorldSpace (Nasdaq: WRSP), Worthington Industries (NYSE: WOR) and more.

Because of the holiday on Friday, U.S. equity and bond markets will be closed. Markets in Hong Kong, Singapore and the U.K. will also be closed.
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Podcast 04: CU Skeptic [Currency Marketing] [The Banktastic Credit Union Feed]

By Tim McAlpine

Welcome to episode 4 of Credit Union Innovators. My guest is the infamous CU Skeptic. I don't know who he is, but this is what he states on his blog.

He's a sub-30-year-old male that has spent the last few years working in and around the banking and credit union industry. He has heard the tales of credit union greats and seen what some would call the bottom of the barrel. He's seen the efforts of small town banks and has all of his personal accounts with one of the big banks.

His take on banks and credit unions? At their current state, credit unions as a whole are no different than banks to the end user. Each have their share of sellouts and standouts, but in his eyes, that’s the bottom line.

You can listen by streaming audio here on the blog or you can subscribe to it in iTunes and listen on your iPod.

Some links to get to know the CU Skeptic even better:

His blog

Production notes:

Interview recorded with Rogue Amoeba's Audio Hijack and Skype
Intro recorded with a M-Audio Microtrack II mobile digital recorder
Edited in Audacity
Hosted on Evoca
Podcast RSS Feed through Feedburner
Music is A Song for Jake by Oregon Chad licensed through Creative Commons

The first day of Northern Voice 2008 = MooseCamp [Tinfoiling] [The Banktastic Credit Union Feed]

The first day of NV08 was pretty good. Of course there were sessions you couldn’t get to but there certainly was enough to keep you busy.

The Enterprise Social session had a good attendance and talked about wikis in the enterprise and how to successfully grow and use them. One aspect of wikis which was noted again and again was that search of all kinds sucks. But the biggest question was how do you get people to use these tools? What exactly hinders their use? It was interesting to note that the successful use of a wiki in an enterprise situation was conditioned on both the top and the grassroots contributing and there had to be a balance of both. It wasn’t like it would take hold just because it was introduced.

Citizen Journalism was interesting but it was also a presentation by CBC. The ‘motherhood’ culture predominated. Sure you can send stories and news to them but they will control the content. I don’t think they get it. By it’s nature citizen journalism uses the ‘openness’ of the web as one of its strongest points. To have it funneled and used by a large public media outlet takes away that strength. It was interesting to see how the CBC have now silently changed into beginning to understand what is happening. A few years ago blogging and alternative sources of news were largely ignored and discounted. But the giant will move slowly.

Photocamp was great. Lots of discussion around light.

WordPress and your problems was everyone moving into specific groups with resident experts leading the discussions and helping everyone with their questions. Jim Groom led our small group with some amazing information about plug-ins and presentation schemes.

Alan Levine had a session ‘More Than Cat Diaries’ that showed some web sites that don’t look like blogs but are running on blog software. The tag ‘notcatdiaries‘ on del.icio.us gives numerous examples.

That was it. Voxant was buying the beers and handing out T-shirts at the local bar so a bunch of us headed over there and continued discussing the day’s event. By the end of the day my brain hurt. And now we move into the second day.

Holy Hell! Don't Panic...

Bear Stearns sold for $2 a share over the weekend to sure up the financial system. Bear basically became the sacrificial lamb to save the rest of the investment banks, but JP Morgan got to eat the whole feast... or is it rat poison.
(Stocks in this article: NYSE: BSC, NYSE: JPM, NYSE: LEH, AMEX: SPY, AMEX: DIA, Nasdaq: QQQQ, AMEX: QLD, AMEX: DOG, AMEX: SDS, NYSE: GS, NYSE: MS, NYSE: C, NYSE: CS, NYSE: DB, NYSE: MER, NYSE: BCS)
Over the weekend, the Fed opened up the discount window to all the investment banks to insure what killed the Bear would not also cause mass extinction on Wall Street. At the same time, the Fed promised to keep the offer open for at least six months. The Fed also cut the primary credit or discount rate a quarter point to close the spread between it and the fed funds rate. I seem to recall The Greek and others recommending the closing of that spread a while back...
To further insure that all of New York's Financial District did not commit mass suicide today, the Fed is also offering backstop to JP Morgan's (NYSE: JPM) bid for Bear Stearns (NYSE: BSC) in the sum of $30 billion to cover its illiquid assets. The pain will all be felt by Bear Stearns' shareholders (or rather sh*tholders), which may be 30% composed of BSC's employees according to Barron's. Expect plenty of lawsuits as these people watched their stock crash from over $70 down to $2 in ten days. This is going to prove reminiscent to Worldcom for some folks.
Call in PETA!
The Greek spoke with an anonymous JP Morgan representative over the weekend, and according to her, what happened to Bear was just plain tragic. The $17 billion or so of cash on the company's balance sheet disappeared almost overnight as the leverage it had employed proved in hard core fashion why leverage increases risk. An ugly rumor got started (I have some ideas here) that Bear was in trouble. All of a sudden, nobody wanted to take the other side of Bear's trades, or risk any capital tied in any way to Bear. Or, maybe Bear really was in trouble.
Bear Stearns' new building is worth roughly $1.2 to $1.5 billion alone according to Bloomberg and Barron's, respectively, so how the hell do you buy the entire firm for $240 million? Well, you're taking on Bear's risk, and that risk is poison apparently. Still, Big Brother Fed has got your back so poison might not taste too bad at all.
Global markets tanked today as a result of concern for the most important economy in the world. Gold jumped $30 early this morning (now just $16 higher) and the dollar fell to a record low againt the euro of 1.59 (more recently about 1.58). Lehman Brothers looked as if it would be pressured in the premarket.
Don't panic folks! Lehman Brothers (NYSE: LEH) is now on death watch, but probably should not be. Regarding the market, a lot depends on what you folks do now. If you all rush to your computers and sell sell sell, then we'll crash today no matter what the Fed does. But, if the Fed plays its hand in full this morning, and goes through with its FOMC move that probably would have occurred tomorrow; instead acting today before the market open, then maybe it can once again breath life into this struggling patient. The fact is that initial reactions are already looking overdone. It's a good thing that this all played out well enough ahead of the market open for cooler heads to prevail, we hope...
Thank you. (disclosure)

Petroleum Status

The EIA's Petroleum Status Report this morning continued to produce information that counters logic for current energy pricing.

(Stocks in this article: AMEX: VDE, AMEX: GDX, AMEX: KOL, AMEX: NLR, NYSE: HUM, NYSE: FNM, NYSE: FRE, NYSE: BSC, NYSE: UPS, NYSE: SAM, Nasdaq: JASO, NYSE: PPC, Nasdaq: TTWO, NYSE: CAT, AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, AMEX: DOG, AMEX: SDS, AMEX: QLD)

Petroleum Status

The EIA Petroleum Status Report showed inventory build three times higher than expected, and served as a splash of cold water on the face of commodity traders. We said here in our weekly article that perhaps continued inventory building at heavy pace might force inflection point against the wild driver of momentum in the oil trading pits. But hey, what we do we know. Two weeks ago we labeled our weekly article, "Set to Retest Market Lows" (we then did) and then labeled this week's article, "Buy the News" (looks like you did). Sometimes, I scare myself to tell you the truth. But, I'm not psychic, or I would be on a beach in Greece instead of a stuffy New York City apartment. Or, I would be working for Goldman Sachs (NYSE: GS), since they seem to have the psychic market cornered.

Besides softening domestic demand, the strategic oil reserve draw should be winding down by our estimation. Last year, the government announced it would fill the reserve, and we diligently calculated that by March end, the reserve should be filled and Iran should be trembling. Might this be part of the reason inventory status is so changed... In any event, oil has no right rising in price, based on U.S. demand alone.

And, if global demand is the driver, than pricing should have reached this point sometime last year. European growth is burdened now, and China must eventually see some impact despite its own robust domestic growth. While it takes time to build power plants, it only takes hours to contemplate their fuel demands. Thus, the global demand factor was known.

So, why didn't oil rise to these levels when global economies looked flawless? Perhaps the barrier of historic price record itself stood in the way, as traders moved cautiously into the darkness of new pricing territory. They tested the water, found it lukewarm, but feared it might be cold deeper within and backed away before testing again. Could there be any other tangible reason for the energy equation?

Negative correlation to the dollar's direction has been just about perfect over the last ten dollars of oil price rise. So, oil price rise may be nothing but illusion at this point. It's just that your dollar cannot purchase what it use to, and the trend continues deteriorating. Even decoupling the two would have no economic consequence on American consumption cost. We would still be paying more for it in real dollars.
Or, is oil simply overpriced due to momentum? How far can momentum push price in an efficient marketplace? Or, are well-advised and capitalized investors buying oil ahead of a coming war. These are the possibilities. Tell me what you think is the real driver, if not a combination of each factor. Because the greatest of all factors, demand as measured by the EIA figures, says oil should be moving lower, not higher.
We will publish a solution for the dollar drift issue in a coming article. This is a symptom of a problem America must cure or otherwise settle for relegation as less than global leader.
You can support "The Greek" by supporting our advertisers. Thank you. (disclosure)

Innovation is local in a global context | case study - Zara [The Bankwatch] [The Banktastic FI Feed]

A thoughtful post on the nature of innovation, relative to globalisation, making the point that while the world appears global, the reality is quite local for effective innovation. The innovation levers technology and communication for the global aspects.

One example is Zara. Based on NW Spain, they have developed a global strategy of successful stores, but the innovation is centred in Galicia.

Irving Wladawsky-Berger
On average, it takes nine months to develop a new fashion product and get it into stores. Zara is able to shrink that number to a remarkable four to five weeks. Consequently, it can assess in real time how well its products are doing in its stores around the world and take action accordingly. If after a week a product is not selling well, it is withdrawn from the stores and the orders are cancelled. On the other hand, if a product proves hot, production is ramped up, and variations on its design are quickly pursued.

Some points of note on Zara’s strategy;
- they reduced production cycyle from 9 months to 4 weeks
- local receptivity on new designs is gathered real time from all stores back to Galicia
- design is all in house in Galicia
- actual production is local near the individual stores
- all communication is network based

Premarket Action: Bravo Bernanke!

Through this premarket action, some of the world's most important central banks are working together to bring liquidity back to mortgage markets.
In dramatic premarket fashion, the U.S. Federal Reserve in concert with the ECB, Bank of England, Bank of Canada and the Swiss National Bank are undertaking creative, concrete and substantial action to address credit market issue. This ties right in with our discussion over the weekend, that the intangible in the economic dilemma is human creativity and the problem solving human mind. It is constantly discounted as a stagnant economic factor, while it proves itself dynamic time and again. It finds solutions where none are evident or expected, and reliably so. We'll have more to say about the market in our follow up article today.
Please find the Fed announcement republished word for word below:
Since the coordinated actions taken in December 2007, the G-10 central banks have continued to work together closely and to consult regularly on liquidity pressures in funding markets. Pressures in some of these markets have recently increased again. We all continue to work together and will take appropriate steps to address those liquidity pressures.
To that end, today the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank are announcing specific measures.
Federal Reserve ActionsThe Federal Reserve announced today an expansion of its securities lending program. Under this new Term Securities Lending Facility (TSLF), the Federal Reserve will lend up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days (rather than overnight, as in the existing program) by a pledge of other securities, including federal agency debt, federal agency residential-mortgage-backed securities (MBS), and non-agency AAA/Aaa-rated private-label residential MBS. The TSLF is intended to promote liquidity in the financing markets for Treasury and other collateral and thus to foster the functioning of financial markets more generally. As is the case with the current securities lending program, securities will be made available through an auction process. Auctions will be held on a weekly basis, beginning on March 27, 2008. The Federal Reserve will consult with primary dealers on technical design features of the TSLF.
In addition, the Federal Open Market Committee has authorized increases in its existing temporary reciprocal currency arrangements (swap lines) with the European Central Bank (ECB) and the Swiss National Bank (SNB). These arrangements will now provide dollars in amounts of up to $30 billion and $6 billion to the ECB and the SNB, respectively, representing increases of $10 billion and $2 billion. The FOMC extended the term of these swap lines through September 30, 2008.
The actions announced today supplement the measures announced by the Federal Reserve on Friday to boost the size of the Term Auction Facility to $100 billion and to undertake a series of term repurchase transactions that will cumulate to $100 billion.
Information on Related Actions Being Taken by Other Central BanksInformation on the actions that will be taken by other central banks is available at the following websites:
Bank of CanadaBank of EnglandEuropean Central BankSwiss National Bank

Statements by Other Central BanksBank of JapanSveriges Riksbank
You can support "The Greek" by supporting our advertisers. Thank you. (disclosure)