On one hand, it could be much worse. On the other hand, nobody is motivated. I like that there is some nibbling in the market right now, but the masses are steadfast about not forcing the issue. Last night's primary results give hope, but voters are fickle. Yet, the investor class, and would-be investor class (which should be all Americans), while having the power to change things, aren't sure about themselves. People sitting at their cubicle or in the company cafeteria feel lonely, like maybe they're in this fight alone, but they're not. The greatness of grassroots movements is individualism, people making judgments based on what they know and what they have been taught. It's not the same as receiving marching orders.

So, Tea Party participants have more passion than union members but the former is saddled with doubt and so, too, the stock market is saddled with doubt. It would seem a no-brainer; a seismic shift is needed in Washington, where the agenda of the elites takes precedence over everything. The Administration is sticking with the blame game as seen by the spin on the egg recall as being George Bush's fault. I'd like to see the Republicans sharpen their ideas more, although it's not true they have none. In the meantime, the market meanders. In the meantime, the core of the nation's confidence continues to erode. The stock market is the perfect proxy for the nation's psyche, the value is there but the will is anchored.

Housing data is so atrocious and heartbreaking that we have to consider how much more humane it would have been to have allowed it to fall to its eventual bottom rather than this macabre slow-drip agony. Our housing sector analyst, David Urani, breaks down the situation later on in this report.

The selling I'm witnessing is mostly frustration, although there are legitimate reasons for concern. It has been a long time since any economic data release could be deemed good. In fact, in light of what we know, even positive data earlier in the year needs an asterisk affixed. Through it all, there is the business cycle, there is value, there are pockets of global strength, and there is magnificent opportunity here at home. The market is hanging tough on thin volume, but it's not convincing. We are working on short exposure if major support points are breached but right now, you should have some cash.

Today, crude and gasoline inventories climbed significantly more than expected. It's something of an exclamation point to lackluster demand this summer. Labor Day weekend is supposed to see a spike in drivers hitting the road, so we'll see. Our oil sector analyst, Conley Turner, breaks down the industry trends later in this report.

Just Stay Away from Private Markets
By: Brian Sozzi, Equity Research Analyst

The last couple of months have been rather eventful for global equity markets. Seemingly each day there are conflicting signals regarding the sustainability of the U.S. recovery, the impact from the implementation of deficit reduction measures in the EU, and how will the cool down in red hot China unfold. Second quarter earnings did very little to minimize investor trepidation when it comes to risk assets. Corporations beat on earnings handily, enacted share repurchase plans, spun stories of positivity, and served up in line 3Q forecasts by and large. However, the market has not bought into such tales, believing them to be folly as three-months of souring economic data may well metastasize in second half earnings.

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Keynes Fails on Housing, Recovery Still out of Grasp
By: David Urani, Research Analyst

The housing sector has been through a lot over the past few years. In fact, one could say it has been the focal point of the bad conditions in the economy. It was only natural that we would seek to prop it up with the implementation of the $8,000 tax credit for homebuyers. The full extent of the program from late 2009 through early 2010 has cost about $30 billion. You would think we would have something to show for it, but the answer is no. The truth is, now that the tax credit incentive is gone, we are sitting on lows for home sales not seen since the 1990's. Yes, the home sales environment now is the worst it has been throughout the entire housing downturn. And, the tax credit is by no means the only thing we've done, having spent tens of billions of dollars more on mortgage liquidity measures through the Fed and the $75 billion HAMP mortgage modification plan. So much for basing our recovery on the Keynes textbook. Here's a breakdown of where we are and where we're going in the housing market:

Existing home sales in July fell by 27% from June as the buying frenzy for the tax credit was removed. The result was the lowest level of single-family home sales since 1995. At a 3.83 million unit annual pace, demand in July was 14% lower than the previous cycle low set in November 2008. All four major regions showed declines of more than 20%, including a 35% drop in the Midwest. The result goes hand in hand with a record low for new home sales set in May (note: existing home sales data lag new home sales because of how they are recorded).

In 1974, the nation was facing a difficult housing situation as three years of home supply sat on the market. In an effort to clear that inventory, a $2,000 tax credit was offered for a year for newly constructed homes. Consequentially, as we saw with the 2009-2010 tax credit, home sales surged and that inventory was in fact cleared. That tax credit was hailed as a success, thus the popularity for another one in 2009.

What we should have noticed, however, was that the tax credit did nothing to fundamentally strengthen housing. New home sales did increase after a long lull, but existing home sales had never really weakened. High rates of sales from 1975 through 1978 led way to a prolonged housing crash as the savings and loan crisis of 1980 took home sales into the dumps. Interestingly, in the 1980's, home sales recovered without incentives. What we see now is in much of the same vein - tax credit incentives brought home sales back out of the dumps but what we failed to recognize is that the fundamentals this time around were in a true downturn and had never actually recovered by the time the tax credit expired. In essence, we created a mini-bubble that only endangers those who recently bought a home only to face a difficult market now that it's over, with a high chance of real estate re-devaluation.

As we can see in the chart above, pricing has held somewhat, but we see this as a lag effect, similar to the pricing delay experienced when home sales began to plunge in 2007. Notice that in past housing busts, we never really saw a prolonged decline in prices, only sales. This recession's housing bust is unique in that it reflects a true bubble in home values. That bubble is now poised to deflate further now that the tax credit is gone, with both the supply and demand sides of the equation in dire straits. We covered the demand side, now let's look at supply.

Foreclosure filings for July increased from June, reaching a total of 325,229 for the month. That makes 17 consecutive months that foreclosure filings have been above 300,000. Both new delinquencies and foreclosure completions rose during the month, indicating an all-around bad report. New delinquencies had been on a steady decline, indicating stabilization in the health of homeowners. However, the latest uptick in new filings indicates that we are by no means home free yet, and in fact weak pricing continues to put more borrowers underwater. In addition, the rate of foreclosure completions (repossessions) continues to rise, and now rests at the second highest level on record, second only to May. Essentially, that means that the rate of vacant homes hitting the market is at an all-time high pace, threatening to add to the excess supply in the market. In fact, existing home supply has already risen for four of the last six months and is up 22% year to date. So, the decrease in sales combined with the increasing supply can only lead to weakness for home prices.

With all of the programs we've initiated to help housing, we've pretty much tried everything for all angles. I'm afraid to say we don't really have any other options aside from the extreme/highly expensive. When it comes down to it, it's going to take a turn in employment to truly get housing back on track. When you take a look at employment trends versus existing home sales (below) you can see a clear inverse relationship. Not only will employment improve potential homebuyers' confidence, but it will also put unemployed homeowners back on the job and out of the foreclosure process. Although I do expect to see some bottom feeding in home sales in the months ahead, with some modest increases, the continual high rates of foreclosure are likely to keep inventory rising anyway as demand is unlikely to strengthen enough to offset repossessed inventory. Only when employment turns will I be confident in the housing market, and given the latest figures, we simply aren't there yet.

Color on Oil
By: Conley Turner, Research Analyst

The price of crude oil continued to be under pressure as a host of data pointed to an economy clearly on the ropes. The fact that the economy is weaker translates into a reduction in activity, which then means less demand for energy. The most recent of such reports was in the form of durable goods orders, which showed that business spending fell sharply in the month of July as the economic recovery slowed. In what can be viewed as an abundance of caution, many corporations curtailed additional investments in plant and equipment as the cloud of uncertainty settled on the macro business environment.

Excluding transportation, durable orders declined by 3.8%, which is the sharpest decline recorded since the start of the year. Orders for capital goods declined in July, and represented the largest decrease since January of 2009. It is important to note that it was during this time that the economy was in the throes of the Great Recession. This data point is just the latest of a series of similar reports that support the ongoing narrative of a weakening economy.

A similar report earlier in the week conveyed that sales of previously owned homes showed an actual decline in the month of July to the lowest level in a number of decades. Additionally, the situation of chronic unemployment continues to be the Achilles heel of this ongoing recovery attempt. The official number being close to 10% is bad enough, but if a wider measure of unemployment is considered to include those who are partially employed or who have become despondent about actually getting a job, the number is then closer to 18%, as my colleague Brian Sozzi mentioned above. This statistic is sobering as it showcases the significant battle that the Administration and the country have in terms of getting the economy back on track.

The broader equity market is swooning, and oil prices are following in tandem. Adding pressure to crude prices is the most recent inventory report which indicated a build in crude supplies of 4.1 million barrels in the previous week. There is just not enough demand for energy to deplete existing supplies. In fact, it is possible that the onslaught of recent economic news could possibly drive the price of the commodity even lower. As it stands, oil is currently trading at the low end of the current trading range, and some investors are viewing this as an entry opportunity.

iPads Will Continue to Dominate
By: Carlos Guillen, Research Analyst

Despite the fact that there has been increasing competition to make tablets, Apple Inc.'s (AAPL) iPads will likely continue to dominate the tablet landscape at least until 2011. According to market research firm iSuppli Corp., the iPad will account for an overwhelming 74.1% of global tablet shipments in 2010, with the remaining 25.9% consisting of a mix of older PC-type tablet products and competitive slates. But it goes further than that, the first significant iPad competitors should arrive in 2011; nonetheless, Apple still will maintain a prevailing 70.4% share of shipments, iSuppli estimates. Even in 2012, the iPad will continue to control nearly two-thirds of shipments, at 61.7%, as the competition strives to develop ecosystems of tablet apps and content that can match up with those of Apple.

Reacting to iPad demand, China-based white-box vendors have been withdrawing from the netbook segment and are instead rushing to launch iPad-like tablet PCs in the China market at 600-1,500 yuan (U.S. $89-$221), according to sources from notebook players. However, inferior quality may put the vendors at a competitive disadvantage. The white-box vendors originally planned to enter the e-book reader market in the second half of 2009, but since demand for e-book readers in the Asia Pacific market dropped significantly in the first half of 2010, the vendors decided to turn to the tablet PC market instead.

Historically speaking, it will take some time before competitors will be able to take a bite out Apple's iPads. It takes time to bring a product to market, then longer to provide the necessary software support, and longer to provide the same user experience that iPads provide. However, the push to compete with Apple is strong, and huge resources have been devoted to accomplish this task.