Look for shares of Office Depot (NYSE: ODP) to take a beating today after the office supplies retailer shocked Wall Street by predicting a huge drop in its second quarter same-stores sales.

Office Depot is going to announce its second quarter numbers later this month, and investors got a better picture of just what to expect this morning after the company stated that it is now forecasting a 10% drop in its same-store sales for the quarter, citing the slowing American economy as the main reason.

The company also warned it expects the remainder of the year to remain difficult. While the retailer believes that sales trends should improve slightly, it is remaining pessimistic. Margins for the quarter, it says, have declined by about 200 basis points than what it had previously anticipated. Even before today's revision, the company had estimated about 200 to 250 basis point decline in its margins. Looking at the rest of the year, the company thinks that its margins should increase sequentially in both Q3 and Q4.

Now and then, a media outlet or analyst will talk about $200 crude. Most analysis shows oil peaking at $160 or so and dropping back over the next few months. The commodity may never trade at $60 again, but most of its rise may be over.

Unfortunately, the picture of the energy world seems to be changing. According to The Wall Street Journal, "Oil's historic ascent from $100 to nearly $150 a barrel in just six months is lending weight to a far grimmer prediction: Crude could reach $200 a barrel by the end of the year." The paper adds that this could mean gas would rise to $6 a gallon.

Oil may actually go higher especially if demand in China and India continues to rise and oil producing countries, including Venezuela and Nigeria, stay politically unstable.

What is truly frightening is what $200 oil would do to the U.S. economy. It would almost certainly send companies in the automotive and airline sectors into Chapter 11. Some consumers could see the cost of gas and heating their homes become as high as 20% to 25% of their total cost of living. That would destroy current retail spending habits.

But the economic effect would be more widespread than the airline and car sectors. Every industry that has to ship large amounts of its products, from newspapers to food processors, would be faced with nearly unimaginable additions to their costs of doing business.

All of that would send the US economy into a long and very deep recession. If nothing is done about oil prices soon, the odds of tremendous trouble go way, way up.

Douglas A. McIntyre is an editor at 247wallst.com.

Bloomberg News reports that vacancies are rising fast. It notes that the average vacancy rate at neighborhood and community malls rose to 8.2%, up from 7.3% in 2007 and the highest level since 1995. And at regional and super-regional malls, vacancies increased to 6.3%, up from 5.6 % in 2007.

Sam Chandan, chief economist of research firm, Reis Inc., told Bloomberg that the amount of retail space being abandoned, "consistent with store closures, is at its highest level in almost 28 years." What's going on? Retailers --such as Linens 'n Things, Sharper Image, Lillian Vernon, Bombay and Levitz Furniture -- have filed for bankruptcy.

Why so many bankruptcies? It could be that with housing prices down 15% and 3 million mortgages in foreclosure people can't borrow the money they formerly used to purchase the goods that these malls sell. With consumer demand dropping and vacancies on the rise, it's surprising that rents are increasing at all.

The New York Times reports that the European Central Bank raised its equivalent of the Fed Funds rate to 4.25%. Meanwhile, Bernanke's economic wrecking crew has kept the U.S. rate at 2%. Investors will sell dollars and buy Euros. That will cause the dollar to lose even more of the 72% it's lost since January 2001. But none of this is really happening because AFP reports that President George Bush has declared that "we're strong dollar people."

The key to U.S. policy is repeated denials of the obvious -- which is that U.S. policy is consistently intended to weaken the dollar. The reason is that a weak dollar makes the goods of big U.S. corporate exporters relatively cheap when they sell overseas. And of course, since oil is traded in dollars, a weak one causes the price of oil to spike. It now resides at a comfortable $146 a barrel, up 508% since January 2001.

But Reuters reports that Treasury Secretary Hank Paulson -- who last year brought us "subprime is contained" -- now says that the weak dollar is not to blame for high oil prices. With apologies to the old E.F. Hutton advertisements -- which said "When E.F. Hutton talks, people listen" -- when Hank Paulson talks, people snicker.

Non-farm private employment decreased 79,000 in June on a seasonally adjusted basis, ADP announced Wednesday in the ADP National Employment Report. (pdf)

Meanwhile, the May estimated change in employment was revised down 15,000 to a gain of 25,000 jobs, ADP said.

In the June jobs report, employment in the service-providing sector fell 3,000, its first declined since November 2002. The goods-producing sector declined 76,000, and manufacturing employment fell 44,000, their 19th and 22nd consecutive monthly declines, respectively.

Employment among small-size businesses, defined as those with fewer than 50 workers, rose just 7,000 during the month, while employment at large businesses with more than 500 workers declined 51,000. Jobs at medium sized business, with 50-499 employees, decreased 35,000.

It is reasonable to believe that as the cost of crude rises, demand will fall. It is in the Economics 101 textbooks. It has to to be true.

Not so, says The International Energy Agency. According to The New York Times, the think tank says "the small decline in oil demand in the industrialized countries will be more than offset by an estimated increase in demand of 3.7 percent a year from 2008 to 2013 in developing countries, particularly in Asia, the Middle East and Latin America."

The argument has the benefit of making sense. Asia, especially China, cannot keep up its GDP growth without gas to drive its transportation industry. It has cut the amount it provides to underwrite the price of diesel and gas, but it has not eliminated the practice. Driving a car or truck on the mainland is still cheap.

In the Middle East and Latin America, many of the countries are net exporters of crude. Brazil recently claimed that it found one of the largest oil deposits ever discovered. The field are just off its coast in the ocean. Many of the nations with excess oil will keep some of that at home to build their own infrastructures.

Oil prices are staying high whether the US can afford that or not.

Douglas A. McIntyre is an editor at 247wallst.com.

If an enemy sworn to the destruction of the global economy was given free reign, it would follow the strategies of its current leaders.

One key to destroying an economy is to break its pricing mechanism. What does an effectively functioning pricing system do? It creates a market of buyers and sellers who can meet, agree on a price, conduct the transaction, and create an information trail that permits future market participants to judge what might be a fair price for their transactions.

Another key to destroying an economy is to put too low a price on risky behavior. Why is it important to price risk accurately? Because if decision-makers do not assess the risk at the time of their decision, the economy will end up paying for the under-priced risk long after those decision-makers have left office.

So how have current leaders broken the pricing mechanism and under-priced risk? Here are three ways:

It's heartbreaking to hear about the increasing numbers of homeless people as a result of the subprime mortgage crisis and the ensuing foreclosures. It's even more distressing to read that 2 million children will be affected as a result.

Many who join the ranks of the homeless are actually middle-class families. Many are renters of homes that were foreclosed. Practically all of them never expected to be in this situation. According to a study released in April by the National Coalition for the Homeless, "76% of displaced homeowners and renters are moving in with relatives and friends. About 54% are moving to emergency shelters. About 40% are already on the streets."

Well, I find this whole situation infuriating for several reasons. One is personal responsibility. I can't help but wonder how a middle-class family with two earners does not save enough for a rainy day. And if you can't manage that, what were you doing buying a 3,000-square foot house in the first place?

Another reason this is all so infuriating is lack of proper laws to protect tenants of foreclosed homes. What are renters to do if they're not even notified in time to arrange their affairs? What are they to do if they lose their deposits? What are they to do if the new owner doesn't assume the rental responsibilities? More protection is required in such situations.

Then there is good old plain greed and callousness. Somehow, they always seem to go hand in hand. The housing market is oversupplied, we hear. There is a great deal of inventory standing empty. Many foreclosed homes stand empty. So it wasn't enough that lenders, with their greed, brought the country to this mess, now they can't even see a way to redeem themselves. It's true, they're not in the business of renting homes out, but if there are empty homes, and there are homeless people, then perhaps they should. Or at least find a way to get those empty homes filled out.

Knowing them, they'll likely to still manage exploit the public even in this while making a buck or two for themselves, then why not do something good for a change?

The Dow Jones Industrial Average is down 150 points (at 10:15 a.m.). I guess that it was to be expected as we woke up to news that Goldman Sachs (NYSE: GS) downgraded investment banks. Wall Street is also worried about the outlook for tech stocks after both RIM (NASDAQ: RIMM) and Oracle (NASDAQ: ORCL) reported quarterly results Wednesday, giving a tepid outlook.

Then, final revision of first quarter GDP were released an hour before the open, and while growth was revised upward to 1% from an anemic 0.6% original estimate, the components weren't very encouraging. Consumer spending, which accounts for 70% of GDP, grew by 1.1%, the smallest gain since the second quarter of 2001, which was during the last recession. Also, corporate profits after taxes fell 7.8%, a higher decline than previously estimated. Housing, as measured by residential fixed investment plunged by 24.6%.

Also, looking at inflation, the price index for gross domestic purchases, a closely watched measure of inflation, rose at a 3.6% rate, up 0.1 percentage point from the preliminary estimate. Excluding food and energy, the price index was up 2.3%, which is above the Fed's preferred range of around 1.5% to 2% for that index.

One bright spot, as it has been awhile now, is that exports rose 5.4%, which was much better than the estimate of 2.8 percent in May.

Moving to the labor markets, weekly initial claims, which were also reported at the same time, were unchanged. But -- and a big But it is -- the better indicator, four-week average of new jobless claims, was at the highest level since October 2005 in the aftermath of Hurricane Katrina.

Amid the cascade of data flowing from the financial world, every once in a while there's a data point with not only macroeconomic significance, but also potentially with trend-indicator characteristics, as well.

One such data point may have occurred Wednesday when MasterCard (NYSE: MA) released data indicating that U.S. consumers purchased an average of 9.45 million barrels of gasoline per day in the week ended June 20, 2008, down 2.7% from the 9.71 million gallons per day purchased a year earlier, Bloomberg News reported.

The consumption decrease occurs after a roughly 30-40% increase in gasoline prices compared to a year ago, and if the decline continues, it would represent the 'demand destruction' level that's essential to slowing gasoline price increases.

Further, a key oil analyst holds that view. Daniel Yergin, chairman of Cambridge Energy Research Associates, told a U.S. Congressional panel that "...2007 may well have been the top, the break point, in terms of gasoline demand," Bloomberg News reported Wednesday. He added that the price of oil has hit a break point where the United States will begin to seek alternatives.

Are the days of wine, roses and interest rate cuts over? The answer for now seems yes.

In a statement released today, the Federal Open Market Committee said it decided to keep its target for the federal funds rate at 2% because data indicates that labor markets have soften further and financial markets remain under stress. Moreover, the credit crunch, the lousy housing market and rising energy prices are "likely to weigh on economic growth for the next few quarters." No kidding.

The FOMC's decision, which comes amid growing fears about the outlook for inflation, should not have come as a shock to investors. Federal Reserve Chairman Ben Bernanke and other top bankers have hinted for months that the days of wine, roses and interest rate cuts would be coming to an end. In fact, the market seemed to have already absorbed the market. The major stock market averages barely budged after the announcement was issued.

Some people waiting for their economic stimulus checks may be in for a shock.

According to USA Today, about $2 billion in payments from 1.8 million checks are being confiscated from people who owe child support, student loans and back taxes. Taxpayers get letters from the government explaining why their bank accounts are not being stimulated and so far few have complained, according to a Treasury Department official quoted by the newspaper.

I am all for making sure that children get the financial support they deserve. People also should not be able to dodge student loan payments or tax bills. The government, though, cannot impose a one-size-fits-all solution. For instance, what if someone is laid off and is already behind in their bills? The economic stimulus is supposed to help people in need, right?

Though the economic stimulus checks have helped boost retail sales, investors should keep their expectations in check. Many of the people I know are using their stimulus checks to pay bills, not buy big-screen televisions. A good portion of my stimulus is going right back to Uncle Sam for taxes I need to pay for being self-employed. That's another rant for another time.

GM (NYSE:GM) went back to huge incentives to move out inventory and keep its sales churning, at least at a modest level. Its product mix, with too many SUVs and pick-ups, is bleeding the company as more buyers move to sedans which burn less gas.

Under the company's latest program, the big car company will "offer zero-percent loans for up to 72 months or cash rebates of up to $7,000," according to The Wall Street Journal.

What may not be apparent, at least at first blush, is that the program costs GM some real money. It has to come up with the capital to finance the customer's borrowing. It does not get that money without paying interest. GM sells a car, gives up the 4% interest it might have earned each year, and has to find capital to make the loan at a time when its corporate cash balance is falling..

The other problem GM has is that the rebates and low financing devalue the car itself. The consumer is getting a "cut rate" vehicle. When the time comes to launch next year's models, people are not going to be willing to pay huge increases which include the normal annual price increase, but without the incentives. In theory, a buyer could move from $25,000 for a 2008 model of a GM sedan to $32,000 for the same model for 2009.

Incentives cut the price that GM can get on a brand, not just in the year it is sold, but for at least a year after. And, the money GM loans the customer is not "interest free" for GM.

Douglas A. McIntyre is an editor at 247wallst.com.

An interesting post written by Joseph Lazzaro on Tuesday indicated that many economists think that the economies of Brazil, Russia, India and China, known as the BRIC economies, will supplant the United States and European nations in terms of world power and economic strength. While this may be true to a degree, I have a message for those emerging economic powerhouses: they had better be careful.

Dear Brazil, you have resources you can't yet even contemplate. However, you have been whacking through your opportunities at a very rapid pace. You have no idea about what political powers you should align yourself with. Can you reign in your pirates, your poachers, your drug lords? Can you effectively protect even just one of your trees?

Dear Russia, you scare me. The world knows more of your organized crime than it knows of your present government. You move more capital through your black markets than through your own ports. You turn your backs on true enterprise in exchange for quick profit.

FedEx Corp. (NYSE: FDX) is up a creek without a paddle.

The second-largest delivery company reported today a net loss of $241 million, or 78 cents per share, compared with net income of $610 million, or $1.96 per share, a year earlier. Excluding an $891 million charge for its Kinko's unit, profit would have been $1.45 per share, missing the $1.47 estimate of analysts surveyed by Bloomberg News.

Wall Street, though, gave a thumbs down to FedEx's lackluster guidance which heightened concerns about the health of the overall economy. Shares of FedEx and its rival United Parcel Service Inc. (NYSE: UPS) slumped in early trading.