Good morning. Happy Thursday. Hope you enjoyed your day off.
The Asian/Pacific markets closed mixed. China (down 1.2%) was the only 1% mover. Europe is currently mostly up. Only Greece (up 1.2%) has moved more than 1% from its unchanged level. Futures here in the States are up slightly.
The dollar is up. Oil moved down yesterday (electronically) and has regained the loss today. Copper also moved down yesterday and is up today (relative to yesterday’s close) Gold and silver are down.
China cut its 1-year lending rate by 31 basis points and deposit rate by 25 basis points but left its reserve requirement unchanged.
Bank of England did not change its benchmark interest rate but did up the target of its asset purchase program from 325 pounds to 375.
The ECB cut interest rates by 25 basis points to 0.75%. It also cut the deposit rate to 0.
Even though we only had a single day off, it felt like a long weekend. Let’s refresh our memories. Here are the daily index charts. The market rallied huge last Friday and followed through both Monday and Tuesday. The small caps have been on fire and are no longer lagging. All the indexes are at their highest levels since early May.
One by one the market is absorbing major news items. Problems aren’t solved in Europe, but they seem to at least be putting a bandaid on the debt issues. Whether it works in the long run remains to be seen, but near-sighted Americans are pretty content a disaster will not strike in the near term. The big issues in the US for several years have been 1) high unemployment and 2) a depressed housing market. Housing seems to have bottomed. Anecdotally there have been many positive stories nationwide, and the home builders have been leading the market for a couple months. If housing prices tick up, people may breathe a big sigh of relief and feel like they can spend a little money again. Unemployment is another question. If fell very slowly for many months but ticked back up recently. Tomorrow we get the latest data. If the numbers are good, the market could soar. If they aren’t, it’ll be one more piece of bad news the market will have to absorb. At least the indexes have a big cushion to work with. More afte the open.
headlines at Yahoo Finance
headlines at MarketWatch
today’s upgrades/downgrades
this week’s Earnings
this week’s Economic Numbers
0 thoughts on “Before the Open (Jul 5)”
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The employment and consumer confidence are key to the summer market. First time claims down, but prior week up. The average about the same. The ADP numbers are 175K NFP, but they are high and not the same sample as the BLS data.
The market is setting for and ABC down in August and Sept. This drill in the summer July, is really just hope confronting seasonality and experience with the Street.
Be cautious, there are a few buys and I am holding them is stops.
what do you think will make the market buyers lose hope and start the market down without the fed stepping in?
no big disarster till the world wide ponsi cracks and the euro goes to zero
a ABC down in aug /sept would be consistent with the sideways corrective pattern that govts are trying for,but there are to many patterns,that are of no interest to a daytrader that only wants volitily
the PIGS should kick germany out of euro land,now that may make some volitility
you’d have a ton of volitility if timmy and the walrus took their dicks out of the pigs
we have shtty ism munufacturing numbers again and the market should be in the toilet.
But magically it goes back up to even. Anybody have ANY idea whats going on?
overbought signals are extreme
shorting here
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Home prices won’t bottom until mortgage rates are back up near their long term mean values, say 6%. Right now the Fed is only keeping housing from deflating rapidly by its low interest rate policies. As rates go up, Joe 6-Pack can afford less house. As inflation goes up, Joe 6-Pack can afford less house. The lower the Fed keeps rate, the higher real inflation (not the manipulated CPI number).
This is a Catch-22. The Fed lets rates go up and prices drop due to reduced affordability. The Fed keeps on printing and more of consumer spending goes towards food and energy and there’s less available for mortgage payments…and home prices drop.
Sure, the low rates make home prices affordable for new buyers, but without ever lower rates, who’s going to be able to pay more to buy from today’s buyers?
Without increasing personal incomes, which isn’t going to happen anytime soon with real unemployment at 17%, home prices generally stagnate in a flat rate environment. If rates go up…look out below.
Eventually rates will have to go up or real inflation will get out of hand and even the government’s CPI trickery won’t be able to hide the growing magnitude of the problem.
you’re right. stagflation. combine this with the fiscal cliff, taxes and health care
and the shit is gonna hit the fan