Not a bad day for the bulls following yesterday’s huge rally. Stocks opened lower as Euro fears weighed on the markets. Housing starts added to the negative sentiment, but the sellers never really materialized. Markets spent the rest of the day near the flat line before finishing flat. Volume was very light and breadth was marginally negative. All in all, it was an uneventful session.
From Daily Futures:
U.S. Economy – Weak Housing Starts
The U.S. Census Bureau said that housing starts were at an annual rate of 593,000 in May, down 10.0% from April’s pace and up 7.8% from a year ago, much less than expected. September lumber fell $7.50 to $203.60.
The Federal Reserve said that industrial production was up 1.2% in May, stronger than expected. Utilization increased from 73.7% to 74.7% of capacity in May.
The U.S. Labor Department said that the producer price index was down .3% in May and up 5.3% from a year ago, a smaller monthly decline than expected.
The Mortgage Bankers Association’s index of mortgage applications jumped up 18% last week, helped by refinancings.
A Reuters survey of 90 economists showed that they do not expect any change in the federal funds rate until early 2011. The June 2011 eurodollars were up .03 at a new contract high of 98.915.
Grains and Cotton
Australia’s government increased the estimate of its 2010-2011 wheat crop from 21.94 to 22.10 million tons, up from 21.66 million tons the previous year. July wheat closed up 9.5 cents at $4.612.
Livestock
August cattle closed up .57 at 89.17 ahead of Friday’s monthly on-feed report. Some analysts are predicting higher placements in May.
Coffee
Coffee prices paused today for the first time after rising a quick 25 cents in six days. September coffee ended down .0035 at $1.5960.
Energies
The U.S. Department of Energy (DOE) said that crude oil supplies were up 1.7 million barrels last week to 363.1 million barrels. Supplies of gasoline were down 600,000 barrels and distillates were up 1.8 million barrels. August crude oil finished up .81 at $78.72.
The DOE also said that over the past four weeks, gasoline demand was down .7% from a year ago while distillate demand was up 12.5% from a year ago.
Yesterday afternoon’s 6 to 10 day forecast from the National Weather Service expected above average temperatures for most of the U.S. east of the Rocky Mountains. August natural gas fell 20.9 cents to $5.031 anyway.
Currencies
The U.K.’s Office for National Statistics said that the unemployment rate for February to April was 7.9%, down from 8.0% a month ago. The September British pound ended down .0021 at $1.4795.
Eurostat said that consumer prices in the EU-27 were up 2.0% in May from a year ago, the same as a month ago. Also, hourly labor costs in the EU-27 were up 2.2% in the first quarter from a year ago.
Australia’s Statistics Bureau said that home builders started 42,399 homes in the first quarter of 2010, the most in almost six years.
The Bank of Japan kept its monthly assessment unchanged in June, saying that the economy continues to show moderate recovery. The September yen was down .0012 at 1.0951.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
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