A rally in the Euro sparked a huge equity rally today as investors bought stocks with the hope that the sovereign debt fears have been overblown. Interestingly, investors shrugged off a slew of bad news. The Empire State manufacturing index missed expectations, homebuilder confidence missed expectations, Best Buy missed earnings, the ICSC retail sales report came in negative year over year, Greek bond yields spiked to over 9% while bond yields throughout Europe experienced similar action. Regardless, investors were keenly focused on the technicals of the market and chose to overlook the fundamental data. Volume was very light on the day though breadth was strong at 5:1.
From Daily Futures:
U.S. Economy
The New York Federal Reserve’s regional index of manufacturing increased from 19.1 to 19.57 in June, less than expected.
The National Association of Home Builders’ sentiment index dropped from 22 to 17, weaker than expected and a sign of ongoing pessimism about the housing market. September lumber was down $2.10 at $211.10.
The U.S. Treasury Department said that net foreign purchases of long-term securities totaled $110.9 billion in April while U.S. residents bought $27.8 billion of long-term foreign securities.
Grains and Cotton
The USDA said that 128,080 tons of U.S. wheat were sold to unknown destinations in 2010-2011. July wheat ended up a quarter of a cent at $4.517.
After yesterday’s close, the USDA said that 77% of the corn and 73% of the soybeans were rated good to excellent. December corn was down a half-cent at $3.745.
Livestock
August cattle closed up .47 at 88.60, helped by today’s higher stock market.
Coffee
Coffee prices closed higher again for the sixth consecutive day with talk of tight world supplies. July coffee finished up 8.40 cents at $1.5935, the highest close in 21 months.
Energies
Has there been too much attention placed on Europe’s debt problems? August crude oil finished up $1.63 at $77.91, the best close in four weeks.
Metals
July copper ended up 1.25 cents at $3.0045, still helped by yesterday’s strong industrial production figures from Europe.
Currencies
The U.K.’s Office of National Statistics said that consumer prices were up 3.4% in May from a year ago, down from a 3.7% annual gain in April. The September pound ended up .0043 at $1.4816.
The Bank of Japan met and kept the interest rate unchanged, at 1.0%, as expected.
Statistics Canada said that manufacturing sales were up .2% in April to C$44.5 billion. Also, productivity was up .7% in the first quarter of 2010.
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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