The Commentary   
Good day, here you will find the commentary e-mail that is sent out to subscribers and hedge fund clients daily during the trading week. Once a week or every second week they are put up here for you to read to get an idea of what is going out to clients. This is only the commentary part and does not have any trading information.  Hope you enjoy reading the following commentaries, have a great day and good trading!!

Wednesday, January 18, 2012 4:03 p.m est.

Interesting: China home prices fall. According to Bloomberg.com: "China’s December home prices posted their worst performance last year, with only two of the 70 cities tracked posting gains, as the government reiterated its plans to maintain housing curbs. Prices in 52 of 70 cities monitored by the government declined from the previous month, the National Statistics Bureau said in a statement on its website today. New home prices in the nation’s four major cities of Shanghai, Beijing, Shenzhen and Guangzhou declined for a third month, it said."

This isn’t good; The World Bank cut it's Global Growth Outlook, again.
The Washington-based institution said the world economy this year will grow 2.5%, down from a June estimate of 3.6%, down -25%. The World Bank sees the euro area contracting -0.3% in 2012, compared with a previous estimate of +1.8% growth, down -20%. The U.S. outlook was cut to an expansion of +2.2% from +2.9%. “Even achieving these much weaker outturns is very uncertain,” the World Bank said in its Global Economic Prospects report saying that a recession in the euro region threatens to exacerbate a slowdown in emerging markets such as India and Mexico.

Interesting stat out today; The Baltic Dry index, which measures the cost of shipping dry goods around the world, has crashed by -55% since October 14th. It was down for much of 2009 and 2010, including a -63% drop in the early summer of 2009, without indicating an economic collapse but is something to watch.

The market started the day flat with a little downside but as the day wore on and traders chose to deny news such as Germany being downgraded, Iran rattling its chains again and average economic data the Dow saw highs of +100.00 points, S&P 500 +15.00 points and the Nasdaq Composite +45.00 points once again on guess what,,, pathetic volume!! Interestingly oil was down on the day even though Iran was acting up and President Obama was going to announce that the keystone pipeline deal from Canada was dead! Environmentalists were happy about this of course because a possible disaster has been diverted! I mean really,,,,,these people are idiots. So instead you have to ship that oil by truck all the way down or get it from Middle East ships which I’m pretty confident don’t have slave rowers anymore so their carbon foot print is enormous! What ever happened to looking at things rationally.....

At the close the Dow was up by +97.00 points to 12,579.00, S&P 500 +14.00 points to about 1308.00, S&P 100 +6.00 points to 593.00 and the Nasdaq Composite +42.00 points to about 2770.00. Oil was lower all day closing the day down -$.30 around the $100.50 level.

Wholesale prices fell in December for the second time in three months, as the cost of gas and food fell. The producer price index dropped a seasonally adjusted -0.1% last month. Economists had forecast a +0.1% increase. The decline in wholesale prices stemmed entirely from lower energy and food costs. Energy fell -0.8%, mainly because of lower prices at the gas pump. Food costs also dropped -0.8%. The decline was mostly the result of an -11.1% decrease in the price of vegetables. Yet core wholesale prices, which strip out the volatile food and energy categories, jumped an unexpectedly high +0.3%. Economists were expecting a +0.1% increase. he government attributed one-third of the increase in the core rate to rising prices for light trucks. Higher cigarette and pharmaceutical prices also contributed. The core index is viewed by the Fed as a more accurate gauge of inflationary pressure because who really needs food and energy prices anyhow!! Core prices have climbed +3.0% over the past 12 months, the largest one-year increase since the summer of 2009. Higher inflation could limit the central bank’s ability to try to further stoke the economy. Overall wholesale prices have risen an even faster +4.8% in the past 12 months.

The output of the nation's factories, mines and utilities rebounded in December after struggling in November, the Fed said. Industrial output rose +0.4% in December, in line with expectations. Output fell a revised -0.3% in November, slightly worse than the previous estimate of a -0.2% decline. Despite the month-to-moth volatility, output rose at +3.1% annual rate in the fourth quarter. Factory activity alone rose +0.9% in December after a -0.4 decrease in November. Capacity utilization, a gauge of slack in the economy rose to 78.1% in December from 77.8% in November.

A measure of builder confidence in the market for newly built single-family homes climbed in January to the highest level since June 2007, according to the National Association of Home Builders/Wells Fargo housing market index. The gauge rose 4 points to 25%, the fourth consecutive rise. Economists had expected only a 1-point improvement to 22%. NAHB Chief Economist David Crowe attributed the gains to improvements in employment and consumer confidence. The seasonally adjusted index, which correlates closely with single-family housing starts, is designed so that readings over 50% are considered "good," which hasn't been the case since April 2006.

Tuesday, January 17, 2012 4:03 p.m est.

The market took off this morning for no real reason except to go up especially because volume was one of the lowest days of the year, even though its only a couple of weeks old! The Dow saw highs of +150.00 points, S&P 500 +14.00 points and the Nasdaq Composite +35.00 points but as volume dwindled so did the market and the final hour almost saw the market go negative but it came back a bit to close with decent gains.

At the close the Dow was up by +60.00 points to 12,482.00, S&P 500 +5.00 points to about 1294.00, S&P 100 +2.00 points to 586.00 and the Nasdaq Composite +17.00 points to about 2728.00. Oil was higher all day closing the day up +$2.00 around the $101.00 level.

The market remains in an overbought condition and sentiment is extremely bullish so a pullback this expiration traded week wouldn’t be surprising. The market has had a strong start this January and one of the strongest ever. It is actually matching what happened in 1987 and you know how that year turned out!!! This is also a shortened trading week as it was a long weekend and I found some interesting data that has a strong bias to it!! Looking at what the market does for the week following the Martin Luther King day holiday it is quite interesting. Historically, this has been a brutal week for the market, with the market averaging a loss of a little more than -1%, and ending higher only 29% of the time. Since 1998 there have been only four times this week was up and three of them saw paltry gains of only +.50% for the week. Only one time was it up +1.82% and that was in 2001. What’s interesting is that the first day of trading has usually been higher and then the market turns down so it will be interesting to see how this week turns out...

The Empire State manufacturing index rose in January to its highest level since April, the New York Fed said. The Empire state index rose to 13.5% in January from a revised 8.2% in December. This is the third straight large increase after the index had below zero from June through October. The size of the gain in January surprised analysts as they expected the index to rise to 11.3% in January. Underlying conditions were mainly strong as the new orders index rose to 13.7% in January from 6% in December. The employment indexes both increased. The index for the number of employees rose to 12.1% in January from 2.3% in December while the average workweek rose to 6.6% from negative -2.3% in the prior month. A reading of expected conditions six-months ahead climbed sharply in January to 54.9%, its highest reading in a year.

Friday, January 13, 2012 4:03 p.m est.

The market sold off strongly this morning after economic data wasn’t very good, JP Morgan’s earnings were worse than expected and S&P reported that it was going to downgrade most of the EU countries. Several euro zone countries face an “imminent” downgrade by ratings agency S&P, Reuters and Dow Jones news agencies reported in the morning. A spokesperson for S&P in Paris declined to comment on the reports.

The Dow saw lows of -170.00 points, S&P 500 -18.00 points and the Nasdaq Composite -40.00 points early on but as the day went by losses were cut more than in half because no one was around to trade as we are going into a long weekend due to the Martin Luther King day on Monday. The sad part of it was that one of the reasons the market came back was because traders actually liked the idea that some of the countries may only see small cuts and that Germany was going to be excluded. Unfortunately the selling may not be over as volume was actually worse than pathetic considering how serious the news out today was so next week could be interesting. Another news story ignored by the media was that President Obama put in another request to the Senate to raise the debt limit another $1.2 billion so by the election in November it will be well over $16 billion and about 120% of GDP.

At the close the Dow was down by -49.00 points to 12,422.00, S&P 500 -6.00 points to about 1289.00, S&P 100 -3.00 points to 584.00 and the Nasdaq Composite -14.00 points to about 2711.00. Oil was sharply lower early on but came back by its close to finish the day only down -$.40 around the $99.00 level.

After falling for four straight months, the trade deficit widened in November, bringing the trade gap up to its highest level since June. The nation’s trade deficit widened +10.4% in November to $47.8 billion. This is the largest increase since May. Exports fell -0.9% to $177.8 billion in November, the second straight drop after hitting a record high in September. Imports rose +1.3% to $189.7 billion in November. Imports have been treading water after hitting $226.2 billion in May. Analysts expected a deficit of $43.6 billion. The sharp increase in the deficit could cut the government’s estimate of fourth-quarter growth. A higher deficit subtracts from growth because Americans are buying more foreign goods. Economists now estimate that the economy grew at a +3.2% annual rate in the fourth quarter, up from a +1.8% growth rate in the third quarter. The government will release its first estimate of fourth-quarter growth later this month. Some economists argue that the trade gap is the most significant barrier to job creation in the economy. Every dollar that goes abroad to purchase oil or Chinese consumer goods, and does not return to purchase U.S. exports, is lost domestic demand that could be creating jobs. The U.S. trade deficit in goods with China reached $26.9 billion in November compared with $25.1 billion in the same month last year. The trade gap with China is set to hit a new record high in 2011. The U.S. exported $9.9 billion of goods to China in November, the highest level since December 2010. An increase in foreign oil imports was a big driver in the increase in imports in November. The value of U.S. crude oil imports rose to $27.3 billion in November from $26.0 billion in October as the average price of a barrel of oil rose to $102.50 from $98.84 in the previous month. This is the first increase in the price of oil in six months. Import prices meanwhile fell -0.1% in December, the fourth fall in five months. Economists had expected a +0.2% gain. November prices were revised to show a +0.8% gain from an initially reported +0.7% advance. Excluding fuel and food, prices rose +0.1% in December. For all of 2011, import prices rose +5.3%, the third year in a row they have increased.

Consumer sentiment was reported this morning and it was at its highest level since May, with both current and future economic conditions seen as improving, according to data released Friday by the University of Michigan and Thomson Reuters. The consumer-sentiment index reached 74.2% in the preliminary reading for January, the highest level since May, compared with 69.9% in December. Economists had expected a January reading of 73% on higher stock prices and improving jobs conditions. The sentiment gauge, which covers how consumers view their personal finances as well as business and buying conditions, averaged about 87% in the year before the start of the most recent recession. Economists watch sentiment data to get a feel for the direction of consumer spending. According to the data from Reuters, a gauge measuring consumers’ views on the current economy rose to 82.6% in January from 79.6% in December. Meanwhile, a barometer for their economic expectations rose to 68.4% from 63.6%.

Thursday, January 12, 2012 4:00 p.m est.

Interesting: It appears those super agent movies may be real after all!! In a Iran there was a scientist assassinated which makes thing interesting for the Middle East. According to The Wall Street Journal: "An Iranian scientist working for a key nuclear site was killed in Tehran with a magnetic bomb attached to his car, in what the government said was a plot by the U.S. and Israel."

Also interesting: According to Investors Business Daily: "Americans are feeling better about the economy, but they aren’t giving President Obama credit as he seeks re-election, according to the latest IBD/TIPP survey. The Economic Optimism Index shot up 11% in January to 47.5, still below the neutral 50 level but the fifth straight monthly gain and the best reading since February 2011." The repor added: "Meanwhile, the Presidential Leadership Index fell 3.3% to 46.7, little changed over the last several months despite less gloomy views on the economy. Most ominously for Obama, the president’s leadership rating fell 9.7% among independents to 41.7. They disapproved of his job performance by 52%-39% in January vs. 46%-44% in December."

Yesterday the market was flat once again and closed slightly mixed with little change. Today it was looking like the market was going to be strong as the Dow saw highs of +40.00 points, S&P 500 +5.00 points and the Nasdaq Composite +10.00 points but after traders decided to think about the poor economic data out it started to sell off with the Dow seeing lows of -70.00 points, S&P 500 -7.00 points and the Nasdaq Composite -15.00 points. Of course volume remained low so the market came back on hopes that banking earnings due out tomorrow morning would be good. At the close the Dow was up by +22.00 points to 12,471.00, S&P 500 +3.00 points to about 1296.00, S&P 100 +1.00 points to 587.00 and the Nasdaq Composite +14.00 points to about 2725.00. Oil was higher on the day but when the EU announced that it was postponing its decision on sanctions against Iran it sold off strongly closing down -$2.00 around the $99.00 level.

Retail sales increased only +0.1% in December to a seasonally adjusted $400.6 billion. Sales rose an upwardly revised +0.4% in November. Details of the December report were mixed. Economists expected total sales to rise +0.3%. Excluding the +1.5% rise in motor vehicle sales, retail sales fell -0.2%. Economists had expected ex-auto sales to rise +0.3%. Core sales, excluding autos, gasoline and building materials, fell -0.2% after a +0.3% gain in November. This is the first drop in core sales since last December.

Jobless claims rose by +24,000 last week to a seasonally adjusted 399,000 and claims from two weeks ago were revised up to 375,000 from 372,000. Economists had projected claims would rise to 380,000. The average of new claims over the past four weeks, meanwhile, increased by +7,750 to 381,750 and continuing claims rose by +19,000 to a seasonally adjusted 3.63 million. About 7.33 million people received some kind of state or federal benefit in the week ended December 24th, up +111,010 from the prior week. Total claims are reported with a two-week lag.

Yesterday it was reported from the Fed that Economic conditions improved as 2011 drew to a close, according to the Fed’s latest survey of economic conditions. The so-called Beige Book survey of business contacts in the Fed’s 12 districts said economic activity increased “at a modest to moderate pace.” This rate is an improvement from the mid-November report which said some districts were growing at a “slow” pace. “Compared with prior summaries, the reports on balance suggest ongoing improvement in economic conditions in recent months, with most districts highlighting more favorable conditions than identified in reports from late spring through early fall,” the report said. The latest Fed report said holiday retail sales were up “noticeably” over last year. The auto sector was so vibrant that some suppliers reportedly were nearing capacity constraints. The non-financial service sector, seen as key to the outlook by many economists, reported stronger demand. Price pressures were described as “quite limited.” Real estate activity was seen as steady at very low levels. The only good news were reports of further gains in apartment construction. Bank lending activity was reported to have edged up, mostly due to business demand. Wage pressures were also seen as modest given the low level of hiring. The report was based on information collected from late November through December 30th.

Tuesday, January 10, 2012 4:03 p.m est.

Interesting: According to The Wall Street Journal: "U.S. consumer borrowing rose by the most in a decade during November, surging 10% with Americans pulling out their credit cards as the holiday shopping season got rolling. The level of consumer credit outstanding increased by $20.37 billion to $2.478 trillion, the Federal Reserve said Monday."

I never reported yesterday as the market was mostly flat and the fact that I appear to have contracted the flu virus! Today the market started the day higher for no real reason than the fact that Asia and the EU were higher. The Dow saw highs of +140.00 points, S&P 500 +16.00 points and the Nasdaq Composite +40.00 points. Volume however has fallen to incredibly low levels so it wasn’t surprising that the final hour saw the market pull back. At the close the Dow was up by +70.00 points to 12,463.00, S&P 500 +11.00 points to about 1292.00, S&P 100 +4.00 points to 586.00 and the Nasdaq Composite +26.00 points to about 2703.00. Oil was higher today closing up +$1.00 around the $102.00 level.

Speaking of low volume, according to multiple reports, individual investors have pulled billions out of the market in the last nine weeks and buying municipal bonds. CNBC has reported: "U.S. (equity mutual) funds—not including ETFs —lost $1.1 billion in the week ended Wednesday, according to data from Lipper FMI. This follows a $1.7 billion outflow in the previous week. Investors put money into taxable and municipal bond funds instead, the data showed."

This is interesting as companies have been making money the past couple of years and instead buying taxable and tax-free municipal bonds, which yield next to nothing, and which may be backed by receipts which may never materialize as municipalities continue to struggle to make ends meet. Treasury bonds are backed by the government, whose debt levels are now reportedly as large as the entire economy which should also make one think. This could mean we are getting closer to a bottom in the market but I think that won’t come until the EU problems and American debt is dealt with concisely.

Friday, January 6, 2012 4:03 p.m est.

Interesting: For Americans, the climb out of the bottom is increasingly difficult. According to The New York Times: "researchers have reached a conclusion that turns conventional wisdom on its head: Americans enjoy less economic mobility than their peers in Canada and much of Western Europe. The mobility gap has been widely discussed in academic circles, but a sour season of mass unemployment and street protests has moved the discussion toward center stage."

Even though the employment report this morning was positive the market still opened lower as futures sold off strongly at the close yesterday on EU worries. The Dow saw lows of -80.00 points, S&P 500 -8.00 points and the Nasdaq Composite -15.00 points. Tech stocks helped to lead the market once again though as Apple was strong with the Dow seeing highs of +5.00 points, S&P 500 +1.00 points and the Nasdaq Composite +15.00 points. The final hour saw it become mixed so at the close the Dow was down by -55.00 points to 12,360.00, S&P 500 -3.00 points to about 1278.00, S&P 100 -2.00 points to 581.00 and the Nasdaq Composite +4.00 points to about 2674.00. Oil was lower all day closing down -$.25 around the $101.00 level.

As European worries will be a harbinger for the market for awhile, another thing that will start to effect the market is the Presidential Cycle. Traditionally, the first two years are flat to lower, while the third year is the best of all years. Year four, which has just started tends to have an upward bias. Unfortunately this cycle has been way off the mark. The first year, 2009, had a rally, after 2008's crash but that wasn’t surprising considering how far the market had fallen. 2010, was more like the norm, while 2011 which should have seen the biggest rally was mostly flat, again away from the tradition. That leaves us with 2012, which is supposed to be a fairly good year. So far it has seen a bit of a rally but really,, its only been one week! Since 1945, a positive January in an election year has never missed in predicting a full-year gain for the market. This indicator is perfect, going 8 for 8 and posting an average gain of +16%. However, if January is negative, the rest of the year has delivered a full-year loss 56% of the time, with an average -3.9% decline. Interestingly, when the market is up from July 31st through Oct. 31st, the incumbent or his party wins, and when it's down the other side wins. So, if you're Mr. Obama, your hoping traders wait to rally the market until summer and then till halloween.

The economy added +200,000 jobs in December and the unemployment rate fell for the fourth month in a row. This is the fourth biggest gain of 2011 and suggests that the economy is expanding but the numbers may be suggesting something that isn’t there. The government constantly lowers the labor force participation rate as more and more people "drop out" of the labor force for one reason or another. This doesn’t make sense when one also considers the overall rise in the general civilian non institutional population. There is also an indication that the people who are finally running out of jobless benefits are going out and getting anything they can. Anyhow, more hiring puts more money in the hands of consumers and usually leads to an increase in spending. That’s a big deal since consumer spending accounts for as much as 71% of economic growth.

The unemployment rate edged down to 8.5% from an upwardly revised 8.7% in November. Economists were expecting to add +150,000 jobs and the jobless rate was forecast to rise to 8.7% from an initially reported 8.6% in November. Yet improved job growth in the second half of 2011 still falls well short of what’s necessary to get the economy fully back on track. The economy needs to add at least +250,000 jobs a month for several years to reduce the jobless rate to pre-recession levels and increase annual growth well above +3%, a level usually associated with a healthy recovery. The economy has expanded sluggishly since the end of the 2007-2009 recession, mainly because of weak hiring. Businesses do not want to add workers unless they are assured of higher demand for their goods and services.

Employment for November and October, meanwhile, were little changed as the government now says +100,000 jobs were created in November instead of a prior figure of +120,000 but the number of jobs created in October was revised up to +112,000 from 100,000. Wages and hours worked, meanwhile, rose slightly as hourly earnings were up +0.2% to $23.24; hours worked rose 0.1 hour to 34.4. An alternative measure of unemployment, the so-called U6 rate, fell to 15.2% in December from 15.6% in November. That rate includes part-time workers and those who recently stopped looking for work. The economy added 1.64 million jobs in 2011, compared to an increase of 940,000 in 2010. The private sector created 1.9 million jobs last year. The U.S still has about 5.8 million fewer jobs now compared to end of 2007. In 2009 alone, the economy lost 5.1 million jobs.

All the new jobs were added in the private sector: +212,000 overall. Government lost -12,000 jobs to continue a nearly two-year trend of shrinking their bureaucracies to balance their budgets. The increase in jobs, however, was heavily concentrated in sectors that do a lot of seasonal hiring. The transportation and warehouse sector, for instance, hired +50,000 workers last month to lead the way, but +42,000 of those positions were for couriers and messengers. In addition, the retail industry filled +28,000 positions. Other sectors that increased hiring included manufacturing, mining, health care and the leisure and hospitality trade.

Thursday, January 5, 2012 4:03 p.m. est.

The market sold off today as the European Union worries are slowly creeping back in with the Dow down -120.00 points, S&P 500 -12.00 points and the Nasdaq Composite -20.00 points but as volume was low the market turned around and the Dow saw highs of +20.00 points, S&P 500 +6.00 points and the Nasdaq Composite +25.00 points. The final hour saw it become mixed as traders started to get nervous about the jobs report due out tomorrow morning.

At the close the Dow was down by -3.00 points to 12,416.00, S&P 500 +4.00 points to about 1281.00, S&P 100 +1.00 points to 582.00 and the Nasdaq Composite +22.00 points to about 2670.00. Oil was lower all day closing down -$1.50 around the $102.00 level.

Jobless Claims fell by -15,000 last week to 372,000. Claims from two weeks ago were revised up to 387,000 from 381,000. Economists had projected claims would drop to a seasonally adjusted 373,000. The average of new claims over the past four weeks, meanwhile, declined by -3,250 to 373,250, the lowest level since June 2008. Also, continuing claims fell by -22,000 to a seasonally adjusted 3.6 million. Continuing claims are reported with a one-week lag. About 7.22 million people received some kind of state or federal benefits, down -8,311 from the prior week. Total claims are reported with a two-week lag.

Private-sector payrolls increased +325,000 in December, led by the service-providing sector and small businesses, according to the ADP employment report. The November level was revised to 204,000 from a prior estimate of 206,000. Markets look to ADP's report on private-sector payrolls to provide some guidance on the employment report which will be released tomorrow morning and includes information on both private- and public-sector payrolls. However, analysts have noted seasonal-adjustment issues that have led to past ADP estimates for December substantially missing the government's data. Economists expect the report to see strengthening employment, with overall employment up +150,000 in December, compared with +120,000 in November. Economists also expect the unemployment rate to rise to 8.7% from 8.6%.

Planned job cuts announced by employers declined in December to 41,785, the lowest monthly total since June, according to outplacement firm Challenger, Gray & Christmas. The figure was down -1.6% from November but up +31% from December 2010. For all of 2011, job cuts rose +14% to 606,082. The recession peak was in 2009 with 1.29 million.

The Institute for Supply Management's services index rose to a reading of 52.6% from November's 52%, a reading that nonetheless was below the 53.3% forecast. Of key subcomponents, production stayed at 56.2%, new orders edged up +0.2 points to 53.2% and employment rose +0.5 points to 49.4%. Any reading over 50% indicates expansion, and the services gauge has shown growth for 25 straight months.

Tuesday, January 3, 2012 4:03 p.m. est.

Happy New to one all!!! The market continued its schizophrenic ways in the New Year rocketing out of the gate this morning by +2% with the Dow up +270.00 points, S&P 500 +27.00 points and the Nasdaq Composite +60.00 points. I guess everything is good in the world now!! Gains were cut in half midday however and by the close the market was well off of highs.

At the close the Dow was up by +180.00 points to 12,397.00, S&P 500 +19.00 points to about 1277.00, S&P 100 +10.00 points to 581.00 and the Nasdaq Composite +44.00 points to about 2649.00. Oil rallied hard as there was no news out closing up $4.00 around the $103.00 level.

I read an interesting article over the weekend about the problems the economy is facing and because of the huge load were looking at that no matter what happens it may not be able to be saved. This will likely keep the market flat for another year or at least till the election which will be great for us! With the way the market ended the year compared to what it did today it makes one think the market still has a lot of problems to deal with and is really no place for your basic investor. Basically, America is in a catch 22 situation. It needs the economy to improve in order to generate jobs, but the economy can only improve if people have jobs. They need the economy to recover in order to improve our deficit situation, but if the economy really recovers long term interest rates will increase, further depressing the housing market and increasing the interest expense burden for the U.S, therefore increasing the deficit. A recovering economy would result in more production and consumption, which would result in more oil consumption driving the price well above $100 per barrel, therefore again depressing the economy.

Another year going by means that more people have to save for their retirements. Right now there are 10,000 Baby Boomers turning 65 every day!! If the savings rate goes back to 10% like the old days, the economy will collapse due to lack of consumption. Consumer spending accounts for 71% of GDP, but a reduction in consumer spending will push the country back into recession, reducing tax revenues and increasing deficits so you can see why catch 22 will be the theme for 2012.

Speaking of debt and real GDP, if we talk about the debt load, the payroll tax cut, extension of unemployment benefits and Bernanke’s gift to banks, it did nothing to help people in the real world. The government manipulated GDP has languished between +0.4% and +1.8% in the first three quarters of 2011 but if you go by a true measure of inflation, GDP has remained at a recessionary level of -2% to -3%. Bernanke did accomplish his goal of pumping up the stock market with his QE2 gift during the first six months of 2011, with the S&P 500 peaking at 1364, +8% in late April. Interestingly, the market began to fall the second he stopped QE2 with the market dropping -18% in three months. It did come back to break even for the year after he promised to keep interest rates at zero forever and the hope of QE3 though. Then there is housing where the effort to not complete foreclosures did nothing to slow the continued fall in home prices. After the recalculations of lower sales you see that real home prices will have fallen another -5% in 2011. Obama threw $50 billion of your tax dollars at the housing market in 2009 – 2010 with tax credits, loan modification programs, home builder tax loss carry-backs, and a bunch of other solutions and overall prices had still fallen another -12% in the last 18 months. Overall, prices have fallen -42% nationally since 2006. There has never been a decline in house prices on a nationwide basis like this. Don’t forget what Ben Bernanke said in July 2005; “what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit.”

There are approximately 48.5 million homes with mortgages in America and 10.7 million of them have negative equity. Another 2.4 million have less than +5% equity. Considering it costs more than 5% in closing costs to sell a house that means 27% of home occupiers with a mortgage are still trapped. With 2.2 million foreclosures still in the pipeline and a looming recession, home prices will likely continue to fall another -10% to -20% over the next two years and one third of all home occupiers will be underwater.

Then you have the question of the $1.4 trillion of bad mortgage backed securities on The Fed’s balance sheet now worth less than $700 billion. How will they unload this? The Treasuries they have bought will drop in value if interest rates rise. Quantitative easing’s Catch 22 is that it can never be unwound without destroying the Fed and the economy. The Fed was able to expand his balance sheet from $2.47 trillion to $2.95 trillion in twelve short months. According to the Fed, increasing your balance sheet by $480 billion isn’t really printing money out of thin air however, they are now leveraged 57 to 1. This is commonplace in Europe so maybe he should move there. In comparison, Lehman Brothers and Bear Stearns were leveraged 40 to 1 when they went bankrupt.

Speaking of Europe, the complete implosion of Europe and the ensuing weakness of the Euro have also given the false impression that the U.S. dollar is a safe haven. This will likely continue at least for the first half of this year. The dollar has regained its losses. With annual deficits equaling 10% of GDP, a national debt now exceeding 100% of GDP, and Ben Bernanke in perpetual printing mode, the dollar won’t be able to stay higher for ever. With crude still above $100 a barrel, employment still weak, and double digit food and energy inflation slowing consumer spending, Europe knows a recession during 2012 is highly likely because you have the imminent collapse of the European Union. Greece, Ireland, Portugal and Spain are effectively bankrupt and still sitting out there. Spain is the size of the other three countries combined and has a 20% unemployment rate. You can also tell that the Germans are losing patience with these spendthrift countries as debt does matter. The EU has made The Fed look like a lightweight by increasing their balance sheet by 44% to over $3.5 trillion in a futile effort to solve a debt crisis with more debt. It seems central bankers are programmed to print until the very end. It will be interesting to see if the European Union will survive 2012. Too many countries, too much government debt, too many fake banks, too many bureaucrats, too much austerity rammed down the throats of citizens, and not enough honesty or reality based solutions.

Speaking of that, over here State and local governments were able to put off hard choices for another year, as Washington DC handed out hundreds of billions of dollars. California will have a $19 billion budget deficit; Illinois will have a $17 billion budget deficit; New Jersey will have a $10.5 billion budget deficit; New York will have a $9 billion budget deficit. Don’t forget that the Congress that is now filled with Tea Party newcomers will refuse to bailout these spendthrift states so substantial government employee layoffs are going to happen so expect the occupiers to kick it up a notch! State and local governments have laid off -535,000 workers since 2008 already. With borrowed Federal government stimulus handouts evaporating into thin air during 2011 – 2012, this total will reach 800,000 by the end of the next year. The Post Office will do their part by cutting -28,000 jobs in 2012, even though they need to cut -100,000. States and municipalities based their budgets on the revenues produced by the fake housing boom from 2003 – 2007. The tax revenue dried up, but the union jobs continue to grow, costing taxpayers billions. States and localities can’t print, so layoffs will continue. Does any of this sound like the market should rally +10% to +15% this year, I don’t think so, volatility will continue!!

It was reported this morning that the Institute for Supply Management's manufacturing index for December climbed to 53.9% from 52.7% in November, which is a six-month high. Economists had anticipated a 53% reading. Any reading above 50% indicates expansion. The production and employment gauges each rose +3.3 points, and there was a +0.9% gain for the new orders index.

Construction projects rose +1.2% in November. The gain in construction spending in November was above analysts' expectations of a +0.5% gain. However, October construction spending was revised down to show a -0.2% decline from the previous estimate of a +0.8% gain. In November, spending on private construction rose +1.0% and residential construction rose +2%. Spending on public projects rose +1.7%.

Friday, December 30, 2011 4:03 p.m. est.

Well this final week of trading for the year didn’t see much of an upside push with Wednesday seeing a -1% sell off and then a +1% rally yesterday. Surprisingly today saw the market under pressure so it made it seem as if investors wanted the market to close right where it started the year at the unchanged level!

The market started the day higher with the Dow up +5.00 points, S&P 500 +2.00 points and the Nasdaq Composite +5.00 points but it was so little that when it sold off the Dow saw lows of -75.00 points, S&P 500 -6.00 points and the Nasdaq Composite -10.00 points in the final hour.

At the close the Dow was down by -70.00 points to 12,218.00, S&P 500 -5.40 points to about 1258.00, S&P 100 -2.40 points to 571.00 and the Nasdaq Composite -9.00 points to about 2605.00. Oil was also flat remaining around the $99.00 level closing down -$.56 for the day.

Overall the market was flat for the year with the S&P 500 actually closing down about -.40 points or +.03% for the entire year which is just bizarre! It almost seemed liked traders were trying to get it back exactly where it started the year! Even the Nasdaq was lower closing down just about -2% for the year. The only indice that even came close to having a decent year was the Dow up about +5.5% but that’s only 30 stocks so in reality it doesn’t count. This is quite disappointing actually as I thought there could at least be a bit of a push higher to make the market look better for the year but instead it went no where which is great for the style of trading we do but for others their frustration will likely continue. People have left the market and volume confirms it! Why should they come back anyhow, the coming year will be facing little change as the EU is still dealing with their problems, we have an election year, America is going broke and the middle east is kicking up sand once again! What it does mean is that volatility will likely continue at least at the start of the year.

Tuesday, December 27, 2011 4:03 p.m. est.

Just wanted to say that because the market will likely be flat for the rest of the week I’m going to take it off till Friday unless there is a surprise or something news worthy.

The market started slightly to the downside with the Dow off -25.00 points, S&P 500 -3.00 points and the Nasdaq Composite -10.00 points. It then turned higher but not by much with the Dow up +30.00 points, S&P 500 +3.00 points and the Nasdaq Composite +15.00 points. The final hour saw volatility come in though and the market finished the day about where it started the day.

At the close the Dow was down by -3.00 points to 12,291.00, S&P 500 +.10 points to about 1265.00, S&P 100 -.50 points to 573.50 and the Nasdaq Composite +7.00 points to about 2625.00. Oil rallied today after Iran threatened to close the Straight of Hormuz because different countries are starting to talk about putting sanctions on them to get them to stop their nuclear program. It closed up +$1.50 around the $101.00 level.

One of the reason the market may have limped along today was because volume was less than half of normal and will likely be that way into year end. Another indication that the market may stay flat is that last week the market rallied however after Europe gave its banking system nearly $700 billion dollars, their markets fell. What does that mean, $700 billion isn't enough money to cover the trillions that has disappeared from all of their countries so it looks like the EU just threw another band-aid on the problem and hope it sticks. One thing that reveals that the problem may persist as we go into 2012 is that Goldman Sachs is the biggest investment bank in the world so its movement is important. On Tuesday, when the market rallied, Goldman barely moved higher. This isn’t a good sign because if this had been a trading bottom you would think that their shares would have led the way higher, or at least have participated nicely in the rally. Instead, the stock didn’t rise very much more and it was on lower volume than the prior day when it fell over five points. This could be a sign that the rally we have seen may end at the start of the year.

The Conference Board said its consumer-confidence index jumped to 64.5% in December - the highest level in eight months from a revised 55.2%. Economists were expecting the index to climb to 60%. Consumer confidence has jumped nearly 25% points in the past three months and now sits at its highest level since April. "Consumers are more optimistic that business conditions, employment prospects and their financial situations will continue to get better," said Lynn Franco, director of the board's consumer-research center. Yet Franco also cautioned against reading too much into the data. "While consumers are ending the year in a somewhat more upbeat mood, it's too soon to tell if this is a rebound from earlier declines or a sustainable shift in attitudes." The present situation index rose to 46.7% from 38.3% and the future expectations index rose to 76.4% from 66.4%, the board said. The percentage of people who expect more jobs to be available in coming months moved up to 13.3% from 12.4%.

Friday, December 23, 2011 4:03 p.m. est.

Just wanted to wish you a very Merry Christmas and Happy Hanukah! Hope you have a wonderful holiday with friends and family!!! The market started flat today but as the day went on and volume got less and less it rallied with the Dow seeing highs of +130.00 points, S&P 500 +12.00 points and the Nasdaq +25.00 points right at the close. At the close the Dow was up by +125.00 points to 12,294.00, S&P 500 +11.00 points to about 1265.00, S&P 100 +5.00 points to 573.00 and the Nasdaq Composite +20.00 points to about 2619.00. Oil was over $100 early on and closed up +$.20 around the $99.70 level. The market is up over +4% in the past four days alone and is now just back to about unchanged for the entire year. With four trading days left in the year I would assume that the market will try to add to these gains but it is starting to get quite overbought so even if it does remain higher we’re likely to start the year on the downside.

Personal income rose +0.1% in November, as consumer spending also gained +0.1%. In October, personal income had gained +0.4%, while spending had increased +0.1%. For November, economists had expected personal income to gain +0.2%, and for spending to also rise +0.2%. Meanwhile, there was no growth in November for the price index for personal consumption expenditures, though this inflation gauge is up +2.5% from the prior year. The core inflation reading, which excludes volatile food and energy costs, rose +0.1% in November, matching economists’ expectations. Compared with the prior year, core inflation is up +1.7%. The personal-saving rate declined to 3.5% in November from 3.6% in October.

Led higher by transportation equipment, orders for Durable Goods rose +3.8% in November, the largest gain since July. Economists had expected durable-goods orders to rise +3.6% due to aircraft, among other items. Transportation-equipment orders rose +14.7%, with a +73.3% gain for non-defense aircraft and parts. Excluding transportation, durable-goods orders rose +0.3% in November. Orders for core capital goods, which exclude defense and aircraft, fell -1.2% in November. Shipments of durable goods fell -0.4% in November. Unfilled orders rose +1.3% in November, and inventories gained +0.6%. In October, there was no growth in durable-goods orders.

Led by growth in the South and Midwest, sales of new single-family homes rose to a seasonally adjusted annual rate of 315,000 in November, the highest level since April. Economists had expected November's result, and have been cheered by improving trends in recent housing data, though overall levels remain relatively low. Sales in October were upwardly revised to 310,000 from a prior estimate of 307,000. The median sales price fell to $214,100 from $222,600 in October. The supply of new homes on the market declined to 6 months from 6.2 months. Sales of new homes are up +9.8% from the prior year.

Thursday, December 22, 2011 4:03 p.m. est.

Interesting; The Wall Street Journal: "Southern European investors, fearful of the health of their banks and the future of the euro, are increasingly stashing their wealth in currencies, real estate and investment products outside the euro zone, say bankers and government officials." The Journal added: "investors in Greece, Portugal and Italy are asking bankers and lawyers for ways to protect their money in the case of a failure of euro-zone banks or a breakup of the euro itself. Some are converting deposits into currencies such as the Swiss franc. Others are buying real estate outside the monetary union, such as in London, or setting up trusts to hold their wealth in jurisdictions as distant as Singapore or the Bahamas, say bankers and lawyers."

One example is Greece. According to The Journal: "capital flight from Greece is intensifying. Since the start of Greece's debt crisis in late 2009, Greeks have pulled more than €60 billion of cash—about a quarter of total deposits—from their banks. Between September and early November, those outflows totaled nearly €14 billion, representing two of the worst months for deposit outflows since the start of the crisis."

The most important relationship in looking at the global economy, is the direction of money, into and out of the U.S dollar right now and that will be the clue for 2012. In 2001, after the 9/11 attacks on the Twin Towers, dollars left America and went to China and the emerging markets, where "growth" was the word, and where hot money fueled an economic binge. Ten years later, it is possible, and plausible that dollars are starting to flow back to America which will likely keep markets sideways at least for a while. Right now the dollar has been pulling back this week but as we move into next year things could get interesting!

The market didn’t continue its rally yesterday and basically closed where it started with only slight gains. Today it rallied a bit on diminishing volume with the Dow seeing highs in the final hour of +80.00 points, S&P 500 +12.00 points and the Nasdaq +25.00 points.

At the close the Dow was up by +62.00 points to 12,154.00, S&P 500 +10.00 points to about 1254.00, S&P 100 +4.00 points to 567.00 and the Nasdaq Composite +21.00 points to about 2600.00. Oil was almost hitting $100 early on and closed up +$.80 around the $99.50 level.

Jobless Claims fell to their lowest level since April 2008 with them falling -4,000 to a seasonally adjusted 364,000. The four-week average fell -8,000 to 380,250, the fewest since June 2008. Economists had expected that claims would rise to 375,000, while remaining at levels historically associated with an improving labor market. There is concern about the expiration of special federal unemployment-insurance payments, with more than 2.8 million people expected to lose benefits by the end of February, according to the National Employment Law Project, a New York-based advocacy group. Continuing claims fell -79,000 to 3.55 million, reaching the lowest level since September 2008. The four-week average of these ongoing claims fell -40,000 to 3.63 million, the lowest level since October 2008. About 7.15 million people received some kind of state or federal benefit in the week ended December 3rd, down about -300,000 from the prior week.

A gauge of consumer sentiment reached 69.9% in the final reading for December compared with 64.1% in November, according to data from the University of Michigan and Thomson Reuters and is the fourth consecutive monthly gain in the index. A preliminary reading for December pegged the gauge at 67.7%. Economists had expected a final December result of 68.7%, with consumers somewhat cheered by declining retail gasoline prices and the large drop in initial jobless claims. The sentiment gauge, which covers how consumers view their personal finances as well as business and buying conditions, averaged about 87% in the year before the start of the most recent recession. Economists watch sentiment data to get a feel for the direction of consumer spending.

Real Gross Domestic Product for the third quarter was revised to an increase of +1.8% annualized from the earlier estimate of a +2% rise. Economists expected third-quarter growth to be unrevised at a +2% rate. The downward revision to third-quarter GDP was largely due to weaker consumer spending. A key measure of inflation was revised higher. The core personal consumption index, which excludes food and energy prices, increased +2.1% up from +2% reported earlier. Corporate profits before-tax were revised lower. Corporate profits before-tax increased +1.2% quarter-to-quarter, down from the +1.6% gain reported earlier.

Leading economic indicators grew +0.5% in November, led by the interest-rate spread and building permits. Economists had expected growth of +0.3% in November, compared with a +0.9% gain in October. The LEI is a weighted gauge of 10 indicators that are designed to signal business cycle peaks and troughs. Among the 10 indicators that make up the LEI, seven made positive contributions in November.

Yesterday it was reported that an average of 14% fewer existing homes were sold annually between 2007 and 2010, according to revisions by the National Association of Realtors, pointing to a housing market that was even weaker than previously believed. During the revision's time period, there were average annual sales of about 4.42 million existing homes, compared with prior estimates of about 5.16 million. NAR revised the data to correct for some sampling and data-reporting problems.

Tuesday, December 20, 2011 4:03 p.m est.

The market took off this morning as improving German business data and a better Spanish bond auction made it look like the EU was looking like it would solve its problems. The Dow saw highs in the final hour of +360.00 points, S&P 500 +38.00 points and the Nasdaq +85.00 points.

At the close the Dow was up by +337.00 points to 12,104.00, S&P 500 +36.00 points to about 1241.00, S&P 100 +16.00 points to 563.00 and the Nasdaq Composite +81.00 points to about 2604.00. Oil was higher all day closing up +$3.50 around the $98.00 level. Today may have been the start of the Santa Claus rally as the market is about 1% away from break even for the year and this being Christmas and the start of Hanukah today, its not surprising to see it up. Next year, that’s another story...

New construction of Homes rose in November to the highest annual rate since April 2010, with multi-family activity leading the monthly growth. Housing starts rose +9.3% last month to a seasonally adjusted rate of 685,000, the highest annual rate since April 2010. Starts for units in buildings with at least five units rose +32.2% in November, climbing to a rate of 230,000, the highest level since September 2008. Meanwhile, starts of new single-family homes rose +2.3% to an annual rate of 447,000. Starts in October were revised down to 627,000 from a prior estimate of 628,000. Economists had expected an annual rate of 635,000 for starts in November. Meanwhile, building permits, a leading indicator of housing construction, rose +5.7% in November to a seasonally adjusted annual rate of 681,000, the highest annual rate since March 2010.

Building permits for single-family homes rose +1.6% on the month to a 435,000 rate. Many economists consider single-family permits to be the most important number in the government’s release.

In the past year, overall starts are up +24.3% but starts of single-family homes are down -1.5% for the year. Meanwhile, starts of units in buildings with at least five units have gained a record +180.5%, with the data going back to 1959. The increasing demand for multifamily properties is due to a shift from home ownership to renting that is likely to last for years.

Monday, December 19, 2011 4:03 p.m est.

The market popped higher today with the Dow seeing highs of +50.00 points, S&P 500 +5.00 points and the Nasdaq +20.00 points but it was on thin volume and when it couldn’t make anymore gains it fell seeing lows in the final hour with the Dow seeing -120.00 points, S&P 5600 -16.00 points and the Nasdaq -35.00 points.

At the close the Dow was down by -100.00 points to 11,766.00, S&P 500 -14.00 points to about 1205.00, S&P 100 -6.00 points to 547.00 and the Nasdaq Composite -32.00 points to about 2523.00. Oil was higher at the start of the day but it fell midday to only close up +$.40 around the $94.00 level.

Home builder confidence rose to a 19-month high in December, though the gauge still remains in weak territory. The National Association of Home Builders/Wells Fargo housing market index rose to 21% in December from 19% in November, marking the third monthly rise in a row. Economists had anticipated a 20% reading. The index for November was downwardly revised from 20%. The seasonally adjusted index, which correlates closely with single-family housing starts, is designed so that readings over 50% are considered "good," which hasn't been the case since April 2006.

Friday, December 16, 2011 4:03 p.m est.

Not surprising the market rallied today as it was expiration and we saw full profits to end the year!! The Dow saw highs of +100.00 points, S&P 500 +15.00 points and the Nasdaq +50.00 points but when Fitch and Moody’s announced that they were downgrading some EU banks selling began and the Dow saw lows of -50.00 points, S&P 500 -1.00 points and the Nasdaq only seeing gains of +5.00 points. Of course it was expiration so the market came back to finish the day mostly unchanged.

At the close the Dow was down by -2.00 points to 11,866.00, S&P 500 +4.00 points to about 1220.00, S&P 100 +2.00 points to 554.00 and the Nasdaq Composite +14.00 points to about 2555.00. Oil sold off again midday but came back to also closed mostly unchanged down -$.10 around the $94.00 level.

Next week we basically start holiday and year end trading and it appears that the combination of Europe, the 2012 Election, and the economy are having their influence on markets. Trading will get even thinner as we approach Christmas holidays which will likely exacerbate the situation. Then you have Iran making threats, weird politics happening in Russia, and the general uncertainty of the moment, so we’ll likely see volatility continue.

The good thing however is that with the U.S dollar actually strengthening its apparent that the U.S. is still the refuge country for global investors. If the dollar continues to rally and at the least stocks and bonds remain steady, or fall less than other global assets, volatility will continue and this will be incredible for our style of trading. Money does seem to be moving away from Europe and other parts of the world to the U.S. Even China is starting to show signs of problems as a report from them indicates they have overbuilt with their now overhyped property markets.

Money has been leaving the U.S. for over twenty years now so could we be seeing a long term trend change, maybe. Emerging markets, especially China were growing and the promise of the Euro was alluring but now that is definitely changing. The dollar has been weak since the 9/11 attacks and stocks have rallied on that weakness as we started being like Japan with the dollar put trade. However, if this pro-dollar trend remains in place, it could be the trend for many years and the dollar and markets may rally together once again. The bad news however is that this means we could see higher interest rates and that may hold back the housing market. In the end I think 2012 will prove to be interesting with volatility. Besides that its also supposed to be the end of the world and there are an extra large amount of solar flares hitting the earth to make things interesting!!

Consumer prices were unchanged in November, mainly because of declining energy costs. So-called core prices rose a seasonally adjusted +0.2%, however. The core data strips out volatile food and energy costs. Economists had forecast CPI to be unchanged overall, with a +0.1% increase in the core rate. Consumer prices have risen an unadjusted +3.4% over the past 12 months, but that's down from +3.9% in June. Yet the core rate has risen +2.2% over the past 12 months, the largest such increase since 2008. Inflation-adjusted hourly wages, on average, fell -0.1% in November.

Thursday, December 15, 2011 4:03 p.m est.

Interesting; Realtors "overcounted" housing sales "for years." Home sales data regarding previously owned homes has been inaccurate since 2007. According to Reuters: "Data on sales of previously owned U.S. homes from 2007 through October this year will be revised down next week because of double counting, indicating a much weaker housing market than previously thought." The report added: "The National Association of Realtors said a benchmarking exercise had revealed that some properties were listed more than once, and in some instances, new home sales were also captured."

Yesterday the market sold off hard as oil was falling and the dollar was strong because there was more talk about the EU failing. The market closed near its lows of the day off about -1%. Today, the market started the day higher, making up all of yesterday’s losses as economic data was pretty good. The Dow saw highs of +150.00 points, S&P 500 +14.00 points and the Nasdaq +30.00 points but as the dollar strengthened once again and oil slipped, selling took hold and the Nasdaq was the first index to touch red territory. The final hour saw it come back though and there were decent gains for the day.

At the close the Dow was up by +47.00 points to 11,870.00, S&P 500 +4.00 points to about 1216.00, S&P 100 +1.00 point to 552.00 and the Nasdaq Composite +2.00 points to about 2541.00. Oil was really hit hard yesterday down over $5 and today it started the day higher but sold off once again closing down -$1.00 around the $94.00 level.

With expiration tomorrow its looking more and more that this expiration traded week won’t be to the upside but the good news is we’re going to see full profits once again. Volatility to the downside may grow as we go into another weekend of wondering what Europe will say by Monday and we will start moving into slower Christmas volumes.

This morning it was reported that Jobless Claims fell by -19,000 last week to a seasonally adjusted 366,000, putting claims at the lowest level since May 2008. Claims from two weeks ago were revised up to 385,000 from 381,000. Economists had projected that claims would rise to 390,000. Jobless claims have fallen below 400,000 - a level historically associated with an improving labor market in five of the past six weeks. The four week average of new claims over the past month, meanwhile, fell by -6,500 to 387,750 to the lowest level since July 2008. Continuing claims rose by +4,000 to a seasonally adjusted 3.60 million. About 7.45 million people received some kind of state or federal benefit in the week ended November 26th, up +874,670 from the prior week.

Industrial production declined -0.2% in November, dragged lower by a sharp -3.4% reduction in the output of motor vehicles and parts. Economists had forecast a flat reading after a +0.7% gain in October. Even excluding autos, manufacturing output fell -0.2%. While October data was unrevised, readings from June, August and September were revised higher while July's was revised lower. Compared to November 2010, industrial production was +3.7% higher. Capacity utilization fell to 77.8% in November from an upwardly revised 78% in October; utilization has clung to a narrow 0.5% band since July.

Producer Prices climbed +0.3% in November as the price of food increased, mostly for vegetables and chicken. Economists had predicted a +0.1% rise. The increase was driven by higher food prices, which rose +1% last month. Energy costs rose a slight +0.1% after falling -1.4% in October. Minus the food and energy categories, so-called core wholesale prices rose +0.1%. Economists were expecting a +0.2% increase in the core rate. Over the past 12 months, wholesale prices have risen +5.7%, the smallest year-over-year increase since March. Core prices have climbed a lesser +2.9% in the past 12 months, the lowest increase since June 2009. Intermediate prices, meanwhile, rose +0.2% last month while crude prices jumped +3.8%. The core intermediate index, an indicator of future inflation, fell -0.4% in November.

The U.S. current-account deficit, which is the combined balances on trade in goods and services, income, and donations, fell to $110.3 billion, or -2.9% of GDP, in the third quarter, from an upwardly revised $124.7 billion, or +3.3%, in the second quarter. More than half of the decrease reflected a decrease in the deficit on goods. A decrease in net unilateral current transfers and increases in the surpluses on services and on income also contributed. The second quarter deficit initially was reported as $118.0 billion, and the revision was mostly due to increased net financial inflows.

The Empire State manufacturing index rose in December to its highest level in seven months, the New York Fed said. The Empire state index rose to 9.5% in December from 0.6% in November. The index had been at or below zero since June. The size of the gain in December surprised analysts as economists expected the index to rise to 3% in December. Underlying conditions were mainly strong. The new orders index rose to 5.1% from negative -2.1% in November. The employment indexes were mixed as the index for the number of employees rose to 2.3% from a negative -3.7% in November but the average workweek fell to negative -2.3% from -2.4% in the prior month. A reading of expected conditions six-months ahead climbed sharply in December to its highest reading since May.

Yesterday it was reported that Import prices rose by +0.7% in November, the first increase in four months. The rise in import prices was the largest since April but was less than expected. Economists were expecting import prices to rise +1.5%. Import prices in October were revised slightly higher to a drop of -0.5%, compared with initial estimate of a drop of -0.6%. Over the past year, import prices increased +9.9%. Imported fuel prices rose +3.6% in November after a -1.5% decline in the previous month. The price index for imports excluding fuel fell -0.2% for the second straight month.

Tuesday, December 13, 2011 4:03 p.m est.

Very interesting dialogue in the Senate today as Jon Corzine and his top people were once giving testimony about the ongoing MF Global debacle. When it came right down to it they were all adamant that they never used customer funds to cover any trades and that the books were all intact going into the bankruptcy etc. Corzine was even more direct then his last testimony which makes one think that maybe they actually may find the missing money!

The market rallied today even though economic data wasn’t very good and that Europe was still under pressure as Germany was making comments once again about not putting up the cash to support the EU. This makes me think that the initial rally today was due to expiration related trading. The Dow saw highs of +130.00 points, S&P 500 +14.00 points and the Nasdaq +30.00 points. Selling did take hold later on and the final hour saw outright selling with the Dow off -120.00 points, S&P 500 -17.00 points and the Nasdaq -45.00 points at one point.

At the close the Dow was down by -66.00 points to 11,955.00, S&P 500 -11.00 points to about 1226.00, S&P 100 -4.00 point to 556.00 and the Nasdaq Composite -33.00 points to about 2579.00. Oil rallied today as Iran was making threats that if they ever got attacked that they could shut down the Strait of Hormuz pretty quick which would basically shut down all of the Middle Easts oil supply to North America. It closed up +$2.40 around the $100.00 level.

Retail spending slowed in November, with sales rising only +0.2% following a sharper +0.6% increase in October. Sales excluding the volatile auto sector also rose +0.2% last month. Economists expected retail sales to rise by +0.5% overall, or by +0.4% excluding the auto sector. In October, retail sales were revised up to a +0.6% increase from an initially reported gain of +0.5%. Purchases by consumers account for as much as 70% of growth, so the slower increase in retail sales in November suggests the economy won't grow quite as fast in the fourth quarter as forecasters were predicting.

Inventories at businesses rose +0.8% in October. Economists had been expecting inventories to rise a seasonally adjusted +0.9%. Business sales climbed +0.7%. The inventory-to-sales ratio, an indication of demand, was unchanged at 1.27. Retail inventories were also unchanged.

The Fed said at 2:15 est. that it would it would keep interest rates at the same level that it has had the past three years at near-zero levels as the central bank refrained from new action with recent signs of improvement in the economy. The decision leaves the Fed’s key interest rate at an historic low range of 0% to 0.25%, and the central bank kept its guidance that it intends to keep rates near zero until mid-2013 given its expectations for the economy. They were a little more upbeat about the outlook. In its statement the Fed said that the economy “has been expanding moderately,” despite slowing in global growth. They noted that the unemployment rate remained high at 8.6% according to the Labor Department, despite some improvement in labor market conditions. While consumer spending was advancing, businesses appeared to be pulling back, the statement said and there was one dissent to the decision. Charles Evans, the president of the Chicago Fed, dissented in favor of more easing. The Fed will next meet on January 24th-25th. Economists expect the Fed may be ready to announce an overhaul of how they signal policy plans. The minutes of the Fed’s last two meetings have included lengthy discussions of communication issues. Some Fed officials want to provide clearer guidance on the mid-2013 promise and to tie low short-term rates to economic conditions. Fed officials are also pondering whether to adopt an explicit inflation target. Many economists think the Fed will show the expected future path of interest rates. Economists are split on whether the Fed will decide next year whether to launch another round of bond purchases or quantitative easing.

The Fed has purchased $2.3 trillion of bonds trying to push down long-term interest rates. In September, the Fed announced an Operation-Twist plan to buy longer-term securities and sell $400 billion of short-term debt to lengthen the average maturity of securities on its balance sheet.

Monday, December 12, 2011 4:03 p.m est.

The market had rallied on Friday as it looked like the EU problem was solved but as the weekend wore on and there was more confirmation that Britain was going to have nothing to do with solving their problems, the market sold off today. The Dow saw lows of -250.00 points, S&P 500 -29.00 points and the Nasdaq -60.00 points. Germany also said it doesn’t want to front all of the cash for the deal and German Chancellor Angela Merkel stated that she doesn't expect any more meetings before Christmas. That means that two weeks will go by and the potential for no further progress will rise. For many countries, the agreement will have to be ratified by national assemblies and parliament so we could be looking at February before anything gets done. That means that there is the potential for further disagreement and delay in implementation of the plan. Because of this volatility will likely continue to rise going into year end and the first tell tale sign that the EU may be continuing to struggle is that next week Italy has to auction new debt. If yields rise dramatically the markets will likely remain under pressure. There is one thing that could help though and that is we are approaching year end so there is still a chance for a rally and its an expiration traded week which is generally higher.

In the final hour the market came back a bit and at the close the Dow was down by -163.00 points to 12,021.00, S&P 500 -19.00 points to about 1236.00, S&P 100 -8.00 point to 560.00 and the Nasdaq Composite -35.00 points to about 2612.00. Oil closed down -$1.50 around the $98.00 level.

Friday, December 9, 2011 4:03 p.m est.

Today there was good news on the MF Global front as the trustee was authorized to give back about 72% of all customers cash that has been basically in limbo for over a month now and that they may have found $875 million of the $1.2 billion missing cash in bond funds overseas. Only time will tell however.....

The market rallied today as traders decided that there was a possibility that the EU ideas may work out in the end with the Dow seeing highs of +210.00 points, S&P 500 +25.00 points and the Nasdaq +60.00 points although Britain said that they would basically have nothing to do with helping them out.

At the close the Dow was up by +187.00 points to 12,184.00, S&P 500 +21.00 points to about 1255.00, S&P 100 +9.00 point to 568.00 and the Nasdaq Composite +50.00 points to about 2647.00. Oil closed up +$1.50 around the $99.80 level.

It was interesting that the market rallied as the EU failed to reach an agreement on its crisis. According to Reuters: "The European Union failed to secure backing from all 27 countries to change the EU treaty at a summit on Friday, meaning any deal will now likely involve the 17 euro zone countries plus any others that want to join, three EU diplomats said. An agreement at 27 fell through after British Prime Minister David Cameron demanded concessions that Germany and France were not willing to give, one of the officials said." Its good that they actually accomplished something though with 23 of 27 agreeing to cut spending. The agreement may not be perfect. But there was a serious attempt to get something done and at least a little something did come of it. That means that the markets could give Europe the benefit of the doubt and a lot of the risk hedging may come off which may have been why there was another round of short covering in the market. The bottom line is that this may be an important day and that because the market accepted the result today that it may set the stage for what happens the rest of this year.

It was reported this morning that the trade deficit narrowed for the fourth straight month in October, bringing the trade gap down to its lowest level this year. The nation’s trade deficit narrowed -1.6% in October to $43.5 billion. A prominent feature of the report was a sharp upward revision to the September trade gap to $44.2 billion from the initial estimate of $43.1 billion, which could cut the government’s estimate of third quarter growth, now estimated at a +2% annual rate. Analysts had expected a deficit of $43.6 billion. Meanwhile, exports of goods alone slipped -1.2% to $127.8 billion however, exports saw a record amount of capital goods and petroleum in the month. Exports of civilian aircraft also increased in October. Despite the improvement in the overall trade gap, the trade deficit with China widened to $28.1 billion in October from $25.7 billion in the same month last year. Imports from China in October were the highest on record.

The University of Michigan/Thomson Reuters index of consumer sentiment reached 67.7% in the initial reading for December, its highest level since June.

Thursday, December 8, 2011 4:03 p.m est.

The market was looking to go higher according to Globex trading overnight after the EU cut interest rates to 1% but it suddenly fell after European Central Bank President Mario Draghi said that the European Union treaty prohibits "monetary financing." He was responding to a reporter's question about why the central bank doesn't ramp up its bond-buying program. Things got worse after S&P announced that it was going to lower its ratings on all EU countries with the Dow seeing lows of -240.00 points, S&P 500 -30.00 points and the Nasdaq -60.00 points. EU leaders will meet in Brussels on Thursday evening and Friday so the volatility will likely continue.

At the close the Dow was down by -200.00 points to 11,998.00, S&P 500 -27.00 points to about 1234.00, S&P 100 -11.00 point to 559.00 and the Nasdaq Composite -53.00 points to about 2596.00. Oil closed down -$2.00 around the $98.00 level.

Jobless Claims fell -23,000 to a seasonally adjusted 381,000 last week, the lowest level since late February. However if you look at the non-seasonal level it has risen over +100,000 to be over the 500,000 level. Last weeks numbers were revised up by +2,000 to 404,000. The four-week average of new claims also fell, down -3,000 to 393,250 and is the lowest level since early April. Continuing claims fell by -174,000 to a seasonally adjusted 3.58 million, the lowest number since September 2008. The insured unemployment rate fell two-tenths of a percentage point, to 2.8% and is the lowest rate since October 2008. The four-week average of continuing claims dropped -20,500 to stand at 3.67 million.

Wednesday, December 7, 2011 4:03 p.m est.

The market was lower at the start of the day with the Dow seeing lows of -90.00 points, S&P 500 -14.00 points and the nasdaq -40.00 points but as it turned into drift mode the Dow saw highs of +110.00 points, S&P 500 +10.00 points and the Nasdaq +15.00 points as tech stocks continue to be under pressure.

At the close the Dow was up by +46.00 points to 12,196.00, S&P 500 +3.00 points to about 1261.00, S&P 100 +2.00 point to 570.00 and the Nasdaq Composite -.40 points to about 2649.00. Oil inventories revealed some large increases so it fell under -$100 at one point but closed down -$.50 around the $100.00 level. Managers are really trying to hold the market up but it is getting quite overbought here in the short term so it will be interesting to see if it can hold as we approach expiration next week!

Tuesday, December 6, 2011 4:03 p.m est.

The market started the day higher but then fell as it drifted with the Dow seeing lows of -20.00 points, S&P 500 -4.00 points and the nasdaq -10.00 points. Of course it turned around though on weak volume with the Dow making highs of +120.00 points, S&P 500 +8.00 points and the Nasdaq +15.00 points as tech stocks seemed to be under pressure.

At the close the Dow was up by +50.00 points to 12,150.00, S&P 500 +1.00 points to about 1258.00, S&P 100 +1.00 point to 567.00 and the Nasdaq Composite -6.00 points to about 2649.00. Oil was flat all day and basically closed unchanged to finish the day around the $101.00 level.

It’s interesting that the market is holding up so well considering what is going on with the EU and it is still debatable if it will be make it in the new year however money flow data suggests that money, albeit small may be moving back into the U.S. The reason I see that is the U.S dollar is also showing some support. It has been a long time since stocks and the dollar have moved up simultaneously. For several years this has been an opposing relationship so if this continues it would be a sign that money is moving into the U.S.

You can see that the market is making the biggest attempt at holding up into yearend as the market rallied when Europe seemed to get serious about making an attempt to get its fiscal house in order but by the end of the week there was a whole lot less momentum in stocks. Yesterday when S&P announced that it would downgrade the credit of European nations, including France and Germany even though the market fell off of its highs it still remained higher. Stocks seem to be supported by money leaving the Euro and the gold market, economic data has been stable of late and there even has been some job growth and stability in the manufacturing sector. Although I think they are going to be lowered next year, corporate earnings also remain steady. Compared to the rest of the world, it's clear that the markets are seeing something in the U.S so it will be interesting to see how we close the year.

Monday, December 5, 2011 4:03 p.m est.

The market rallied pretty hard at the start of the day as there was no bad news from the EU this weekend and only had positive things to say this morning. The Dow made highs of +170.00 points, S&P 500 +23.00 points and the Nasdaq +50.00 points. However when S&P came out and said that they were putting many of the AAA EU countries on credit watch negative the market gave up much of its gains.

At the close the Dow was up by +80.00 points to 12,098.00, S&P 500 +13.00 points to about 1257.00, S&P 100 +4.00 points to 566.00 and the Nasdaq Composite +29.00 points to about 2656.00. Oil was higher all day on news that Iran shot down a U.S drone over the weekend but the news about S&P turned it negative closing down -$.10 to finish the day around the $101.00 level. The market is likely to see volatility all week as the EU debacle continues and volume continues to dry up.

Friday, December 2, 2011 4:03 p.m est.

The market was looking to rally even before the employment report came out an hour before the open today but when the number came in better than expected, Globex futures actually pulled back a bit. There were still strong gains to be had at the open though with the Dow making highs of +130.00 points, S&P 500 +16.00 points and the Nasdaq +35.00 points. Of course it is Friday and who knows what will come out of Europe over the weekend so the market pulled back from its highs and actually turned mixed in the final hour. In the end the market still closed with its second biggest weekly gains ever, coming off of one of its worst down weeks ever however!! Makes you wonder why so many people are staying out of the market, however for us this volatility has been incredible so it has made our trading the past few months incredible for selling options!

At the close the Dow was down by -.61 points to 12,020.00, S&P 500 -.30 points to about 1244.00, S&P 100 +.60 points to 562.00 and the Nasdaq Composite +.75 points to about 2627.00. Oil was higher all day closing up +$.90 to finish the day around the $101.00 level.

Employment as up +120,000 jobs in November and the unemployment rate fell to 8.6% from 9%. The government also revised jobs data for October and September to show that +72,000 additional jobs were created. Economists had forecast a +125,000 increase in employment in November and no change in the jobless rate. The bad news is that about half of the drop in the unemployment rate stemmed from a decline in the number of workers in the labor force dropping out. Hiring in October was revised up to +100,000 from +80,000 and the job gains in September were revised up to +210,00 from +158,000. In November, companies in the private sector hired +140,000 workers, with retailers adding +50,000 and the government cutting -20,000 jobs. Average hourly earnings fell -0.1% last month to $23.18 and that's really bad news while the workweek was unchanged at 34.3 hours. The good news was that the broader private sector unemployment rate dropped to 15.6% from 16.2% in October.

Thursday, December 1, 2011 4:03 p.m est.

The market decided to consolidate its gains today and started the day lower. It was able to gain some traction though with the Dow making highs of +15.00 points, S&P 500 +4.00 points and the Nasdaq +20.00 points. It fell again after that however with the Dow seeing lows of -80.00 points, S&P 500 -8.00 points and the Nasdaq Composite -15.00 points. At the finish of the day it remained lower as traders started to anticipate the employment report coming out tomorrow morning!

At the close the Dow was down by -25.00 points to 12,021.00, S&P 500 -2.00 points to about 1245.00, S&P 100 -1.00 points to 561.00 and the Nasdaq Composite +6.00 points to about 2626.00. Oil was flat all day closing down just a little -$.30 to finish the day around the $100.00 level.

Yesterday the rally was huge but if you look at it without blinders on you get a different picture. Basically, the world's central banks, by dropping the price of dollar based swaps or loans, made a whole lot of money available to the banking system. The fact that Canada, the U.K., and Switzerland's central banks joined the Fed stated that we're all in this together now! It worked as it provided an impressive one day rally, which could continue but isn’t guaranteed. Markets will start to look around and ask questions and the questions will be the same as they were last week! Where is Greece going to get the money to pay for decades of no taxes having been collected and how will Italy, Spain, Portugal and Ireland be able to paper over the huge losses caused by runaway speculation on housing based on no real economic activity over the years! What it all means is that unless the European Union actually does something to change the way it does business, all the gains in the rally could disappear and the Euro will likely take a huge hit. Basically, the Fed and the global central banks may have bought Germany and the European Union a few weeks in which to get their house in order, but little more.

It may not last anyhow after you look at why China's central bank lowered its reserve requirements. According to Reuters: "China's factory sector shrank in November for the first time in nearly three years, an official purchasing managers index (PMI) showed on Thursday, underlining the central bank's move to cut bank reserve requirements to help the economy." To be sure, the drop wasn't huge but the number falling below 50 is bad for sentiment and indicates a slowdown may be bigger than expected and indicate just how bad the current global situation is.

Jobless Claims rose last week by +6,000 to a seasonally adjusted 402,000. Economists had expected to only rise to 393,000. Claims in the prior week were revised up to 396,000 from an original reading of 393,000. T he average of new claims over the past four weeks, meanwhile, increased by +500 to 395,750. Continuing claims climbed by +35,000, to 3.74 million and a total of 7.01 million people received some kind of state or federal benefits two weeks ago.

Wednesday, November 30, 2011 4:03 p.m est.

The market looked to rally this morning as Globex futures rallied overnight after it was announced that China said it was going to cut its bank reserve-requirement ratio. Then when it was announced that all of the major global central banks said they had agreed to lower dollar swap rates in a bid to provide more liquidity to domestic banks they really took off. Economic data was also positive so at the open the market took off and the market held gains all day with the Dow making highs at the close of +500.00 points, S&P 500 +52.00 points and the Nasdaq +110.00 points.

At the close the Dow was up by +490.00 points to 12,046.00, S&P 500 +52.00 points to about 1247.00, S&P 100 +23.00 points to 562.00 and the Nasdaq Composite +105.00 points to about 2620.00. Oil rallied today but closed well off of its highs up +$.60 to finish the day around the $100.00 level.

Private-sector payrolls increased +206,000 in November, the largest gain since last December, led by the service-producing sector and small businesses, according to the ADP employment report. The October level was revised up to +130,000 from a prior estimate of +110,000. Markets look to ADP's report on private-sector payrolls to provide some guidance on the main employment number, which will be released Friday and includes information on both private- and public-sector payrolls.

Economists expect the numbers to be up +125,000 in November, compared with +80,000 in October. Analysts also expect the unemployment rate to remain at 9.0%.Outplacement consulting firm Challenger, Gray & Christmas said -42,474 planned layoffs were announced in November, down -0.7% from October's total. That's the second straight drop after September's 28-month high of 115,730. At first it sounds encouraging, but digging deeper into the report you see that cuts in 2011 have already surpassed last year's total, according to their report. The report noted that jobs losses are up +13% overall and now total 564,297, already more than 2010's full-year total of 529,973 and we still have to get through December.

The productivity of workers in the third quarter was revised down to a +2.3% increase from an initial reading of +3.1%. Economists had expected productivity to be revised down to +2.5%. A combination of slower output growth and higher hours accounted for the downward revision. The government said real output of goods and services, which adjusts for inflation, rose +3.2% in the third quarter instead of +3.8% as originally estimated. Hours worked, meanwhile, rose +0.8% last quarter instead of an initial reading of +0.6%. Unit-labor costs fell -2.5% instead of -2.4% as initially reported. Economists expected the decline in unit-labor costs to be 2.3%. Hourly wages adjusted for inflation fell -3.2% last quarter, larger than the initial estimate of a -2.4% drop.

Tuesday, November 29, 2011 4:03 p.m est.

The market started the day mixed seeing slight lows before rallying with the Dow seeing highs of +100.00 points, S&P 500 +12.00 points and the Nasdaq +20.00 points. Midday it became mixed once again but the final hour saw selling take hold and the market closed mixed. At the close the Dow was up by +33.00 points to 11,555.00, S&P 500 +3.00 points to about 1195.00, S&P 100 +2.00 points to 539.00 and the Nasdaq Composite -12.00 points to about 2516.00. Oil continued higher closing up +$1.60 to finish the day around the $100.00 level.

Consumer confidence jumped up to 56% in November, reaching the highest level since July, on improved expectations and views on the present economy, the Conference Board reported. The index rose more than 15 points, the largest gain since 2003 from an upwardly revised 40.9% in October. A prior estimate for confidence in October had the level at 39.8%. With improving employment figures and lower gas prices, economists had expected a reading of 45% for November, with the overall gain somewhat offset by volatility in stocks and Europe, as well as gridlock over budget cuts. Despite the confidence gain in November, consumers remain concerned about jobs, and confidence readings are at relatively low levels, generally when the economy is growing at a good clip, confidence readings are at least 90% plus.

Home prices took a fall in September, according to a key index, ending a string of five monthly gains as the housing market continues to struggle to generate momentum. The S&P/Case-Shiller 20-city composite index fell -0.6% in September to take the year-on-year decline in home prices to 3.6%. The worse-than-expected drop limited third-quarter price appreciation to a mere +0.1%. Only three cities, New York, Portland and Washington D.C., saw monthly gains, and another three cities, Atlanta, Las Vegas and Phoenix, registered new lows. “The markets are fairly thin, and the relative lack of closed transactions might be exacerbating the downside,” said David Blizer, chairman of the index committee at S&P Indices. While the collapse of prices seen in 2007 to 2009 “seems to be behind us,” Blitzer said any chance for a sustained recovery will probably need a stronger economy. The slight third-quarter advance put home prices back where they were in the first quarter of 2003. Home prices are down -31% from their peak in 2006. Separately, CoreLogic reported that 10.7 million, or 22.1%, of all residential properties with mortgages were in negative equity at the end of the third quarter, which compares to 22.5% at the end of the second quarter.

Monday, November 28, 2011 4:03 p.m est.

Yeah, the best news ever happened today!!! Barney Frank said he is retiring instead of seeking re-election!!! Finally the guy that created the entire housing debacle is gone, thank goodness!!!

I don’t think that's why the market rallied so hard today but I wish it was!!! The main reason is because the EU made some more promises over the weekend about fixing their problems and their were record retail sales for Black Friday this past weekend. The Dow saw highs of +325.00 points, S&P 500 +38.00 points and the Nasdaq +90.00 points. The final hour saw some selling occur as the rally our of the gates was so strong but most of the gains were held right into the close. At the close the Dow was up by +291.00 points to 11,523.00, S&P 500 +34.00 points to about 1193.00, S&P 100 +12.00 points to 535.00 and the Nasdaq Composite +86.00 points to about 2527.00. Oil rallied strongly today closing up +$1.45 to finish the day around the $98.00 level.

It wasn’t surprising to see the rally today as the market had been down seven days in a row and was incredibly oversold. The test will be how we end the week. So far the Dow has been up triple digits about 48 times this year and down about the same amount which is amazing but is one reason we have done so well with our style of trading this year. As we are about to move into the final month of the year for trading we’ll likely see the volatility quiet down as there is going to be strong pressure by the under achieved managers to help scrape something together by yearend. For now we’ll see how the week ends to prove if were seeing a short term bottom or not.
Sales of new single-family homes rose +1.3% in October to an annual rate of 307,000. Sales in September were revised down to 303,000 from an original reading of 313,000. Economists had expected new home sales to climb to an annual rate of 320,000 on a seasonally adjusted basis. The median sales price fell -$1,000 to $212,300. The supply of new homes on the market dropped slightly to 6.3 months. Sales of new homes are +8.9% higher compared to one year ago, but the housing market remains mired in its worst slump in modern times.

Wednesday, November 23, 2011 4:03 p.m est.

Want to wish everyone a very happy Thanksgivings, a time for us all to be incredibly thankful for the wonderful blessing we have received! Yesterday the market remained under pressure but by the close it was only a slight loss. Today it hit its six straight down day with it falling the hardest likely because of the upcoming holidays. The market is closed tomorrow and only open a half day on Friday which by the way means I won’t be reporting till Monday unless there is some big surprise on Friday to report. The biggest reason for the fall today was that a bond auction for Germany didn’t turn out that well indicating that even EU’s main leader is under pressure with bond yields continuing higher. One thing that was very interesting today however was that Irelands credit rating was moved back to stable because of all of the austerity programs they have stuck to the past year and they are actually forecasting that their economy will grow in 2012!

The Dow saw lows of -210.00 points, S&P 500 -23.00 points and the Nasdaq -60.00 points and then after moving back and forth for the rest of the day the market sold off into the close making slightly new lows. At the close the Dow was down by -249.00 points to 11,547.00, S&P 500 -23.00 points to about 1193.00, S&P 100 -11.00 points to 537.00 and the Nasdaq Composite -50.00 points to about 2523.00. Oil closed down -$1.80 to finish the day around the $96.00 level.

This morning it was reported that Jobless Claims rose +2,000 to a seasonally adjusted 393,000. Economists had expected a level of 390,000. Claims for the prior week were revised to 391,000 from an earlier estimate of 388,000. The average of new claims over the past four weeks, fell -3,250 to 394,250, reaching the lowest level since early April. Continuing claims rose +68,000 to 3.69 million. The four-week average for these claims fell -2,250 to 3.67 million, the lowest level since October 2008. A total of 6.73 million people received some kind of state or federal benefits, down -45,000 from the prior week.

Consumer spending rose a modest +0.1% last month, while personal incomes rose a faster +0.4%, the Commerce Department reported. Economists had forecast spending to rise by +0.3% and income by +0.2%. As a result, the personal savings rate rose to +3.5% of disposable income, the money leftover after paying taxes, from +3.3% in September. Inflation, meanwhile, fell -0.1% in October, putting its increase over the past 12 months at +2.7%. The core PCE, which excludes volatile food and energy costs, rose +0.1%. Economists called for a +0.1% increase. Over the past year, core PCE inflation has risen a smaller +1.7%. In September, Americans boosted spending +0.7%, even though their incomes rose only +0.1%, revised data showed.

Orders for long-lasting Durable goods fell -0.7% in October, largely because of weaker demand for commercial aircraft. Bookings for electrical equipment and computers also fell. Economists had expected orders to drop -1.5%. If the transportation sector is excluded, however, orders actually rose +0.7%. Bookings for transportation equipment, a particularly volatile category, fell -4.8% last month. Orders for commercial aircraft was down -16.4%. Orders minus defense rose +0.2%. Orders for core capital goods, which excludes defense and transportation, fell -1.8% last month. Shipments of durable goods rose +1.3% to mark the fifth increase in the past six months.

Consumer sentiment has risen to the highest since June, while remaining at relatively low levels, according to data released from the University of Michigan and Thomson Reuters. A gauge of consumer sentiment hit 64.1% in the final reading for November, the highest level since June, compared with 60.9% in October. A preliminary reading for November pegged the gauge at 64.2%. Last year, however, the index stood at 71.6%.

Economists had expected a final November result of 65%, with consumers somewhat cheered by lower gas prices, but concerned about stock volatility. The sentiment gauge, which covers how consumers view their personal finances as well as business and buying conditions, averaged about 87% in the year before the start of the most recent recession. Consumer views on current conditions and their expectations rose in November with he current-conditions gauge rising to 77.6% in November from 75.1% in October. The expectations barometer increased to 55.4% in November from 51.8% in October.

Monday, November 21, 2011 4:03 p.m est.

The market was sharply lower this morning as worries about the EU continue to persist and the supposed super committee said that they were unable to come to an agreement to balance the budget and cut the deficit. At one point the Dow saw lows of -350.00 points, S&P 500 -34.00 points and the Nasdaq -75.00 points but was able to rally a bit into the close. This is a shortened trading week and has generally been to the upside and with the oversold condition of the market and the fact that the news is now out about the government there is a chance that by the end of the week we either see the market higher or at the least flat.

At the close the Dow was down by -249.00 points to 11,547.00, S&P 500 -23.00 points to about 1193.00, S&P 100 -11.00 points to 537.00 and the Nasdaq Composite -50.00 points to about 2523.00. Oil closed down -$.70 to finish the day around the $97.00 level.

The National Association of Realtors said sales rose +1.4% to a seasonally adjusted annual rate of 4.97 million from 4.9 million in September. Economists had anticipated a decline to an annual rate of 4.8 million in October. The September figure was marginally downward revised by 100,000. The median price of homes dropped -4.7% from year-ago levels to $162,500. Inventories declined -2.2% to 3.3 million, reflecting 8.0 months of supply at current sales rates. This is kind of good news and points to the progress on inventories as a hopeful sign.

Friday, November 18, 2011 4:03 p.m est.

It was a pretty quiet expiration today with the Dow seeing lows of -25.00 points, S&P 500 -5.00 points and the Nasdaq -25.00 points but then it saw some upside with the Dow up +75.00 points, S&P 500 +4.00 points and the Nasdaq +5.00 points. The market is in wait mode as Europe is still dealing with its problems and the supposed super committee needs to make a decision about the budget by next Wednesday. There is a good chance that volatility will pick up once again depending on their decision about what they will do but we are moving into the final expiration cycle of the year and I'm sure the window dressers are waiting to push the market so it looks good on the books.

At the close the Dow was up by +25.00 points to 11,796.00, S&P 500 -.50 points to about 1215.00, S&P 100 -.30 points to 548.00 and the Nasdaq Composite -15.00 points to about 2573.00. Oil closed down another -$1.00 to finish the day around the $98.00 level.

Data suggest that the risk of recession has receded, the Conference Board said as it reported that its index of leading economic indicators grew +0.9% in October. the largest growth since February, led by gains in building permits. The index "is pointing to continued growth this winter, possibly even gaining a little momentum by spring," said Ken Goldstein, a Conference Board economist, in a statement. Economists had expected growth of +0.7%. The Conference Board revised September's result down to +0.1% from a prior estimate of +0.2%. The LEI is a weighted gauge of 10 indicators that are designed to signal business cycle peaks and troughs. Among the 10 indicators that make up the LEI, nine made positive contributions in October, led by building permits, the interest-rate spread, and average weekly manufacturing hours. The only negative contribution came from faster supplier deliveries.

Thursday, November 17, 2011 4:03 p.m est.

So the debt of America went over the $15 trillion mark yesterday. Currently it costs about $1 billion a week just to pay for the debt. The supposed super committee is meeting and more news is coming out as they must make a deal by November 24th otherwise automatic cuts will come to the budget. There are $1.2 trillion over the next 10-years in "savings" or "spending cuts", being talked about which will likely lead to higher taxes for working people, rich or poor. What's not clear is what will be cut and how much taxes will go up, either if the Super Committee comes to an agreement, or if the automatic $1.2 trillion cuts go into effect if the group fails. Some things sound just like a politician, such as massaging budget assumptions and painting rosy economic scenarios. Others include taking credit for "saving" money on wars that are ending and putting off until next year what lawmakers don't want to deal with now." Yet, as the Journal points out "none of these efforts make the fundamental policy changes needed for a long-term budget fix," while "Any perception of gimmickry could undermine the bill's credibility especially among tea-party conservatives and on Wall Street, possibly risking another hit to the U.S.'s credit rating." The big question is whether Washington can even make cosmetic changes to its arrogance and self-interest driven, lobbyist fueled pyramid scheme!!! Yesterday the market sold off about -1.5% as worries about the EU continued and questions about the future were kicking around. Strangely oil rallied hard to close well over the $100 level, up about $3.20. Many analysts thought it was because of the Trans Canada pipeline going down from Alberta Canada to the Gulf being canceled but that seemed like a loose reason to rally that much. Today seemed to prove the point as oil sold off strongly back below the $100 level, once again. Stocks followed suit as they were down hard all day except for a brief stint where the Dow made it barely into the positive area first thing in the morning. The Dow saw lows of -230.00 points, S&P 500 -28.00 points and the Nasdaq -65.00 points.

At the close the Dow was down by -135.00 points to 11,771.00, S&P 500 -21.00 points to about 1216.00, S&P 100 -10.00 points to 546.00 and the Nasdaq Composite -52.00 points to about 2588.00. Oil closed down -$3.70 higher to finish the day around the $99.00 level. Tomorrow is expiration and once again we are going to see very nice profits. As we move into the final trading expiration cycle of the year the question will be all of the problems out there will continue or will a year end rally to make things look "okay" transpire!! Thank goodness we'll just be following our Program Numbers!!

Jobless Claims fell last week by -5,000 to a seasonally adjusted 388,000, the lowest level since early April. Economists had expected a rise to 397,000. Claims in the prior week were revised up to 393,000 from an original reading of 390,000. The average of new claims over the past four weeks, meanwhile, dropped by -4,000 to 396,750, also the lowest level since early April. Continuing claims declined by -57,000 to 3.61 million, and a total of 6.77 million

New construction of Houses fell only slightly in October after a strong gain in the previous month. Starts fell -0.3% in October to a seasonally adjusted 628,000 annualized units, stronger than the 605,000 pace expected by economists. Starts in September were revised to a +7.6% gain to 630,000 units compared with the initial estimate of a +15% increase to 658,000 however. Starts of new single-family homes rose in October after falling in the prior month. Starts of large apartment units fell last month after a big gain in September. Building permits, a leading indicator of housing construction, surged +10.9% to a seasonally adjusted annual rate of 653,000. This is the highest level of permits since March 2010.

Yesterday it was reported that Consumer prices fell a seasonally adjusted -0.1% in October mainly because of falling gas costs, but "core" inflation edged up +0.1%. The core data strips out volatile food and energy categories and is used the Fed to guide its interest-rate decisions because its not important that people eat. Economists had forecast CPI to be unchanged, with a +0.1% increase in the core rate. Consumer prices have risen an unadjusted +3.5% over the past 12 months, down from +3.9% in September. The core rate has risen at a slower +2.1% pace over the 12 months ended in October, but that was up from +2% in September. Gas costs dropped -3.1% last month but they are on the rise the last month so look out. Food prices rose +0.1%.

The output of the nation's factories, mines and utilities rose +0.7% in October, the Fed said. The October gain was the biggest since July and was stronger than the +0.4% increase expected by analysts. However, industrial output in September was revised to a decline of -0.1% compared with the initial estimate of a +0.2% gain. Factory activity alone rose +0.6% in October after a +0.2% increase in September. Mining and gas exploration had a strong +2.3% gain in October. Capacity utilization - a gauge of slack in the economy - rose to 77.8% in October from 77.3% in September. Capacity utilization has been rising slowly and is at its highest level since July 2008.

Wednesday, November 16, 2011

Wow, you know I’m thinking of joining the Occupy Wall Street people after hearing the news this morning. Being a Canadian and living here I must say I am very proud to be Canadian today! As I mentioned the other day with MF Global America going bankrupt because it wanted to keep any of its cash away from the American affiliate MF Global also moved into bankruptcy. It then proceeded to make sure that all of their clients were receiving “all” of their cash and trades and this week it is finishing that promising with the move to Dominion Securities! Never thought I would be dealing with them as I worked with them in the 80’s day trading the S&P 100! Anyhow, I just read that there is a possible $40 million shortfall in investor funds which you would think at first is bad news!! I know what your thinking right away but guess what, their insurance fund the Canadian Investor Protection Fund is putting up the missing money and STILL GIVING BACK EVERYTHING to those investors right away!!! Their trustee “requested short-term liquidity of up to $40-million in order for those transfers to occur,” rather than incur more delays waiting for the funds tied up in the U.S. and Britain to become available. CIPF’s board approved the request.”

The key point that they said about this is that: “once those U.S. and British funds are freed up, CIPF would be reimbursed for any amounts KPMG draws down under the liquidity request. In the court ruling Monday that approved the bulk transfer of accounts to RBC Dominion, CIPF was granted top priority among creditors to recover whatever funds it provides to KPMG to distribute to customers. They also said CIPF would fund the liquidity requirements out of its $400-million “liquid bond portfolio” – the nest egg the industry fund has accumulated to backstop investor losses in the event of an insolvency of a CIPF member firm, such as MF Global Canada. She said that in addition to the fund’s bond portfolio, it also has a $100-million credit line and an insurance policy that would pay off $116-million in the event the fund had to pay out $100-million or more in a member insolvency.”

You know this isn’t rocket science, everyone knows that the American SIPC has loads of cash, the CME has offered up to $300 million cash for losses so why isn’t the trustee, SIPC in the States just letting everyone have their cash back and then go looking to get their cash back like the Canadians? America has become a nation of regulators, regulations, lobbyists and lawyers when it comes to big business. Its not about the client its about the greed and what can “I” get out of this. Canada appointed an accounting firm for its trustee while America awarded that position to a lawyer who is making over $800 per hour so of course he’s not going want to give those clients their money to fast because he says he needs to “account for the missing funds before he can give out any additional funds.” Anyhow, there is some good news for American MF Global clients this morning as Gidden is going to court to move some more cash to clients because pressure is mounting as clients who were completely in cash haven’t received a dime so it will likely flow out to everyone. Once again I encourage you to write, e-mail anyone you can about the difference between the two countries and even contact the news. Things need to change and “We the people” need to take back our rights!

Tuesday, November 15, 2011 4:03 p.m est.

The market started the day slightly lower but it turned midday after Europe closed with the Dow seeing highs of +80.00 points, S&P 500 +10.00 points and the Nasdaq +35.00 points but selling in the final hour pulled the market back quite a bit going into the close. At the close the Dow was up by +17.00 points to 12,096.00, S&P 500 +6.00 points to about 1258.00, S&P 100 +3.00 points to 565.00 and the Nasdaq Composite +29.00 points to about 2686.00. Oil was up again closing +$1.25 higher to finish the day around the $99.50 level.

Producer Prices dropped by the largest amount in 20 months as a big drop in gas prices as well as the introduction of new-model-year vehicles offset a rise in the cost of eggs, poultry and medications, according to data. The producer price index fell a seasonally adjusted -0.3% last month. Economists had predicted no change but that will change next month anyhow as oil itself has rallied over +30% this month alone. Wholesale prices were dragged lower as a -1.4% drop in energy prices offset a+0.1% gain for finished consumer foods. Minus those two categories, core wholesale prices were flat, below the +0.1% gain forecast by economists. Over the past year, wholesale costs have risen +5.9%, with the core increasing a lesser +2.8%.

Retail sales climbed +0.5% in October as Americans continued to spend at an accelerated pace. Economists expected an increase of +0.2% on a seasonally adjusted basis. The rise in retail sales was driven by higher purchases at internet stores such as Amazon and electronics and appliance stores such as Best Buy. Sales of autos rose just +0.4% after a big surge in September while gasoline sales fell. Excluding the auto sector, retail sales increased +0.6%, compared to the forecast calling for a +0.1% gain. Sales for September, which were originally reported as up +1.1%, were unchanged. Over the past 12 months, retail sales have risen +7.2%.

The Empire State manufacturing index moved slightly into positive territory in November after five months in negative territory, the New York Fed said. The Empire state index rose to +0.6 in November from negative -8.5 in October. Readings above zero indicate expansion, with higher numbers of firms reporting that conditions had improved. Economists expected the index to remain at negative -3% in November. Despite the improvement in the headline, underlying conditions were mixed. The new orders index fell to negative -2.1 in November from -0.2 in October, while the shipments index rose to +9.4 from +5.3. Inventories fell to negative -12.2 in November from negative -9.0 in the prior month. The employee index fell to negative -3.7 in November from -3.4 in the prior month while the average workweek was positive for the first time in six months. The prices paid index fell to its lowest level in nearly two years. A reading of expected conditions six-months ahead strengthened in November to its highest reading since May. Thursday, November 17, 2011 4:03 p.m est.

So the debt of America went over the $15 trillion mark yesterday. Currently it costs about $1 billion a week just to pay for the debt. The supposed super committee is meeting and more news is coming out as they must make a deal by November 24th otherwise automatic cuts will come to the budget. There are $1.2 trillion over the next 10-years in "savings" or "spending cuts", being talked about which will likely lead to higher taxes for working people, rich or poor. What's not clear is what will be cut and how much taxes will go up, either if the Super Committee comes to an agreement, or if the automatic $1.2 trillion cuts go into effect if the group fails. Some things sound just like a politician, such as massaging budget assumptions and painting rosy economic scenarios. Others include taking credit for "saving" money on wars that are ending and putting off until next year what lawmakers don't want to deal with now." Yet, as the Journal points out "none of these efforts make the fundamental policy changes needed for a long-term budget fix," while "Any perception of gimmickry could undermine the bill's credibility especially among tea-party conservatives and on Wall Street, possibly risking another hit to the U.S.'s credit rating." The big question is whether Washington can even make cosmetic changes to its arrogance and self-interest driven, lobbyist fueled pyramid scheme!!! Yesterday the market sold off about -1.5% as worries about the EU continued and questions about the future were kicking around. Strangely oil rallied hard to close well over the $100 level, up about $3.20. Many analysts thought it was because of the Trans Canada pipeline going down from Alberta Canada to the Gulf being canceled but that seemed like a loose reason to rally that much. Today seemed to prove the point as oil sold off strongly back below the $100 level, once again. Stocks followed suit as they were down hard all day except for a brief stint where the Dow made it barely into the positive area first thing in the morning. The Dow saw lows of -230.00 points, S&P 500 -28.00 points and the Nasdaq -65.00 points.

At the close the Dow was down by -135.00 points to 11,771.00, S&P 500 -21.00 points to about 1216.00, S&P 100 -10.00 points to 546.00 and the Nasdaq Composite -52.00 points to about 2588.00. Oil closed down -$3.70 higher to finish the day around the $99.00 level. Tomorrow is expiration and once again we are going to see very nice profits. As we move into the final trading expiration cycle of the year the question will be all of the problems out there will continue or will a year end rally to make things look "okay" transpire!! Thank goodness we'll just be following our Program Numbers!!

Jobless Claims fell last week by -5,000 to a seasonally adjusted 388,000, the lowest level since early April. Economists had expected a rise to 397,000. Claims in the prior week were revised up to 393,000 from an original reading of 390,000. The average of new claims over the past four weeks, meanwhile, dropped by -4,000 to 396,750, also the lowest level since early April. Continuing claims declined by -57,000 to 3.61 million, and a total of 6.77 million.

New construction of Houses fell only slightly in October after a strong gain in the previous month. Starts fell -0.3% in October to a seasonally adjusted 628,000 annualized units, stronger than the 605,000 pace expected by economists. Starts in September were revised to a +7.6% gain to 630,000 units compared with the initial estimate of a +15% increase to 658,000 however. Starts of new single-family homes rose in October after falling in the prior month. Starts of large apartment units fell last month after a big gain in September. Building permits, a leading indicator of housing construction, surged +10.9% to a seasonally adjusted annual rate of 653,000. This is the highest level of permits since March 2010.

Yesterday it was reported that Consumer prices fell a seasonally adjusted -0.1% in October mainly because of falling gas costs, but "core" inflation edged up +0.1%. The core data strips out volatile food and energy categories and is used the Fed to guide its interest-rate decisions because its not important that people eat. Economists had forecast CPI to be unchanged, with a +0.1% increase in the core rate. Consumer prices have risen an unadjusted +3.5% over the past 12 months, down from +3.9% in September. The core rate has risen at a slower +2.1% pace over the 12 months ended in October, but that was up from +2% in September. Gas costs dropped -3.1% last month but they are on the rise the last month so look out. Food prices rose +0.1%.

The output of the nation's factories, mines and utilities rose +0.7% in October, the Fed said. The October gain was the biggest since July and was stronger than the +0.4% increase expected by analysts. However, industrial output in September was revised to a decline of -0.1% compared with the initial estimate of a +0.2% gain. Factory activity alone rose +0.6% in October after a +0.2% increase in September. Mining and gas exploration had a strong +2.3% gain in October. Capacity utilization - a gauge of slack in the economy - rose to 77.8% in October from 77.3% in September. Capacity utilization has been rising slowly and is at its highest level since July 2008.

Monday, November 14, 2011 4:03 p.m est.

The market was lower today as European bond yields were making new highs once again with the Dow seeing lows going into the final hour of -130.00 points, S&P 500 -17.00 points and the Nasdaq -35.00 points before bouncing a bit in the final hour to cut losses.

At the close the Dow was down by -75.00 points to 12,079.00, S&P 500 -12.00 points to about 1252.00, S&P 100 -5.00 points to 563.00 and the Nasdaq Composite -22.00 points to about 2657.00. Oil was down closing -$.80 to finish the day around the $98.00 level.

Well it seems about every second day there is a claim that the money has been found that MF Global is missing and the good news is that this one is only being said by one reporter so there’s a possibility its true. Nonetheless the trustee for the case says that he must account for every cent that is possibly missing before he can give out any money but also said that it may be “close at hand” in finding out! Another matter is that the CME is starting to make an effort on making things right about MF Global as it says it will put up $300 million of the missing $593 million dollars. This is nice and it should as MF Global was a supposedly a "highly regulated" entity with its regulators being the CFTC and the supposedly "self-regulating" futures exchange CME Group. They actually brag about how they protect clients money in their advertisements!

“Clearing members must calculate segregation and secured requirements and ensure compliance with capital requirements on a daily basis. CME Clearing monitors intra-day price movements and trading activity throughout the trading session. To assess the impact of these price changes on clearing members, intra-day mark-to market calculations are performed on clearing member positions and reviewed by CME Clearing throughout the day and overnight. Additionally, CME Clearing monitors its clearing member firms’ settlement variation and performance bond activities at non–CME cleared exchanges and clearing organizations daily. The risk management team may contact the exchanges or clearing organizations to follow up on this activity.”

This is all great but if the CME really does all that it says it does, how in the world did $593 million dollars go missing in the first place? How did so much cash manage to slip out of supposedly segregated client accounts and into MF Global's corporate account? Obviously it should have been doing an automated computer-based audit everyday as I’m sure it would have been relatively easy to set up.

The overall picture appears to be one of negligence on the part of CME with respect to its regulatory duties and obligations and maybe that’s why they are willing to put up some cash, however I think they should be putting it all up if it is missing. The thing is that the CME Group in my view has a contractual duty that it created itself to reimburse customers for any and all of their segregated fund losses because it promised to do so. The promise is seems legally binding by them for every customer who opens an account with a CME Group approved clearing member.

Specifically, CME's promise is as follows:
If a clearing member were unable to meet its financial obligations to CME Clearing and a default occurred in its customer segregated or customer secured account, CME Clearing may act immediately to:
...Apply the clearing member’s guarantee fund and house performance bond deposits to the failed obligation...

The CME Group wrote up the pamphlet from what I’m talking about for the purpose of convincing customers to have confidence in the system and to do business with it. This is why its sad that they didn’t immediately credit customer accounts with the full amount of all cash, even if it means dipping into their emergency fund to do that above the $300 million they’ve mentioned. They make about $1.5 billion per year anyhow and and this would help to convince people to continue to do business with them and once the cash is found they can get reimbursed instead of making people wait, especially those who were prudent and went to cash just before they went bankrupt.

I think on that part it is negligent of the trustee who must have an idea by now of how much isn’t missing and at least give 80% of the peoples money back! Once again I look North and see that Canada now has everything straightened out and clients are getting their trades and cash back tomorrow with a new brokerage. They the reason this is taking so long is because of MF Global’s atrocious book keeping but they have been stuck at that $593 million or about 10% of all funds for awhile now!

Another reason it may be taking so long is the trustee’s $891 per hour cost! Anyhow I encourage everyone to e-mail your government representatives, the CME,CFTC, SIPC etc even if you don’t have a futures account with MF so this won’t happen again and let them know that this is starting to take way to long and will be bad for business unless clients start to receive a larger portion of their cash to make things right!

Friday, November 11, 2011 4:03 p.m est.

Today is Remembrance Day and Lest we shouldn’t forget what the brave men and women did to grant us our freedom from years past and present. Please tell one of them today how much you appreciate them for being willing to give their lives for our freedom. Out of all the days of the year I wish this was a world wide holiday as there would be no stock or bond markets if we weren’t granted this freedom years ago and I encourage you to send an e-mail to the NYSE to make it a holiday.

The market was higher today as there was no news from Europe with the Dow seeing highs of +290.00 points, S&P 500 +29.00 points and the Nasdaq +60.00 points however it was on dwindling volume likely because most traders were observing Remembrance day. At the close the Dow was up by +260.00 points to 12,154.00, S&P 500 +24.00 points to about 1264.00, S&P 100 +10.00 points to 568.00 and the Nasdaq Composite +54.00 points to about 2679.00. Oil was up closing +$.90 higher to finish the day around the $99.00 level. As we head into expiration next week the volatility will likely continue as the problems in Europe are far from over and investors will start to focus on the government’s committee to make the much needed cuts to get the deficit down by November 23rd, the due date before mandatory cuts and taxes raised etc.

Consumer sentiment rose to 64.2% in the preliminary reading for November, compared with a final October reading of 60.9%, on the data from the University of Michigan and Thomson Reuters. Economists had expected a November result of 63%, with consumers cheered by higher equity prices and lower unemployment-insurance claims. The sentiment reading, which covers how consumers view their personal finances as well as business and buying conditions, averaged about 87% in the year before the start of the most recent recession. Economists watch sentiment data to get a feel for the direction of consumer spending.

Thursday, November 10, 2011 4:03 p.m est.

Interesting: According to The Wall Street Journal: "Retirement trust funds created to cover billions of dollars in medical costs for unionized workers and their families are running short, forcing the funds to cut costs, trim benefits, and ask retirees and companies to pony up more cash."

Of course the market had to rally today because it was down so much yesterday and the fact that in the shortest of times it was oversold. The Dow saw highs of +190.00 points, S&P 500 +18.00 points and the Nasdaq +20.00 points. It didn’t last though but it was only the Nasdaq that turned into the red with lows of -20.00 points before turning around a bit in the final hour.

At the close the Dow was up by +113.00 points to 11,894.00, S&P 500 +11.00 points to about 1240.00, S&P 100 +5.00 points to 558.00 and the Nasdaq Composite +4.00 points to about 2625.00. Strangely oil was up once again closing up +$2.00 to finish the day around the $98.00 level.

Here is an interesting statistic: Pre election years for the stock market have been up every year except for 1931. One year wouldn’t normally mean anything except that was also a year ending in a 1 and other 1 ending decades also saw pressures on the market! 1931 was down -53% but it too had a great rally in October and up from Oct 5th to Nov 9th. If it sounds similar the current low was October 4th and then we fell hard after November 8th.

Jobless claims fell by -10,000 to 390,000, below the 398,000 forecast and the lowest level since April. The four-week average dropped by -5,250 to 400,000, the lowest level since April 16th.

The trade deficit narrowed by -4% in September to $43.1 billion. The trade deficit was below the consensus forecast of economists of a deficit of $45.4 billion. The government also revised the deficit in August to $44.9 billion from $45.6 billion. The narrower deficit should add to third quarter GDP. Exports rose faster than imports in September and hit a new record level. Exports rose +1.4% in September after a +0.1% gain in August. Imports rose +0.3% after a -0.2% decline in the prior month. The trade deficit with China remained virtually unchanged at $28.06 billion compared with the same month last year.

Wednesday, November 9, 2011 4:03 p.m est.

Yesterday I noted that “One interesting aspect about this rally was that it remained higher even though the Italian bond moved to a new higher yield and the Euro was flat. It will be interesting to see how we end the week.” I knew it seemed strange that the U.S dollar wasn’t rallying yesterday with those bonds staying up and with the Italian bond now moving above 7.00% everyone is saying the EU is moving into crisis mode. The dollar was up hugely today and thus the reason for the market to be down so hard.

The Dow saw lows of -440.00 points, S&P 500 -50.00 points and the Nasdaq -110.00 points. Just as anticipated once the Greece problem was masked over and a more important country such as Italy is looking to be in major trouble, the market fell pretty hard. The 10-year yield on their bond closed around the 7.25% level which is extremely high but with an almost $2 trillion dollar debt and GDP the past 15-years averaging less than 1%, its not surprising. The key thing to note is that America is facing $15 trillion plus debt and so far our bond yields are moving down as people seek safety but eventually,,,, will America being facing the situation!!!

At the close the Dow was down by -390.00 points to 11,781.00, S&P 500 -47.00 points to about 1229.00, S&P 100 -20.00 points to 553.00 and the Nasdaq Composite -106.00 points to about 2622.00. Oil closed down -$1.00 to finish the day around the $95.50 level.

Inventories at Wholesalers fell -0.1% in September, but they were up +11.9% from the prior year which isn’t a good longer term sign as we move into the Christmas season. Sales of wholesalers rose +0.5% in September, while the inventory-to-sales ratio moved to 1.15.

Tuesday, November 8, 2011 4:03 p.m est.

The market was up and down today as Italy was voting on in its budget plans. When it appeared that there wasn’t going to be a vote the market fell with the Dow seeing lows of -70.00 points, S&P 500 -7.00 points and the Nasdaq -20.00 points. When it was finally passed but it wasn’t a majority the market waited awhile before deciding to rally or not and when it did the Dow saw highs of +120.00 points, S&P 500 +17.00 points and the Nasdaq +35.00 points. The market continues to move higher as volume continues to move lower and lower and is getting itself into an overbought condition as it approaches highs made last week. One interesting aspect about this rally was that it remained higher even though the Italian bond moved to a new higher yield and the Euro was flat. It will be interesting to see how we end the week.

At the close the Dow was up by +102.00 points to 12,170.00, S&P 500 +15.00 points to about 1276.00, S&P 100 +7.00 points to 573.00 and the Nasdaq Composite +32.00 points to about 2728.00. Oil closed with a gain of +$1.00 to finish the day around the $97.00 level.

Monday, November 7, 2011 4:03 p.m est.

The market was under pressure with Italy now being under pressure about its austerity plans but eventually it was ignored with the Dow seeing highs of +70.00 points, S&P 500 +7.00 points and the Nasdaq +10.00 points. It couldn’t hold though as there are still questions about what’s going on and the fact that Italian bonds hit new record high yields. The Dow saw lows of -60.00 points, S&P 500 -8.00 points and the Nasdaq -35.00 points. The market came back though to basically close at the highs of the day as it seemed that the EU was getting things under control and Greece announced a possible new Prime Minister.

At the close the Dow was up by +85.00 points to 12,068.00, S&P 500 +8.00 points to about 1261.00, S&P 100 +4.00 points to 566.00 and the Nasdaq Composite +9.00 points to about 2695.00. Oil closed with a gain of +$1.30 to finish the day around the $96.00 level.

One of the things that is also hurting the market is the American MF Global mess that continues to go on. Interestingly, once again Canada is shining as its regulatory system has protected its clients. KPMG their bankruptcy trustee says that once the books are done the cash is supposed to be returned to clients. I wish my accounts were up here now!! Anyhow, since the American MF Global announced their bankruptcy, traders have been unable to get cash out or close positions. This is hard to believe in the futures industry and the fall out has been huge with some traders because of it who trade in the commodity’s market. Finally over the weekend accounts were moved to a new brokerage with trades still on and were able to receive about 60% of their margin or about 50% of their cash balances. This haircut unfortunately put trades into a margin call this morning however so although it supplied some cash I’m sure all it did for some people was to help cover losses. This is where I am really glad about the way we trade as time is working for us not against us!

Last Monday it was determined that the best way to protect client assets was through bankruptcy. This made more sense in light of the news that customer money may have gone missing to the tune of $600 million. In bankruptcy, the SIPC can seize some of MF Global’s $40 billion in assets and put clients at the head of the list of creditors to make sure that all of its clients are made whole, while in a sale, they would have had no control over that. In this light, bankruptcy, while temporarily freezing access to client funds – may be the best way for clients to insure the return of their funds. Even just a single $1 of misappropriated client funds is unacceptable and if this money really is missing, so far to the tune of about $593 million, down from $900 million last Monday, it represents about 10% of the total segregated customer funds. This should mean in an absolute worst case scenario where there is fraud and the bankruptcy judge can’t get any of their assets to cover client funds gone missing, each account would be looking at a reduction in their accounts of around 10%. This is terrible but not the end of the world but the worst thing is not knowing exactly what’s going on and when more money will be moved. Listening to a regulatory analyst today he said that MF Global’s book keeping was a massive mess and is hard to track but he said that it should be finished in the next few days or by the end of the week for sure so hopefully by next week things will be back to normal!

Friday, November 4, 2011 4:03 p.m est.

The market started the day lower once again as the employment data wasn’t that good and questions remained about what the EU was going to do after the G20 meeting ended with little results made. Lows were hit midday with the Dow seeing -185.00 points, S&P 500 -22.00 points and the Nasdaq -45.00 points. The market crawled back a bit in the final hour but still finished the day on the downside.

At the close the Dow was down by -61.00 points to 11,983.00, S&P 500 -8.00 points to about 1253.00, S&P 100 -4.00 points to 562.00 and the Nasdaq Composite -12.00 points to about 2686.00. Oil closed with a slight gain of +$.30 to finish the day around the $94.00 level.

There were+80,000 jobs added in October and the unemployment rate edged down to 9.0% from 9.1%. Economists had forecast a +100,000 increase in employment and no change in the jobless rate. Although the increase in employment fell short of expectations, government revisions showed sharply higher job growth in September and August. Hiring in September was revised up to +158,000 from +103,000 and job growth in August was revised up to +104,000 from +57,000. In October though which is good news. Companies in the private sector hired +104,000 workers, but government cut -24,000 jobs to reduce the overall gain to +80,000. Hourly earnings rose +0.2% and the workweek was unchanged at 34.3 hours. The broader and more accurate unemployment rate fell to 16.2% from 16.5% in September which is also good news. Slow and steady is the word....

Thursday, November 3, 2011 4:03 p.m est.

The market was up again today as the European Union decided to lower interest rates a quarter of a point to 1.25% and investors now a days like lower interest rates even more than growth because they said their economy seems to be slowing down again. There was one blip during the rally after it was announced that the Greek government may collapse and Jefferies, an investment bank was halted because of questionable trades related the EU. This put the S&P 500 and Nasdaq in the red but in the end the final hour saw the Dow saw highs of +230.00 points, S&P 500 +25.00 points and the Nasdaq +60.00 points.

At the close the Dow was up by +208.00 points to 12,045.00, S&P 500 +23.00 points to about 1261.00, S&P 100 +23.00 points to 566.00 and the Nasdaq Composite +58.00 points to about 2698.00. Oil closed with a slight gain of +$2.00 to finish the day around the $94.00 level.

Jobless Claims fell by -9,000 last week to 397,000 while economists had expected new claims to fall to 400,000, on a seasonally adjusted basis. Claims from two weeks ago were revised up to 406,000 from an original reading of 402,000. The average of new claims over the past four weeks, fell by -2,000 to 404,500. Continuing Claims declined by -10,500 to 3.70 million. Continuing claims are reported with a one-week lag.

The productivity of Businesses climbed +3.1% in the third quarter as workers produced more goods and services in nearly the same amount of time. Economists had expected productivity to increase by +3.7% in the third quarter. Output climbed +3.8%, the fastest rate since the second quarter of 2010, while hours worked rose a much smaller +0.6%. As a result, unit-labor costs fell -2.4%, the biggest drop in six quarters. In the second quarter, meanwhile, productivity was revised up to show a -0.1% decline compared to a previously stated -0.7% decrease. Although hourly wages rose +0.6% in the third quarter, higher inflation more than offset the increase. Inflation-adjusted wages fell -2.4%. In the past 12 months, productivity has risen at a 1.1% rate. Higher productivity is widely regarded as the key to a rising standard of living because it tends to lead to higher pay for workers and larger profits for companies.

Wednesday, November 2, 2011 4:03 p.m est.

The market was up today as investors decided to ignore what was going on with the EU and the Dow saw highs of +220.00 points, S&P 500 +24.00 points and the Nasdaq +45.00 points. After the Fed released its decision about leaving interest rates alone but didn’t make any type of promise for a QE3 stimulus package so it sold off a bit but still closed with a decent gain.

At the close the Dow was up by +178.00 points to 11,836.00, S&P 500 +20.00 points to about 1238.00, S&P 100 +8.00 points to 556.00 and the Nasdaq Composite +33.00 points to about 2640.00. Oil closed with a slight loss of -$.50 to finish the day around the $92.00 level.

By a 9-to-1 vote, the Fed voted to keep the target Fed funds rate at a level between 0% and 0.25%, to continue its "Twist" program of shifting $400 billion in its bond portfolio toward longer maturities and continue reinvesting maturing principal payments into mortgage-backed securities. The Fed kept its pledge that "exceptionally low levels" of rates are warranted at least through mid-2013. "Economic growth strengthened somewhat," the Fed statement said, but the unemployment rate will decline only gradually toward levels that the Fed judges to be consistent with its dual mandate and there are "significant downside risks" to the economic outlook. The three Fed members who dissented from the prior two decisions, Richard Fisher, Narayana Kocherlakota and Charles Plosser, voted with the majority, while Chicago Fed President Charles Evans dissented as he called for additional policy accommodation.

Private-sector payrolls moderately increased in October, led by the services-producing sector and small businesses, according to the ADP employment report. Payrolls rose +110,000, as services employment gained +114,000 and goods-producing employment fell -4,000. Economists had expected an overall gain of about +100,000. “The recent trend in private employment is probably below a pace consistent with a stable unemployment rate and reflects the sluggish pace of GDP growth exhibited earlier this year,” said Joel Prakken, chairman of Macroeconomic Advisers, which produces the report from anonymous payroll data supplied by Automatic Data Processing Inc.

Small-business employment rose +58,000, compared with +53,000 for medium businesses. Large-business employment fell -1,000. September’s growth result was also revised higher, to an expansion of +116,000 for private-sector payrolls from a prior estimate of +91,000. Markets look to ADP’s report on private-sector payrolls to provide some guidance on the estimate for employment, which will be released Friday and includes information on both private- and public-sector payrolls. Analysts expect the Labor Department to report a slight slowdown for employment, with overall employment up a weak +90,000 in October, compared with +103,000 in September. Analysts also expect the nation’s unemployment rate to remain at 9.1%.

Also out were that the number of planned job cuts announced in October as compiled by outplacement firm Challenger Gray & Christmas fell to about -43,000, the lowest since June. The biggest cuts were in the financial and government sectors. Last month’s result is down 63% from September, but up +12.6% from October 2010.
“Most of the government cuts this year were at the state level. We have yet to see the full impact of mandated federal spending cuts,” said John Challenger, chief executive of the firm bearing his name.

Tuesday, November 1, 2011 4:03 p.m est.

The market started the day down pretty hard as the Greek President decided that they should have a referendum to see if they should accept the EU’s plan for their country because they’re in such great condition they feel they can do that! This is when you know that people are in denial! Anyhow, the Dow saw lows of -320.00 points, S&P 500 -39.00 points and the Nasdaq -85.00 points. The final hour saw a bit of a comeback but it didn’t last long. Then of course there was news out first thing this morning that MF Global had been skimming money off of clients accounts to the tune of $700 million however by the end of the day they say it was down to $100 million as there were still trades going through and their lawyer said that everything was matching up in accounting.

At the close the Dow was down by -297.00 points to 11,658.00, S&P 500 -35.00 points to about 1218.00, S&P 100 -15.00 points to 548.00 and the Nasdaq Composite -77.00 points to about 2607.00. Oil closed with a loss of -$1.00 to finish the day around the $92.00 level.

So far this is looking like a correction in an up market but with the new old news out of the EU it will likely remain under pressure for some time to come. Actually if you look at volume patterns it looked more like a counter trend and not the real thing anyhow considering how overbought it was. We also saw a +10% move in one month so a pullback shouldn’t be a surprise. With the MF Global problem etc, there is also more and more evidence to show that the U.S. stock market is an increasingly unattractive place to park savings for the public. The signs of discontent remain apparent across the globe and frankly, it is disturbing. The groundswell of protest near Wall Street is a sign of the times and it is a clear declaration that too many have been impacted by a recession that never ended. Another thing is that money continues to flow out of domestic mutual funds ($4.3 billion in the week the rally began), thus higher prices are probably being driven substantially by a short covering panic. That may mean this past rally was capitulation and this reversal may imply a new trend for a bit. reversal very soon. While we are aware the sentiment is nowhere near as optimistic as it was a couple of months ago, we believe a lasting bottom can only be achieved with a true capitulation– tremendously one sided. We would allow some room on the upside but remain firmly in the bear market camp.

Growth in the Manufacturing sector slowed in October as production and inventories declined, according to a closely followed index. The Institute for Supply Management's manufacturing gauge dropped to 50.8% last month, just slightly above a 2011 low from 51.6% in September. Economists had expected the index to rise to 52.1%. Readings over 50% indicate that more manufacturers are expanding instead of shrinking. Only eight of the 18 industries tracked reported growth in October, down from 12 in the prior month. The ISM's new-orders index was unchanged, employment rose and prices fell.

Construction spending rose +0.2% in September. The increase put spending on building at a seasonally adjusted annual rate of $787.2 billion and is below the $799.6 billion level reached in June. The gain in construction spending in September was slightly below analysts' expectations of a +0.3% gain. Year-over-year, construction spending is down -1.3%. There were revisions to the prior two months. Spending in August was revised up to a +1.6% gain compared with the initial estimate of a +1.4% increase. However, spending in July was revised to a -3.3% drop compared with the prior estimate of a -1.4% fall. In September, spending on private construction paced the increase, rising +0.6% for the second straight month. Residential construction rose +0.9%. Spending on public projects fell -0.6% in September after jumping +3.5% in the previous month. School construction fell -0.9% in the month and unbelievably spending by the federal government fell -6.8% in September, the most since last December.

Monday, October 31, 2011 4:03 p.m est.

The market sold off today when Japan said overnight that they were going to make another attempt at weakening the Yen so the dollar rallied pretty hard which pulled the market back. For the month it was going to set a record anyhow as it was up well over +10% but in the end it was still the best since 1991! Another factor in a very small way was that MF Global declared bankruptcy because Jon Corzine took some risky trades on EU bonds and with them only paying 50 cents on the dollar, it was a trade gone bad. Anyhow, because of this they didn’t allow any trading in any accounts as all of their retail accounts will need to find new homes. There are rumors flying around about who it will be but one thing for sure is that they will be picking up a lot of investors! The Dow saw lows in the final hour right at the close of -280.00 points, S&P 500 -33.00 points and the Nasdaq -55.00 points.

At the close the Dow was down by -276.00 points to 11,955.00, S&P 500 -32.00 points to about 1253.00, S&P 100 -14.00 points to 563.00 and the Nasdaq Composite -53.00 points to about 2684.00. Oil closed with a slight loss of -$.65 to finish the day around the $93.00 level.

Friday, October 28, 2011 4:03 p.m est.

The market decided to take a break from its rambunctious moves with it opening a bit lower after economic data was average. The Dow saw lows of -40.00 points, S&P 500 -8.00 points and the Nasdaq -15.00 points. It didn’t last long though as it moved back to the unchanged level as traders decided what to think about the EU over the weekend. The final hour saw the Dow see highs of +30.00 points, S&P 500 +1.00 points and the Nasdaq +1.00 points.

At the close the Dow was up by +23.00 points to 12,231.00, S&P 500 +.50 points to about 1285.00, S&P 100 +.07 points to 577.00 and the Nasdaq Composite -2.00 points to about 2737.00 to finish with its fourth straight weekly gain. Oil closed with a slight loss of -$.65 to finish the day around the $93.00 level.

One of the reasons that the market may have stalled is because the more and more you look at the EU rescue plan, you realize that it might not work for a few reasons. One thing right off the top is that they’re missing about an additional 21 billion Euros in "official aid." Another thing is that the fundamental situation remains unchanged as structural problems have yet to be solved. The banks themselves need more than 106 billion in recapitalization efforts and the fact that the French banks only need to raise 8.8 billion is insane. Besides that do you really think that investors in their right mind will fund Greek and Spanish banks to the tune of $56.2 billion euros!!! With regard to leverage, all I can say is that it probably won't turn out well. Then of course you have to question, where will they get all this money anyhow? One thought was that China will help out but something tells me that China's help won't come cheap and that could be troublesome. Finally, the 50% cuts on the private bonds weren’t voluntary so when it gets right down to it we may hear a lot of kicking and screaming!

The main point of all of this though is that this is looking exactly the same as when America flushed the system with cash instead of solving the structural problem, just like Japan did 30-years ago. Questions will also start to emerge once again because don’t forget Italy and Ireland are still sitting out there with their hands out for cash and we won’t know what the real EU plan will be until it's revealed in November and something tells me that won’t be as pretty as what was revealed yesterday. For example Italy sold some 10-year bonds this morning and they jumped about +2% percentage points which isn’t good. Oh and don’t forget that as we move into November the questions about the “Super Committee” solving America’s budget problems by Thanksgiving will start to arise! This tells me that although this rally could run for a while longer on rumors and blind hope, it will eventually wear itself out and volatility will start up again. I do believe we have seen the lows for the year though because there are a lot of window dressers out there still for yearend its just that we can’t keep up this torrid pace forever!

The wages of workers rose slightly in September, but people spent money at a more rapid pace and seemed to dip into their savings to pay for their purchases, which is never a good thing. Personal income rose +0.1% last month, while personal spending climbed +0.6%. As a result, the personal savings rate fell to +3.6% from +4.1% the month before and that was the lowest level in almost four years. Adjusted for inflation, wages fell -0.1% last month. Inflation as measured by the personal consumption expenditure price index rose +0.2% in September, down from a +0.3% increase in August. Economists had forecast a +0.3% increase in personal income and a +0.6% rise in consumer spending. The core PCE index was expected to edge up +0.1%.

A gauge of consumer sentiment rose to 60.9% in the final reading for October, compared with a preliminary reading of 57.5%, according to reports on the data from Thomson Reuters/University of Michigan. Economists had expected a slight gain to 58% with consumers somewhat happy by stock gains. The September level was 59.4%. The sentiment reading, which covers how consumers view their personal finances as well as business and buying conditions, averaged about 87% in the year before the start of the most recent recession. Economists watch sentiment data to get a feel for the direction of consumer spending.

Thursday, October 27, 2011 4:03 p.m est.

Yesterday the market started the day higher but as news came out of Europe that nothing was going to be done the market sold off but turned around again to close near its highs of about +1% once again with the Dow up +160.00 points, S&P 500 +13.00 points and the Nasdaq +12.00 points because hope lingered. Today Europe came through and saved the day as European leaders reached a deal with Greek debt holders overnight that would see private investors take a -50% cut in the face value of their bonds! Your kidding right,,,that’s good news,,, I’m glad I don’t own those bonds!!! I’m not sure how this is all good news anyhow as all this will do is reduce Greek debt levels to 120% of gross domestic product by the end of the decade and this deal doesn’t include Italy who is in even worse shape than Greece when you add it all up! Anyhow the market rocketed out of the gate making most of its gains right away but the final hour saw some more added with the Dow seeing highs of +420.00 points, S&P 500 +51.00 points and the Nasdaq +110.00 points. You know that volatility is still around when in the final ten minutes over -100.00 points were shaved off the Dow, but it still finished with great gains.

At the close the Dow was up by +340.00 points to 12,208.00, S&P 500 +43.00 points to about 1285.00, S&P 100 +18.00 points to 577.00 and the Nasdaq Composite +88.00 points to about 2739.00. Of course with all of this good news oil also rallied with a gain of +$3.75 to finish the day around the $94.00 level.

We are now coming into the end of the month so part of this rally is likely due to window dressing as its looking as if this could be the strongest monthly gain ever for the market. At the highs today the market was up about +14% for the month so by November 2012 this could mean that the the Dow could be up around +170%, somewhere around 33,000.00!!! If you take it from the lows that were hit in early October we’re up +20%, so the market could be up a whopping +230% by November 2012 or, Dow 40,000! Something tells me that this won’t be the case and in the shorter term I think were closer to a peak to at least allow the market to consolidate these huge gains. The fact that were also running into some pretty good resistance also speaks of it so the next couple of weeks could see volatility kick up once again.
Jobless Claims fell slightly in the latest week down -2,000 to 402,000. Economists was for claims to rise +2,000 to 405,000. The four-week average fell -1,750 to 405,500 while continuing claims were down by -96,000, to 3.65 million.

Pending home sales fell -4.6% in September the National Association of Realtors said. The pending-home-sales index fell to 84.5% from 88.6% in August but +6.4% above Sept. 2010 level. "A combination of weak consumer confidence and continuing tight lending criteria held back home buyers, even though the private sector added nearly 2 million net new jobs in the past 12 months." A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing. An index of 100 is equal to the average level of contract activity during 2001.

The Economy expanded at a much faster pace in the third quarter, growing +2.5% as consumers spent more on big-ticket items such as autos and businesses investment surged. Growth almost doubled the +1.3% rate of the second quarter. The forecast was to expand by +2.8% in the third quarter by economists. Consumer spending climbed +2.4%, the highest rate since the end of 2010, and business investment shot up +16.3%. Inventories, which subtract from gross domestic product, rose 1.9%. Excluding inventories, final sales of goods and services increased +3.6%. Inflation, as measured by the price index for gross domestic purchases, fell to 2% in the third quarter from 3.3% in the second quarter. Excluding food and energy, the index fell to +1.8% from +2.7%.

Yesterday it was reported that Sales of new single-family homes rose by +5.7% in September as prices fell to the lowest level in nearly a year. New home sales climbed to an annual pace of 313,000 in September from August's slightly revised level of 296,000, on a seasonally adjusted basis. Economists had forecast new home sales to rise to 300,000. Yet sales are still -0.9% lower compared to one year ago. The median selling price of new homes, meanwhile, fell by -3.1% to $204,400, marking the lowest level since last October. The supply of new homes available fell to 6.2 months at the current sales pace from 6.6 months in August, matching the lowest level since April 2010. The South accounted for more than half of all new home sales last month, while sales fell in the Northeast and Midwest.

Orders for long-lasting goods fell in September for the third time in four months, mainly because of lower demand for autos and commercial aircraft. Yet, outside of the volatile transportation and defense sectors, orders rose again for a broad range of manufactured goods to suggest the economy is still on a modest growth path as it enters the fourth quarter. Bookings for American made products designed to last at least three years fell by -0.8% last month. Economists had expected a -1% fall.

Tuesday, October 25, 2011 4:03 p.m est.

According to Reuters, Southern Europe now has a lost generation of "young professionals" who will take any job, just to have one. The result is a "lost generation stuck in junk jobs."

The article reports that in countries like Spain and Portugal, as well as increasingly so in Italy "young professionals accept any conditions as they try to start their careers." Spain has a 40% youth joblessness rate, and the so called "junk jobs" are described as "temporary contracts that used to be common in tourism, farming and construction but are now used by all kinds of companies."

More important are the macro-aspects of the situation. According to Reuters: "In Spain, Portugal and Italy, a rigid dual system has emerged. Middle-aged people have stable jobs with benefits. They are expensive to fire and protected by masses of legislation. Meanwhile, younger workers are stuck in a revolving door of temporary contracts that are easy to abuse. The two-track job market is stunting economic growth, studies show. Temporary workers get trapped for longer and longer periods without benefits, which affects output and makes southern Europe less competitive." This is quite interesting as this is what is starting to happen over here and maybe why Consumer Confidence hit lows that were seen in 2009 today!

Yesterday the market closed with gains of about +1% with the Dow up +105.00 points, S&P 500 +16.00 points and the Nasdaq +62.00 points up about +2.3%. Today the market started the day lower as earnings were mixed and the market was getting quite overbought and when they announced that there will be no Eurozone finance minister meeting to announce their decisions about troubled countries, the market tanked with the Dow seeing quick lows of -180.00 points, S&P 500 -22.00 points and the Nasdaq -40.00 points. It did rally by midday but then started to fall back again.

At the close the Dow was down by -207.00 points to 11,707.00, S&P 500 -25.00 points to about 1229.00, S&P 100 -10.00 points to 554.00 and the Nasdaq Composite -61.00 points to about 2638.00. Oil has been rallying this past week and appears to want to get to the $100 level once again. It finished with a gain of +$1.30 to finish the day around the $93.00 level.

Consumers became even more pessimistic in October, with worse expectations and views on the current economy, as consumer confidence dropped to its lowest level since March of 2009. The consumer-confidence index declined to 39.8% from a September level of 46.4%, which was upwardly revised from a prior estimate of 45.4%. "Consumer confidence is now back to levels last seen during the 2008-2009 recession," said Lynn Franco, director of the Conference Board's consumer research center, in a statement. Generally when the economy is growing at a good pace, confidence readings are at 90% and above. Economists had expected a reading of 46% for October, illustrating consumer concerns over long-term trends. The expectations index fell to 48.7% from 55.1% in September, while the present-situation gauge fell to 26.3% from 33.3%. Consumer spending is the largest portion of the economy, and economists watch confidence readings to get a feel for the direction of spending. Still, the two always seem to differ as people continue spending.

The S&P/Case-Shiller 20-city composite index rose +0.2% in August, as 10 of 20 cities saw gains and is the fifth straight month of gains, S&P said. On a year-on-year basis, prices are down -3.8% however. The 20-city composite is down -30.8% from its peak. The S&P/Case-Shiller 20-city composite rose +0.2% on the month to narrow year-on-year declines to -3.8%. The data add to a perception of a housing market that is stabilizing both in terms of transactions and prices but at low levels. “With 16 of 20 cities and both Composites seeing their annual rates of change improve in August, we see a modest glimmer of hope with these data,” said David Blitzer, chairman of the index committee at S&P Indices. Blitzer said the data from the Midwest “really stands out” as Chicago, Detroit and Minneapolis have all posted very sharp monthly increases going back to May. Prices of multi-family homes — a rare area of strength in the housing market — aren’t measured in the Case-Shiller report.

The Richmond Fed said its manufacturing index was unchanged in October at -6%, as shipments and plans for hiring fell. The new orders gauge rose 12 points to finish at -.5%, however. Two months ago, the Richmond Fed's index hit its lowest level since June 2009. The Richmond Fed is a diffusion index, calculated by subtracting the percentage of respondents who say activity has dropped from those who say it has increased.

Friday, October 21, 2011 4:03 p.m est.

Today was expiration for the October options and I have to say it was another extraordinary expiration cycle for profits as the volatility this past month really pumped up premiums in the options especially for the S&P 500 futures e-mini’s! I would suspect that the November cycle will start to see premiums get back to normal as we start approaching year end which usually sees a nice rally to finish up.

Today was very interesting trading wise as Germany and France ruined the plans for the weekend goal of solving the European liquidity crisis. The summit that was scheduled will go on, but it's likely that the highly anticipated announcement of a solution, scheduled for release on October 23rd, won't be going on as scheduled. It's just as likely that any announcement that is made may not be as good as expected either. You would think that this would have killed the market yet it rallied pretty strongly so maybe things may change over the next couple of days. If nothing is said by Monday morning however all of the gains could vanish just as quick.

The Wall Street Journal added: "European officials are looking for ways to bolster the euro-zone bailout fund's firepower without increasing financial commitments from governments such as Germany that are backing it. As the French and German leaders met, it emerged that the talks are focusing on using the fund to provide collateral to back up bond issues by troubled countries. The idea would be to use the collateral to boost investor confidence by providing guarantees for an initial portion of losses in the event of default—known as first-loss insurance—and keep borrowing costs for countries like Spain and Italy from spiraling to unaffordable levels." The European economy and especially Europe's banks remain too leveraged and in danger of collapse if another problem emerges, such as those with the sub-prime mortgage crisis.
The market saw quick highs with the Dow up +230.00 points, S&P 500 +24.00 points and the Nasdaq +50.00 points but then fell back losing half of the gains. Of course being expiration it came back in the final hour with the Dow making slightly new highs of +275.00 points in the final hour of trading but the rest of the indices didn’t follow along.

At the close the Dow was up by +267.00 points to 11,542.00, S&P 500 +23.00 points to about 1238.00, S&P 100 +9.00 points to 559.00 and the Nasdaq Composite +39.00 points to about 2637.00. Oil was up all day as the dollar was weaker and gold rallied a bit. It finished with a gain of +$1.35 to finish the day around the $87.40 level.

Thursday, October 20, 2011 4:03 p.m est.

The market saw lots of volatility today starting higher on decent economic data but then falling after Greece was unable to get a vote for new austerity measures. The Dow saw lows of -110.00 points, S&P 500 -12.00 points and the Nasdaq -45.00 points. It then turned around likely because of expiration which starts tomorrow morning with the Dow seeing highs of +70.00 points, S&P 500 +10.00 points and the Nasdaq seeing highs of only +5.00 points. The final hour saw it pullback once again though closing mixed.

At the close the Dow was up by +37.00 points to 11,542.00, S&P 500 +6.00 points to about 1215.00, S&P 100 +3.00 points to 550.00 and the Nasdaq Composite -5.00 points to about 2599.00. Oil was down hard at the start of the day but turned around to finish with only a loss of -$.70 to finish the day around the $85.00 level.

Jobless Claims fell by -6,000 to 403,000 last week but claims from two weeks ago were revised up to 409,000 from an original reading of 404,000. Economists had expected new claims to fall to 400,000 on a seasonally adjusted basis. The average of new claims over the past four weeks fell by -6,250 to 403,000 which is starting to see a nice trend. The monthly average is seen as a more accurate gauge of labor trends because it smoothes out volatility in the week-to-week data. Continuing claims also dropped by -7,500 to 3.72 million.

Sales of existing homes fell -3% in September, reflecting continued tough times in the housing market as well as newly imposed tougher loan limits. The National Association of Realtors said sales fell to a seasonally adjusted annual rate of 4.91 million, pretty much in line with the 4.9 million consensus. August data was revised higher to 5.06 million from an initially reported 5.03 million. The impact of tougher jumbo loan limits was seen in the West, where sales dropped -8.8%. The median price of homes dropped -3.5% from year-ago levels to $165,400. Inventories declined -2% to 3.48 million units which was good news, representing 8.5 months of supply at current sales rates.

Manufacturing in the Philadelphia region showed signs of recovery in October, the Fed’s Bank of Philadelphia reported. The Philly Fed diffusion index rose to +8.7% in October from negative -17.5% in September. This is the first positive reading in three months. Readings above zero indicate expansion. The increase was much larger than expected as economists were expecting the index to improve only to negative -10%. Underneath the headline, labor market conditions improved only slightly however. The Philadelphia index has been weaker than the national data for the past two months. The Institute for Supply Management reported that its key reading of the health of the manufacturing sector rose to 51.6% from 50.6% in August.

Leading economic indicators rose +0.2% in September. The increase in the index, which rose +0.3% in August, matched the forecast of economists. Although the index has risen five straight months, the board also said the data shows weakening growth, with only five of the 10 indicators posting an increase. The slow pace of LEI suggests a growing chance that this slow economy is going to be here for a while. The coincident index, which measures current conditions, rose +0.1% in September, while the lagging index climbed +0.2%.

Wednesday, October 19, 2011 4:03 p.m est.

It was a poor start to the day as Apples earnings last night were much less than expected with their stock off -5% overnight. Meanwhile Intel’s earnings were really good but that’s an old tech company so everything is ignored. Remember Netscape... Anyhow, the market started the day lower but with hopes of the EU saving the day it turned around and the Dow saw highs of +60.00 points, S&P 500 +5.00 points but the Nasdaq was still off -5.00 points. Unfortunately after the Fed announced “that the economy was expanding, although many areas described the pace of growth as “modest” or “slight,”in its beige book report released at 2:00 p.m est, the market started to sell off with the Dow seeing lows of -110.00 points, S&P 500 -20.00 points and the Nasdaq -60.00 points.

At the close the Dow was down by -72.00 points to 11,505.00, S&P 500 -16.00 points to about 1210.00, S&P 100 -7.00 points to 547.00 and the Nasdaq Composite -53.00 points to about 2604.00. Oil was down pretty good -$2.40 to finish the day around the $86.00 level.

Housing starts surged +15% in September to the highest level in one-and-a-half years, aided by increased demand for rental stock as well as rebuilding after Hurricane Irene. The Commerce Department said starts rose to a seasonally adjusted annual rate of 658,000, which also is +10.2% above the September 2010 reading and the best level since April 2010, the month the homebuyer tax credit expired. The figures were well ahead of the 590,000 forecast, but single-family starts rose a more modest +1.7% to 425,000, which is only a two-month high. The less-volatile building permits figures declined -5% to 594,000, and single-family permits eased -0.2%. August's reading on housing starts was modestly revised higher to 572,000 from 571,000, and August's reading on permits was revised higher to 625,000 from an initial reading of 620,000.

Consumer prices rose a seasonally adjusted +0.3% in September, while so-called core prices rose a lesser +0.1%. The core data, which posted its smallest increase since March, strips out volatile food and energy costs. Economists had forecast CPI to rise +0.3% overall, with a +0.2% increase in the core rate. Consumer prices have jumped an unadjusted +3.9% over the past year while the core rate has risen at a slower +2% pace, unchanged from August. The increase in prices in September was led by gas and a wide variety of groceries. In a related report, the government said average hourly wages adjusted for inflation fell -0.1% in September, seasonally adjusted.

Tuesday, October 18, 2011 4:03 p.m est.

Here’s a good one for my most favorite country in the world;
A record number of Americans applied for temporary work visas last year, so says the latest Immigration Canada statistics because of the contrasting health of the two countries labor markets. Canada is the only major economy that has fully recovered from the 2008 financial crisis and there are more Canadians working today than in September 2008. No other G7 country can say the same. The biggest reason is likely because they don’t have a moron for a President but mostly because Canada never got sucked into buying too much house as you actually had to have a job and money for a down payment! Then when the global recession hit, commodity prices were high which is what Canada is all about so that helped to support it. Commodities aren’t high now but the relatively strong economy can probably handle current commodities headwinds! Besides all that Forbes just said that Canada is the best country in the world to invest in and it does produce the best hockey players in the world! I mean really, look at Boston who won the Stanley Cup last year, 16 Canadian players!!

The market was lower this morning as it was reported overnight that China’s economy appears to be falling faster than previously thought it would and France received the first shots across the bow of a possible downgrade. Moody’s said it may put a negative outlook on France's Aaa rating in the next three months if slower growth and the costs for helping bail out banks and other euro zone members stretch its budget too much. Add into the fact that Goldman Sachs reported a bigger than expected loss and IBM had weaker sales than expected out of their earnings report and the the Dow saw early lows of -110.00 points, S&P 500 -10.00 points and the Nasdaq -30.00 points. Of course there was Apples earnings to look forward to after the close today so the market turned around with the Dow seeing highs of +260.00 points, S&P 500 +34.00 points and the Nasdaq +60.00 points in the final hour. The market pulled back after the highs just in case Apples earnings weren’t stellar and it was a good thing as they were less then expected after the bell.

At the close the Dow was up by +180.00 points to 11,577.00, S&P 500 +24.00 points to about 1225.00, S&P 100 +11.00 points to 555.00 and the Nasdaq Composite +43.00 points to about 2657.00. Oil was up to about +$2.00 to finish the day around the $88.00 level.

The Producer Price index rose a seasonally adjusted +0.8% in September to mark the biggest increase since April. Economists had predicted a +0.4% gain. Higher wholesale prices were driven by a +2.3% increase in energy costs and a +0.6% rise in food costs. If those two categories are excluded, "core" wholesale prices rose a lesser +0.2%. Economists were expecting a +0.1% increase. Over the past 12 months, wholesale prices have climbed an unadjusted +6.9%. Omitting food and energy, wholesale prices have risen a more modest +2.5% in the past year.

Home-builder confidence in October rose by the largest amount since the introduction of the now-expired home-buyer tax credit program, though the gauge remains mired at historically weak levels, according to an index released Tuesday. The National Association of Home Builders/Wells Fargo housing market index rose by four points to 18, the biggest one-month gain since April 2010. The index, which measures builder confidence in the market for new-built single-family homes and is closely correlated with single-family housing starts data, came in stronger than the 14 reading seen by a MarketWatch-compiled economist poll. That said, the index - designed so that a reading of 50 is consistent with a "good" assessment - is still not back to pre-recession levels. The index hasn't been above 50 since April 2006.

Monday, October 17, 2011 4:03 p.m est.

The market started the week on the downside as questions arose once again how long it will take to fix the EU problems as German Chancellor Angela Merkel said it may take awhile to fix everything! Really, isn’t it supposed to be instantly because that’s how the market has been trading. None the less the market moved lower and lower all day with the Dow seeing lows of -270.00 points, S&P 500 -27.00 points and the Nasdaq -65.00 points.

At the close the Dow was down by -248.00 points to 11,397.00, S&P 500 -24.00 points to about 1201.00, S&P 100 -11.00 points to 544.00 and the Nasdaq Composite -53.00 points to about 2615.00. Oil was down about -$1.00 to finish the day around the $86.00 level. As I mentioned on Friday we could see some volatility with it being an expiration traded week and the fact that the market was getting quite overbought. It all came true today but was on low volume so either investors don’t really care or its just a pullback from the extended run we saw last week. Time will tell and I have a feeling we’ll end the week nearer to where we started it so we’ll see...

The economy isn’t showing any signs of getting better as the Empire State manufacturing index increased only slightly in October and remained in negative territory for the fifth straight month, the New York Federal Reserve said. The Empire state index inched higher to a negative -8.5% from a negative -8.8% in September. Readings below zero indicate deterioration, with higher numbers of firms reporting that conditions had worsened. Economists expected the index to improve to negative -5%. Several key components were stronger than the headline though. The new orders index rose to +0.2% from negative -8%, while the shipments index rose to +5.3% from negative -12.9%. The employee index rose to +3.4% from negative -5.4% while the average workweek was negative for the fifth month in a row. The prices paid index fell to its lowest level since last November. A reading of expected conditions six-months ahead weakened in October to its lowest level since February 2009.
Industrial production edged up a seasonally adjusted +0.2% in September, and August's output was downwardly revised to zero growth from an initially reported +0.2% gain, the Fed said. Economists had anticipated a +0.1% gain for the month. September's gain was led by business equipment production, which rose +1% on the month and is up +10.3% from September 2010 levels, while the big drag came from utilities, where production dropped -1.8%. Utilization inched up to 77.4% from a downwardly revised 77.3% in August. For the third quarter, industrial production rose an annualized 5.1%.

Friday, October 14, 2011 4:03 p.m est.

Here’s a good one, 10-years ago Steve Jobs was alive, Bob Hope was alive, Johnny Cash was alive but now we're outta jobs, outta hope and outta cash....
Harrisburg Pennsylvania files for bankruptcy. Harrisburg, the Pennsylvania capital that previously defaulted on its debt, cited a “continued erosion of its finances.” According to Bloomberg News, Harrisburg listed liabilities of $500 million, compared with assets of $100 million. A clerk at the U.S. Bankruptcy Court for the Middle District of Pennsylvania confirmed receiving a physical copy of the filing. The city's fiscal troubles have been triggered by an overhaul of the budget and a trash-to-energy incinerator that didn’t increase revenue by as much as expected, Bloomberg reported. The move comes as the state had been mulling a takeover of the city’s finances and forcing the installation of a fiscal rescue plan.

The market started the day lower even though Spain’s credit rating was downgraded to AA- from AA overnight with a negative outlook, due to weak growth, tightening fiscal conditions and high private sector debt but who cares about the future when current Retail Sales came in better than expected. The market saw early highs and then matched them at the close with the Dow seeing highs of +170.00 points, S&P 500 +21.00 points and the Nasdaq +50.00 points.

At the close the Dow was up by +166.00 points to 11,645.00, S&P 500 +21.00 points to about 1225.00, S&P 100 +10.00 points to 555.00 and the Nasdaq Composite +48.00 points to about 2667.00. Oil was up +$3.00 to finish the day around the $87.00 level.

This turned out to be an interesting week as the market was up about +5% by Wednesday and matched it again today by adding another +1%. In 7 trading days the market was up +15%. Before that it was down -10% in 6 sessions and so you wonder why people aren’t interested in getting in the market! The market is right back to the highs it made in August and September in this large sideways channel it has been that has been extremely profitable for us! The question now is if we are going to see another pull back to the bottom of the channel or breakout to the upside. Odds are for at least a correction from here as we are getting pretty overbought and volume continues to fall but I do think we may see a change in this trading channel as we leave the usual volatile October period with a break out to the upside after our next pullback so the books look decent going into year end. That will depend on how low we go from here though, if its a move back to the bottom of the channel we may have to wait a while longer. One thing I’m sure of is that as we move into the end of the month and expiration trading next week, volatility will likely start to kick up again.

Retail sales jumped a whopping +1.1%, not, in September, the biggest increase in seven months, as people bought more cars, clothing and home furnishings. Economists expected an increase of +0.8% on a seasonally adjusted basis. Auto sales jumped +3.6% last month, the biggest increase in a year and a half as carmakers sold nearly 1.1 million vehicles but the deals are amazing my book. You can now buy a car with 0 down, 0 interest for 84 months!!! Excluding the auto sector, sales rose +0.6%, but that was still higher than market expectations of a +0.4% increase. Sales for August, which were originally reported as unchanged, were revised up to a +0.3% increase.

A gauge of consumer sentiment fell however to 57.5% from 59.4% in September, according to reports on the data from Thomson Reuters/University of Michigan. Economists had expected a slight rise to 59.7% with stock volatility offsetting lower gas prices. The sentiment reading, which covers how consumers view their personal finances as well as business and buying conditions, averaged about 87% in the year before the start of the most recent recession. Economists watch sentiment data to get a feel for the direction of consumer spending.

Import prices made a surprise rise in September, with prices up +0.3% in September, while economists had anticipated a -0.4% drop. In addition, August prices were revised to show a -0.2% drop against an initially reported -0.4% decline. Compared to September 2010, import prices are up +13.4%, as fuel prices are up +43.4% and the prices of non-fuel imports have gained +5.5%.

Thursday, October 13, 2011 4:03 p.m est.

According to The Wall Street Journal: "Herman Cain has catapulted to the lead in the race for the Republican presidential nomination, drawing support from a GOP electorate disenchanted with Rick Perry and still wary of Mitt Romney, a new Wall Street Journal/NBC News poll finds." The Journal noted, that in a poll of 1000 adults conducted from October 6-10 "Drawn by Mr. Cain's blunt, folksy style in recent debates, 27% of Republican primary voters picked him as their first choice for the nomination, a jump of 22 percentage points from six weeks ago. Mr. Romney held firm in second place at 23%, his same share as in a Journal poll in late August, while Mr. Perry plummeted to 16%, from 38% in August."

The GOP tends to lead Mr. Obama in a generic poll. For example, according to Rasmussen Reports.com: "The latest Rasmussen Reports national telephone survey of Likely U.S. Voters finds the generic Republican earning 47% support, while the president picks up 41% of the vote. Three percent (3%) prefer some other candidate, and nine percent (9%) are undecided." Mr. Obama, according to Rasmussen data leads, Mr. Romney, Mr. Cain, and Mr. Perry when individuals are asked to choose individual names. Mr. Obama, according to Rasmussen data, leads Mr. Cain by a 42-39% margin, Mr. Romney by a 43-41% advantage, and Mr. Perry by a 49 to 35% distance.

Mr. Obama's favorability is low, but has not fallen much of late. According to Rasmussen: "Overall, 45% of voters say they at least somewhat approve of the president's job performance. Fifty-three percent (53%) at least somewhat disapprove."Rasmussen polls have been the most accurate polls over the last two election cycles.

The Intrade.com presidential election futures markets give Mr. Romney a 67% chance of becoming the GOP presidential nominee. Mr. Cain is only receiving 9% of the vote, despite his recent climb in GOP polls. The Intrade.com futures are currently giving the GOP a 71% chance of grabbing the senate from the Democrats in 2012. Finally, Intrade.com gives Mr. Obama a 47% chance of being reelected.

The market was lower this morning as economic data was pretty average and the fact that earnings so far have been less than expected. The Dow saw lows of +140.00 points, S&P 500 -17.00 points and the Nasdaq -20.00 points. It came back midday though with the Dow seeing highs of +5.00 points, S&P 500 +1.00 and tech stock being strong with the Nasdaq up +20.00 points.

In the end it pulled back a bit once again so at the close the Dow was down by -40.00 points to 11,478.00, S&P 500 -4.00 points to about 1204.00, S&P 100 -2.00 points to 545.00 and the Nasdaq Composite +16.00 points to about 2620.00. Oil was down all day -$1.30 to finish the day around the $84.00 level.

Jobless Claims were down by -1,000 last week to 404,000 after being revised up to 405,000 from an original reading of 401,000 last week. Economists had expected new claims to climb to 406,000 on a seasonally adjusted basis. The average of new claims over the past four weeks, meanwhile, dropped by -7,000 to 408,000, the lowest level since mid-August.

The Trade deficit remained virtually unchanged in August at $45.6 billion and close to the consensus forecast of economists. The government revised the deficit in July up to $45.6 billion from the initial estimate of $44.8 billion. The deficit with China widened to a record $29.0 billion in August compared with $28.2 billion in the same month last year. According to Reuters: "China's trade surplus narrowed in September for a second month in a row as growth of exports and imports both fell below forecasts, reflecting global economic weakness and offering Beijing ammunition to resist U.S. pressure on the yuan." The report added: "Exports increased 17.1 percent last month from a year ago, slowing from a 24.5 percent gain in August, and imports increased 20.9 percent, compared with August's 30.2 percent rise, the customs office said on Thursday. That created a trade surplus of $14.5 billion in September, compared with $17.8 billion in August and $31.5 billion in July. The rolling 12-month trade surplus reached $180.3 billion in September, dipping from $182.7 billion in August."

Wednesday, October 12, 2011 4:03 p.m est.

This is an “oh brother” moment. Fine print in the "Super committee" agreement gives Congress a year to act. According to Investor's Business Daily: "By Nov. 23, the Joint Select Committee on Deficit Reduction is supposed to reach a deal to cut $1.5 trillion from the federal deficit over the next 10 years. Yet the "super committee" has an escape hatch, leading some analysts to contend that the bipartisan panel won't reach an agreement. Under August's debt-ceiling deal, Congress has until Dec. 23 to act on a deficit plan from the super committee. Failure to do so triggers "sequestration", across-the-board discretionary spending cuts of $1.2 trillion over 10 years." While that sounds bad, there is a catch. According to IBD: "the autopilot cuts don't begin until January 2013, giving Congress nearly a full year to hash out a deal to avoid them."

The market started the day higher after it was announced that Slovakia would agree with the EU’s bailout plan with the Dow seeing highs of +210.00 points, S&P 500 +25.00 points and the Nasdaq +50.00 points but selling in the final hour took well off of highs.

At the close the Dow was up by +103.00 points to 11,519.00, S&P 500 +12.00 points to about 1207.00, S&P 100 +5.00 points to 547.00 and the Nasdaq Composite +22.00 points to about 2604.00. Oil was pretty quiet closing down about -$.70 to finish the day around the $85.00 level.

Tuesday, October 11, 2011 4:03 p.m est.

Well maybe the change is starting to take hold as manufacturing may actually be returning home which means jobs and “spending”! This is the second company now who has announced that they are creating manufacturing jobs in America. According to The Wall Street Journal: Otis Elevators, "The U.S. manufacturer, whose elevators zip up and down structures as diverse as the Empire State Building and the Eiffel Tower, is moving production from its factory in Nogales, Mexico, to a new plant in South Carolina. More startling: Otis says the move will save it money."

The reason? According to The Journal: "What's happening at Otis is part of a broader shift in the way manufacturers tally costs. Their outlook has been changing as the cost of producing abroad has risen and they have devised more efficient ways to make things close to where they want to sell them." The Journal added that companies such as Ford Motor and others are also making the same kinds of moves "Wages and other costs are going up in foreign countries—especially China—while pay in many industrial sectors inside the U.S. has risen slowly or even fallen in many cases. Transportation costs have grown, as have the costs of holding large stocks of inventory, a common precaution when producing goods far from their end market."

Yesterday the market rallied pretty hard after it was announced by the EU that they will reveal how they are going to save Greece and Italy by November with it closing up about +3% but on falling volume. Today of course after sane minds resumed and people came back from the Columbus holiday the market started the day down with the Dow seeing lows of -70.00 points, S&P 500 -7.00 points and the Nasdaq -15.00 points after the little country of Slovakia sounded like they didn’t want to join in with the other EU countries to help pay for their bills. Slovakia has about 5 million people and a tax rate of only 19% for both public and corporate accounts. Of course then people thought that they are meaningless so the market rallied a bit with the Dow seeing highs of +15.00 points, S&P 500 +4.00 points and the Nasdaq +25.00 points.

At the close the Dow was down by -17.00 points to 11,416.00, S&P 500 +.65 points to about 1196.00, S&P 100 +.43 points to 541.00 and the Nasdaq Composite +17.00 points to about 2583.00. Oil rallied strongly yesterday and today it continued closing up about +$.40 to finish the day around the $86.00 level.

Friday, October 7, 2011 4:03 p.m est.

The market started the day higher after the employment report came out better than expected although not great with the Dow seeing highs of +110.00 points, S&P 500 +6.00 points and the Nasdaq +10.00 points but after Fitch Ratings downgraded Italy and Spain, the market started to sell off with the Dow seeing lows of -80.00 points, S&P 500 -14.00 points and the Nasdaq -40.00 points. Fitch cut Italy’s credit score to A+ from AA-, reflecting “the intensification of the euro zone crisis“ that will require a “politically and technically complex” solution. They also lowered Spain’s rating to AA-. Because we were going into the weekend the market came back though and almost made it back to old highs before selling off into the end of the day.

At the close the Dow was down by -20.00 points to 11,103.00, S&P 500 +10.00 points to about 1155.00, S&P 100 -3.00 points to 523.00 and the Nasdaq Composite -27.00 points to about 2479.00. Oil was mostly flat closing up about +$.25 to finish the day around the $83.00 level.

Employment was up +103,000 jobs in September, larger than the average 60,000 gain expected by economists. The sad thing was that it was from returning workers after the end of a strike at Verizon which added about +45,000 workers. Revisions to the past two months did add +99,000 workers to payrolls though. The government sector continued to lose jobs in the month. Private payrolls expanded by +137,000 jobs lower than average but the bad news is that overall employment rose from 16.2% to 16.5% for the current month. The unemployment rate held steady at 9.1% as expected while average hourly earnings increased +0.2% to $23.12 in September, reversing a drop in August. Earnings are up +1.9% in the past year with the average workweek rising six minutes to 34.3 hours.

Unfortunately this month has now set a record. According to AP, there are now 4.5 million people who have been without a job for a year or longer. This is a dynamic that is being considered as "semi-permanent" by many. People are starting to give up hope of finding work and it's happening more and more often and I think they are the people demonstrating in front of Wall Street! Furthermore, the bad thing is that expectations are for jobs that pay less for those fortunate enough to find one. As I have been saying, things are ugly for people right now with the word "depression" now commonly used, both in conversation as well as reporting with an increasingly prevalent hopelessness in the air. This could be positive though at least for stocks as it may mean were very near the bottom of the cycle at least until Christmas.

Inventories at Wholesalers rose +0.4% in August, and were up +14.4% from the prior year. Sales of wholesalers rose +1% in August, while the inventory-to-sales ratio was 1.16. I’m not even sure why I even continue to print this information because since the turn of the century into our technical era, inventory control is now seeing items replaced on the shelf the second it is sold with an order sent to the factory that second, so ratios will now always remain tight.

Thursday, October 6, 2011 4:03 p.m est.

Today was a sad day as it was announced overnight that Steve Jobs of Apple died. Our prayers go out for his family. One thing he will always be known for is leading the world in technological advances with cool looking computers, then the Ipod, Iphone and now the Ipad. The question of course is will the people at Apple be able to keep up the vision that Mr. Jobs had. Many analysts are thinking that they may not be able to for two reasons. One was that Steve Jobs said himself that death was a good thing because that is how new life begins so the question is how long will it take for someone to replace him. Secondly other greats such as Henry Ford, IBM, Walt Disney, microsoft, and even all the way back to Edison, all had their times of greatness but they eventually peaked out so the question is what will the next great gadget be as smart phones and Ipads are becoming commonplace now. Today Apple rallied initially on the news but then pulled back too close lower. Will they may make it back to $400, only time will tell...

The market started the day lower as economic data wasn’t that good with the Dow seeing lows of -90.00 points, S&P 500 -9.00 points and the Nasdaq -20.00 points. It turned around pretty quick though with more spiel from the EU about saving the day. The Dow made highs at the close once again up +200.00 points, S&P 500 +22.00 points and the Nasdaq +50.00 points.

At the close the Dow was up by +183.00 points to 11,123.00, S&P 500 +21.00 points to about 1165.00, S&P 100 +8.00 points to 527.00 and the Nasdaq Composite +46.00 points to about 2507.00. Oil closed up another +$2.50 to finish the day around the $82.00 level.

Jobless claims increased by +6,000 to a seasonally adjusted 401,000, smaller than the expected 410,000 that economists thought it may be but the bad thing was that it was once again above 400,000. The four week average, viewed as a more accurate gauge of employment trends, fell by -4,000 to 414,000, the lowest level since late August. Tomorrow the monthly Employment report for September is out and economists think there will be +59,000 created after a flat reading in August. Continuing claims fell by -52,000, to 3.7 million, the lowest level since July 30th. Still, the economy remains weak, and hiring by historical standards is very slow at the current stage of recovery. There needs to be at least +125,000 jobs a month just to keep up with the growth of the labor force and double that amount to drive down the nation’s unemployment rate, which stood at 9.1% for August. Tomorrow could see some volatility after the employment number is released to end the week.

Wednesday, October 5, 2011 4:03 p.m est.

The market pulled back after its big rally yesterday with lows hit out of the gate with the Dow seeing lows of -70.00 points, S&P 500 -9.00 points and the Nasdaq -25.00 points. It turned around pretty quick though as the dollar fell thus causing commodities to rally. The Dow made highs of +150.00 points, S&P 500 +22.00 points and the Nasdaq +65.00 points in the final hour.

At the close the Dow was up by +131.00 points to 10,940.00, S&P 500 +20.00 points to about 1144.00, S&P 100 +8.00 points to 518.00 and the Nasdaq Composite +55.00 points to about 2461.00. Oil closed up a strong +$4.00 to finish the day around the $80.00 level.

Yesterday the S&P 500 fell to an intra-day low early in the session at 1,074.77 which was -21.2% below its closing market high of 1,363.61, hit on April 29th. That’s in excess of the 20% drop that is often used as the dividing line between a correction and a bear market although in reality we have been in one since 2000. The good thing was that it was a turnaround Tuesday and we saw it close higher so the question is was that the bottom and will we rally now for awhile. It would be funny if this correction ended on the very day it was to be considered a bear market.

I’m not completely convinced that we are finished this correction just yet but sentiment is getting pretty bearish. Central bankers and policy makers around the world are up against the wall and there are even demonstrators in the streets of New York joining all of the others elsewhere in the world now. Riots and looting have been commonplace in many countries for months and social unrest is clearly on the rise everywhere. Cities, states, municipalities and countries around the world are broke. The world is getting to a very dark place now so it would be good to at least see a ray of sunshine or should I say a break from the storm appear for a few months going into year end. I think we’ll know more for sure after we get the employment report on Friday.

The private sector added a better-than-expected +91,000 jobs even as the amount of expected layoffs hit their highest level in more than two years, separate reports showed.

The monthly survey from ADP and Macroeconomic Advisors showed that the service sector added +90,000 positions, goods-producing rose just +1,000 and manufacturing fell by -5,000. Economists had expected +75,000 jobs created. August was revised from +91,000 to +89,000 and the governments report subsequently showed a net zero overall job growth for the month, and the unemployment rate actually ticked higher to 9.1%. Government job losses have been averaging -67,000 a month.

On the other end of it employers announced -115,730 planned job cuts last month, more than double August's total of -51,114, according to the report from consultants Challenger, Gray & Christmas. The figure was the highest since April 2009 when -132,590 layoffs were announced. September's job cuts were also much higher than the same time a year ago, tripling from the -37,151 job cuts announced in September 2010. For 2011 so far, employers have announced -479,064 cuts, up +16.5% from the first nine months of 2010.

The Institute for Supply Management said its September services index slowed slightly to 53% from 53.3% in August. Any reading over 50% indicates expanding activity, and the reading came in marginally above economists estimates of 52.7%. The new-orders index increased by +3.7 percentage points to 56.5%, but the employment index fell -2.9 percentage points to 48.7%, indicating contraction in employment after 12 consecutive months of growth.

Tuesday, October 4, 2011 4:03 p.m est.

Finally some good news: Ford said it signed a tentative, four-year labor agreement with the United Auto Workers union that says they will hire 12,000 new hourly jobs in America of all places by 2015, and this was workers that were once outsourced to Mexico, Japan and China! That estimate is nearly double Ford's previous outlook, and also included $16 billion in investments to design, engineer and produce more new and upgraded vehicles and components. The main point about it is that maybe just maybe the big companies are starting to realize that if they outsource everything, the people in America can’t afford to buy their goods so even if it does cost more to build a car per say, at least those 12,000 will now be able to buy a Ford!! Hopefully as time goes by this will happen with more and more companies...

The market was down hard right from the start today as futures closed well below fair value after stocks closed yesterday and overnight they moved even lower. The Dow saw lows of -260.00 points, S&P 500 -26.00 points and the Nasdaq -40.00 points. After Fed chief Ben Bernanke said in his testimony to the Joint Economic Committee of Congress that the central bank’s so-called Operation Twist will have the effect equivalent to a reduction of half a percentage point in the federal funds rate and that the Fed could start a new lending program to be a lender of last resort to the U.S. banking system should there be a bank run if the European sovereign-debt crisis worsens, the market started to turn around. Overall what he had to say wasn’t that good though as he thinks the economy is on the brink of another recession but he made it a point to say that its up to the governing bodies to create the jobs now. What really turned the market around though was in the final hour when it was announced that the EU was looking at bank aid plans. The Dow made highs into the close up +170.00 points, S&P 500 +26.00 points and the Nasdaq +75.00 points.

At the close the Dow was up by +154.00 points to 10,809.00, S&P 500 +25.00 points to about 1124.00, S&P 100 +10.00 points to 510.00 and the Nasdaq Composite +67.00 points to about 2405.00. Oil closed down another -$2.00 to be around the $75.60 level but it closed before the markets big rally and is up over +$2.00 in after hours.

Factory orders fell -0.2% to $451 billion in August. Economists had expected a -0.3% drop. July's gain was revised to +2.1% growth from an initially reported +2.4% gain. In August, shipments fell -0.2%, unfilled orders rose +0.9% and inventories increased +0.4%.

Monday, October 3, 2011 4:03 p.m est.

The market started the week on the downside but bounced on some good economic news with the Dow seeing highs of +50.00 points, S&P 500 +4.00 points and the Nasdaq +10.00 points. It didn’t last though as the woes of Europe took hold and it made new lows in the final minutes of trading with the Dow off -260.00 points, S&P 500 -33.00 points and the Nasdaq -80.00 points.

At the close the Dow was down by -258.00 points to 10,665.00, S&P 500 -32.00 points to about 1099.00, S&P 100 -13.00 points to 500.00 and the Nasdaq Composite -80.00 points to about 2335.00. Oil closed down another -$2.40 around the $77.60 level.

September is now over and for the fifth month in a row the market was lower and it’s the 15th time since 1900 that it has done this. The market was down about -15% during the current losing streak so you would think its time to bounce. The bad news is that we are now in the dreaded October trading period when the market is usually lower and the above statistics indicate that these streaks don’t typically stop at five months. Six out of 14 times have seen it move up but only once in the last five occurrences, was the sixth month positive. The longest monthly losing streak ended in 1942, when the Dow was down nine months in a row. The good news though is that quarterly returns since 1950, and over the last 20 years have seen the third quarter as the worst, and this last one saw the market fall about -12%. Because of this generally the fourth quarter which were now in till the end of the year, has been the most bullish, averaging a gain of about +5%, and seeing a positive return almost 80% of the time over the last 20 years. The most important thing to also remember is that this isn’t 2008 again so even though that is exactly what is happening in Europe it doesn’t mean that we’ll be dragged down to the same degree!

Manufacturing activity picked up a bit in September, according to the Institute for Supply Management’s manufacturing index rising to 51.6% from 50.6% in August. Economists had anticipated an unchanged reading. Though the ISM gauge has yet to fall below to the 50% indicating expansion since the U.S. officially emerged from recession, it’s nonetheless far below the 61.4% peak of 2011 reached in February. Globally, the readings also point to slowing and in some places deteriorating activity, with Australia’s falling to 42.3%, the worst since July 2009, and Brazil’s in negative territory for the fourth month with a 45.5% reading. There were some minor signs of encouragement in the report that saw the employment subcomponent rise 2 points to 53.8%, ahead of Friday’s report on employment. The new orders subcomponent was unchanged at 49.6%, while production rose 2.6 points to 51.2%. The ISM manufacturing index is a diffusion survey, calculated by asking respondents to measure the change of the current month from the previous month. The ISM combines questions on new orders, production, employment, supplier deliveries and inventories and then seasonally adjusts them.

Friday, September 30, 2011 4:03 p.m est.

The market started the day on the downside and slowly grinded lower all day to make lows in the final hour with the Dow off -250.00 points, S&P 500 -30.00 points and the Nasdaq -70.00 points. With this the final day of the month it was also the last day of the quarter with the market down about -14%. This has been the worst quarter since the 2008 crash. At the close the Dow was down by -241.00 points to 10,913.00, S&P 500 -29.00 points to about 1131.00, S&P 100 -12.00 points to 513.00 and the Nasdaq Composite -65.00 points to about 2415.00. Oil closed down pretty hard -$3.00 to be be around the $79.00 level.

Clearly the market isn’t liking what is going on and as we now move into earnings season we may see how much things have slowed down. This may be why it may be another 10-years before we get out of the business funk were in now. Although yesterday we got an “okay” unemployment report for once, it appears that businesses have continued to invest in machines, not workers. In an early 1990s book titled; The End of Work, futurist Jeremy Rifkin made an interesting point that is obvious but we still want to deny because it takes away the way we make a living and that is that automation has slowly lead us to where we are today. Millions of jobs have actually disappeared forever, being replaced by machines that do incredible things. The funny thing is we find them fascinating in what they can do but in reality unless you work in the factory that builds the “machines,” your out of a job!!

The Wall Street Journal notes that in the war of "Man vs. Machine" it's evident that the "machine is winning." Data from the Department of Labor, the Journal reports: "Since the recession ended, businesses had increased their real spending on equipment and software by a strong +26%, while they have added almost nothing to their payrolls." It also said: "In August, new orders and shipments of “capex goods” — defined as non-defense capital goods excluding aircraft, increased by +1.1% and +2.8%, respectively. In the same month, private payrolls edged up a mere +62,000."

So, why do companies hire robots, of course its obvious, they are cheaper. They have no retirement plans, no health insurance, don't require raises and when they break down, they can be replaced without fear of being sued. According to The Journal: "First, employers face a jump in health insurance costs. The Kaiser Family Foundation reported a +9% average increase in the premiums paid by employers this year. The average yearly cost to cover a family hit a record $15,073, up sharply from $13,770 in 2010. Second, companies must deal with higher taxes to replenish state unemployment-benefits. According to the Wall Street Journal, employers will get hit by higher tax bills as many states have to pay back Washington for benefit money borrowed during the recession. In comparison to these rising labor bills, the wholesale cost of capital goods is up +1.6% over the past year."

The big problem is that we have an economy based on consumer spending so the lack of jobs and income growth means consumers can’t spend. When businesses have more of a preference for equipment, from a cost perspective, its also the big reason why policy-makers are having problems igniting job creation. Indeed, the Fed’s pursuit of low interest rates only widens the cost gap because it cheapens the borrowing costs for capital projects while doing little to hold down payroll expenses. Rifkin's conclusion is interesting. If the world doesn't transition from "work" to something equally productive, humanity is essentially done. People are getting by, maintaining living standards but doing it by consuming their capital. Even those with a cushion are still living it up a bit too much. Gerald Celente says, “when people have nothing left to lose, they lose it.” So as I have been saying for quite some time, I believe this will continue for years to come until we get back to the mid 1900’s standard of living so we’ll likely continue to see the market move up and down in huge ranges. The good news we can make money trading in up and down markets!
Personal income declined in August and consumer spending slowed. Personal income fell -0.1% in August, the largest decrease since October 2009 while Consumer spending rose +0.2% in August after a +0.7% gain in July. Real consumer spending, adjusted for inflation, was flat. Economists were expecting a weak income and spending report in part because of the poor employment report last month, which showed no net new jobs created and a decline in average hourly earnings. Economists had expected a flat reading for incomes and a +0.1% gain in spending. The savings rate fell to 4.5% from 4.7% in July and is the smallest savings rate since November 2009. Wages and salaries fell -0.2% in August. Excluding inflation, real disposable incomes fell -0.3% in August, the biggest drop since November 2009. The Fed's favorite measure of inflation, the personal consumption expenditure price index, rose +0.2% in August compared with July and is up +2.9% in the past year. The core PCE rate rose +0.1% in August, weaker than the -0.2% gain forecast. The core PCE index is up +1.6% year-on-year.

A gauge of consumer sentiment rose to 59.4% in September after tumbling to a nearly three-year low 55.7% in August, according to Friday reports on the gauge from Thomson Reuters/University of Michigan. Economists had expected a slight rise to 57.6% with stock volatility and weak employment maintaining downward pressure on sentiment. A preliminary reading released earlier this month estimated a sentiment level of 57.8% for September. The sentiment reading, which covers how consumers view their personal finances as well as business and buying conditions, averaged about 87% in the year before the start of the most recent recession.
Manufacturing activity in the Chicago region expanded at a more rapid pace in September. The Chicago purchasing managers index rose to 60.4% from 56.5% in August and the rise was unexpected. Analysts were looking for a slight decline. Readings over 50% indicate overall business expansion. The Chicago PMI is the last of a series of regional indicators that give clues to the national Institute for Supply Management manufacturers' survey for September to be released on Monday. Based on other regional readings, economists expect the September ISM manufacturing composite to slow a bit more to 50.5% from an August reading of 50.6%. This is down from an average reading of 58.8% in the first six months of the year.

Thursday, September 29, 2011 4:03 p.m est.

Yesterday the market started the day higher but after its initial pop higher it slipped into the red and although it looked like it was going to come back in the final hour selling took hold and it ended the day down about -2% with the Dow off -180.00 points, S&P 500 -24.00 points and the Nasdaq -55.00 points. Today the market started the day up strongly with the Dow seeing highs of +260.00 points, S&P 500 +25.00 points and the Nasdaq +50.00 points. Selling took hold in the final hour though and the market actually moved into negative territory once again with the Dow off -20.00 points, S&P 500 -9.00 points and the Nasdaq Composite -60.00 points at one point.
It did come back with a rally this time though to finish the day mixed. At the close the Dow was up by +143.00 points to 11,154.00, S&P 500 +9.00 points to about 1160.00, S&P 100 +5.00 points to 526.00 and the Nasdaq Composite -11.00 points to about 2481.00. Oil closed higher finishing up +$2.00 to be be around the $83.00 level.

Gross domestic product for the second quarter was revised to an increase of +1.3% annualized from the earlier estimate of a +1% rise. Economists expected second-quarter growth to be revised to a +1.2% rate. The revision to second-quarter GDP was largely due to a pickup in construction spending and slightly faster consumer spending. A key measure of inflation was revised higher. The core personal consumption index, which excludes food and energy prices, increased +2.3% up from +2.2% reported earlier. Corporate profits before-tax were also revised higher Corporate profits before-tax increased +0.7% quarter-to-quarter, up from the +0.5% reported earlier.

Jobless Claims fell by -37,000 last week to 391,000 to mark the lowest level since April, but a government official suggested the surprising drop may have been from a variety of "technical" issues not captured by normal seasonal adjustments. Initial claims from two weeks ago were revised up to 428,000 from an original reading of 423,000. Economists had expected new claims to move to 417,000. The average of new claims over the past four weeks, meanwhile, fell by -5,250 to 417,000. Continuing Claims fell by -20,000 to 3.73 million. About 6.98 million people received some kind of state or federal benefit in the week of September 10th, up 95,242 from the prior week.

The pending sales index of existing homes fell -1.2% to 88.6 in August, the National Association of Realtors said. The pending sales index totaled 89.7 in July. The index's current level is 7.7% above the August 2010 level, but it's well below the pace of pending sales in a healthy economy. The biggest decline took place in the Northeast, while the Midwest and West also fell. The South was the only region to post an increase.

Yesterday it was reported that Durable goods once again fell slightly in August as demand shrank for motor vehicles and certain large defense goods. Bookings for products designed to last at least three years fell -0.1% in August after a +4.1% gain in July. Economists had expected orders to rise by +0.4%. Slower demand for durable goods would be a worrisome sign for an economy whose growth over the past year has been spearheaded by manufacturing and exports. If companies cut back on capital investments because of fresh worries about the economy, growth could slow even further. Orders for core capital goods climbed +1.1%. That closely watched category gives a better read on trends in the private sector because it excludes transportation and government spending on defense. In addition, shipments of core capital-equipment goods, which the government uses to help calculate gross domestic product, rose +2.8%.

Tuesday, September 27, 2011 4:03 p.m est.

This one is so true: Self-checking cashiers fading at grocery stores. People are willing to spend a few extra minutes waiting for a cashier than to waste even more time if a self-checkout cashier goes wrong says a report. According to AP: "some grocery store chains nationwide are bagging the do-it-yourself option, once considered the wave of the future, in the name of customer service." Thank goodness because personally I can’t stand the things although I do fly through them pretty quick but guess what it also means,,,,they might even have to hire some people which could be good for the economy!

The market continued higher on the hopes that the EU would save the day for Greece and Italy, and Iceland, and Portugal and Spain and..... The Dow saw highs of +320.00 points, S&P 500 +32.00 points and the Nasdaq +75.00 points but selling in the final hour almost saw all of the gains wiped out but the TradeBots, who have seemed to be in control of late, saved the day so the market still finished the day with okay gains.

At the close the Dow was up by +147.00 points to 11,191.00, S&P 500 +12.00 points to about 1175.00, S&P 100 +5.00 points to 530.00 and the Nasdaq Composite +30.00 points to about 2547.00. Oil closed before the selling began finishing up +$3.40 to be be around the $84.00 level.

Home prices rose for the fourth month in a row in July, according to the S&P/Case-Shiller 20-city composite. Prices rose +0.9% on a monthly basis, narrowing the year-on-year loss to -4.1%. Detroit and Washington D.C. were the only two cities posting annual price gains, while Minneapolis saw the worst fall with a -9.1% annual drop. David Blizer, chairman of the index committee at S&P Indices, said the market is still far from a sustained housing recovery, which would require continued house price gains through the end of the year and better annual results.

As employment expectations slightly improved, Consumer Confidence moved up a bit in September while remaining at low levels. The consumer-confidence index rose to 45.4% from 45.2% in August, when it had plunged on debt worries, among other factors. Economists had expected a September reading of 46.1%. The August confidence reading was upwardly revised from a prior estimate of 44.5%. Generally when the economy is growing at a good clip, confidence readings are at 90% and above. The expectations part of the report rose to 54% from 52.4% in August. The present-situation gauge fell to 32.5%, the lowest since January from 34.3%.

Monday, September 26, 2011 4:03 p.m est.

The market popped higher on new hopes that the EU would save the day. It didn’t hold though as the S&P 500 fell into the red by -6.00 points and tech stocks really took a hit down -40.00 points at one point as Apple was really hit on worries that they may be having a production problem. The market came back though as the day moved along with strong gains mostly in the Dow seeing highs of +290.00 points, S&P 500 +28.00 points and the Nasdaq +40.00 points in the final hour.

At the close the Dow was up by +272.00 points to 11,044.00, S&P 500 +27.00 points to about 1163.00, S&P 100 +12.00 points to 525.00 and the Nasdaq Composite +33.00 points to about 2517.00. Oil was below the $80 most of the day but at the close it came to finish up +$.40 to be be around the $80.00 level.

The sale of New Homes fell -2.3% in August to an annual rate of 295,000, marking the fourth decline in a row. Sales last month dropped to the lowest level since February. In July, meanwhile, sales were revised up to 302,000 from 298,000 on a seasonally adjusted basis. After peaking in 2011 at 316,000 in April, new-home sales have gradually declined. Also, the average selling price fell another -8.7% from July to $246,000, the lowest level since early 2009. At current sales rates, unsold new homes on the market represented a 6.6 month supply. And the actual number of new homes available decreased to 162,00 to set yet another record low. One analyst predicted that there is still another -10 to -20% left to go in prices before the bottom is hit and it could take another 5 years to see the bottom unless lenders figure out a new way to deal with pricey mortgages.

Friday, September 23, 2011 4:03 p.m est.

Interesting poll: CNBC asked who thought the country was headed into a depression and 67% actually thought it was!!

The day started with the market lower once again with the Dow off -100.00 points, S&P 500 -8.00 points and the Nasdaq -20.00 points. Buyers came in afterwards though and drove the market up with the Dow seeing highs of +80.00 points, S&P 500 +12.00 points and the Nasdaq +40.00 points.

At the close the Dow was up by +37.00 points to 10,771.00, S&P 500 +7.00 points to about 1136.00, S&P 100 +3.00 points to 513.00 and the Nasdaq Composite +28.00 points to about 2483.00. Oil was mostly flat closing down -$.50 around the $80.00 level.

Here’s a scary thought, Goldman may post a quarterly loss. According to The Wall Street Journal: "Global markets have turned so ugly that Wall Street's mightiest firm, Goldman Sachs Group, is at risk of posting its first quarterly loss since the financial crisis. Other banks are also under pressure." This means many things. The stock is off some -45% from its 2011 high, achieved in January as of the close on 9/22. It is just above 50% below its 200-day moving average, which may be a sign that it is so vastly oversold that we may be nearing a capitulation type move on the stock however but the fundamentals are something to watch closely. Investors should be concerned about the markets losing confidence in Goldman because they are the middle man for all kinds of transactions which mean that if they go under, the repercussions throughout the stock, bond, and commodity markets could be extreme, and extremely significant. Another thing is that if they go down, it could be just as bad or even worse than Lehman however its highly unlikely and if it just goes down in price it could be an buying opportunity of some historical importance ahead.

Thursday, September 22, 2011 4:03 p.m est.

Interesting fact; Over 46 million people are now living under the poverty level yet at the same time, there is a possibility of a government shutdown at the end of month. According to The Washington Post: "The surprise defeat in the House Wednesday of a special funding measure to keep the federal government functioning past September 30th was a sharp rebuke of the GOP leadership that controls the chamber and a testament to the fragility of the majority itself. The rejection of the measure resurrected the specter of a government shutdown at the end of the month and suggested that the heated confrontations that dominated Washington in the spring and early summer are likely to return this fall."

This caused the market to fall out of bed this morning as it appeared that congress is up to its old antics. As the day went on things continued to get worse and worse with the Dow seeing lows of -490.00 points, S&P 500 -50.00 points and the Nasdaq -110.00 points.

At the close the Dow was down by -391.00 points to 10,734.00, S&P 500 -37.00 points to about 1130.00, S&P 100 -17.00 points to 510.00 and the Nasdaq Composite -83.00 points to about 2456.00. Oil was hit hard to close down -$4.50 around the $80.50 level.

Jobless Claims fell -9000 to 423,000 last week from 432,000 last week. Claims from two weeks ago were revised up from an original reading of 428,000. Economists had expected new requests for jobless benefits to drop to 424,000, on a seasonally adjusted basis. The past four weeks, meanwhile, climbed to 421,000, the highest level in two months. The monthly average is seen as a more accurate gauge of labor trends because it smoothes out volatility in the week-to-week data. Continuing claims fell by -28,000 to 3.73 million. About 6.89 million people received some kind of state or federal benefits two weeks ago, down 256,256 from the prior week. The Index of Leading Economic Indicators grew +0.3% in August, compared with a +0.1% gain expected by economists. The LEI is a weighted gauge of 10 indicators that are designed to signal business cycle peaks and troughs. Among the 10 indicators that make up the LEI, four made positive contributions in August, led by the real money supply. The largest negative contribution came from stock prices. The LEI for July was revised to +0.6% from a prior estimate of +0.5%.

Wednesday, September 21, 2011 4:03 p.m est.

The market started the day higher even though the International Monetary Fund said that "We have serious concerns that further intervention by the Federal Reserve could exacerbate current problems or further harm the U.S. economy,'' but when Moody’s cut ratings on bank stocks it started to slip. Because everyone anticipated the good news from the Fed though it came back with the Dow seeing highs of +50.00 points, S&P 500 +4.00 points and the Nasdaq +30.00 points at one point.

After the Fed announced no change in interest rates and that they would launch a new $400 billion program that will move its $2.85 trillion balance sheet more heavily to longer-term securities by selling shorter-term notes and using those funds to purchase longer-dated Treasuries the market started to sell off. They will also reinvest proceeds from maturing mortgage and agency bonds back into the mortgage market, an acknowledgement of just how weak conditions in the sector have remained. The market started to really sell off after they said that they are seeing “significant downside risks to the economic outlook, including strains in global financial markets.” It seemed to really sink in when traders started to think about it. With Moody’s downgrading banks, the IMF saying things are really bad and the Fed is getting worried, it was obvious the only path for the day was down so the selling continued right into the close with the Dow seeing lows of -295.00 points, S&P 500 -36.00 points and the Nasdaq -55.00 points.

At the close the Dow was down by -283.00 points to 11,125.00, S&P 500 -35.00 points to about 1167.00, S&P 100 -15.00 points to 526.00 and the Nasdaq Composite -52.00 points to about 2538.00. Oil was up earlier on but fell into the close down -$1.00 around the $85.00 level.

There are more and more murmurings about the U.S. is Japan like and seeing a "lost decade" according to Reuters or as I would say lost 12 years! According to Reuters: "As the U.S. economy slouches toward another recession and confidence in policy-makers erodes, investors are coming to grips with the notion that the country may already be several years into a Japan-style lost decade." What makes the situation in the U.S. different than that in Japan is that the U.S. has a different set of circumstances than those that faced Japan after its real estate bubble burst in 1989, which by the way is still below those levels here in 2011! As Reuters points out "U.S. households, unlike those in Japan, have higher debts and lower savings, while massive deficits have sapped political support for the type of robust government spending Japan relied upon." Perhaps what this may mean is that because the problem in the U.S. is of a higher magnitude "in a prolonged period of anemic growth, the U.S. economy may have a slimmer margin for error." You don't have to be an economist to look around and see the poor nature of the economy where one day a business does well and the next day it could be gone. Perhaps the best measure of what's out there with regard to expectations is what the markets are telling us,,, we’ll continue in this situation for at least another year....

Sales of existing homes climbed +7.7% to a five-month high in August, as previously delayed deals closed, prices fell and rents rose. The National Association of Realtors reported that sales rose to a seasonally adjusted annual rate of 5.03 million, up from an unrevised reading in July of 4.67 million and above the 4.8 million that economists. Compared to July 2010, sales surged +18.6%. Two-thirds of real estate agents polled reported rents rising in August. At the same time, the median price was $168,300, a decline of -5.1% from the same period last year which isn’t good and may be why sales are so good. July prices were revised lower to $171,200 from an initially reported $174,000. Inventories fell -3% to 3.58 million units, representing 8.5 months of supply at current sales rates.

Tuesday, September 20, 2011 4:03 p.m est.

I saw a funny cartoon about Treasury Secretary Geightner today where he was beside rolls of paper and he said that “we can’t be out of money, we still have paper left!!!

Interesting; While Italy was downgraded overnight, Israel’s credit rating was increased!!! They have growth and unemployment around 5% per year yet they are surrounded by countries that want to wipe them off the face of the planet!

Well I wasn’t surprised this morning to hear that people are still picketing on Wall Street! I hate to be so negative but I’m so tired of these people as my own town is filled with them!! There is this guy that stands in the middle of the road at a turn signal light on a meridian begging for money because he’s hungry. Yet he seems to be able to keep his interesting hair style, get tattoos and feed his rather large dog!!! And why is he there constantly,,, because other idiots feel sorry for him and actually give him money!! Oh but he has a mental disease they say,,,,, ya, its that he’s a lazy butt that won’t work for less than $20 an hour!!!! This past generation of kids has been raised to get whatever they want and don’t have to do anything to earn it then when they’re older they expect a handout from the government and anyone that will give them a free ride!!

Overnight Globex futures sank suddenly when S&P lowered the credit rating of Italy but slowly traders decided what the heck, were all going down in the ship anyhow so we might as well push the market up so we saw a higher open. It could have also been that the Fed starts meeting today and everyone is hoping that there will be another QE3 announced or as the new saying goes, “operation twist”. I think they may be surprised in the end as interest rates are already at record lows. After the initial pop selling took hold with the Dow see slight lows of -10.00 points, S&P 500 -2.00 points and the Nasdaq -5.00 points but after rumors started flying about other EU countries promising money to Greece it rallied with the Dow seeing highs of +140.00 points, S&P 500 +17.00 points and the Nasdaq +35.00 points as Apple made a new all time high. The final hour saw selling take hold however as rationality took hold so the market moved back to its earlier lows.

At the close the Dow was up by +8.00 points to 11,409.00, S&P 500 -2.00 points to about 1202.00, S&P 100 -.63 points to 541.00 and the Nasdaq Composite -23.00 points to about 2590.00. Oil was up earlier on over a $1 but fell by the close down -$.50 around the $86.00 level.

Housing starts fell -5% to an annual rate of 571,000 last month, the lowest level in three months so it appears that that sector remains in the doldrums. Economists had expected housing starts to fall to a seasonally adjusted 590,000 from July’s revised level of 601,000. Most of August’s decline took place in the Northeast and it was concentrated in multi-dwelling buildings such as apartments. New building fell -29.1% in the Northeast while the construction of multi-dwelling units sank -12.4%. Construction of single-family homes, which account for three-quarters of the housing market, fell a much smaller -1.4% to an annual rate of 417,000. Permits for new construction actually rose +3.2% to an annual rate of 620,000, marking the highest level since January which is good news. Permits give an indication of whether demand for new homes is growing or slowing. Single-family permits climbed +2.5% to 413,000, the best showing since December.
The residential-construction industry remains stuck in its worst slump in modern times, building fewer than 600,000 new homes in both 2009 and 2010. By contrast, nearly 1.1 million homes were built in the year before the recession and the industry constructed 2 million homes as recently as 2005. Now new homes are selling at about half the rate as would be the case in a healthy housing market. Among the factors depressing sales are a persistently high jobless rate, a flood of foreclosures and the difficulty that both builders and prospective buyers face in trying to get financing from cautious lenders.

Monday, September 19, 2011 4:03 p.m est.

The market started the day down almost -2% as once again the European worries came around and the fact that President Obama was making some sweeping declarations about raising taxes on the rich. The Dow saw early lows of -260.00 points, S&P 500 -28.00 points and the Nasdaq -60.00 points. It did bounce back though as the day went on and the final hour almost saw tech stocks move into the green but in the end it fell back with about a -1% loss.

At the close the Dow was down by -108.00 points to 11,401.00, S&P 500 -12.00 points to about 1204.00, S&P 100 -5.00 points to 541.00 and the Nasdaq Composite -10.00 points to about 2613.00. Oil was down hard all day closing -$2.50 around the $85.00 level.

It’s obvious that volatility is going to remain which isn’t a surprise as the market is dealing with Europe, the Economy and the upcoming Election next year as it appears that Obama is already on the campaign trail. I spoke about possible riots on Friday and they started to happen over the weekend after he made announcements about his tax plan. Many young people without jobs descended on Wall St with slogans declaring that “corporations are destroying the country”! I get a kick out of that as they are the biggest supplier of jobs but heh it shows how ignorant some people are!! I wouldn’t be surprised to see them grow however as these are the same people that are likely looking for a free ride. There was $900 billion dollars spent last year in programs to help the poor that had nothing to do with welfare which means that each so called “rich” person is paying about $9000 extra to help these people stay in poverty. We are becoming a welfare state and so it makes me question when the rich will start to revolt back. I have a friend who runs orphanages around the world and he has seen first hand what happens when all you do is give and give and give! His question for people, is it better to give or better to teach them how to support themselves. From his experience he finds that its better to teach people and more importantly that these people “want” to learn ways to make it themselves, especially in poorer nations or places like China and India who are coming out of third world status. This is what North America was years ago when people worked their way up the ladder to that three bedroom house and two car family. Maybe those people sitting on Wall St should get off their *()$_ and get or even better, create a job!!!

Confidence in the market for newly built single-family homes fell slightly in September to remain in very low territory, according to an index released today. The National Association of Home Builders/Wells Fargo Housing Market Index fell by a point to 14%, on a seasonally adjusted index where readings above 50% are considered good. The index, which correlates closely with single-family housing starts, has held between 13% and 16% for the last six months. Economists had expected a 15% reading.

Thursday, September 15, 2011 4:03 p.m est.

Mortgage rates at record lows: The average rate on the 30-year fixed-rate mortgage fell to a record low 4.09% -- these data go back to 1971 - from 4.12% in the prior week, according to the buyer of residential mortgages. A year ago, the rate was at 4.37%.

Blue collar jobs a better choice? According to The Washington Post: "College graduates are the fastest-growing group of consumers who have filed for bankruptcy protection in the past five years, according to a new study by a financial nonprofit, which underscores the broad reach of the Great Recession." The Post added: "The survey by the Institute for Financial Literacy, slated for release Tuesday, found that the percentage of debtors with a bachelor’s degree rose from 11.2 percent in 2006 to 13.6 percent in 2010. The group tracked similar but smaller increases in consumers with two-year associate and graduate degrees. Meanwhile, the percentage of debtors with a high school diploma or who did not finish college declined."

There is an even worse message in the statistics. According to The Post, citing the above referenced study, it's the older portion of the college educated crowd that is increasing with "the number of people 55 and older, who have less time to recover financially, has jumped 25 percent," while "the number of consumers filing for bankruptcy between ages 18 and 34 has fallen 31%" over the past five years. The report added that "credit cards and other unsecured loans force most people into bankruptcy" are "typically" the most common reason for bankruptcies, but "hefty mortgages and falling home values contributed to the spike in filings among wealthier households and college graduates."

The market has been very volatile this week as Tuesday saw a huge range up and down and in the end it was higher by just about a percent. It was the same thing yesterday as the European Unions rumors about saving Greece and other countries were all over the place but again it was higher. This morning the market was up again even though economic data was abysmal but with the European Central Bank saying that they would loan U.S. dollars to euro-area banks to make sure they have enough of the currency through the end of the year it helped European indices rally along with ours. The key words were the central bank saying it would hold a series of three liquidity operations so basically another QE program to save the day but not really deal with the problem. How long will this last who knows but the Dow saw highs of +190.00 points, S&P 500 +21.00 points and the Nasdaq +40.00 points making it a +4% gain going into the last day of the week and the September expiration cycle.
At the close the Dow was up by +187.00 points to 11433.00, S&P 500 +21.00 points to about 1209.00, S&P 100 +9.00 points to 543.00 and the Nasdaq Composite +35.00 points to about 2607.00. Oil was flat all day closing up +$.10 around the $89.00 level.

The Philadelphia Fed said its manufacturing index was -17.5% in September, the third negative reading in four months. Economists had anticipated a -13.4% reading for September after a -30.7% disaster in August.

Jobless Claims also rose +11,000 last week to 428,000 and claims from two weeks ago were revised up to 417,000 from an original reading of 414,000. Economists had expected new claims to climb to 418,000 on a seasonally adjusted basis. The average of new claims over the past four weeks, meanwhile, rose by +4,000 to 419,500 while continuing claims fell by -12,000 to 3.73 million. About 7.14 million people received some kind of state or federal benefits, down 25,033 from the prior week.

Consumer prices rose a seasonally adjusted +0.4% in August while the core prices, which strips out the less needed food and energy costs, increased a smaller +0.2%. The core rate is now up +2.0% over the past 12 months, the first time it's hit that level since November 2008. Economists had forecast CPI to rise +0.2% overall, with a +0.2% increase in the core rate. Consumer prices have jumped an unadjusted +3.8% over the past year. The increase in the cost of goods and services has resulted in a -1.8% decline in inflation-adjusted weekly wages for workers over the past 12 months. Average hourly wages adjusted for inflation dropped -0.6% in August, marking the biggest one-month decline since July 2008 and that is a very bad sign!

The Empire State manufacturing index fell to -8.8% in September from -7.7% in August and remained in negative territory for the fourth straight month. This is the lowest reading since November 2010 and readings below zero indicate deterioration, with higher numbers of firms reporting that conditions had worsened. The new orders index inched lower to negative -8%, while the shipments index fell 16 points to -12.9%. After dropping sharply during the summer, the index for prices paid increased in September which isn’t good news. Employment indexes were below zero. A reading of expected conditions six-months ahead improved a bit to 13% in September from a two-year low of 8.7% in August.

The output of the nation's factories, mines and utilities rose +0.2% in August after a strong +0.9% gain in the prior month. The August gain was bigger than the flat reading expected by analysts. Factory activity alone rose +0.5% after a +0.6% increase in July. Production of motor vehicle and parts rose +1.7% in August after a +4.5% gain in the prior month. Excluding motor vehicles and parts, factory production rose +0.1% in August. Capacity utilization, a gauge of slack in the economy rose to 77.4% in August from 77.3% in July. Capacity utilization has been rising slowly and is at its highest level since August 2008.

The current-account deficit fell to $118 billion in the second quarter, or 3.1% of GDP, from first-quarter levels of $119.6 billion, or 3.2% of GDP. The deficit narrowed due to an increase in income from U.S. owned foreign assets as well as a increase in the surplus in services, which offset a widening goods deficit and increased government grants. The first-quarter current-account deficit was revised up to $119.6 billion from $119.3 billion.

Yesterday it was reported that Retail sales in August reached $389.5 billion, with virtually no growth from the prior month as consumers spent more at gas stations and grocery stores, but less at motor vehicles and parts dealers. Excluding the volatile auto segment, sales only rose +0.1%. Economists had expected an increase of +0.3% for the overall number, as well as for the data excluding autos. Sales for July were revised to +0.3% from a prior estimate of +0.5%, while sales for June were revised to +0.2% from +0.3%. Over the past three months, retail sales have climbed +7.9% compared to the same period one year ago. In August, sales rose +0.3% at gasoline stations and +0.5% at grocery stores, among other areas. Meanwhile, sales fell -0.3% at motor vehicles and parts dealers, the lowest result since May.

The prices of goods at the wholesale level were unchanged in August as another decline in fuel costs offset an increase in food. The more closely followed core producer price index edged up +0.1% last month to mark the ninth straight increase. Economists had predicted no increase in overall producer prices and a +0.2% increase in the core rate. Energy prices fell for the third straight month, down -1%. Yet the cost of food jumped +1.1% in August. Intermediate prices fell -0.5% and crude goods rose +0.2%, the government said. Overall, producer prices are up +6.5% compared to one year ago, while the core rate has risen a slower +2.5% during that span.

On Tuesday it was reported that the cost of imports dropped -0.4% in August. Economists had forecast import prices to fall -1%. Import prices rose +0.3% in July and fell -0.7% in June. The cost of imports have fallen in two of the past three months mainly because of lower fuel prices, which declined -1.8% in August. Price-import data is viewed as key indicator of whether inflation is rising or falling. Imports excluding fuel rose +0.2% last month, however.

Monday, September 12, 2011 4:03 p.m est.

The market hit lows right out of the gate as there were threats once again of Greece defaulting and that it would affect European banks quite a bit so Germany for example was off about -5% at one point. It did bounce around lunch though with the Dow only seeing losses of -10.00 points, S&P 500 +2.00 points and the Nasdaq +20.00 points. New lows were hit midday though with the Dow seeing -160.00 points, S&P 500 -17.00 points and the Nasdaq -30.00 points. The final hour saw an announcement that China has decided to help out Italy with their debt problems so the market turned around and rallied right into the close finishing the day near highs.

At the close the Dow was up by +69.00 points to 11061.00, S&P 500 +8.00 points to about 1162.00, S&P 100 +4.00 points to 523.00 and the Nasdaq Composite +27.00 points to about 2495.00. Oil interestingly was higher all day closing up +$1.00 around the $88.00 level.

This is the final week of trading for the September expiration cycle and it has been a volatile one so it will likely continue this week. There has been a +15% increase in short interest since March but still far from the peak levels of the financial crisis. Along with that there has been $36 billion in outflows from equity funds, the second highest ever. Hedge fund managers have been selling for months but they have been showing a little bit of evidence that some are buying back in a bit. With $2 trillion under management, this is an industry that could push the market higher at any given time, kind of like today!

Last week's sentiment of investment advisers saw the percentage of bulls and bears is nearly the same which is interesting considering the volatility we’ve been seeing. This is unusual, as it is typical for bulls to outnumber bears. On previous occasions when the two factions have been this close, buying opportunities have occurred except 2008, when the bearish percentage was significantly higher than the bullish percentage before stocks began a rally. It appears that things need to get a lot more bullish or bearish to confirm a bottom or top so the volatility will likely continue at least this week.

Friday, September 9, 2011 4:03 p.m est.

The market started the day lower once again as European woes continued with Greek bonds now hitting 55%!! Could you imagine mortgage rates tied to those rates!

The good news is that our 10-year bond fell to a sixty year low of 1.90% at one point today as investors looked for safe havens in bonds and the American dollar. It’s hard to believe they would however after listening to Obama’s speech last night sounding like he wants to borrow more money for his continuing losing ideas to create jobs. The initial downfall wasn’t bad though but after Juergen Stark, a top official at the European Central Bank, stepped down, the market started to tank as everyone thought it was more than just “personal reasons” he left. Lows were hit in the final hour with the Dow seeing -370.00 points, S&P 500 -38.00 points and the Nasdaq -75 but losses were cut by the close.

As we move into expiration week I’m sure the volatility will continue with the market moving in both directions quite a bit. Actually, 19 of the last 24 sessions have seen triple digit moves in either direction with the Dow! This is the kind of volatility I love for the style of trading we do as premiums are hugely inflated so lets hope it continues at least for the next couple of weeks!!!
At the close the Dow was down by -304.00 points to 10992.00, S&P 500 -32.00 points to about 1154.00, S&P 100 -14.00 points to 520.00 and the Nasdaq Composite -61.00 points to about 2468.00. Oil was down pretty good -$2.00 to close around the $87.00 level.

Thursday, September 8, 2011 4:03 p.m est.

Jobless claims this morning were once again disappointing remaining about the 400,000 level so after a strong finish yesterday the market started lower with the Dow off -60.00 points, S&P 500 -8.00 points and the Nasdaq -15.00 points but of course it couldn’t stay down as everyone anticipated Fed chief Ben Bernanke speech later on in the day that will hopefully reveal another easing plan and then of course there is Obama’s speech later tonight that will reveal an incredible plan to create millions of jobs. I mean really, its not like these guys ever disappoint. I wasn’t surprised when Bernanke said nothing and I’m sure it will be the same old same old from Obama. Anyhow the Dow saw highs of +60.00 points, S&P 500 +6.00 points and the Nasdaq +25.00 points but after Bernanke’s speech was released the market fell once again with the Dow making new lows of -140.00 points, S&P 500 -15.00 points and the Nasdaq -30.00 points in the final hour.

At the close the Dow was down by -119.00 points to 11296.00, S&P 500 -13.00 points to about 1186.00, S&P 100 -5.00 points to 533.00 and the Nasdaq Composite -20.00 points to about 2529.00. Oil was down pretty hard early on but came back to close near the unchanged level, down -$.30 around the $89.00 level.

The number of people who are nearing retirement age but are having to make changes in plans due to high debt burdens and other factors continue to rise. According to The Wall Street Journal; "people are postponing retirement, cutting living standards or both." According to Reuters: "the number of Americans drawing Social Security retirement benefits will jump to 71 million from about 55 million now." The center of the debt problem is mortgages that are now in the hole due to the housing crash. According to The Wall Street Journal: "Thirty-nine percent of households with heads aged 60 through 64 had primary mortgages in 2010 and 20% had secondary mortgages, including home-equity lines, according to research group Strategic Business Insights' MacroMonitor. That was up from just 22% and 12%, respectively, in 1994." Those people can't sell their homes at a profit as often as they used to and they can't borrow on their equity like they used to. Because they are getting older many are turning to renting spare rooms as income. And finally, according to The Journal: "People aren't saving enough either. As calculated in a Wall Street Journal article earlier this year, the typical American household nearing retirement with a 401(k) retirement account has less than one-quarter of what it needs in that account to maintain its standard of living in retirement." What this all means is that many people are now expecting to work for many years into the future, despite their age, raising the retirement age. Usually as you get older and “need” to work your income goes down so it will likely continue to bring the standard of living down for the middle class until we are about equal to the standard of living of the 1970’s and 80’s. The next 10-years is going to be very interesting...

Jobless claims rose +2000 to 414,000 but economists expected them to rise to a seasonally adjusted 411,000. Initial claims from two weeks ago were revised up from an original reading of 409,000. The four week average rose by +3,750 to 414,750, the highest level since mid-July. About 7.17 million people received some kind of state or federal benefits, down -167,009 from the prior week. Total claims are reported with a two-week lag. Continuing claims fell by -30,000 to 3.72 million, reported with a one-week lag.

The trade deficit fell in July as record exports helped offset the biggest trade gap with China in 10 months. The Commerce Department said the trade deficit narrowed to a seasonally adjusted $44.8 billion in July from $51.6 billion in June, a decline of -13.1%, the largest percentage decline since February 2009. Economists had expected a $51 billion deficit. Downward revisions to the nation’s trade deficits for April, May and June could mean the final reading of second-quarter gross domestic product being revised upward from 1%. For the first seven months of the year, the trade gap has been $329.8 billion, wider than the $291.7 billion seen over the same interval during 2010.

In July there were a record $178 billion exports, up by $6.2 billion from June, led by industrial supplies and materials, capital goods and the highest-ever export of automotive vehicles, parts and engines. By contrast, imports $222.8 billion during the month, which was marginally lower than the $223.4 billion in June but still near highs of the year. The decline came down to oil, as petroleum imports shrank, as oil prices fell to $104.27 a barrel in July from $106 a barrel in June and as Americans used 4% less imported energy products. For the year to date, the trade gap with China has been $160.4 billion, +10% worse than the same period of 2010. Exports to South and Central America of $14.7 billion, however, were the largest on record in July, on demand from Brazil, Argentina and Chile, helping the trade balance with the region turn positive.

Tuesday, September 6, 2011 4:03 p.m est.

How about interest rates like this! The Greek 2-year bond hit 50% at one point today!!!

The market tanked once again this morning as European woes are back once again as Greece is saying it may leave the Eurozone which basically means it will default. It’s unlikely as Germany and France have a lot invested in Greece but just saying it causes jitters to start. The Dow saw lows of -310.00 points, S&P 500 -34.00 points and the Nasdaq -65.00 points! It bounced off of the lows though and the final hour saw a decent comeback but it was still the worst first three day start to September ever.

At the close the Dow was down by -101.00 points to 11139.00, S&P 500 -9.00 points to about 1165.00, S&P 100 -6.50 points to 525.00 and the Nasdaq Composite -7.00 points to about 2474.00. Oil was lower at one point down almost -$3 at one point but it closed down -$.65 around the $86.00 level.

One thing that has been really nice about this expiration is the volatility! Some of the trades being done on the sold options are equaling a 5 month supply of trades! Some of them have even been able to be bought back and resold with all of the up and down action. The month of August saw 14 days in which the S&P 500 was up or down at least 1% which is the most we've seen in a month since the flash crash month of May 2010. What’s interesting though is that during the big August decline, there were just as many 1% up days as there were 1% down days which is why its been great for selling option premium. August had an intraday range of at least 1.5% and prior to that only 16% of trading days in 2011 had such a substantial range. In fact, that's the first time we've seen that kind of day-to-day volatility in over two years, since April 2009! The average daily range spiked above 3% in September 2008 and July 2002 and there were only two other spikes above 3% in the last 30 years. The first occurred in October 1987, after the "Black Monday" crash, and the second happened in September 1998, during the Russian default crisis. The volatility is likely to continue for awhile but as September goes I’m sure it will slow as the market gets tired of moving so much.

The Institute for Supply Management said its service-sector index rose to 53.3% from 52.7% in July. Economists expected the services index to drop to 51%. While readings over 50% indicate more firms are expanding than contracting, the index is still sharply lower compared to its peak of 59.7% in February. In a positive sign, the new orders index rose +1.1% to 52.8% and the backlog of orders index climbed +3.5% to 47.5%. The employment index fell slightly, however, and the price index jumped +7.5% points to a relatively high 64.2%. Ten of the 18 service sectors tracked by ISM reported growth. The service sector has areas such as health, finance and entertainment which accounts for 3/4 of all economic activity and employs about four of every five workers. It’s great that this indicator is up but employing 4 of every 5 workers isn’t in my view. You’ve got to build it to see a robust economy in my view...

Friday, September 2, 2011 4:03 p.m est.

I wouldn’t suggest going to Greece for a holiday anytime soon! Greece has just increased their VAT, (value added tax) from 9% last year to 23%!!!
And here’s something that is different! For years people have always said that the only reason America invaded Iraq was for its oil however in reality they didn’t receive a drop for years as saddam hussein was only able to sell it to other countries with a “food for oil” program and none of it came America’s way. However it is making up for it now as the entire world is scrambling to lay claim to Libya's oil. According to The Wall Street Journal: "As world leaders debated how to help rebuild Libya, a global race began to secure access to the country's oil and gas."

This morning the market was looking to open lower before the employment report came out this morning but after it was more dismal than expected, the market tanked right at the open. The Dow saw lows of -250.00 points, S&P 500 -28.00 points and the Nasdaq -50.00 points! It did rally after that a bit going into lunch hour but selling took hold in the final hour once again with the Dow seeing lows of -290.00 points, S&P 500 -34.00 points and the Nasdaq -80.00 points.

At the close the Dow was down by -253.00 points to 11240.00, S&P 500 -30.00 points to about 1174.00, S&P 100 -2.50 points to 529.00 and the Nasdaq Composite -66.00 points to about 2480.00. Oil was sold pretty good with the poor employment report indicating a slowing economy to close down -$2.38 around the $86.55 level.

As we head into fall next week, ouch, I can’t believe I’m saying that!!! After today’s dismal employment report it is easy to say that the economy is flat at best. What it means is that those who have jobs will continue to buy necessities and maybe once in a while spend money on vacations and toys but they won’t go crazy because they’ll always be worried they may lose their jobs! This morning the Presidents labor secretary Hilda Solis was even attacked by CNBC’s financial hosts which is a rarity and she didn’t even appear on Fox because she knew she was really going to get it!! The question is what is Washington going to do to spur growth. All she could say this morning was that Obama has a plan that will be released next Thursday and that she is all for extending unemployment claims and payroll taxes. Why try something new when everything your doing now is working!!!!

Anyhow that's one thing that investors are worried about. The president has few admirers left in the business community and no one has any hope for his highly hyped jobs speech, scheduled for next week. It’s not expected to be anything that businesses will like, if his previous major initiatives, such as health care reform are any hint of what could lie ahead. Besides that he said himself it will only create a million jobs which is almost an insult!!! The massive failure of several solar power firms, financed by the government by half a billion dollars and backed by Mr. Obama, is a negative background and if he mentions “green jobs” again he’ll likely be run out of town!! He needs to put forth a credible jobs plan which has a chance to pass Congress and to actually help people get back to work but the bar is set so high that I give it low odds of success.

Then you have a report out from the WSJ reporting that the Federal Housing Finance Agency is set to file suits against more than a dozen big banks, accusing them of misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble. The suits, which are expected to be filed in the coming days in federal court, are aimed at the Bank of America, JPMorgan, Goldman Sachs and Deutsche Bank, among others.
Goldman Sachs also pointed out this week in a leaked trading desk report to high priced clients that Europe has big problems that many major banks are having a hard time borrowing money and over the coming weekend we could actually see two of their major banks say they need help. That's a lot of pressure on the markets so even if Europe has another moderate to significant problem our markets will have a problem rising.

Job growth was unchanged in August, the weakest performance in almost a year and was the first time since World War II that the economy had a net zero jobs created for a month. Employment in June and July were also revised lower by a cumulative -58,000. Among the more disturbing numbers: the amount of people "marginally attached to the labor force" rose to 2.6 million from 2.4 million. These are workers not included in the unemployment count because they had not sought work in the past four weeks but have looked in the past year. The weak report was lower than the +55,000 gain expected by economists. A strike at Verizon cut -45,000 from payrolls in the month. Factory payrolls fell by -3,000 in August after a +36,000 gain the prior month. Employment at service-providers increased +3,000 in August and construction employment fell by -5,000. The unemployment rate held steady at 9.1% as expected with average hourly earnings decreasing -0.1% to $23.09. Economists had been expecting a +0.1% gain. Earnings are up only +1.9% in the past year and that is very bad news. Even worse is that people are working less with the average workweek falling six minutes to 34.2 hours.

An alternative gauge of unemployment, which includes discouraged workers and those with part-time employment, rose to 16.2% in August from 16.1% in the prior month. The number of unemployed people rose slightly to 14 million from 13.9 million in July. Over six million workers have been out of work for 27 weeks or longer. The jobs picture was brighter in a separate survey of households. The jobless rate held at 9.1% as the number of employed increased by +331,000 and the share of the eligible population holding a job climbed to 58.2% from 58.1%. However, private hiring, which excludes government agencies, climbed +17,000 last month, the smallest increase since a decline in February 2010.

Thursday, September 1, 2011 4:03 p.m. est.

The market was only down slightly at the open but rallied when manufacturing came out a little better than expected but was still poor. The Dow saw quick highs of +110.00 points, S&P 500 +11.00 points and the Nasdaq +30.00 points but as the day wore on profit taking set in as traders started to worry about the employment report tomorrow. The final hour saw the Dow off -130.00 points, S&P 500 -16.00 points and the Nasdaq -40.00 points!

At the close the Dow was down by -120.00 points to 11494.00, S&P 500 -15.00 points to about 1204.00, S&P 100 -6.00 points to 542.00 and the Nasdaq Composite -33.00 points to about 2546.00. Oil was again basically unchanged to close around the $89.00 level.

Productivity fell by an annual rate of -0.7% in the second quarter instead of a -0.3% drop as initially reported. Economists had forecast that the revision would show a -0.6% decline on a seasonally adjusted basis. Worsening productivity stemmed mainly from higher costs for labor. Unit-labor costs jumped by an annual rate of +3.3% last quarter, up from an initial estimate of +2.2%. Also, output of goods and services rose just +1.3%, not +1.8% as first stated. The increase in hours worked remained the same at 2.0%. The hourly wages of workers, adjusted for inflation, fell -1.4% instead of -2.1%. We have now had three months in a row of negative productivity. The last time that this happened was in 1973-74 and 1979. These were very rough times for the economy with strong recessions so is this last three month period a warning, time will tell....

Jobless Claims fell by -12,000 last week to 409,000 and claims from two weeks ago were revised up to 421,000 from an original reading of 417,000. Economists had expected new requests for jobless benefits to drop to 405,000. The average of new claims over the past four weeks, meanwhile, rose by +1,750 to 410,250. The monthly average is seen as a more accurate gauge of labor trends because it smoothes out volatility in the week-to-week data. About 7.34 million people received some kind of claims up +45,531 from the prior week. The number of Americans who continue to receive regular state unemployment checks decreased by -18,000 to 3.74 million.
Activity in the manufacturing sector grew slightly in August, according to a closely followed index that nonetheless suggests the economy isn’t currently in a recession. The Institute for Supply Management said its manufacturing index slowed to 50.6% from 50.9% in July, marking the worst reading since July 2009 however. The index extended its string of readings above 50%, which indicate expansion, to 25 months but barely. Economists had expected a reading on average of 48.8%, and the 50.6% result was higher than every economist polled. The ISM index was as high as 61.4% in February. Readings from new orders and production weighed on the headline index in August as they contracted. The employment index was positive at 51.8% but was -1.7 points lower than the July reading. The ISM index is a long-running and seasonally adjusted series derived by asking purchasing managers questions on new orders, production, employment, supplier deliveries and inventories. Managers are asked the change in the current month compared to the previous month.

Outlays for Construction projects fell -1.3% in July, the largest decline since January. The decline came as a surprise to economists who were expecting a +0.3% increase. The sharp drop in July was offset by sharp upward revisions to May and June. The monthly construction data are highly volatile. Outlays are up +0.1% compared with a year earlier. Spending on private and public projects fell in July. Spending on private construction fell -0.9% after a +2% gain in June. Residential construction fell -1.4% after a +1.1% gain in June. Non-residential construction fell -0.4% after five straight monthly increases. Spending on public projects fell -2.1% in July after rising +0.8% in the previous month. Public construction is at its lowest level since December 2006.

Wednesday, August 31, 2011 4:03 p.m est.

Sign of the times: When in doubt, print your own money. A small town in central Italy, Filettino does not like Italy's austerity measures. So it's trying to become a principality. Thus, it's mayor, Luca Sellari 'has started minting Filettino's own bank currency, the "Fiorito," with his photo on the back, which he says is already being used by the townsfolk." Reuters reported.

Whoops, yesterday I said it was the last day of the month but what I meant to say was that it was that it was the last days of the month! Today is the last day of trading so the market was up again on interesting economic data. The much watched ADP employment came in worse than expected but because it wasn’t as bad as it could have been the market rallied. When more data came out worse than expected but again not into the depths of despair, the market took off with the Dow seeing highs of +160.00 points, S&P 500 +18.00 points and the Nasdaq +40.00 points. The final hour saw some profit taking and one point the Dow was off -40.00 points, S&P 500 -3.00 points and the Nasdaq -20.00 points!

In the end the Dow was up by +53.00 points to 11614.00, S&P 500 +6.00 points to about 1219.00, S&P 100 +2.00 points to 548.00 and the Nasdaq Composite +3.00 points to about 2579.00. Oil was basically unchanged to close around the $89.00 level.

From its intraday low on August 8th the market has now rallied just about +12%! That’s a pretty good move in a short time and the market is now quite overbought. With the employment report looming, a long holiday weekend coming up and the start of a new month it will be interesting to see how September turns out. It has been positive four of the last five years, averaging an almost +2% return. That's a pretty decent performance, making September the fourth-best month over the year. The last 10 years has seen September average a loss however of about -1% ranking it ninth out of the 12 calendar months for the upside. Historically whenever the market sells off in August, the last four months of the year generally see the market rally though. Only once did the market end lower and that was in 1981 so we’re likely to see volatility continue into September. The average gain for the past 10 years is about +8% over the last four months of the year so the bottom we saw at the start of the month could be it for the rest of the year but in today’s market that’s not a guarantee.

Private-sector payrolls increased a moderate +91,000 in August, led by the service-producing sector and small businesses, according to the ADP employment report. Economists were predicting the ADP figure would rise by about +100,000. The July level was revised down to +109,000 from a prior estimate of +114,000. Markets look to ADP's report on private-sector payrolls to provide some guidance on the Labor Department's jobs estimate, which will be released Friday and includes information on both private- and public-sector payrolls. Analysts expect the report to show slow growth of about +53,000, compared with +117,000 in July, and for the unemployment rate to remain at 9.1%.

Employers plan to cut -51,114 workers in August, -23% down on July's 16-month high of 66,414, according to consultancy Challenger, Gray & Christmas which also said 2011 layoff figures are +47% higher than August 2010. In total, employers have announced -363,334 planned layoffs in 2011. California, the District of Columbia and New Jersey have been hardest hit, with the former experiencing -45,105 layoffs since January.

Government agencies, which have borne the brunt of the layoffs this year, announced their intentions to cut -18,426 staff, taking the total for the year to -105,406. Reductions in the civilian and officer ranks in the military were the main driver of the August cuts.

The Chicago business barometer, which also is called Chicago PMI, slowed in August to a 56.5% reading from 58.8% in July, as managers in the region reported slowing production and new orders and a shrinking in order backlogs. Though the reading was ahead of expectations economists had anticipated a 53% reading which puts the indicator at a 21-month low. Any reading over 50% indicates expansion, and Chicago PMI has been in expansion for 23 straight months. The Chicago PMI is closely followed because it's the last major regional indicator before the national Institute for Supply Management's manufacturing gauge, which is due for release tomorrow.

Orders for goods produced in factories rose +2.4% in July. Economists expected orders to rise a seasonally adjusted +2%. Factory orders fell a revised -0.4% in June, down from a prior estimate of a -0.8% decline. Orders for durable goods, products meant to last at least three years climbed +4.1% in July. Orders for nondurable goods edged up +1%.

Tuesday, August 30, 2011 4:03 p.m est.

Yesterday the market continued higher to close with an almost +3% gain. Today the market started the day on the downside as economic data wasn’t that great so the Dow saw lows of -60.00 points, S&P 500 -6.00 points and the Nasdaq -15.00 points but because it was the last day of the month and the Fed’s minutes from their last meeting were released indicating half of them wanting more stimulus it rallied with the Dow seeing highs of +95.00 points, S&P 500 +10.00 points and the Nasdaq +30.00 points in the final hour! So far it looks like all of this volume will see the market close higher on the day.

At the close the Dow was up by +21.00 points to 11560.00, S&P 500 +3.00 points to about 1213.00, S&P 100 +.66 points to 546.00 and the Nasdaq Composite +14.00 points to about 2576.00. Oil was up +1.30 to close around the $89.00 level.

Consumer confidence also fell in August as expectations dived, with worsening views on future business conditions, jobs and income, the Conference Board reported. The nonprofit organization said its consumer-confidence index fell to 44.5% in August, the lowest level since April 2009 from a slightly downwardly revised 59.2% in July. Economists had expected an August reading of 51.9%. Generally when the economy is growing at a good clip, confidence readings are at 90% and above. The expectations barometer tumbled to 51.9% in August, the lowest since April 2009, from 74.9% in July, while the present-situation gauge fell to 33.3% from 35.7%.
The gradual improvement in home prices continued in June with prices rising +1.1% during June from May but are down -4.5% over the past year, according to the closely followed S&P/Case-Shiller 20-city composite home price index. Since the data are collected over three months, the report should be read as one for the second quarter. Prices advanced +3.6% in the April-through-June quarter from the January-through-March quarter. Nineteen of 20 cities saw monthly advances. Despite those positive signs, home prices are still -32% below their peaks, Cleveland in fact just moved over January 2000 levels. While all the California cities as well as Dallas, Denver and Washington, D.C., bottomed in 2009, Las Vegas, Miami, Phoenix, Tampa and Detroit have set new lows this year. “These shifts suggest that we are back to regional housing markets, rather than a national housing market where everything rose and fell together,” said David Blitzer, chairman of the index committee at S&P Indices. Other home-price measures have painted a similar picture. Home prices advanced +0.6% between the first and second quarters but declined 5.9% compared to the same period in 2010, the Federal Housing Finance Agency reported using home sales information from Fannie Mae- and Freddie Mac-acquired mortgages.

The Fed’s Open Market Committee said: On the economy: “Participants noted a deterioration in labor market conditions, slower household spending, a drop in consumer and business confidence, and continued weakness in the housing sector. Manufacturing activity was reported to be mixed. Participants judged that temporary factors affecting demand and production, including the damping effect of higher energy and other commodity prices and the supply disruptions from the Japanese earthquake, could account for only some of the weakness in economic growth over the first half of the year.

While these effects appeared to be waning, the underlying strength of the economic recovery remained uncertain. In addition, many participants pointed to the recent downward revision to estimates of economic activity over the past three years, and some to the financial market strains seen during the intermeeting period, as contributing to a downgrade of the outlook for the economy. Moreover, many participants saw increased downside risks to the outlook for economic growth.” On whether to act: “Most members agreed that the economic outlook had deteriorated by enough to warrant a Committee response at this meeting. While all felt that monetary policy could not completely address the various strains on the economy, most members thought that it could contribute importantly to better outcomes in terms of the Committee’s dual mandate of maximum employment and price stability. In particular, some members expressed the view that additional accommodation was warranted because they expected the unemployment rate to remain well above, and inflation to be at or below, levels consistent with the Committee’s mandate.
A few members felt that recent economic developments justified a more substantial move at this meeting, but they were willing to accept the stronger forward guidance as a step in the direction of additional accommodation. Three members dissented because they preferred to retain the forward guidance language employed in the June statement.” On the pledge to keep rates low until mid-2013: “That anticipated path for the federal funds rate was viewed both as appropriate in light of most members’ outlook for the economy and as generally consistent with some prescriptions for monetary policy based on historical and model-based analysis. In choosing to phrase the outlook for policy in terms of a time horizon, members also considered conditioning the outlook for the level of the federal funds rate on explicit numerical values for the unemployment rate or the inflation rate. Some members argued that doing so would establish greater clarity regarding the Committee’s intentions and its likely reaction to future economic developments, while others raised questions about how an appropriate numerical value might be chosen.” On what options are available: “Reinforcing the Committee’s forward guidance about the likely path of monetary policy was seen as a possible way to reduce interest rates and provide greater support to the economic expansion; a few participants emphasized that guidance focusing solely on the state of the economy would be preferable to guidance that named specific spans of time or calendar dates. Some participants noted that additional asset purchases could be used to provide more accommodation by lowering longer-term interest rates. Others suggested that increasing the average maturity of the System’s portfolio — perhaps by selling securities with relatively short remaining maturities and purchasing securities with relatively long remaining maturities — could have a similar effect on longer-term interest rates. Such an approach would not boost the size of the Federal Reserve’s balance sheet and the quantity of reserve balances. A few participants noted that a reduction in the interest rate paid on excess reserve balances could also be helpful in easing financial conditions.”

On dissents: “Mr. Fisher discussed the fragility of the U.S. economy but felt that it was chiefly nonmonetary factors, such as uncertainty about fiscal and regulatory initiatives, that were restraining domestic capital expenditures, job creation, and economic growth. He was concerned both that the Committee did not have enough information to be specific on the time interval over which it expected low rates to be maintained, and that, were it to do so, the Committee risked appearing overly responsive to the recent financial market volatility. Mr. Kocherlakota’s perspective on the policy decision was shaped by his view that in November 2010, the Committee had chosen a level of accommodation that was well calibrated for the condition of the economy. Since November, inflation had risen and unemployment had fallen, and he did not believe that providing more monetary accommodation was the appropriate response to those changes in the economy. Mr. Plosser felt that the reference to 2013 might well be misinterpreted as suggesting that monetary policy was no longer contingent on how the economic outlook evolved. Although financial markets had been volatile and incoming information on growth and employment had been weaker than anticipated, he believed the statement conveyed an excessively negative assessment of the economy and that it was premature to undertake, or be perceived to signal, further policy accommodation. He also judged that the policy step would do little to improve near-term growth prospects, given the ongoing structural adjustments and external challenges faced by the U.S. economy.”

Monday, August 29, 2011 1:33 p.m est.

Interesting Poll: Recession more Bush's fault than Obama. Majority trust own judgment over President's. According to Rasmussen Reports.com: "Most voters continue to blame the struggling economy on the recession that began during the Bush administration, but the number that trusts their own economic judgment more than the president’s is at a new high. " "52% of voters say the nation’s current economic problems are due to the recession that began under George W. Bush. Forty-three percent (43%) blame Obama’s policies for the poor state of the economy. Voters were more evenly divided on this question in June." The funny thing is were now three years into Obama’s period and the one we really need to blame for this is Barney Frank!

"The latest Rasmussen Reports national telephone survey of Likely Voters shows that 65% say they trust their own economic judgment more than the president’s. Prior to this survey, this finding ranged from 49% to 63% since Barack Obama took office in January 2009. Twenty-four percent (24%) of voters trust Obama’s economic judgment more than their own, which ties the lowest level of trust in the president to date. Another 12% are undecided."

This morning the market popped again as economic data was pretty good and Europe was behaving itself, actually bragging about Greece’s latest bond offering coming in around 10%!!! So far the Dow is seeing highs of +225.00 points, S&P 500 +29.00 points and the Nasdaq Composite +75.00 points. It will be interesting to see if these gains hold for the rest of the day. We are going into a long weekend holiday this coming Friday which will also have another Employment report for us to look at so the market may temper itself a bit before that!! We’re also getting quite overbought in the shorter term and hitting previous resistance levels. Along with the fact that volume is dropping, it may be hard to hold the gains as there are many people likely looking to get out after the sell off we saw the past couple of weeks.

People spent more money than they took in July which shouldn’t be a surprise in today’s world, largely on auto purchases as the personal savings rate fell. What do you need to save more for anyhow when you can buy a new car!! The income of workers rose +0.3% in July, but spending climbed an even faster +0.8% and for now that makes the market happy! The rise in spending matched the increase in February as the largest since summer 2009. Adjusted for inflation, personal spending rose +0.5% last month, compared with a less than -0.1% decline in June. Economists had forecast a +0.4% increase in personal income and a +0.6% rise in consumer spending. The core PCE index was expected to rise +0.2%. “Purchases of motor vehicles and parts accounted for most of the increase in July and for most of the decrease in June.” Since spending rose more than income, the individual savings in July rate dropped to 5.0% from 5.5% of disposable income. That is better than the mid 2000’s when it was negative however. Adjusted for inflation, disposal income actually fell -0.1% to mark the first drop in 10 months. Disposable income is the money people have leftover after paying for food, fuel, housing costs and other necessities. Inflation, meanwhile, rose +0.4% based on the latest reading from the personal consumption expenditure price index. The index has increased +2.8% over the past 12 months, pressured by rising gas prices. The core PCE, which excludes volatile food and energy costs, rose a lesser +0.2%. The core index is closely watched by central bankers and economists to gauge inflationary trends.

Consumer spending is by far the bigger source of growth, but people have been reluctant to spend because of persistent weakness in the economy. The jobless rate remains high at +9.1% and many companies area hesitant to hire, prompting consumers to save more and cut their debts. Consumers won’t sharply increase spending until the economy improves and more jobs become available, but companies won’t hire lots of new workers until the economy improves and consumers spend more so it seems were in a no win situation right now. The increase in spending in July, mainly on autos likely won’t hold. Customers took advantage of good deals and the availability of new models after a recent shortage. An index of pending home sales fell -1.3% in July, the National Association of Realtors reported. The index is nonetheless +14.4% above July 2010 levels. A sale is listed as pending when the contract has been signed but the transaction has not closed, and high levels of cancellations meant gains in the pending-home-sales series in May and June didn't translate to the final sales as measured in the existing-home-sales series.

Friday, August 26, 2011 12:05 p.m est.

Interesting: There is a Merrill Lynch report out that says there is a "80 Percent" chance of a double dip recession. "The probability of a double-dip recession is now above 80%, BofA Merrill Lynch modeling shows. One strategist put that number at 100% and said the recession might have already begun."The market started the day lower as economic data about GDP was a bit lower than expected but at least remained in the single digit level so it wasn’t as bad as it could have been. It was quickly forgotten anyhow as everyone anticipated Fed chief Ben Bernanke’s speech just after the open. The market did see triple digit losses at the open but when his speech was released thirty minutes into trading the Dow saw quick lows of -230.00 points, S&P 500 -24.00 points and the Nasdaq -40.00 points as I mentioned yesterday would likely happen because he didn’t have any comments about another QE3 program. Once traders caught their breath and realized that it was going to be up to them and that one of Bernanke’s points was that they were going to add a day to their next meeting to figure out what to do, the market rallied back with the Dow now seeing highs of +150.00 points, S&P 500 +18.00 points and the Nasdaq +55.00 points!!! So far it looks like all of this volume will see the market close higher on the day.
Fed Chairman Ben Bernanke put off a lengthy discussion of the easing options available to the central bank until the next Fed’s Open Market Committee meeting late next month. In a highly anticipated speech, Bernanke announced that the Fed had decided to expand its September meeting to two days, September 20th and 21st to review the pros and cons of further easing. Many Fed watchers had expected at least a discussion of the options in today's speech but Bernanke refrained, saying it was still difficult to judge how recent stock market weakness, debt-ceiling negotiations and the European debt crisis had impacted the economy. The Fed does expect "a moderate recovery" to continue and strengthen, he said. Bernanke criticized Congress, saying the recent debate over the debt ceiling had hurt the economy.

The economy grew +1% in the second quarter, down from an original estimate of +1.3%. The decline stemmed mainly from slower export growth and less restocking of inventories. Economists predicted GDP would be revised down to +1% on a seasonally adjusted basis. The increase in exports was lowered to +3.1% from +6%. Inventories, meanwhile, increased by $40.6 billion, but that was less than the prior estimate of $49.6 billion. On the upside, consumer spending rose +0.4% in the second quarter instead of +0.1% as initially reported. Consumer spending is the single biggest source of growth in the economy. Corporate profits, meanwhile, rose +3% to $57.3 billion. Real disposable personal income, which adjusts for inflation, rose +1% in the second quarter and +1.2% in the first quarter. That's higher than the prior +0.7% estimate for each period. The core personal consumption expenditure index - an inflation gauge that excludes food and energy prices - rose +2.2%.

This is the 2nd estimate and many people were saying before that we are in a 2nd Recession but they're looking kind of silly because even though things are slower were still plodding along here. I have mentioned before that to me we never got out of the first one or at least not enough growth to balance out the first drop! Until our GDP is EXPANDING as opposed to bouncing back to where it was, it’s not much of a recovery, but that doesn’t mean it’s getting worse, either. All of the recent data is backward looking data anyway and July Durable Goods was up +4% and Retail Sales have been ok so 3rd quarter GDP could be a bit stronger. Inventories may be down and that’s a negative but I think that’s a good thing as it means restocking should be coming. Exports have also been picking up but government spending could throw that off but hopefully Congress will get it together! We also need to watch the GDP Deflator, which was +2.3% and that lowers the +3.4% increase in consumer spending to +0.8% and that’s 70% of the GDP so that could end the story right there. Al l in all were moving just like Japan now just slowly plodding along! The main thing we need is jobs so we get wage inflation and until then we are never going to recover…

Thursday, August 25, 2011 4:03 p.m est.

Yesterday the market was higher once again making it three straight days of gains. This morning the market was looking to open lower but when it was announced that Warren Buffet was going to buy about $5 billion of stock of Bank of America the market shot up giving it a gain of +5% this week alone. The Dow saw quick highs of +85.00 points, S&P 500 +13.00 points and the Nasdaq +20.00 points. Because the move has been strong and their was a rumor out that Germany may be downgraded and that they were going to put more restrictions on short selling, the market started to fall and the Dow saw lows of -200.00 points, S&P 500 -22.00 points and the Nasdaq Composite -50.00 points. From there it basically meandered as now everyone is interested to see what Ben Bernanke will say tomorrow morning as it could be market moving. I don’t expect to hear anything significant and after the initial reaction the market will likely start moving in its own way once again. It will be an interesting end to a strong week thus far!!

At the close the Dow was down -171.00 points to 11150.00, S&P 500 -18.00 points to about 1159.00, S&P 100 -7.00 points to 525.00 and the Nasdaq Composite -48.00 points to about 2420.00. Oil was flat down -.31 to close around the $85.00 level.

Jobless Claims rose +5,000 to 417,000, they were revised up to 412,000 from an original reading of 408,000 two weeks ago. Economists had expected them to total 410,000. The data was boosted by a Verizon strike, applications for jobless benefits but they remain at an elevated level which is associated with subpar hiring trends. In a strong economy, claims usually fall far below 400,000 as companies rapidly add workers. The four week average rose by +4,000 to 407,500 while continuing claims fell by -80,000 to 3.64 million. The slow rate of hiring explains why the federal government is still paying extra benefits to millions of Americans. Some 3.64 million people received extended federal benefits last week, down about -20,000 from the prior week. These people have already used up state benefits, which usually last six months. A total of 7.29 million people received some kind of state or federal benefit, down -45,989 from the prior week.

Tuesday, August 23, 2011 4:03 p.m est.

The market continued higher today with it making triple digit gains early on and it only slowed down when there was a 6.0 earthquake in Michigan that was felt all along the eastern seaboard for some reason. Highs were hit in the final hour with the Dow seeing highs of +330.00 points, S&P 500 +40.00 points and the Nasdaq +110.00 points as everyone was supposedly thinking that Fed chief Ben Bernanke is going to announce a QE3 program on Friday. I think it had more to do with the fact that bonds and gold sold off! The precious metal was off -$60 today to $1830.00 after hitting a new high of $1909 overnight.

At the close the Dow was up +322.00 points to 11177.00, S&P 500 +39.00 points to about 1162.00, S&P 100 +17.00 points to 525.00 and the Nasdaq Composite +101.00 points to about 2446.00. Oil rallied up +1.12 to close around the $85.00 level.

I don’t think that Bernanke will announce anything this Friday except that the Fed will be there if need be because were not in any type of financial mess at all! Actually liquidity has risen quite a bit the past couple of months. Here’s the reason why I say this isn’t 2008 all over again like many people are trying to claim! Banks are in great shape “financially” as they have plenty of cash! For the first time since 2006 the FDIC just reported that they actually had a decrease in problem banks that are in trouble. Their list of “problem” banks fell by 23 to 865 in the second quarter, the first drop since 2006, as the cost for bad loans eased. The FDIC’s confidential list of banks at greater risk of collapse shrank for the first time since the third quarter of 2006 as lenders put aside less money to cover bad loans and charge-offs dropped -42%. The $20.9 billion decline in charge-offs was the largest since the recovery in credit quality, the FDIC said. “Banks have continued to make gradual but steady progress in recovering from the financial market turmoil and severe recession that unfolded from 2007 through 2009,” Martin Gruenberg, the FDIC’s acting chairman, said today in a statement. The deposit insurance fund, which protects customer holdings up to $250,000 per account in the event of a failure, was positive for the first time in two years, the agency said.

Sure we may be slowing down and maybe even going back into recession so that means that companies earnings are lower so the market could be down a bit but no where near the levels were at now or at the least it should be a slower drip lower as most bear markets are. Fair value for the S&P 500 right now is sitting around 12 which is on the low side anyhow so fundamentally there is a bit of support around these levels! The big question for now though is if we rally right into Bernanke’s speech we could see another down draft but no matter what I think were getting close to a short term bottom that should last at least a few more weeks.

New Home sales fell for the third straight month in July, -0.7% to a seasonally adjusted annual rate of 298,000 and was a surprise to analysts. The consensus forecast of economists was for new home sales to rise +1% to 315,000. New-home sales in June fell a revised -2.9% to a 300,000 level compared with the previous estimate of a -1% fall to 312,000. New-home sales are still up +6.8% compared with a year ago. The supply of new homes inched down -0.6% to a record low 165,000. The supply in relation to sales held steady at 6.6 months in July. Median sales prices have risen +4.7% in the past year to $222,000.

The Richmond Fed said that its manufacturing index fell to -10% in August from -1% in July, as shipments and new orders declined sharply. The Richmond Fed gauge wasn't as bad as the -30.7% reading of a similar Philadelphia Fed indicator which came out yesterday but was still the worst reading since June 2009. The Richmond Fed is a diffusion index, calculated by subtracting the percentage of respondents who say activity has dropped from those who say it has increased.

Monday, August 22, 2011 4:03 p.m est.

Not surprisingly, the market popped at the open reversing the sell off after Friday’s record lower August expiration close with the Dow seeing quick highs of +200.00 points, S&P 500 +22.00 points and the Nasdaq +60.00 points in the first few minutes of trading. You could tell it wouldn’t hold it though and about an hour into trading the Dow only had a gain of +5.00 points, S&P 500 -2.00 points and the Nasdaq -5.00 points. From there it rallied again but the final hour saw stocks move back to lows once again.

At the close the Dow was up +37.00 points to 10855.00, S&P 500 +.30 points to about 1124.00, S&P 100 -.30 points to 509.00 and the Nasdaq Composite +4.00 points to about 2345.00. Oil rallied today as the market bounced +1.86 to close around the $84.00 level.

Interesting: According to The Wall Street Journal: "More than three in five U.S. workers in their 50s and 60s plan on working past 65 -- and 47% of that group say they'll do so because they'll need the money or health benefits, according to a 2011 study from the nonprofit Transamerica Center for Retirement Studies." That being said it appears that the so called "New World Order” based on financial engineering and globalization has failed. It seems a certainty now that if you take jobs away from America, especially manufacturing, people here will lose their ability to buy products because they have no jobs. It also seems that no matter how much crap Washington tries to sell the public, they are actually starting to figure out that the whole thing is a scam, and that the government can't actually do everything for them and they may actually have to start to think for themselves and plan their own lives and futures.

The global economy is in bad shape because America, Europe, and China are all in trouble. The U.S. is where it all started with the sub-prime mortgage crisis increasing peoples debt levels to astronomic levels thus taking the economy into the recession. Even though it was supposedly saved with another fake money scheme, QE1 and 2, the now pathetic jobless recovery, and a possible double dip recession has been the result. The sub-prime mortgage crisis took Europe who bought a lot of the worthless paper churned out by Wall Street that was backed by air. along with the other EU countries failing all over the place creating a double barrel blow to the Europeans. China meanwhile had been the beneficiary of U.S. bond interest, and big money flows from U.S. and European corporations but the money which started streaming there right after 9/11 has fueled the building frenzy in China and has also created a new wave of income inequality and started corruption there. So....George Friedman put out a nice piece over the weekend where he reached a nice understandable conclusion! The reason that things are so bad right now is because the system that world governments have created has failed, globalization just may not work! The question is, when will it bottom out, I think we’ll know by this Friday when Ben Bernanke speaks at Jackson Hole. If he doesn’t promise another stimulus program I think we’ll be very close, if he does make something up, I think we’ll continue to grind the “world” economy into the ground!!

Friday, August 19, 2011 4:03 p.m est.

The market started the day lower as Europe was down and it was expiration so the Dow saw quick lows of -110.00 points, S&P 500 -10.00 points and the Nasdaq -30.00 points in the first few minutes of trading. Once the S&P 500 cash indexes expiration number was settled it wasn’t surprising to see the market turnaround and quickly rally with the Dow up +100.00 points, S&P 500 +12.00 points and the Nasdaq Composite +40.00 points. After that it once again turned lower however and the final hour saw the Dow make lows of -180.00 points, S&P 500 -19.00 points and the Nasdaq -45.00 points and remained there basically into the finish of the day. More out over the weekend.

At the close the Dow was down -173.00 points to 10818.00, S&P 500 -17.00 points to about 1124.00, S&P 100 -8.00 points to 509.00 and the Nasdaq Composite -39.00 points to about 2342.00. Oil was basically unchanged on the day to close around the $82.00 level.

Thursday, August 18, 2011 4:03 p.m est.

Yesterday was a pretty quiet day in the market with it closing mostly flat but it made up for it today as European stocks were hit once again with concerns about the transaction fee’s that Germany's Angela Merkel and France's Nicolas Sarkozy want to charge the banks. There was a triple digit loss right out of the gates but when the Philly Fed had an absolutely terrible economic report on its area, the market tanked big time with the Dow seeing lows of -530.00 points, S&P 500 -60.00 points and the Nasdaq -140.00 points in the first 45 minutes of trading. From there volume dried up and the market meandered around until the end of the day where the final hour saw the S&P 500 see -63.00 points and the Nasdaq -150.00 points. One thing that was very interesting was that the 10-year bond hit 1.87% at one point today which hasn’t been seen since 1945!

At the close the Dow was down -420.00 points to 10990.00, S&P 500 -53.00 points to about 1141.00, S&P 100 -22.00 points to 517.00 and the Nasdaq Composite -131.00 points to about 2380.00. Oil was killed closing down about -$5.00 to close around the $82.00 level. I think that with the start of expiration tomorrow morning were going to see some more wild swings, likely to the upside, but even more interesting is that the coming cycle is going to be exciting as the August cycle is going to go down as one of the worst expiration cycles ever!

Manufacturing activity weakened sharply in the Philadelphia region in August, the Philly Fed reported. The bank's business condition index fell to negative -30.7% in August from +3.2 in July and is the lowest level since March 2009. The size of the decline surprised analysts. Economists expected a slight decline in the index to +0.5. The headline business condition index is a separate question and not a buildup of components. As a result, economists pay close attention to the details of the report, which were also very weak. The index for new orders fell to negative -26.8% in August from +0.1% in July while the index for number of employees decreased to negative -5.2% from +8.9% in the prior month. The prices paid index declined to -12.8% from +25.1% in July.

Also negative was that the Consumer Price Index increased +0.5%, the largest monthly gain since March. Energy prices rebounded +2.8% in July after a -4.4% drop in June. Food prices rose +0.4% after a +0.2% gain in the prior month. The core CPI, which excludes food and energy costs, was up +0.2% in July. Economists were expecting the overall CPI to rise +0.4% while the core rate was expected to rise +0.2%.

Jobless Claims also rose +9,000 to 408,000 and the increase was larger than expected. The consensus forecast of economists was for claims to rise to 400,000. The four-week average fell -3,500 to 402,500. Continuing claims increased by +7,000, to 3.7 million.

There was no good news all day as sales of Existing Homes fell -3.5% in July to an eight-month low, with a high cancellation rate again taking its toll on an already troubled housing market. The National Association of Realtors said sales fell to a seasonally adjusted annual rate of 4.67 million. June's data was upwardly revised to 4.84 million from an initially reported 4.77 million. Economists had expected a 4.99 million annual rate for July. The numbers for the second straight month went against the increase in pending home sales, again showing the difference between agreed and closed transactions. Sales in July were +21% above the same month of 2010, which represented the cyclical low following the expiration of the home buyer tax credit. The median price was $174,000, a decline of -4.4% from July 2010. June prices were sharply downwardly revised to $176,100 from an initially reported $184,300, which NAR blamed mostly on late-reporting data from the troubled Phoenix area.
The economy should expand at a "modest pace" through the fall, the Conference Board said as it reported that its index of leading economic indicators grew +0.5% in July, compared with a +0.4% gain expected by economists. "The economy is slow, with little momentum, and shows no indication of acceleration. The LEI is a weighted gauge of 10 indicators that are designed to signal business cycle peaks and troughs. Among the 10 indicators that make up the LEI, six made positive contributions in July, led by the real money supply. The largest negative contribution came from the index of supplier deliveries. In June, the LEI rose +0.3%.

Tuesday, August 16, 2011 4:03 p.m est.

There were a bunch of interesting tidbits out this morning:
Foreign investors have been dumping out of American assets. According to Reuters: "Foreigners unloaded U.S. assets in June for a second straight month and were net sellers of Treasuries for the first time in more than two years as concern about a U.S. credit downgrade soured overseas demand." The wire service added: "U.S. government notes and bonds suffered a net outflow of $4.5 billion, the first since May 2009, as heavy selling by private investors outweighed buying from central banks."

Starbucks CEO Howard Schultz says he'll withhold all donations to the President and members of Congress until a fair budget deal is worked out and is putting together a letter for other CEO’s to sign that they too will withhold contributions! This could make the coming election interesting!

The market was looking lower this morning and after a huge three day run of almost +10% bottom to top its not surprising. When economic data was pretty good and Fitch came out and reaffirmed its coveted 'AAA' rating on the U.S, with a long-term outlook of stable, Globex futures turned around and cut losses quite a bit.
The Dow saw lows of -130.00 points, S&P 500 -12.00 points and the Nasdaq -32.00 points After . The bad thing about it was that volume really dropped off. As Germany's Angela Merkel and France's Nicolas Sarkozy unveiled a tax plan, proposed a new euro-zone council and reaffirmed their commitment to defend the euro, the market turned around and almost made it into green territory but when they said that they weren't going to create Eurobonds the market fell once again with new lows on the Dow of -190.00 points, S&P 500 -24.00 points and the Nasdaq -60.00 points. After this buying came in to cut losses though and at the close the Dow was down -77.00 points to 11406.00, S&P 500 -12.00 points to about 1193.00, S&P 100 -5.00 points to 538.00 and the Nasdaq Composite -32.00 points to about 2523.00. Oil was mostly flat to close down about -$.030 to close around the $87.90 level.

Housing starts fell -1.5% in July, demonstrating the negative impact on demand for new houses that comes from cheaper foreclosed homes, underwater mortgages, tight lending standards and high unemployment. The Commerce Department said starts fell to a seasonally adjusted annual rate of 604,000 from a downwardly revised 613,000 rate in June. Economists had anticipated a 600,000 annualized rate for July, and many had thought June's initial reading of 629,000 was too strong. Single-family starts slipped -4.9% to 425,000 from a downwardly revised 447,000. Building permits, a less volatile statistic, fell -3.2% to an annual rate of 597,000 in July, and June's data also was downwardly revised, to 617,000 from 624,000. Demand for apartments stayed strong, with starts for structures with five or more units up +6.3%.
The output of the nation's factories, mines and utilities were up +0.9% in July as auto assemblies rebounded and the output of utilities jumped because of hot weather, the Fed said. The gain, the biggest since last December, was in line with expectations. There were broad-based gains in July as production increased for all major market groups. Factory activity alone rose +0.6% in July. Total motor vehicle assemblies rose to 8.7 million unit annual rate in July from a 7.9 million rate in June. Excluding motor vehicles and parts, factory production rose +0.7% in July. Capacity utilization,a gauge of slack in the economy rose to 77.5% in July from 76.9% in June and is the highest level of capacity utilization since August 2008.

Monday, August 15, 2011 4:03 p.m est.

Everyone expected a down day to start the week but instead the market was up and remained that way all day, making new highs in the final hour! The Dow saw highs of +215.00 points, S&P 500 +26.00 points and the Nasdaq +50.00 points. The bad thing about it was that volume really dropped off.

At the close the Dow was up +214.00 points to 11483.00, S&P 500 +26.00 points to about 1204.00, S&P 100 +11.00 points to 542.00 and the Nasdaq Composite +47.00 points to about 2555.00. Oil was higher once again to closing up about +$2.00 to close around the $87.60 level.

One of the things that might have helped the rally today was a statement the Fed’s Atlanta President saying that “If additional actions are required, I can assure you the Federal Reserve is not out of bullets. If the anemic growth in the first half of this year is a soft patch in an ongoing, moderately paced recovery, additional monetary stimulus is probably of limited marginal value. But saying this is not the same thing as saying that monetary policy would be ineffective if conditions deteriorate.

Expansion of the balance sheet or changes in the composition of the Fed's asset portfolio are available, in my view. These could be quite effective, particularly if done insufficient size, in the event that the economy retreats back into contraction territory.”

The market has rallied about +7.5% from the bottom last week with volatility falling back a bit but remaining high. Usually you will get either a retest or bit of a pullback after such a big decline and then rally and this time around shouldn’t be any different except that it may hold off for now as this is an expiration traded week. Even if we do correct it would likely be a normal correction but one thing is sure, we’re likely stuck in a new trading range for a while until all of the problems are remedied. Some of the bulls are already saying that its a V bottom similar to the March 09 low however I don’t think so as that was after a +50% decline.
Last week the volatility index challenged the 48 area, as realized volatility on the S&P 500 surged as a result of Monday’s sell-off but then retreated the rest of the week. Usually its an encouraging sign when volatility drops and this is no different. Since 1997, about when the index started to be tracked, the volatility index has peaked five times on its six previous trips to the upper 40’s. The only exception was the financial crisis in 2008, when credit markets essentially stopped functioning but just as I have said, that’s not the case today. If volatility can stay below 50 in the upcoming week, a case can be made for another peak, which would be great but don’t forget we may need some more confirmation that a bottom truly is in.

Manufacturing activity contracted in the New York region in August for the third straight month, according to the Empire state survey from the New York Fed. The Empire state index worsened to a negative -7.7% in August from negative -3.8% in July. Economists had expected a flat reading. Readings below zero indicate deterioration, with higher numbers of firms reporting that conditions had worsened. The new orders index fell to negative -7.8% also, while the shipments index improved to +3%. A reading of expected conditions six-months ahead plunged to +8.7% in August from +32.2% in July and is the lowest level since February 2009. It will be important to follow the national number because if it is down again we may be headed back into a recession!

A measure of confidence in builders for new single-family homes remained stuck at very low levels during August, according to a report from the National Association of Home Builders/Wells Fargo home market index remained at 15% in August, on a seasonally adjusted measure where readings over 50% are considered "good," which hasn't been the case since April 2006. Two of the three components, current sales conditions and traffic of prospective buyers, inched higher, but the component measuring sales expectations for the next six months declined two points.

Friday, August 12, 2011 4:03 p.m est.

Wow the market started the day to the upside even though if it was on schedule to be down as it has changed direction for the past 8 sessions! It did look like it was going to be a down open as overnight trading saw Globex futures on the S&P 500 down -20.00 points at 3:00 a.m est but it came back after France ignored its zero percent growth status this last quarter!

At the open the market was higher but it didn’t last long with the Dow almost entering negative territory but the S&P 500 was down -1.00 point and the Nasdaq Composite -10.00 points. It did turn around though to move back to old highs on the Dow of +150.00 points, S&P 500 +15.00 points and the Nasdaq +25.00 points.
At the close the market broke tradition being up with the Dow seeing +126.00 points to 11269.00, S&P 500 +6.00 points to about 1179.00, S&P 100 +3.00 points to 531.00 and the Nasdaq Composite +15.00 points to about 2508.00. Oil was pretty flat closing down about -$.50 to close around the $85.30 level.

Retail Sales rose +0.5% in July as consumers spent more money on autos, gas, clothing and electronics. Excluding the volatile auto segment, sales still rose +0.5%. Economists expected an overall increase of +0.7% on a seasonally adjusted basis, or +0.3% excluding autos. Sales for June and May, meanwhile, were also revised higher. Over the past three months, retail sales have climbed +8.2% compared to the same period one year ago. Gas sales increased +1.6%, electronics and appliances +1.4%, autos +0.5% and clothing +0.5%. Excluding gas, total retail sales rose +0.3%.

A gauge of consumer sentiment fell pretty strongly to 54.9% in August, the lowest level since May of 1980 from 63.7% in July, according to the gauge from Thomson Reuters/University of Michigan. Stocks experienced extreme volatility during the survey period for the preliminary August reading. Also, with a tough employment environment and a malfunctioning Washington, consumers have been concerned about current and future economic conditions. The sentiment reading, which covers how consumers view their personal finances as well as business and buying conditions, averaged about 87% in the year before the start of the most recent recession. It’s obvious though that with Retail Sales up strongly that is a better indicator of what sentiment really is.

Business Inventories increased a seasonally adjusted +0.3% to $1.52 trillion in June, marking an +11.1% increase from June 2010 levels. Economists expected an increase of +0.4%. The total business inventories-to-sales ratio based on seasonally adjusted data at the end of June was 1.28.

Thursday, August 11, 2011 4:03 p.m est.

I think volatility is coming to a fulcrum because when I went to bed last night Globex S&P 500 futures were up about +15.00 points but when I woke up they were down -15.00 points!!! The reason was because of a bunch of rumors that French banks can’t meet their debt obligations! The problem, they're rumors!!! The strange thing is that it was from Reuters, one of the best news sources ever! The only good thing is that they had the courtesy to say at the end of their statements that they couldn’t confirm the sources! In the past they wouldn’t have even reported it then but I guess everyone is looking for news nowadays!!! Nonetheless it took futures down as its easier to sell now and ask questions later. When rationality came into play and Bank of France Governor Christian Noyer said in a statement that French banks have reported first-half results that underline their solidity in a difficult economic environment and that their capital is "adequate and their medium and long-term funding programs are being carried out under perfectly satisfactory conditions," the market turned around. Noyer also said that the recent market turmoil "doesn't affect the financial solidity of French banks and the capacity to resist that they have demonstrated since the start of the crisis," the statement added.

Anyhow this helped to turn European stocks around and futures so at the open the market was higher and it built on it with the final hour seeing the Dow making highs of +560.00 points, S&P 500 +65.00 points and the Nasdaq +140.00 points. At the close the Dow was up +423.00 points to 11143.00, S&P 500 +52.00 points to about 1173.00, S&P 100 +22.00 points to 529.00 and the Nasdaq Composite +112.00 points to about 2493.00. Oil rallied again up about +$2.80 today to close around the $85.70 level.

I keep hearing an interesting stat out there that the market has to fall another couple of percent to a -20% decline before it can go up and everyone can call it a bear market. In case no one noticed we made a high at the beginning of May and with that number we are now down -20%! Did I miss something or did the rules change! Not that it matters either way but here’s something interesting that no one else is talking about. If you do believe this is 2008 once again and want to go by the rule that we are moving into a bear market, if you go back to the 2008 high and then trace a line to the initial slide you find that the decline was exactly the same as we have just seen! The really interesting thing though is that the timeline it exactly the same as when we hit our recent in May! Coincidence maybe but the correlation is very interesting! After that the market went back and forth like we are seeing now but in short order it rallied about +8% before falling back to a lower high. Comparing this to our current time frame it puts the market higher going into expiration next week. After that it fell back again to make a lower high before rallying once again to final peak before selling off strongly once again.

Or here’s another interesting comparison if you think the bull market is just taking a respite! When we made our first initial high after the March 2009 low the market sold off pretty strongly -14% pretty quickly but not quite as steep as this week. It then bounced and finally made a lower low of -16% before continuing the rally. We’re off a bit more and faster, but its close. The point of these -15% plus declines I’m talking about is that they actually occur more often then not in both bull and bear markets and that after all of these declines volatility increased but some type of bottoming process occurred for awhile.

So the next question is, are we still in the bull market or has it changed to a bear? Personally I think we may have changed back to a bear unless we can continue to rally higher instead of turning down again later this month. There is still a lot to deal with in Europe and America but in the end all I worry about where the market will be expiration to expiration so the longer term doesn’t mean that much. The one thing this sell off has confirmed is that September and October are likely to be pretty volatile now but because the market will be testing itself to find its way back and forth, premiums will be rich so it should be very profitable!!

It was reported this morning that Jobless Claims dropped by -7,000 last week to a seasonally adjusted 395,000. Initial claims from two weeks ago were revised up to 402,000 from an original reading of 400,000. Economists expected new claims to rise to 410,000. The average of new claims over the last four weeks fell by -3,250 to 405,000, the lowest level since mid-April. Continuing Claims fell by -60,000, to 3.69 million.

The Trade deficit widened by +4.4% in June to $53.1 billion, the largest deficit in almost three years. The widening of the trade deficit was unexpected as economists expected the deficit to narrow to $48.2 billion. Both imports and exports weakened in June, but exports had a larger decline. The trade deficit with China widened to $26.7 billion in June, the highest since September 2010. The government also revised the deficit in May to $50.8 billion from $50.2 billion. The June deficit suggests a downward revision to second-quarter GDP growth from the initial estimate of a +1.3% annual rate.

Monday, August 8, 2011 4:03 p.m est.

So America gets downgraded from Standards and Poor’s Friday night giving the bears an entire weekend to relish the moment and proclaim its the end of the world and when I wake up Monday morning I see the American dollar and the 10 and 30-year bonds actually rallying so I have to say, what downgrade!!!! Nonetheless Globex futures were interesting as they were down about -2.5% likely only because of the reaction of bonds and the dollar. It seemed that more of the concentration was worries about Europe but it all came to a head after Obama had to open his mouth and attack S&P for the downgrade and then make that pivotal error of keeping the two governmental parties apart by talking about the need for higher taxes!!! The Dow saw lows shortly afterwards of -610.00 points, S&P 500 -79.00 points and the Nasdaq Composite -170.00 points making it the worst start to August ever. The next closest time was 1896 and for the 1900’s was 1990 with a -6% loss!!! The final hour saw a bit of a rally start after S&P came out and said that not all stocks are worthy of a downgrade so that little tidbit helped to cut losses almost in half or +3% but by the close it fell to new lows once again with the Dow off -640.00, S&P 500 -80.00 points and the Nasdaq Composite -170.00 points. I have been calling for volatility but unfortunately its only been in one direction but it will find a bottom and when it does the market is really going to move...

At the close the Dow was down -635.00 points to 10809.00, S&P 500 -80.00 points to about 1119.00, S&P 100 -34.00 points to 509.00 and the Nasdaq Composite -175.00 points to about 2358.00. Oil really took a hit closing down about -$6.00 today to close around the $81.30 level.

The -12% decline the S&P 500 has seen over the first six trading days of August is the worst start to the month in the S&P 500's history ever and In 11-trading days the market has now fallen -17% and -9% in just 3-days. Things are bad but with decent earnings, bonds and the dollar stable it seems that its become way to bearish too fast so we could easily see a turnaround with a huge pop in the market in the matter of hours to settle out a new range. The question will be from what level and interestingly where we ended the day is right where there is some strong support. Of course the index continued to decline for the remainder of August in 1990 by -3.66%. It then rallied slightly from September through the end of the year. There have been three other starts to August where the S&P declined more than -3% (1982, 2002, 2004), and in each of these instances, the index gained significantly for the remainder of August. In 1982, the S&P then went on to gain +35% for the remainder of the year, and in 2004, the index gained +14% over the rest of the year. In 2002, the index was essentially flat for the remainder of the year after dropping -4% in the first five days of August. That is more where I think we are now but through all of the dismal news it is due for a bounce and today may have seen the lows. One of the biggest indications at least in the short term is that the number of stocks above their 50-day exponential moving average has dropped to a lower level than during the 2008 and March 2009 lows so you can see how extreme we are at right now! In addition, it is an extreme that suggests investors are totally bearish on both the economy and stocks and are throwing in the towel. I’ll likely have more out later tonight after looking at some charts.

Friday, August 5, 2011 4:03 p.m est.

The market popped higher this morning after the employment report came in better than expected. The Dow saw quick highs of +175.00 points, S&P 500 +18.00 points and the Nasdaq Composite +40.00 points. Unfortunately its never a good thing to see a pop after a big down day because you know its not going to hold usually because there are margin calls from money managers occurring and today was no different because the selling began pretty quick with the Dow selling off to lows of -250.00 points, S&P 500 -33.00 points and the Nasdaq Composite -100.00 points which takes the market off -15% from its yearly high. Of course not five minutes after that the market went green again after the announcement that the EU may buy the debt of Italy and Spain if they reform their banking systems. After Italy said they would make reforms the market really started to rally with the Dow seeing highs of +140.00 points, S&P 500 +12.00 points and the Nasdaq Composite +2.00 points, not back to highs but it confirms that volatility is strong! Selling took hold in the final hour with all indices going red but the finish indices were mixed!

At the close the Dow was up +61.00 points to 11445.00, S&P 500 -.73 points to about 1199.00, S&P 100 -1.00 points to 543.00 and the Nasdaq Composite -24.00 points to about 2532.00. Oil remained lower closing flat up about +$.05 today to close around the $86.90 level.

Yesterday was interesting as the sell off seemed to be very controlled but the numbers were incredibly negative indicating huge panic selling. Advance-declines were about 19 to 1 negative and up/down volume was the most incredible number of all with only 19.7 million traded on the upside, and nearly 1.8 billion to the downside on the NYSE. The advance-declines on Nasdaq were almost as bad with 2452 down and only 208 up and that was about 11 to 1 negative. Up/down volume was 38 million up and 3.75 billion to the downside, about a 100 to 1 ratio. What’s interesting about that is it has only happened seven other times since 1994. Ten days later the market was up about +5% and three months later was also higher in all seven instances! It will be interesting to see if it happens once again...

The S&P 500 is now in bear market territory, along with many other indexes but the index is actually doing fairly well, all things considered as its only off about -4.5% for the year. The problem is that its been mostly in the last ten days which have been extremely painful to investors who were betting on steady growth in the economy and corporate earnings. The problem is that most of the damage has been done to individual sectors in the market, many of which are down double figures for the year, not to mention what they've lost from their recent highs. For example the biotech area is off -11.8% for the year, banking sector nearly -19% for the year and the housing stocks are off nearly -17%. The main point is that seeing housing and banking off that much underlies the basic problem in this economy. The U.S. was too reliant on housing as a growth engine the past decade instead of manufacturing and innovation that was America's industrial engine moving it overseas, thus taking away jobs and adding to the inability of the U.S. economy to rebound. This is going to take much longer to heal than anyone expects...

The economy added +117,000 jobs in July and an even larger +154,000 in the private sector while the unemployment rate fell to 9.1% from 9.2%, partly because -193,000 people dropped out of the labor force, basically giving up on looking for a job!!! The unemployment rate doesn’t count discouraged workers or those who have stopped looking for a job or just part time jobs and if you did, the jobless rate would have been 16.1%, down from a whopping 16.2% in June. Job gains in May and June were also revised up by a combined +56,000. Average hourly wages rose +10 cents, or +0.4%, to $23.13. The workweek was unchanged at 34.3 hours. Economists had projected a +75,000 increase in jobs in July, with the unemployment rate holding steady at 9.2%. Average hourly wages were expected to rise +0.2%.

This was a better than expected number and when you look at it with rose colored glasses its at least a start! However,,,,,the jobless rate has stayed above +8% for 30 straight months now, the longest stretch of high unemployment since the Great Depression in the 1930’s!!!! During times of growth you normally see at least +200,000 jobs a month, and much larger increases would be required for months on end to move the unemployment rate back down to expansion levels. Once again the rate of hiring in July wasn’t even enough to absorb the natural increase in the labor force, which requires about +125,000 new jobs a month. .

Thursday, August 4, 2011 4:03 p.m est.

The market so far today is selling once again as Japan made a play to sell the Yen which strengthened the U.S dollar. The market sold off enough to hit the -10% from the recent high in at the start of May. The market was down pretty good all day with lows hit in the final hour with the Dow off -525.00 points, S&P 500 -61.00 points and the Nasdaq Composite -135.00 points. The past 10-days have seen a very controlled sell off and one of the reasons is likely because of the low volume and the question of what the future holds! Many people are screaming that its 2008 all over again but no its not! Yes things are bad and the future looks bleak but companies have adjusted to the slowdown now, stocks are cheap and earnings are good. This is a correction,,,,for now. Besides that, which money manager wants to see a crash while on holidays!! I think this is one of the reasons why they always seem to be in the September/October time frame! People have come back from holidays, its the end of summer, kind of depressing,,,,that is until you start thinking about Christmas!!!! Anyhow, for now, “this expiration cycle” is now 11 days away from ending so were likely near the end of this downturn. Pessimism is getting extreme and the market is technically extremely oversold here so were at least close to a bounce starting anytime!!! There are low expectations for the employment report tomorrow so as I said yesterday it will be interesting to see how the market reacts to the number.

At the close the Dow was down -513.00 points to 11384.00, S&P 500 -60.00 points to about 1200.00, S&P 100 -23.00 points to 544.00 and the Nasdaq Composite -137.00 points to about 2556.00. Oil really sold off today closing down about -$5.20 today to close around the $86.83 level.

Jobless Claims were down by -1,000 last week to 400,000. The number was basically what economists were looking for. Claims from two weeks ago were revised up to 401,000 from an original reading of 398,000. The average of new claims over the last four weeks,fell by -6,750 to 407,750, the lowest level since mid-April. The monthly average smoothes out volatility in the week-to-week data. Continuing claims increased by +10,000, to 3.73 million. A total of 7.57 million people received some kind of government benefit in the week ended July 16th, down -75,192 from the prior week.

Wednesday, August 3, 2011 4:03 p.m est.

The market started the day slightly higher but a large sell program took it down midday with the Dow off -170.00 points, S&P 500 -20.00 points and the Nasdaq Composite -50.00 points but the market did turn around once again to move into the green finishing the day similar to yesterday but on the upside. Unfortunately the Dow didn’t match its record of 9 consecutive days down by closing higher today. Its too bad because it was last done in 1978!! At the close the Dow was up +30.00 points to 11896.00, S&P 500 +6.00 points to about 1260.00, S&P 100 +3.00 points to 568.00 and the Nasdaq Composite +24.00 points to about 2693.00. Oil continued taking a hit down about -$2.60 today to close around the $91.00 level.

Payrolls at companies increased by a quiet +114,000 in July, suggesting modest job growth continued in the fragile economy, according to the ADP employment report. It was the 18th straight month of job growth in the report. Economists were predicting the figure would rise by +85,000 in July after increasing by a revised +145,000 reported in June however there has been a huge discrepancy between these numbers and the actual employment numbers. There were modest downward revisions to earlier months data totaling +12,000. June’s gain was initially reported as 157,000. The ADP report covers only private-sector employment, and not government jobs. Economists are looking for a gain of +75,000 in total employment in July, with the nation’s unemployment rate pegged to remain steady at 9.2% on Friday’s employment report.

Outplacement firm Challenger Gray and Christmas said planned layoffs surged by 59% to 64,414 in July and is the highest monthly total since March 2010. The bulk of the planned job cuts occurred in just five companies: Merck, Borders, Cisco Systems, Lockheed Martin and Boston Scientific.

The Institute for Supply Management on Wednesday said its service-sector index fell to 52.7% from 53.3% in June. Economists expected the services index to rise to 53.5%. While readings over 50% indicate more firms are expanding than contracting, the index is sharply lower compared to a recent peak of 59.7% in February. The new orders index dropped -1.9 percentage points to 51.7% and the backlog of orders index declined -4.5 percentage points to 44.0%. Thirteen of the 18 service sectors tracked by ISM reported growth. The service sector areas covered are areas such as health, finance and entertainment which accounts for three quarters of all economic activity and employs about four of every five workers.

Factory orders fell -0.8% to $440.7 billion in June, May's data was downwardly revised to show +0.6% growth instead of +0.8%. Economists had anticipated a -0.9% drop in June. Inventories, up twenty of the last twenty one months, rose +0.2% to $594.4 billion, the highest since the series started in 1992. June durable-goods orders was revised to show a -1.9% fall instead of the initially reported -2.1% decline.

Tuesday, August 2, 2011 4:03 p.m est.

Yesterday the market started the day strongly as it was announced there was a debt deal made but by the close it was down slightly. Today the selling continued as there was more negative economic data out indicating that this Friday’s employment report may be weaker than expected. It wasn’t that bad though until the final hour where selling really took hold. The market basically closed at its lows with the Dow off -267.00 points, S&P 500 -33.00 points and the Nasdaq Composite -76.00 points.

At the close the Dow was down for the eighth day -266.00 points to 11867.00, S&P 500 -33.00 points to about 1254.00, S&P 100 -14.00 points to 565.00 and the Nasdaq Composite -75.00 points to about 2669.00. Oil has been lower the past couple days closing down about -$1.10 today to close around the $94.00 level.

July is finally over which is good news, considering the market was off by more than -2%. It's now been three straight months of negative returns for the market, which hasn't happened since November 2008. Unfortunately, seasonality data may not offer much hope in the end as we have started August just as bad. Over the last 30 years, we find that August tends to be a very mediocre month overall though. In fact, its one of the lowest for rallies only up about .50%, the fourth lowest of all the months. So far its looking like this month will be like that already down -3% and its only the second day of the month!! We’re pretty oversold here so it will will be interesting to see if we start bottoming out here, I would suspect that the employment report on Friday may provide a reason for a turn even if its is bad as we are seeing rumor selling now. September has historically been the worst month, on average, over the past 30 years. Therefore, when you look at two-month time frames, the August-September period shows the lowest average return. While the median return and percent positive of this period aren't the lowest, they're still less than impressive compared to other time frames. However, four of the last five years has seen the August-September period up about +3.5%.

The Income of workers rose slightly in June, but they spent less and saved more at the same time that consumer prices fell, according to government data. Personal income increased a seasonally adjusted +0.1% on the month, the smallest gain since last November. Spending by consumers, however, dropped -0.2% to mark the first decline in nearly two years. Adjusted for inflation, personal consumption fell less than -1% in June. As a result, the individual savings rate for June climbed to the highest level of 2011, +5.4% of disposable income, up from +5% in May. Inflation, meanwhile, also declined in June based on the latest reading from the personal consumption expenditure price index. The index decreased -0.2%, likely reflecting a drop in oil prices. Yet the core PCE, which excludes volatile food and energy costs, rose +0.1%, suggesting prices for many other consumer goods remain elevated. Economists had forecast +0.1% increases in both personal income and consumer spending for June. The government also revised data on consumer spending in May to show an increase of +0.1%. Personal income for May was revised down to an +0.2% increase instead of an originally reported +0.3%. Consumers’ spending ranks as the single biggest contributor to expansion in the economy, accounting for as much as two-thirds of growth. Yet consumer spending barely rose in the second quarter, up a measly +0.1%, in a reflection of the weakened state of the economy.
Yesterday it was reported that the Institute for Supply Management's manufacturing gauge in July dropped -4.4 points to 50.9%, barely staying above the 50% no-change line and coming in below economists forecast's of 54.3%. The new orders index fell into negative territory, and indexes for prices and employment in particular saw big drops.

Outlays for Construction projects rose +0.2% in June. The gain was in line with expectations. Outlays are down -4.7% compared with a year earlier. Spending on private construction paced the increase, rising +0.8% compared with a +0.3% gain in May. Residential construction fell -0.3%. Non-residential construction rose +1.8%. Spending on public projects fell -0.7% after remaining flat in May. By itself, the data suggests little revision to second quarter GDP. The government assumed a +0.3% rise in construction spending in its initial estimate of second quarter growth. The economy grew at a sluggish +1.3% pace in the second quarter.

Friday, July 29, 2011 4:03 p.m est.

Funny thing, Apple has more cash on hand right now than the government with $75 billion and the government $73 billion! Maybe we need to see them take over, Iphones for everyone in government!!!!!

Treasury bills are now in question with regard to safety which really should be unthinkable! These are the gold standard of investment safety and quality but the U.S. Treasury bill is being questioned with regard to risk by investors. According to The Wall Street Journal: "As gridlock continues in Washington, many in the market are scrambling to figure out which debt would be most in danger of defaulting and a possible candidate, the Treasury bill that matures August 4th."
The market was looking to open lower once again as Globex futures were selling off after a vote by the Republicans fell through but when second quarter GDP came in much worse than expected it fell even more. Lows were seen in the first few minutes of trading with the Dow off -150.00 points, S&P 500 -17.00 points and the Nasdaq Composite -40.00 points but when it looked like a deal may come through the market rallied taking it into the green with the Dow up +2.00 points, S&P 500 +2.00 points and the Nasdaq Composite +15.00 points. Unfortunately that fell through and people didn’t want to hold for the weekend so it was sold again closing lower.

At the close the Dow was down -97.00 points to 12143.00, S&P 500 -8.00 points to about 1292.00, S&P 100 -4.00 points to 581.00 and the Nasdaq Composite -10.00 points to about 2756.00. Oil was sharply lower today as it makes its way back to the mid $90’s closing down about $1.50 to close around the $96.00 level.

Gross domestic product expanded at only a +1.3% annual rate in the second quarter, after a downwardly revised +0.4% gain in the January-March quarter. Economists had forecast GDP growing at a +1.6% rate in the second quarter from a previously estimated +1.9% rate in the first quarter. This was the weakest six months period since the recovery began in the second quarter of 2009. Growth in the second quarter was held down by weak consumer spending, which only expanded at a +0.1% rate. State and local government spending was also weak in the quarter. Inflation, as measured by the core personal consumption expenditure index, rose +2.1% in the second quarter, the fastest pace since the fourth quarter of 2009.

The Chicago PMI slowed to a reading of 58.8% in July from 61.1% in June, though that marked the 22nd month the indicator was above the 50 line indicating expansion. Economists had expected a 61.9% reading. Indexes for production and new orders fell, while order backlogs bounced back into positive territory. The employment index dropped sharply, to 51.5% from 58.7%.

A gauge of consumer sentiment fell to 63.7% in July, the lowest level since March 2009 from 71.5% in June, according to media reports of the gauge from Thomson Reuters/University of Michigan. A preliminary reading for sentiment in July was at 63.8%. Economists had expected a final July reading of 64.3%. Washington's stalled debt negotiations and a tough employment environment have been taking a toll on consumer sentiment, analysts say. The sentiment reading, which covers how consumers view their personal finances as well as business and buying conditions, averaged about 87% in the year before the start of the most recent recession.

Thursday, July 28, 2011 4:03 p.m. est.

Yesterday the market sold off pretty good as the talks about the debt increase were non existent and got worse after the Fed reported a weakening economy midday.

The Dow closed near its lows of -200.00 points, S&P 500 -27.00 points and the Nasdaq Composite -75.00 points. Today the market started a bit lower but turned higher as short term it is quite oversold. The Dow saw highs of +80.00 points, S&P 500 +12.00 points and the Nasdaq Composite +40.00 points. By midday those gains started to slip however and the market turned into the red to close near its lows of the day except the Nasdaq which was able to squeak out a gain.

At the close the Dow was down -62.00 points to 12240.00, S&P 500 -4.00 points to about 1301.00, S&P 100 -2.00 points to 584.00 and the Nasdaq Composite +1.00 points to about 2766.00. Oil was lower on the day but not by much closing down about $.30 to close around the $97.00 level.

As we approach the weekend and no deal is being made more and more commentators are talking about another 2008 crash. Yes it is a bad thing but the country actually won’t go into default for another 10-days after the August 2nd deadline and may even be extended more after that as revenues have been strong of late for the government. Even though were seeing both sides still fighting it out Obama could easily put through legislation that will allow the country to operate anyhow, but of course the media is ignoring that fact because its not exciting! S&P would then likely put another threat out about a downgrade but for them to actually do it would likely take another month, just in time for that fall crash period!!! We are on a slippery slope towards that but many things are different now with the Fed providing support and the economy is already in the dumps. One big difference is that earnings are much better than back then so there is support there. Right now this seems more like the April/May 1979 t-bill default which only caused a .06 % change in interest rates. You would think that if a default was coming interest rates would already be on the rise but instead they’re actually moving down as people are looking for safety. The stock market then was pretty much in a trading range, the rest of the year and that’s likely what we’ll do now. This default in the end is going to be bad for stocks but for now it will likely be contained as the Fed will do anything to keep interest rates low. Eventually if bonds do take a hit, interest rates would likely rise to 4% on the ten year and 5% on the 30 year and that could see the market down about -10% but not likely in one day!

Jobless Claims dropped by -24,000 to 398,000 but Initial claims from two weeks ago were revised up to 422,000 from an original reading of 418,000. Economists had expected new requests for jobless benefits to fall to 413,000 in the latest week. The average of new claims over the past four weeks fell by -8,500 to 413,750, also the lowest level since April. The monthly average is seen as a more accurate gauge of labor trends because it irons out volatility in the week-to-week data. Economists say claims would have to continue to fall to indicate improvement in hiring trends. Until the past week, jobless claims had topped the key 400,000 level for four months after hitting a three-year low of 375,000 in late February. Applications usually fall far below 400,000 in a period of rapid hiring. Continuing claims fell by -17,000 to 3.7 million.

Pending home sales rose +2.4% in June, driven by gains in the West and the South, according to an index released by the National Association of Realtors. The pending home sales index rose to 90.9 in June from 88.8 in May and was +19.8% above June 2010 levels, which was the low point following the expiration of the home buyer tax credit. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing. Cancellations led to a decline in the June existing-home sales report despite the strength in the May pending home sales report.

Yesterday it was reported that weaker orders for airplanes and automobiles translated into a steeper-than-forecast -2.1% decline in durable-goods orders in June, the Commerce Department. It was the second large drop in the past three months for durable-goods orders, raising fears that manufacturing is running out of steam after leading a tepid recovery over the past two years. Without a strong manufacturing sector, it is hard to see how forecasts of a strong second-half recovery can be realized. The decline in orders in June followed a revised +1.9% rise in May and a -2.5% drop in April. The decline was a surprise to economists surveyed as they had forecast a flat reading.

It was soft labor markets and weak real estate offset a slight boost to consumer spending and an encouraging start to the tourism season, the Fed reported in its Beige Book on the U.S. economy. The Beige Book, which is based on information collected on or before July 15th, said growth has slowed in the majority of districts, particularly those nearest the Atlantic seaboard, with the Minneapolis district hurt by the now-concluded state government shutdown. That represents a slightly worse result than the June 8th Beige Book, when seven districts grew at a steady pace. It confirms economic data showing poor growth from April to June. Consumer spending rose, helped by “modest” growth of non-auto retail sales, which the report said may have been the result of falling gas prices. Auto sales slowed, however, with inventories still lean due to Japanese supply chain disruptions. The Labor Department reported that the unemployment ticked up to 9.2% in June. Price pressures moderated somewhat though some firms have been able to pass on some cost increases to customers, the Beige Book said.

Tuesday, July 26, 2011 4:03 p.m. est.

Yesterday the market was lower on worries about the country defaulting in seven days as both sides are still far away from a deal. It was interesting to hear commentators over the weekend saying that if something wasn’t done by Sunday night the world markets would collapse! That’s when you know its not going to happen!!! At its worst the Dow saw lows of -140.00 points, S&P 500 -14.00 points and the Nasdaq Composite -40.00 points but by the close they were cut more than in half. Today the pressure was still there so it started down again with the Dow seeing lows of -100.00 points, S&P 500 -8.00 points and the Nasdaq Composite -10.00 points. Tech stocks were strong though with Apple moving over the $400 level so the market came back with the S&P and Nasdaq actually moving into positive territory going into the final hour.

Unfortunately it didn’t hold because at the close the Dow was down -92.00 points to 12501.00, S&P 500 -5.50 points to about 1332.00, S&P 100 -2.50 points to 597.00 and the Nasdaq Composite -3.00 points to about 2840.00. Oil was lower on the day to start but closed higher in the end up about +$.45 to close around the $99.50 level.

There has been significant progress made on overseas bailouts, even as the debt debate here in America has been inching along but one thing that has helped the market with support has been earnings. On the whole, second-quarter earnings have been very strong so far but investors are still finding reasons to doubt them and that may be because some companies are seeing a slowdown on the way. Still you would think that better than expected earnings would start a rally but one of the reasons may be that confidence in the economy is abysmal because the jobs market is so bad. "Nationally, the average duration of jobless in America shot up to 39.9 weeks as of June, or about 10 months, which is a record high since 1948." "A year after the official end of the recession, the percentage of the long term unemployed (out of work for 27 weeks or more) now stands at 44.4% (or 6.3 million people) of the total jobless, up from the 43.1% level last June. Those out of work for a year or longer jumped to around 4.4 million, or 30.3% of all unemployed." What's more worrisome is that: "more than two million (2,039,000) Americans (over 14% of the unemployed, up from 9% in 2010) have been out of work for 99 weeks or longer. Huffington Post reported that this is the first time since the 99 week statistic has been tracked that it has exceeded the two million mark." The Huffington Post (not known as a conservative publication) is even saying that "Hope is gone. The future is terrifying."

There are plenty of workers to choose from for any rare job opening. According to Econmatters.com: "The elevated long-term unemployment could be partly attributed to the fact that there are 4.7 unemployed workers in May for every job available, i.e. 13.9 million jobless competing for 3.0 million job openings. The ratio was the same as in April and has never risen above 4-to-1 for nearly 2.5 years, whereas in the 2001 recession, the ratio never exceeded 2.8-to-1, according to the Economic Policy Institute." With ongoing debt worries and the economy not moving the great earnings are being offset so its understandable that the market is falling but not by that much so we continue in this sideways action we’ve basically been in since March! We are near the top of the range right now so If we actually see a default in seven days we could still see a significant correction start however right through support!

This morning it was reported that Consumer Confidence rose in July on improved expectations, the Conference Board reported. The nonprofit organization said its consumer-confidence index increased to 59.5% in July from a downwardly revised 57.6% in June. Economists had expected the July reading to decline to 55.3% on concerns about the debt ceiling. Generally when the economy is growing at a good clip, confidence readings are at 90% and above. The expectations index rose to 75.4% in July from 71.6% in June, while the present-situation gauge fell to 35.7% from 36.6%. "Overall, consumers remain apprehensive about the future, but some of the concern expressed last month has abated," said Lynn Franco, director of the Conference Board's consumer research center, in a statement.

Sales of new single-family homes fell -1% in June to an annual rate of 312,000, as purchases in the Northeast dropped to the lowest level on record, the Commerce Department reported. Economists had expected housing starts to increase to an annual rate of 325,000 on a seasonally adjusted basis. Sales for May were revised slightly lower to an annual rate of 315,000. The median sales price jumped +5.8% to $235,000 last month from $222,400 in May. At the current sales pace, there was a 6.3 months supply of new homes. The number of newly completed homes on the market at the end of June, meanwhile, fell to a record low of 164,000.

Friday, July 22, 2011 4:03 p.m. est.

It was interesting when earlier in the week that Steve Wynn a well known casino/resort owner in Las Vegas came out publicly slamming the Obama administration saying that doing business in America today is the worst he has ever seen in his life,,, and he’s a Democrat!! At first I thought it was a one time deal but last night Caterpillar reported earnings that were worse than expected and they said that China is slowing down but their main point was saying that the Obama administration basically sucks for business!!! This could turn out to be quite interesting for Obama if more and more companies start talking....

The market was lower today on profit taking, Caterpillars poor earnings and the fact that the GOP came out said that in reality the talks with the Obama administration about the debt crisis are non existent! The Dow saw lows of -90.00 points, S&P 500 -8.00 points and the Nasdaq Composite -5.00 points. The market became mixed midday however as tech stocks were strong on decent earnings from AMD but the Dow was still in the red but the S&P 500 saw slight gains of +3.00 points and the Nasdaq Composite +30.00 points.

At the close the Dow was down -43.00 points to 12681.00, S&P 500 +1.22 points to about 1345.00, S&P 100 +.35 points to 602.00 and the Nasdaq Composite +24.00 points to about 2858.00. Oil was higher again up about +$.75 to close around the $100.00 level.

The other night I saw that movie Larry Crowne with an e as he said. It was a great movie about life in America today. In the movie he is a regular middle aged man working at Umart ala Walmart, and gets fired for not having a college education. His house has a bigger mortgage than what’s its worth so its going to be foreclosed on but he's optimistic. As time goes on he becomes discouraged however as he can't find a job anywhere! In the end he ends up gong to college and learns that its easier to walk away from paying his mortgage instead of even attempting to pay it. It was a great example of the problem in America today.

According to Bloomberg; "The U.S. homeownership rate has fallen below 60% when delinquent borrowers are excluded, a sign of the country’s move toward a “rentership society.” Meanwhile, The Las Vegas Review Journal (LVRG.com) reports: "The vast majority of Americans (77%) are stressed by at least one thing at work, finds the Harris Interactive-Everest College Work Stress Survey." According to the report: "The most common issues are: low pay, commuting, unreasonable workload and concern over being fired or laid off." Other reasons for stress are "annoying coworkers - difficulty with a boss, poor work-life balance and lack of opportunity for advancement."

Bloomberg added that the national renter rate "which stood at 66.4% on March 31st, would be 59.7% without an estimated 7.5 million delinquent homeowners who may be forced into renting, according to Morgan Stanley analysts led by Oliver Chang. The lowest homeownership rate on record was 62.9% in 1965, the first year the Census Bureau began reporting the data." According to the report: "The homeownership rate reached an all-time high of 69.2% in 2004." While many Americans don't want to rent a home forever, the rate of worrying remains alarming. According to LVRG.com: "Concerns over low pay and job security are consistently one of the top stressors for Americans. In most regions of the U.S., 16 percent of Americans listed low pay as their top stressor, and concerns over job security were a close second. For example, 13 percent of college graduates ranked losing their job as the biggest stressor, which is in line with Americans without college degrees." This may be one reason so many are looking to change careers. In many cases, the move toward a new career seems to be leading toward healthcare, which is viewed as a stable field.
It's increasingly clear that two major trends in America have been reversed. First, homeownership was a pillar of society, traditionally being optimistic and would do anything to own a home! Second, Americans have been relaxed about life in general, given the history of a decent economy, despite an occasional recession. The fact that people are moving toward renting their homes now, coupled with the rise of stress, in my opinion is a significant set of changes.

Thursday, July 21, 2011 4:03 p.m. est.

Yesterday the market closed down a little as it was basically a quiet day but today it started the day strongly higher after it was announced that there was a deal made with France and Germany over Greece having a “selective default.” Not sure how that’s good news but more of an excuse for the bulls to run. When economic data came out revealing that Jobless Claims continue to get worse the market ignored it and focused more on the fact that the Philly Fed didn’t sneak further into the red so the Dow saw highs of +190.00 points, S&P 500 +21.00 points and the Nasdaq Composite +40.00 points. It’s obvious the computers are in control once again and that were likely just going to see volatility pick up here once we reach an overbought level.

At the close the Dow was up +153.00 points to 12724.00, S&P 500 +18.00 points to about 1344.00, S&P 100 +8.00 points to 602.00 and the Nasdaq Composite +20.00 points to about 2734.00. Oil is getting closer to that $100 level once again up about +$.55 around the $99.00 level.

Factory activity rebounded in the Philadelphia region in July slightly but for traders it was good enough. The Philly Fed’s business activity index rose to +3.2% in July from a negative -7.7% in June. This almost completely retraces the steep drop in June. The index was +3.9% in May but as high as +43.4% in March, which was a 27-year peak.

The decline in June raised fears that the manufacturing sector was on the verge of contracting after leading the economic recovery over the past two years. The increase in the Philly Fed index was larger than expected as economists forecast the index would remain a negative -2.7%. The new orders index rose to +0.1% from negative -7.6% in June. The shipments index rose slightly to +4.3% in July from +4.0% in the previous month. The employment index increased to +8.9% in July from +4.1% in June. The average workweek fell sharply to negative -5.4% in July from +1.9 in June. Price pressures continued to ease. The prices paid index fell to +25.1% in July from +26.8% in June after dropping by 22% points in June. The prices received index fell to +1.1% in July from +4.4% in June.

Jobless Claims rose last week by +10,000 to a seasonally adjusted 418,000. Economists has expected new requests for jobless benefits to fall to 403,000. Claims in the prior week were revised up to 408,000 from an original reading of 405,000. The four week average fell -2,750 to 421,250 while continuing claims decreased by -50,000 to 3.7 million. A total of 7.33 million people received some kind of state or federal benefits.

Economic activity should slowly expand in coming months, the Conference Board said as it reported that its index of leading economic indicators grew +0.3% in June, matching estimates from economists. "The strengths among the leading indicators have been balanced with the weaknesses in recent months," a Conference Board economist said in a statement. Among the 10 indicators that make up the LEI, five made positive contributions in June, led by the real money supply. The largest negative contribution came from stock prices. In May, the LEI rose +0.8%. The LEI is a weighted gauge of 10 indicators that are designed to signal business cycle peaks and troughs.

House prices rose a seasonally adjusted +0.4% in May, marking the second straight increase, the Federal Housing Finance Agency said. Prices for April were revised down to a +0.2% increase from an original reading of a +0.8% gain. In the past 12 months, prices have fallen -6.3%, and are they down 19.6% from an April 2007 peak. In May, prices rose the most in the Mountain region, up +2.0%. The steepest decline occurred in the West South Central part of the U.S. - Arkansas, Texas, Louisiana and Oklahoma - where prices fell -1.0%. FHFA data is based on sales information compiled by the large mortgage firms Fannie Mae and Freddie Mac.
Yesterday it was reported that Sales of existing homes slipped in June to a seven-month low, with a trade group attributing the weak economy and a spike in cancellations for the surprise downturn. The National Association of Realtors reported sales of single-family existing homes fell -0.8% to a seasonally adjusted annual rate of 4.77 million from 4.81 million in May. Economists had anticipated a 4.9 million rate of sales. The data caught economists by surprise in part because pending homes sales had gained +8.2% in May. Lawrence Yun, the chief economist of the NAR, said "a very weak economy led to weak sales," and cancellations jumped to 16% from just 4% in May. The NAR also downgraded its 2011 sales projection to 5 million from a range of 5.1 million to 5.2 million. The median existing home price was $184,300, an increase of 0.8% from June 2010.

Tuesday, July 19, 2011 2:20 p.m. est.

According to Reuters: "Global consumer confidence fell in the second quarter to its lowest level in a year and a half as an uncertain economic outlook, a deepening euro zone debt crisis and rising inflation made people more cautious, a survey showed on Sunday." The report added: "Confidence dipped in China, due to rising inflation, as well as in the Middle East where an initial bounce in consumer morale after social uprisings in the first quarter gave way to caution as the political outlook became unclear and rising prices curbed spending power. Egypt and Saudi Arabia posted the biggest falls from the first quarter in Nielsen's ranking of confidence in 56 countries worldwide. Confidence was lowest in euro zone countries engulfed by a deepening debt crisis with Greece coming bottom of the global ranking . Portugal, Ireland, Spain and Italy were also in the bottom 10 although while confidence fell from the first quarter in Spain and Italy it rose slightly in Portugal and Ireland."
The market popped higher today as worries about Europe’s banks not really passing their stress tests and the debt level/budget talks seemed to suddenly be going well!! The Dow saw highs of +210.00 points, S&P 500 +21.00 points and the Nasdaq Composite +60.00 points just after President Obama came out and said that it looks like the two sides are very close to a deal! Yeah,,, President Obama saves the day again or should I say the Republicans waffled once again! Nonetheless, it appears the game of politics continues on and it won’t likely change until there is a real crisis. Of course this is summer and everyone is gone until late August so no one wants to react now but with fall coming it seems like a perfect time for S&P or Moody’s to come out and lower America’s debt rating! If that occurs you could see a quick drop for sure at least for a day before Obama’s political engines put the fire out with more promises! Greece’s default, excuse me, near default, has taken about 3 years and running, so don’t expect America’s to be much different! Yes we could see a swift correction but it will likely be only for a short time before it bounces back and then the real volatility will kick in.

New construction of Homes jumped in June to their highest level in five months, the Commerce Department said. Starts rose +14.6% in June to a seasonally adjusted 629,000 annualized units, stronger than the 580,000 pace expected by economists. This is the highest level of starts since January. Starts of new single-family homes rose by +9.4% to 453,000 in June, while starts of large apartment units surged +31.8%% to 170,000. Building permits, a leading indicator of housing construction, rose +2.5% to a seasonally adjusted annual rate of 624,000. This is the highest level of permits since December.

Monday, July 18, 2011 4:03 p.m. est.

The market started the day on the downside as worries about Europe’s banks not really passing their stress tests and the debt level/budget talks seemed to be going nowhere. There was also the fact that Moody’s came out and lowered their GDP numbers for the last quarter. The Dow saw lows of -190.00 points, S&P 500 -19.00 points and the Nasdaq Composite -50.00 points. Of course the market turned around midday as there is no volume right now cutting losses in half by the close. This is looking like it will be another quiet sideways trading week as everyone is now expecting nothing from Obama and the Republicans until 1159:59 August 1st so they can claim they saved the day!

At the close the Dow was down -95.00 points to 12385.00, S&P 500 -11.00 points to about 1305.00, S&P 100 -4.00 points to 584.00 and the Nasdaq Composite -24.00 points to about 2766.00. Oil was lower as it appeared that a slowdown may be on the day off about -$1.30 around the $96.00 level.

Builder confidence in the market for newly built, single-family homes rose two points to 15% in July on the National Association of Home Builders/Wells Fargo Housing Market Index. The gain offsets much of June's three-point fall, but its still the ninth time out of 10 the index has held to the same three-point range. "We view the upward movement in the July HMI as a correction from an exceptionally weak number in June that was at least partly attributable to negative economic news and the close of a disappointing spring selling season," said NAHB Chief Economist David Crowe in a statement. The seasonally adjusted index is designed so that any number over 50 is considered "good" which hasn't been the case since April 2006.

Friday, July 15, 2011 4:03 p.m. est.

Today was expiration and it was nice to see another fully profitable expiration cycle! It was interesting this morning that the market ignored the S&P warning on U.S. debt completely although not surprising as politicians will likely continue to play their games until the final hours so they can claim to have saved the day! Instead they focused on good earnings from Google and Citigroup's results and started the day higher. Economic data wasn’t that bad also so the Dow saw quick highs of +65.00 points, S&P 500 +9.00 points and the Nasdaq +30.00 points. Of course worries about the budget/debt crisis and now S&P threatening to lower the rating on American bonds even if they get the budget in order and get the debt level set higher started traders thinking and they sold the market off with the Dow seeing lows of -40.00 points, S&P 500 -2.00 points and the Nasdaq Composite -1.00 point but because it is expiration the market came back to close near the highs of the day.

At the close the Dow was up +43.00 points to 12479.00, S&P 500 +7.00 points to about 1316.00, S&P 100 +3.00 points to 588.00 and the Nasdaq Composite +27.00 points to about 2790.00. Oil was also higher rallying about +$1.80 around the $97.50 level.

The cost of living for people fell last month for the first time in a year, mainly because of a drop in gas prices. The consumer price index fell a seasonally adjusted -0.2% in June. Energy costs sank -4.4%, the largest decline since December 2008 as the price of gas and household electricity decreased. Gas prices fell -6.8% and electricity declined -1.6%, the biggest drop in 14 years. The cost of food rose +0.2%, though it was the smallest monthly increase in 2011. Consumer inflation has climbed an unadjusted +3.6% over the past year, largely because of the surging cost of gas and many other commodities. The 12-month increase in consumer inflation was as low as 1.1% as recently as November. The so-called core rate of inflation, which excludes food and energy, climbed a higher than expected +0.3%.

Manufacturers in the New York region said business activity had weakened slightly in early July, according to a report released by the New York Fed. The Empire State index remained below zero for the second straight month, rising only to negative -3.8% in July from negative -7.8% in June. The index has fallen dramatically the past three months after hitting a 12-month high of 21.7% in April. Readings below zero indicate more firms said business was worsening than said it was improving.
In July, 26% of firms said business got worse. At the same time, 23% said business improved. The small increase in the index was well below expectations. Economists expected the headline index to rebound to 5% in July. The new-orders index fell to negative -5.5% from negative -3.6% in the prior month. Executives at the manufacturing firms were more hopeful about a turnaround. The future-business index rose almost 10 points to 32.2%. The future-employment index rose to 2.2% in July from negative territory in the prior month. in July, the prices-paid index fell to 43.3% from 56.1% in June. The index the difference between those saying prices are higher and those saying lower has fallen a cumulative 27 points in the past two months and is now at its lowest level since January. The prices-received index also declined, to 5.6% in July from 11.2% in June.

Industrial production rose +0.2% in June, the first rise in two months after supply chain disruptions following the earthquake in Japan, the Fed reported. Economists had anticipated a stronger growth rate of +0.5%. The growth in June was led by a +0.9% increase in the volatile utilities component, which largely reflects air conditioning usage, and manufacturing output didn't budge at all. Capacity utilization stayed at 76.7% for a second month, slightly below economist expectations of 76.9%. For the second quarter, industrial production rose at a slender 0.8% annual rate.

Thursday, July 14, 2011 4:03 p.m. est.

The market started the day with decent economic data so the Dow saw quick highs of +90.00 points, S&P 500 +10.00 points and the Nasdaq +25.00 points but as worries about the budget/debt crisis and Moody’s threatening to lower the rating on American bonds if it isn’t resolved started to hit home so selling took hold with the Dow seeing lows of -80.00 points, S&P 500 -11.00 points and the Nasdaq Composite -45.00 points going into the final hour.

At the close the Dow was down -55.00 points to 12437.00, S&P 500 +9.00 points to about 1309.00, S&P 100 -3.00 points to 585.00 and the Nasdaq Composite -34.00 points to about 2763.00. Oil sold off pretty good about -$2.30 around the $95.75 level.

Jobless Claims fell -22,000 to a seasonally adjusted 405,000 last week and is the smallest amount of new applications since mid-April. The drop in claims helped the market to start the day higher originally. Economists expected new requests for jobless benefits to total 420,000. Claims in the prior week were revised up to 427,000 from an original reading of 418,000. The four week average meanwhile, dropped a lesser -3,750 to 423,250. The four-week average is seen as a more accurate a barometer of labor trends because it smoothes out week-to-week volatility in the data. The decline in last week’s claims would have been even steeper if not for a government shutdown in Minnesota triggered by a budget standoff. Minnesota said 11,500 state workers filed applications for jobless benefits last week. Continuing Claims increased by +15,000, to 3.73 million and 3.83 million people received extended benefits.

The Producer-Price index fell a seasonally adjusted -0.4% last month, marking the first decrease in one year and matched the forecast of economists. Yet the core rate of wholesale inflation, which strips out the volatile food and energy categories, rose a higher-than-expected +0.3%. About half the increase stemmed from higher prices for light trucks. The core index is usually viewed by investors and the Fed as a better gauge of inflationary pressure. Energy costs sank -2.8% last month, mostly because of falling gasoline prices. The wholesale cost of residential electric power also fell a record -2%. Still, wholesale energy costs are up an unadjusted +20% over the past year. Until oil prices eased in May, the surging cost of petroleum had fueled a sharp increase in wholesale rates through last fall and this spring filtering into higher prices for a variety of other products. As a result, wholesale prices have risen an unadjusted +7% in the past 12 months. The core rate is up a much smaller +2.4%, however. Wholesale food costs, meanwhile, rose +0.6% last month. The price of fresh fruit and melons jumped almost +12% and accounted for more than half of the increase in the food category. Over the past year wholesale food costs have climbed +7.4%.

Retailers increased a slight +0.1% in June, better than economists expected but also further evidence of the reluctance of consumers to spend. The slight increase in June sales was unexpected. Economists expected sales to fall -0.2%. Retail sales excluding autos, gas stations and the building-materials segment, or what some economists call control-group sales rose +0.1% in June and is the smallest gain in this category since last July. Excluding a +0.8% rise in motor-vehicles sales, retail sales for the month were flat in June, in line with expectations. Sales at gas stations fell -1.3% as pump prices decreased. Excluding gasoline, sales rose +0.3%. Excluding autos and gasoline, sales rose +0.2% in June. Retail sales account for about half of total consumer spending and about a third of final sales in the economy. Economists don’t think that inflation-adjusted consumer spending for the first quarter will match the slow +2.2% rate in the first three months of the year.

Wednesday, July 13, 2011 4:03 p.m. est.

Here’s an interesting note: Did you know that last year Apple accounted for 20% of all retail sales in the U.S! You would think that the stock would be through the moon and if we didn’t have them what would the world look like!!!

Well I never thought I would say it but the U.S can now call itself Janarica! After hearing Ben Bernanke’s statement today about the strong possibility of Q3 it is evident that we are following the same path that Japan did a couple of decades ago! Since their housing bubble burst in 1988, they have been stimulating and stimulating their economy but it continues to get worse or remain flat. Just in the past year have their housing prices started to increase again! Of course their market rallied after every cash input but eventually it would move lower once again. Currently the Nikkei just moved below the 10,000 level the other day from a high of 39,000 in 1990 so obviously it doesn’t work!! Ron Paul actually said it best during the question/answer time after Bernenkes speech when he pointed out blatantly that the last $5 Trillion of stimulus or QE 1&2 hasn’t done anything for the economy and has only helped the banks and supported the stock market!

Before his speech the market was already going to head higher but it rallied more after it was announced that he would be providing more stimulus with the Dow seeing +170.00 points, S&P 500 +18.00 points and the Nasdaq +45.00 points. Rationality seemed to come into play though or likely more expiration related adjustments so the market lost most of its gains by the close of the day.

At the close the Dow was up +45.00 points to 12492.00, S&P 500 +4.00 points to about 1318.00, S&P 100 +2.00 points to 587.00 and the Nasdaq Composite +13.00 points to about 2795.00. Oil rallied hard afterwards also but ran out of steam only closing up about +$.50 around the $98.00 level.

While the Fed believes that the temporary shocks holding down economic activity will pass, the central bank is examining several untested means to stimulate growth if conditions deteriorate, including another round of asset purchases, dubbed QE3, Fed chairman Ben Bernanke said in remarks prepared for the House Financial Services Committee. Bernanke discussed three approaches to further easing in his prepared remarks. One option, Bernanke said, would be for the Fed to provide more "explicit guidance" to the pledge that rates will stay low for "an extended period." Another approach would be another round of asset purchases, or quantitative easing, or for the Fed to "increase the average maturity of our holdings." Finally, the Fed could also reduce the quarter percentage point rate of interest that it pays to banks on their reserves, "thereby putting downward pressure on short-term rates more generally." Bernanke was clear to stress that easing was not the only option under consideration and that the next Fed move could well be to tighten. At the moment, Fed officials see a recovery that "will likely remain moderate," Bernanke said, with the unemployment rate falling "only gradually." Inflation is expected to subside in coming months, he said.

Tuesday, July 12, 2011 4:03 p.m. est.

Overnight Globex futures were looking pretty poor as they were selling off once again as worries about Greece, Italy, America and now Spain remain in everyone's thoughts. By the open worries were kicked down the road so to speak so the Dow only saw lows of -5.00 points, S&P 500 -2.00 points and the Nasdaq Composite -5.00 points. From there the market became mixed and after the Fed minutes were released revealing a slight hint that there may be more stimulus highs were hit with the Dow seeing +70.00 points, S&P 500 +7.00 points and the Nasdaq +5.00 points. When Moody’s came out and downgraded Ireland to junk status selling began once again with the market finishing the day at new lows.

At the close the Dow was down -60.00 points to 12447.00, S&P 500 -6.00 points to about 1314.00, S&P 100 -3.00 points to 585.00 and the Nasdaq Composite -21.00 points to about 2782.00. Oil rallied for no real reason up +$2.25 around the $97.00 level.

The Trade Deficit jumped +15.1% in May to the highest level in almost three years, largely because of the increased cost of oil imports. The trade gap widened to a seasonally adjusted $50.2 billion from $43.6 billion in April and the biggest monthly deficit since October 2008. Economists had forecasted the trade deficit to rise to $44.5 billion. Imports increased +2.6% to $225.1 billion, while exports fell less than -1% to $174.9 billion. The bulk of the increase in imports was tied to the higher cost of oil, whose price hit a recent peak in May. Imports of crude oil and related petroleum products jumped to a seasonally adjusted $34.9 billion in May from $30.6 billion in April. The trade deficit in petroleum alone totaled $30.4 billion, the highest level since October 2008. Imports from China, meanwhile, climbed to $32.8 billion in May from $29.6 billion in April. As a result, the trade deficit with the rising Asian giant increased $3.4 billion to $25 billion in May. Country data is not seasonally adjusted. The U.S. also showed deficits of $11.3 billion with OPEC nations, $8.8 billion with the European Union, $6.3 billion with Mexico, $2.7 billion each with Canada and Saudi Arabia and $2.6 billion with Japan. Canada, Mexico and Saudi Arabia are the three largest exporters of petroleum to the U.S.

Monday, July 11, 2011 4:03 p.m. est.

According to The Wall Street Journal: "Moody's warned of "red flags" at 61 rated Chinese companies as it sought to provide transparency on its approach to ratings amid rising investor concern about corporate governance at such entities."

Government checks are about to run out. According to Reuters: "Close to $2 of every $10 that went into Americans’ wallets last year were payments like jobless benefits, food stamps, Social Security and disability, according to an analysis by Moody’s Analytics." And what lies ahead could be a major and very significant crisis as "By the end of this year, however, many of those dollars are going to disappear, with the expiration of extended benefits intended to help people cope with the lingering effects of the recession. Moody’s Analytics estimates $37 billion will be drained from the nation’s pocketbooks this year." This was one of the reasons the market started the week solidly on the downside and then there was talk about traders worried about the debt problem in America and that Italy is now starting to see signs of default. Portugal saw their bonds hit 12% overnight and the EU is now saying that Greece will have to “default on some of its bonds” so the the Dow saw lows of -190.00 points, S&P 500 -27.00 points and the Nasdaq Composite -70.00 points going into the final hour. The market came back a little before the end of the day but still remained down pretty good.

At the close the Dow was down -150.00 points to 12506.00, S&P 500 -24.00 points to about 1319.00, S&P 100 -11.00 points to 587.00 and the Nasdaq Composite -62.00 points to about 2800.00. Oil sold off closing down -$1.50 around the $95.00 level. As I mentioned on Friday we could see some selling this expiration traded week and viola there it is. The market has been buying time on all of this financial mess and its starting to build again so we could see more volatility if earnings that start after the bell don’t support the market!

Friday, July 8, 2011 4:03 p.m. est.

Sorry about that, I was out east this past week as my kids were at a Leahy (Natalie Mcmaster) fiddle camp and so I was sending out the commentary in-between flights but it never made its way out the door.

The market sold off today as the employment report out this morning was absolutely abysmal! Not only does Canada have a stronger dollar now but they are also creating amore jobs with +28,000 last month compared to only +18,000 here. What’s even more astronomical about that is Canada only has 10% of the population of America! The Dow saw lows of -150.00 points, S&P 500 -18.00 points and the Nasdaq Composite -45.00 points in the morning but buying in the final hour cut those losses.

At the close the Dow was down -62.00 points to 12657.00, S&P 500 -9.50 points to about 1344.00, S&P 100 -4.-0 points to 598.00 and the Nasdaq Composite -13.00 points to about 2859.00. Oil sold off all day as it indicates less spending closing down -$2.00 around the $96.50 level. The market was correcting two weeks ago as it appeared that the economy was slowing and when we had some “okay” data come out it rallied almost back to where it was so with this incredibly poor data, the question is are we headed back down again. That very well could be as this is an expiration traded week coming up and we have moved pretty fast to the upside creating an overbought condition. This is also the start of earnings season on Monday with Alcoa after the bell coming out. Earnings are expected to be pretty good overall however so we could see support there but if they’re bad and they’re outlooks are average it could be a hard week down. One thing for sure is that volatility will likely be strong!

The economy added jobs at a slower pace in June than in May, suggesting that the sudden slowdown in the economy might be longer-lasting and more severe than feared. Employment rose by only +18,000 in June, well below the +125,000 gain expected by economists. Even worse was that job gains in May were revised down to only +25,000 in May from the initial estimate of +54,000. Employment rose by an average of +215,000 per month from February through April but now has only averaged +22,000 over the past two months. The unemployment rate also moved higher to 9.2% in June from 9.1% in the previous month and is the highest level since December. Economists had expected the unemployment rate to remain steady. Average hourly earnings were flat in June and up only +1.9% over the past year. This is really dismal news as it means that the labor market remains far away from healthy and steadily getting worse! A healthy pace of job creation is loosely defined as somewhere over 250,000 jobs per month for several months and with all of this stimulus you would think it would be growing faster! It’s easy to say that it was because of the slowdown in Japan after its earthquake however President Obama said it best when he acknowledged that the employment data confirm policy makers have a “big hole” to fill on stimulating job growth. The question is what is he going to fill it with???

Thursday, July 7, 2011 10:30 p.m. est.

This morning the market has popped higher on average economic gains and even though the EU raised interest rates a quarter point this morning. Out of the gate the Dow is seeing highs of +80.00 points, S&P 500 +12.00 points and the Nasdaq Composite +30.00 points. Oil was up almost +$2.00 to be around the $98.00 level. It will be interesting to see if this gain lasts throughout the day as we have the big employment report out tomorrow and the market is still very overbought.

Companies in the private sector added +157,000 jobs in June, according to the Automatic Data Processing Inc's employment report. The gain follows a revised gain of just +36,000 in May, down from the initial estimate of a +38,000 gain. The June reading was well above analysts' expectations of a gain near +70,000. According to ADP, the goods-producing sector added +27,000 jobs in June, including +24,000 in manufacturing. The service sector added +130,000 jobs.

Meanwhile Jobless Claims fell by -14,000 to a seasonally adjusted 418,000 while claims for the prior week were revised up to 432,000 from an original reading of 428,000. Economists expected new requests for jobless benefits to drop to 424,000. The average of new claims over the past four weeks fell by -3,000 to 424,750. The four-week average is seen as a more accurate a barometer of labor trends because it smoothes out week-to-week volatility in the data. Continuing claims fell by -43,000 to 3.68 million.

Wednesday, July 6, 2011 12:00 p.m. est.

So far its been another quiet day so far with the Dow seeing lows of -30.00 points, S&P 500 -7.00 points and the Nasdaq Composite -10.00 points from a poor services report. Interestingly it seemed that traders decided to ignore the fact that China raised rates again and it looks like Portugal is now on the list for a default once again because it came back though going into lunch hour with the Dow seeing highs of +45.00 points, S&P 500 +2.00 points and the Nasdaq Composite going for its seventh up day in a row of +10.00 points. Oil was basically flat for the day around the $97.00 level.

According to Reuters: "China raised interest rates for the third time this year on Wednesday, making clear that taming inflation remains a top priority even as its vast economy gently eases." The report added: "The 25-basis-point increase in lending and deposit rates underscores China's quiet confidence that the world's second-biggest economy is resilient enough to take tighter monetary policy in its stride, and is not threatened by a hard landing that some investors fear." The real question, though, is whether the rising problem of municipal debt in China will be affected by the steady climb in rates, and what the repercussions may be in the next few months.
Its interesting how the market is just throwing this aside and is another example of what low volume will do for you because the reason the market has been down of late is due to Greek debt so you would think that another negative and Dollar positive item is that private bond holders of Greek debt have decided to leave in droves! Although they said they would participate in bond rollovers, they are quietly dumping out of all their Greek paper, leaving the EU holding a much bigger bag than they had anticipated. Looks like its time to start warming up the third saving run, or should we say third out!!!

The number of planned job cuts announced by employers rose by +4,297, or 11.6%, to 41,432 in June, according to the latest report from consultancy Challenger, Gray & Christmas. Though up for the second month, the pace of downsizing in the first half is at the lowest level since 2000. The Challenger data tracks with the separate job openings and labor turnover survey from the Labor Department, which says the number of layoffs and discharges as a percent of total employment in April was at a five-year low.

The Institute for Supply Management's services-sector index for June fell to 53.3% from 54.6% in May, the private group reported. Economists expected the ISM services index to fall to 54% last month. Any reading over 50% indicates that more firms are expanding than contracting.

Tuesday, July 5, 2011 4:03 p.m. est.

Not surprisingly the market started the shortened trading week lower with the Dow seeing lows of -40.00 points, S&P 500 -5.00 points and the Nasdaq Composite -10.00 points. Of course because of the strength we’ve been seeing of late by midday the market actually turned slightly positive for a bit. The final hour saw profit taking though so at the close the Dow was down -13.00 points to 12,570.00, S&P 500 -2.00 points to about 1338.00, S&P 100 -.65 points to 595.00 and the Nasdaq Composite +10.00 points to about 2826.00. Oil was higher again closing up about +$1.90 to close around the $97.00 level.

The market was up every day last week just +5% and the Nasdaq Composite up +8% over the last ten days Of course the likelihood of continued gains falls with each day that the market continues to go up. Its the law of averages and trader exhaustion taking their effect. That means that sometime this week, the odds of a pullback will likely occur and now reaching the point where traders have to decide if this is a bull market rebound or just the end of a nice end of the month move which is very cyclical every month or end of the quarter, pre-fourth of July seasonal run. What could move the market this week though is the employment report is out on Friday or even the Challenger job cut data, the ADP employment report, Jobless claims data, and the ISM non manufacturing report are all market moving.

One of the most reliable trading patterns in the market is based on the tendency of money managers to buy stocks at the turn of the month, the period that is the last trading day of the month and the first five calendar days of a new month. That's because new money comes into their hands and they have to put it to work. This pattern is a bit more reliable at the end of a quarter when managers are pressured to show good results on their quarterly statements and I’ll bet that's what happened in the last five days.

Some holidays, if they fall during a certain time can increase the likelihood of the market moving up also. Two of the more reliable ones are Memorial Day and the Fourth of July. This year, the period near Memorial Day gave us a +2% gain on the S&P 500 and the last five days, have been excellent with a move of +4% over five days. All in all this could easily be a down week with the strength of this past move and the fact that the market is so overbought! This should make for some interesting trading with the economic data coming out!

Friday, July 1, 2011 3:52 p.m. est.

The market popped higher once again this morning because there was basically no volume and no one trading as it is the last day of trading before the long weekend and Canadians are already celebrating Canada Day! The Dow crawled to highs of +170.00 points, S&P 500 +18.00 points and the Nasdaq Composite +45.00 points going into the final hour. I’m sure we’ll hold gains going into the close. Oil was actually down on the day closing with a loss of -$.65 to close around the $95.00 level. It will be interesting to see if these gains can hold next week when everyone gets back from vacation. I hope everyone has a wonderful Canada Day and Independence Day celebration, a good day to be thankful for incredible countries!!

Conditions for the nation's manufacturers picked up unexpectedly in June, easing fears of a double-dip. The Institute for Supply Management's factory index rose to 55.3% in June from 53.5% in May. The increase was a surprise as estimates were for the index to fall to 52.3%. The ISM index had plunged to 53.5% in May from 60.4% in April. Below the headline, the report was also firm. The key employment index improved to 59.9% in June from 58.2% in May. New orders jumped to 51.6% in June from 51.0% in the prior month. The price index fell to 68.0 from 76.5 in the prior month.

A gauge of consumer sentiment declined to 71.5% at the end of June from 74.3% in May, according to the Thomson Reuters/University of Michigan survey. Economists had expected a final reading of 72%. The sentiment reading, which covers how consumers view their personal finances, as well as business and buying conditions, averaged about 87% in the year before the start of the most recent recession.

Construction spending fell -0.6% in May to a seasonally adjusted $753.5 billion, worse than the -0.1% fall that economists had anticipated, as residential construction dropped -2.1%. That represents a -7.1% downturn from May 2010. April's data was downwardly revised to show a -0.6% drop.

Thursday, June 30, 2011 4:03 p.m. est.

Yesterday the market continued to rally with the Dow closing with gains of +73.00 points, S&P 500 +11.00 points and the Nasdaq Composite +11.00 points and it continued today with the Dow seeing highs of +170.00 points, S&P 500 +15.00 points and the Nasdaq Composite +40.00 points going into the final hour before pulling back a bit just before the close. For the week so far the market is up about +4%! This is quite remarkable but not surprising with volume this low and it being so oversold. Today was the last day of trading for June also and even though the rally has been strong the market is still down about -1.5% for the month. With the market going into a long weekend it will be interesting to see if those gains can be held as short term the market is quite overbought now.

At the close the Dow was up +145.00 points to 12188.00, S&P 500 +17.00 points to about 1297.00, S&P 100 +6.90 points to 576.00 and the Nasdaq Composite +41.00 points to about 2729.00. Oil has been rallying closing up around the $95.00 level.

One of the reasons the market popped this morning was that it was reported that the Chicago PMI unexpectedly increased in June, climbing to a 61.1% reading compared to a 56.6% reading in May. Economists had expected it to fall to a 55% reading, as the indicator recedes from the strong 70.6% level in March. ISM-Chicago said the June report "lacks decisive direction" because three of the subindexes rose while four fell. Any reading over 50% indicates expansion. The Chicago PMI is closely followed because the national Institute for Supply Management manufacturing index is released on Friday.

Jobless Claims fell -1000 to 428,000 from the prior week. Economists had expected initial claims to fall to a seasonally adjusted 425,000. Initial claims from two weeks ago were unrevised at 429,000. The average of new claims over the past four weeks, meanwhile, was essentially unchanged at 426,750. The monthly average is considered a more accurate measure of employment trends. Continuing Claims fell by -12,000 to a seasonally adjusted 3.7 million. A total of 7.51 million people received some kind of state or federal benefits.

Yesterday it was reported that Pending Home Sales rose +8.2% in May, partly bouncing back from a dismal April, the National Association of Realtors said. The +13.4% gain from May 2010 levels marks the first time in 13 months that contract activity was above year-ago levels. "Absorption of inventory is the key to price improvement, and this solid gain in contract signings implies that home values in many localities are or will soon be stabilizing as inventories get absorbed at a faster pace," said NAR Chief Economist Lawrence Yun. He said some markets including Hartford, Conn., Indianapolis, Minneapolis, Houston and Seattle have seen a rapid turnaround, with signings up by as much as 30% from year-earlier levels. The April decline was revised to an -11.3% fall from the initial -11.6% decline. A sale is listed as pending when the contract has been signed but the transaction has not closed, which normally occur with a lag time of one or two months.

Tuesday, June 28, 2011 4:03 p.m. est.

The market continued to rally today but as I said yesterday it was on anemic volume and was a very slow climb after the initial higher open. The Dow saw highs just before the close of +150.00 points, S&P 500 +17.00 points and the Nasdaq Composite +45.00 points.

At the close the Dow was up +145.00 points to 12188.00, S&P 500 +17.00 points to about 1297.00, S&P 100 +6.90 points to 576.00 and the Nasdaq Composite +41.00 points to about 2729.00. Oil rallied as the U.S dollar rallied because of the fake austerity plans for Greece so oil rallied pretty hard up about +$2.50 to close around the $93.00 level.

Consumer confidence fell in June reaching the lowest level since November on concerns about employment and income, the Conference Board reported. The nonprofit organization said its consumer-confidence index fell to 58.5% from an upwardly revised 61.7% in May. Economists had expected a June reading of 60.5%. Generally when the economy is growing at a good clip, confidence readings are at 90% and above. The future-expectations barometer fell to 72.4% from 76.7% in May, and the present-situation gauge fell to 37.6% from 39.3%. "Consumers rated both current business and labor market conditions less favorably than in May, and fewer consumers than last month foresee conditions improving over the next six months," said Lynn Franco, director of the Conference Board's consumer research center, in a statement.

Single-family home prices fell modestly in April, pointing to signs of stabilization in the hurting housing market at the start of the spring buying season, a closely watched. The S&P/Case-Shiller composite index of 20 metropolitan areas fell to 0.1% on a seasonally adjusted basis. Economists had forecast a decline of -0.2%. On a non-seasonally adjusted basis, however, the index rose +0.7%, its first advance in eight months, the report said. "The seasonally adjusted numbers show that much of the improvement reflects the beginning of the spring-summer home buying season," David Blitzer, chairman of the index committee at Standard & Poor's, said in a statement. "It is much too early to tell if this is a turning point or simply due to some warmer weather." The excess amount of houses for sale, ongoing foreclosures, tight credit and weak demand have kept the housing market on the slide even as other areas of the economy start to recover. Prices in the 20-city index fell -4% year over year, slightly worse than expectations for a drop of -3.9%.

Monday, June 27, 2011 4:03 p.m. est.

It was interesting how the market was off so much on Friday with the Dow closing near its lows of -115.00 points, S&P 500 -15.00 points and the Nasdaq -34.00 points. Today it reversed those lows and rallied pretty good with the Dow seeing highs of +165.00 points, S&P 500 +17.00 points and the Nasdaq Composite +45.00 points. Volume was abysmal but it is summer. At the close the Dow was up +109.00 points to 12043.00, S&P 500 +12.00 points to about 1280.00, S&P 100 +6.50 points to 570.00 and the Nasdaq Composite +35.00 points to about 2688.00. Oil was lower once again today closing down about -$.50 to close around the $90.50 level.
This week will likely be similar to last weeks for volatility but going nowhere fast in the end, especially because we are headed into the July 4th holiday on Monday. Even though volume was pathetic today it will likely get even worse and so the movement of the market may get slower and slower until its crawling by Friday.

Considering that the market has rallied about 100% since its lows in 09, an -8% correction is quite something considering that economic data has been very poor the past two months, along with the ongoing euro-zone debt issues and with sentiment getting incredibly bearish its looking pretty resilient!

Today it was reported that Consumer spending was flat in May, the weakest reading since June 2010. Personal income rose +0.3% and economists had expected this number but a +0.1% gain in spending. The savings rate rose to +5% from +4.9% in April. Excluding inflation, disposable incomes rose +0.1 after falling -0.1% in April. Spending adjusted-for-inflation fell -0.1% for the second straight month. The personal consumption expenditure price index rose +0.2% in May and is up +2.5% in the past year. The core rate rose +0.3%, up from the +0.2% gain forecast and the biggest gain since October 2009. Over the past year, core inflation is running at a +1.2% rate, still below the Fed's implicit target near +2%.

On Friday it was reported that economic growth was revised modestly higher in the first quarter to account for a slightly faster pace of restocking and a smaller increase in imports, but this still remains anemic. Gross domestic product growth rose at annual rate of +1.9%, up from the previously estimated +1.8%. The revision was in line with economists' expectations. The economy expanded at a +3.1% rate in the fourth quarter. Growth has remained slow so far in the second quarter, but economists are cautiously hopeful that activity will pick-up in the third quarter. First-quarter growth was supported by stronger than previously estimated accumulation of business inventories, slower imports and a smaller decline in residential construction, while the increase in business spending was revised lower. Business inventories increased $55.7 billion, above last month's $52.2 billion estimate. The change in inventories added +1.31% percentage points to GDP growth. Consumer spending which accounts for more than two-thirds of U.S. economic activity grew at an unrevised +2.2% rate. Imports were revised down to a +5.1% growth pace from +7.5%. It also showed inflation pressures a little bit stronger, with the personal consumption expenditures price index revised to up 3.9% from 3.8%. That compared to the fourth quarter's +1.7% increase.

Stronger orders for airplanes translated into a better-than-expected +1.9% increase in durable-goods orders. Durable-goods orders have bounced up and down for the past year and May was no exception, recovering from a steep April decline. Orders have been alternating between gains and losses since last June. The direction has been on an upward trend though as orders are up +9.7% in the past year. Orders fell a revised -2.7% in April, the biggest decline since October but lower than the prior estimate of a -3.6% drop.

Thursday, June 23, 2011 4:03 p.m est.

Here’s a couple things that you won’t hear about on your local tv stations! It shouldn't come as much of a shock, but Saudi Arabia seems to be picking up on its anti-Iran rhetoric, a fact that could cause problems for the oil market except today of course! The strategic divisions in the Middle East, and a real possibility of a fight between Sunni and Shiite Muslims could create some problems though. According to The Wall Street Journal, in closed door remarks, Saudi Prince Turki al-Faisal, told an audience that Saudi Arabia could opt to "replace" Iran's oil exports, presumably within the framework of OPEC, while "preparing to employ all of its economic, diplomatic and security assets to confront Tehran's regional ambitions." This is in response to Iran's increased activity in places such as Gaza, Syria, and according to multiple sources in other areas of the Middle East where revolutions and governments have been overthrown.

The Journal says that the rivalry between Saudi Arabia and Iran is heating up, and describes the situation as a "Cold War, fueled by oil and ideology, between Shiite Islamists who rule Iran and the Sunni Saudi royal family, each of whom consider themselves leaders of the world's Muslim populations." "U.S. and Arab diplomats said Saudi Arabia's monarchy often uses Prince Turki to float ideas concerning the country's future policies," adding that "Saudi Arabia has pursued an increasingly aggressive foreign policy over the past year—sometimes at odds with the U.S. and driven by concerns about Iran and the recent political turmoil in North Africa and the Middle East." The dispute may also include Iraq. According to the Journal: "Saudi Arabia has withheld sending an ambassador to Baghdad due to charges that Prime Minister Nour al-Maliki's Shiite-majority government is too close to Iran. Indeed, Iraq sided with Iran in the recent dispute over OPEC energy prices. And Prince Turki alleged that Iranian military officers were directly involved in formulating Iraqi security policy, a charge Baghdad has regularly denied."

Pimco predicts Greece, European defaults. According to Reuters: "The head of PIMCO, the world's biggest bond fund, predicted that Greece and other European economies would default on their debts to resolve their problems as the euro area faces a debt crisis." Mohammed El-Erian added that he thought it would take three years for global economic issues to work out and that for Europe, the problems would be worked out "through default." El-Erian added that it was "unlikely but not impossible" that a Greek default would trigger another global financial crisis.This is turning out to be an exciting week because after I reported on Monday the market rallied pretty hard on Tuesday a little over +1% giving us fills on the upside and then yesterday and today it is falling bringing the market back to about where it started the week. The Dow saw lows today of -230.00 points, S&P 500 -23.00 and the Nasdaq -40.00 points. It came back and at one point the Nasdaq turned positive with a +20.00 point gain after it was announced that Greece likely has a deal with the IMF and EU for Austerity measures in the next 5-years! Haven’t we heard this tune before!!

At the close the Dow was down -60.00 points to 12050.00, S&P 500 -4.00 points to about 1284.00, S&P 100 -5.00 points to 568.00 and the Nasdaq Composite +18.00 points to about 2687.00. Oil was clocked today moving below the $90 level at one point after it was reported that the International Energy Agency, IEA, would put out 60 million barrels of oil on the market. It closed down about -$4.00 to close around the $91.00 level.

As part of the IEA move, the U.S. will release 30 million barrels of oil from the Strategic Petroleum Reserve, which stands at 727 million barrels. This is the third time in the history of the IEA that its members have decided to release stocks. “We are taking this action in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries and their impact on the global economic recovery,” U.S. Energy Secretary Steven Chu said in a statement. “As we move forward, we will continue to monitor the situation and stand ready to take additional steps if necessary.” Interestingly the number of oversold stocks has fallen rapidly as it only took a few good up days in a row to change things. Less than a week ago, 63% of the stocks in the S&P 500 were oversold and was the highest level since late June 2010. Yesterday the number of oversold stocks has been more than cut in half to 25.4%. Last week's spike in oversold stocks was only the fourth time in a year that the percentage exceeded 50%. The previous three periods were late June 2010, late August 2010, and mid-March of this year and all three periods were preludes to market bottoms. The main thing is that as expected the market is being volatile in this low volume period and will likely continue to be like this for the rest of the summer. We are more on the oversold side but upside resistance is holding the market back and now with oil under pressure the upside may get tougher so a sideways we will go,,,,,for now......

Jobless Claims rose by +9,000 to a seasonally adjusted 429,000. Initial claims from two weeks ago were revised up to 420,000 from an originally reported 414,000. Economists had expected initial claims for last week to total 415,000. The average of new claims over the past four weeks, meanwhile, was flat at 426,250 after taking the latest revisions into account. The monthly average is considered a more accurate measure of employment trends. Continuing claims moved down -1,000 to a seasonally adjusted 3.7 million. Continuing claims are reported with a one-week lag. A total of 7.54 million people received some kind of state or federal benefit.

Sales of new homes fell -2.1% to a seasonally-adjusted annual rate of 319,000 in May. The new-home sales pace was higher than economists estimate of a 310,000 rate and also +13.5% above May 2010 levels, and came as April figures were modestly revised higher to a 326,000 rate from an initially reported 324,000 rate. This is a new all time low though!!! Activity is basically half of what it was when the U.S. entered recession in December 2007. The supply of new homes on the market fell -3.5% to an annual rate of 166,000, the lowest on record, which represents 6.2 months of supply at the current sales rate and that is good news! The median price of a new home, which isn't adjusted, fell -3.4% from year-earlier levels to $222,600, though that was +2.6% above April levels.

Monday, June 20, 2011 4:03 p.m est.

The backlog of foreclosures seems to be keeping those under water in homes longer. According to Reuters: "In New York State, it would take lenders 62 years at their current pace, the longest time frame in the nation, to repossess the 213,000 houses now in severe default or foreclosure, according to calculations by LPS Applied Analytics, a prominent real estate data firm." In New Jersey, it would take 49 years, said the report. In contrast, in states where courts don't play as prominent a role "the pace is much more brisk — three years in California, two years in Nevada and Colorado — but the dynamic is the same: the foreclosure system is bogged down by the volume of cases, borrowers are fighting to keep their houses and many lenders seem to be in no hurry to add repossessed houses to their books." The bottom line is that this will go on for a very long time, probably much longer than anyone expected at any time. In fact, it's to the point, where one foreclosure lawyer told Reuters that “Banks aren’t even trying to win.”

The market started the week on the downside which was great for downside fills and when it turned around and rallied pretty hard with the Dow seeing highs of +100.00 points, S&P 500 +9.00 and the Nasdaq only +20.00 points it made them look even better. Volume was atrocious as we are now in full on summer trading so it barely budged after making highs. At the close the Dow was up +76.00 points to 12080.00, S&P 500 +7.00 points to about 1278.00, S&P 100 +2.00 points to 569.00 and the Nasdaq Composite +13.00 points to about 2629.00. Oil was selling off once again at one point touching the $91 level but it came back to close up about +$.25 to close around the $93.00 level.

With the market so oversold and volume so weak I wouldn’t be surprised if we see a slow upward trend the entire week and maybe for the summer for that matter. Because we’re now in summer trading mode I think I will also take a break and either report intraday or only here and there during the week because it is so slow. Of course if there are some surprises or something interesting to talk about you’ll hear about it.

Friday, June 17, 2011 4:03 p.m est.

The market shot up for expiration first thing in the morning as it usually does on these days for the S&P 500 cash expiration. The difference today was that it was a quarterly expiration where the June S&P 500 futures contract expires also and so it follows the cash expiration number first thing in the morning. All other months it is at the close of the day. The Dow saw highs of +110.00 points, S&P 500 +12.00 and the Nasdaq only +25.00 points. After that though it pulled back as traders awaited the S&P 100 expiration and a rebalancing of the S&P 500. The Nasdaq once again turned negative seeing lows of -15.00 points.

At the close the Dow was up +43.00 points to 12004.00, S&P 500 +4.00 points to about 1272.00, S&P 100 +1.00 points to 567.00 and the Nasdaq Composite -7.00 points to about 2616.00. Oil sold off once again today closing down about -$2.00 to close around the $93.00 level.

A gauge of consumer sentiment fell in early June on a decline in readings of both current conditions and expectations, according to the Thomson Reuters/University of Michigan gauge fell to 71.8% in early June from 74.3% in May. Economists had expected the June reading to decline to 73.5% on concerns about stock volatility. The sentiment reading, which covers how consumers view their personal finances, as well as business and buying conditions, averaged about 87% in the year before the start of the most recent recession. The gauge of current economic conditions declined to 79.6% in June from 81.9% in May, while the expectations barometer fell to 66.8% from 69.5%. Meanwhile, one-year inflation expectations declined to 4% from 4.1%, while the inflation outlook for five to 10 years rose to 3% from 2.9%.
The economy is likely to grow in a “choppy” manner through the summer and autumn, the Conference Board said as it reported that its index of leading economic indicators grew a surprisingly strong +0.8% in May. The reading for May came in ahead of expectations, following a downwardly revised -0.4% drop in April, from the initially reported -0.3% drop. Economists had forecast a +0.5% improvement in May.

Thursday, June 16, 2011 4:03 p.m est.

The market was volatile today starting the day mixed but then rallying pretty strong with the Dow seeing highs of +100.00 points, S&P 500 +9.00 and the Nasdaq only +15.00 points. It didn’t last though as selling took hold and the market made new lows for the week with the Dow seeing lows of -25.00 points, S&P 500 -7.00 points and the Nasdaq Composite a strong -35.00 points. Once again it came back though in the final hour to close mixed. As we move into expiration tomorrow it looks like it will be another fully profitable cycle on both sides!!

At the close the Dow was up +64.25 points to 11,962.00, S&P 500 +2.00 points to about 1268.00, S&P 100 +2.00 points to 566.00 and the Nasdaq Composite -8.00 points to about 2624.00. Oil was pretty flat today closing up about +$.15 to close around the $95.00 level.

One of the reasons the market turned lower after the open was that the the Philadelphia Fed's manufacturing index fell from +3.9% in May to -7.7% in June, which is the worst level in 31 months and now the second Fed district to go negative! Economists had forecast a reading of +5.5%. The survey's indicators for activity and new orders turned negative this month, while indicators for shipments and employment fell but remained slightly positive, the Philly Fed said.

Housing Starts recovered partially in May from a steep drop in April with starts rising +3.5% in May to a seasonally adjusted 560,000 annualized units, stronger than the 550,000 pace expected by economists. Starts remain -5.6% below March and fell a revised -8.8% in April to 541,000 units compared with the initial estimate of a -10.6% fall to 523,000 units. The sharp drop was blamed on severe weather. Building permits, a leading indicator of housing construction, rose +8.7% in May to a seasonally adjusted annual rate of 612,000 and is the highest level of permits this year which is good news.

Jobless Claims fell by -16,000 last week to a seasonally adjusted 414,000, the Labor Department said. Claims from two weeks ago were revised up to 430,000 from an originally reported 427,000. Economists had expected them to edge down to 425,000. The average of new claims over the past four weeks was unchanged at 424,750. Continuing claims dropped -21,000 to a seasonally adjusted 3.68 million. A total of 7.4 million people received some kind of state or federal benefit in the week of May 28th, down 209,116 from the prior week. Total claims are reported with a two-week lag.

Wednesday, June 15, 2011 4:03 p.m est.

Thank you for all of the birthday wishes yesterday it was a nice day off! As expected the market rallied pretty good, a little over +1% with the Dow making +123.00 points, S&P 500 +17.00 and the Nasdaq +39.00 points. Today however, it fell just about -2% on economic worries. Many people were blaming the Greek austerity plans that were causing riots once again but I think when the Fed’s New York region reports a negative manufacturing number along with Home Builders having the worst sentiment ever and throw in oil falling over -$4, it makes people want to sell. Lows were hit in the final hour with the Dow seeing lows of -210.00 points, S&P 500 -26.00 points and the Nasdaq Composite -55.00 points. The good news is that it was also on low volume so a big part of this may just be expiration related as we are now starting to move into it tomorrow as this is a quadruple witch expiration starting Friday morning.

At the close the Dow was down -179.06 points to 11,897.00, S&P 500 -23.00 points to about 1265.00, S&P 100 -9.00 points to 565.00 and the Nasdaq Composite -47.00 points to about 2631.00. Oil really sold off today most likely because of worries about a slowdown coming down the pike with it closing down about -$4.00 to close around the $95.00 level.

Manufacturing activity deteriorated sharply in the New York region in June, according to the Empire State manufacturing survey released by the New York Fed. The Empire State index fell below zero to -7.8% in June from +11.9% in May. This is the first time the index has been below zero since last November. The decline was unexpected as economists expected the index to move up to 13.3%. The data is likely to raise concern that the slowdown seen in manufacturing in May could be more than a temporary soft-patch. The details of the report were weak. The Employment part of the index dropped -15%. The new orders and shipments indexes also fell sharply into negative territory.

Add to that Consumer Prices rose a seasonally adjusted +0.2% in May as the cost of food, clothing, autos and housing all climbed sharply. The consumer price index advanced despite the first decline in energy prices in 11 months and the core prices, which strip out volatile food and energy costs, increased +0.3%, the largest one-month gain since July 2008. Economists had forecast CPI to be unchanged, with a +0.2% increase in the core rate. Consumer prices have risen +3.6% over the past year, the biggest 12-month increase since October 2008. Although this is bad it also indicates that the Fed is even more unlikely to add QE3 and we may even see higher interest rates and that may have been why the U.S dollar rallied so hard today.

The already-weak index of Builder Confidence for new single-family homes fell -3% points in June to 13%, the lowest reading since September 2010, according to the National Association of Home Builders/Wells Fargo Housing Market Index. Economists had expected a 16% reading. "Builders are being squeezed by the continuing weakness in existing-home prices - against which they must compete -- as well as rising material costs," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nevada. The worst-ever reading was 8% in Jan. 2008, and the gauge hasn't been above 50% since April 2006. The HMI is a seasonally adjusted index where any number over 50% indicates that more builders view sales conditions as good than poor.

Yesterday it was reported that Retail sales fell -0.2% in May to a seasonally adjusted $387.1 billion. This is the first decline after ten months of gains. Sales rose a downwardly revised +0.3% in April. Ahead of the report, economists expected total sales to fall -0.7% in May. Excluding the -2.9% drop in motor vehicle sales, retail sales rose +0.3%. Economists had expected sales excluding autos to be unchanged. Core sales, excluding autos, gasoline and building materials, rose +0.2% in May.
Wholesale prices rose +0.2% in May, the slowest pace in 10 months, as the cost of food fell and the increase in energy prices tapered off. The more closely followed core producer index also rose +0.2% in May. Economists had predicted increases of +0.1% for overall producer prices and +0.2% for the core rate. Food costs dropped -1.4% last month, owing mainly to lower vegetable prices, to mark the biggest one-month decline in almost a year. Energy prices, meanwhile, rose +1.5% in May, the slowest rate since September. The price index for intermediate goods rose +0.9% and crude prices dropped -4.0%.

Monday, June 13, 2011 4:03 p.m est.

I won’t be writing a report tomorrow as its my birthday and I never try to work that day unless of course there is a surprise out there, from there we’ll see how the week goes...

The market made an attempt this morning to break its losing streak with the Dow seeing highs of +60.00 points, S&P 500 +6.00 points and the Nasdaq Composite +15.00 points. Of course when S&P lowered their rating to CCC and high risk there was a sell off with the Dow seeing lows of -40.00 points, S&P 500 -5.00 points and the Nasdaq Composite -20.00 points. It didn’t last though and the market turned around again going into the final hour.

This being an expiration traded week I’m sure that it will break the six week losing streak as they are usually up weeks and the market is quite oversold so it wouldn’t be surprising to see a bit of a rally. Besides all that every word that is being spoken is about doom and gloom so sentiment is following suit. We’re also now headed hard into summer trading and I’m willing to bet that this will be lowest volume year ever so we’re likely to see mostly sideways action which is perfect for us!!!

At the close the Dow was up a whopping +1.06 points to 11,953.00, S&P 500 +.85 points to about 1272.00, S&P 100 +1.40 points to 568.00 and the Nasdaq Composite -4.00 points to about 2639.00. Oil was down hard again because of that Saudi increase with it closing down about -2.00 cents to close around the $97.00 level.

Friday, June 10, 2011 4:03 p.m est.

Well after a one day rally the market sold off once again taking back all of the gains it had made yesterday plus even though there were rumors flying around about the Fed creating a QE3 program!!! The market slowly lost ground till it hit bottom midday with the Dow seeing lows of -190.00 points, S&P 500 -21.00 points and the Nasdaq Composite -50.00 points. The market turned around really quick after it was announced that the Fed would be buying $62 billion in Treasury debt this month in the last round of the program known as quantitative easing or QE2. The Fed’s Bank of New York said the purchases will include $12 billion of reinvestments from maturing mortgage-related securities, which Fed officials have said will continue beyond the end of the month. The buybacks will begin Monday. Interesting timing for that announcement wasn’t it!! The final hour saw the market hold its little rally but in the end it sold off again to close just above lows.

At the close the Dow was down -172.00 points to 11,952.00, S&P 500 -18.00 points to about 1271.00, S&P 100 -7.00 points to 567.00 and the Nasdaq Composite -41.00 points to about 2644.00. Oil fell hard after Saudi announced it was gong to increase oil production. It appears that OPEC may be ending soon as the fight has now started. It closed down -2.65 cents to close around the $99.00 level.

A report out today said that recent housing and employment data suggests the economy is at a tipping point where a double-dip recession is possible and home prices could have much further to fall. Robert Shiller said the recent move up in unemployment is not yet enough of a sign as to which way the recovery is heading but if unemployment continues to rise in the coming months, it could suggest another recession. “Whether we call it a double-dip or not, I think there is a risk,” Shiller told Reuters Insider in an interview. Data is showing home prices fell into a double dip in March could prove to be either a seasonal effect over the winter months or part of a downward trend. “My gut feeling is we might see a continuation of the decline” in home prices, Shiller said earlier Thursday at a Standard & Poor’s housing summit. He added that a -10% to -25% fall in real home prices “wouldn’t surprise me at all,” though he cautioned that was not a forecast. Shiller pointed to the huge amount of unsold homes on the market and the large amount of homeowners under water on their mortgages as pressuring prices. As for when home prices might bottom, Shiller told Insider that was unclear and it was possible prices could slide for 20 more years. “We’ve seen five years of decline already since the peak in 2006 and I don’t see evidence that we’re coming out of it,” he said.

Shiller, known for warning about bubbles in the stock market and housing market, is also the co-founder of the S&P/Case-Shiller home price index. Last week the index showed single-family home prices in March move to lows not seen since March 2003, falling below the previous crisis-era bottom set in April 2009. That report, along with other data, including grim jobs figures and a slowdown in manufacturing, suggested that the economic soft patch seen in the first quarter of the year could be more protracted.

Home prices had been supported a little last spring by a tax credit, but the housing market has struggled since the credit expired. I could almost see it dragging out for much longer as a 2002 a study showed that about 49% of the country owned some type if mutual fund and individual stock holders were only about 20%. I’m sure with all of the volatility we have seen the past nine years that the numbers are now lower and even if they are the same those people are likely quite frustrated as the value of these funds have gone down or are flat. Its also a fact that a lot of people got out of stocks to move into housing and we know what happened there...

It was reported today Import Prices rose +0.2% in May, a surprise increase but the smallest gain of the year. Economists were looking for a -0.6% drop following the revised +2.1% monthly growth in April. Import prices had gained at least +1% each month since October and have not declined since June 2010. Higher industrial supplies and materials and finished goods prices offset a -0.2% dip for fuel, which was the first monthly decline since Sept. 2010. Prices for overall imports advanced +12.5% over the past year, the largest 12-month increase since Sept. 2008.

Thursday, June 9, 2011 4:03 p.m est.

And on the seventh day the bears rested! I saw that line somewhere today and it made a lot of sense! So far June has proven to be true to the fact that its the worst month of the year! Interestingly the June expiration cycle has been one of the most up cycles of the year so it will be interesting to see how this one turns out as would have to rally pretty hard to get positive with only six trading days to go...

The market started higher as economic data didn’t have any real surprised in and about midday the Dow saw highs of +130.00 points, S&P 500 +14.00 points and the Nasdaq Composite +20.00 points. The final hour saw profit taking though so at the close the Dow was up +76.00 points to 12,125.00, S&P 500 +10.00 points to about 1289.00, S&P 100 +4.00 points to 574.00 and the Nasdaq Composite +10.00 points to about 2685.00. Oil was up again closing up about +$1.20 to close around the $102.00 level.

Jobless Claims rose slightly last week, reflecting little change in the labor market. They were up by +1,000 to a seasonally adjusted 427,000. Claims from two weeks ago were revised up by +4,000 from an originally reported 422,000. Economists had expected initial claims to fall to 419,000. Claims fell to as low as 375,000 in mid-February before bouncing higher. The average of new claims over the past four weeks, meanwhile, dipped -2,750 to 424,000. Continuing claims dropped -71,000 to a seasonally adjusted 3.68 million. Continuing claims are reported with a one-week lag. Some 3.99 million people received extended benefits and is down about -52,000 from the prior week. Many workers who have used up state benefits are also eligible for extended relief from the U.S. government. The total number of people receiving some kind of state or federal benefit declined by -89,233 to 7.60 million. These are also reported with a two-week lag.

The Trade Deficit narrowed sharply in April as imports from Japan were curtailed due to the earthquake. The nation’s trade deficit narrowed 6.7% in April to $43.7 billion from a revised $46.8 billion in March. The government said imports from Japan fell by a record amount in April to $8.8 billion, the lowest level in a year, following the March 11th earthquake and tsunami. Imports of autos and auto parts declined sharply. Analysts had expected the deficit to narrow to $48.0 billion. In addition to the wild-card from the Japan tragedy, annual revisions to the trade data painted a different picture of the trade sector this year. Under the revised data, the deficit reached $47.9 billion in January, its highest level in more than two years, and has been on a downward trend over the past three months. The deficit in March was revised down to $46.8 billion from $48.2 billion. In real terms, which adjust for inflation, the improvement in the trade picture in April was even greater, with the deficit narrowing by almost 11%. These revisions may help brighten the somewhat poor picture of economic growth in the first half of the year.

Wednesday, June 8, 2011 4:03 p.m est.

Guess what, another quiet day. The market made an attempt at the open to be up as it is incredibly oversold in the short term as we have now been down for six straight days. It didn’t hold however and fell slightly into the red. A bit later on it made another try at a rally and the Dow saw highs of +30.00 points, S&P 500 +3.00 points and the Nasdaq +1.00 points. Because tech never really made a comeback, selling took hold and the Dow saw lows of -40.00 points, S&P 500 -7.00 points and the Nasdaq Composite -35.00 points. The final hour saw a rally start but it then fell again back to lows.

At the close the Dow was down -22.00 points to 12,049.00, S&P 500 -5.00 points to about 1280.00, S&P 100 -1.00 points to 570.00 and the Nasdaq Composite -26.00 points to about 2675.00. Oil was lower early on as it looked like there was going to be a quota increase for OPEC as Saudi Arabia was calling for one but when a few of the smaller countries seemed to take hold and declare no additional oil will be pumped, it started to rally closing up +1.65 cents to close around the $101.00 level. This is the first time this has ever happened and many analysts are wondering if this will be the end of OPEC.

It was reported at 2:00 p.m est, that the pace of economic growth is slowing in four of the 12 Fed’s regions, according to the central bank’s latest survey of economic conditions known as the Beige Book. The report is more cautious than the past few reports, reflecting the weak pace of growth in the first quarter that has continued into April and May. Yesterday Fed Chairman Ben Bernanke said growth was uneven and “frustratingly slow.” The survey found some slowing in the Philadelphia, New York, Atlanta, and Chicago districts and there was only one region, Dallas, reported any accelerating growth. The remaining seven districts said growth continued at a steady pace. The bad news was that survey did not give any single reason for the slower growth. Consumers had less money to spend in many regions because of higher prices for food and energy and deadly storms took their toll on communities and agricultural sectors.

As expected, there was some slowing in the pace of manufacturing reported, and factory owners were said to be less confident about the economic outlook. The service sector, information technology and business and professional services was expanding at a steady pace, the Fed said. Labor markets were seen as still improving at a gradual pace. Firms in most regions were having trouble passing along higher commodity prices to their customers. The market for rental properties was the one bright spot in the housing sector. Agriculture was hit hard by recent storms. There were some reports that banks were easing standards for loans.

The Fed Beige Book is a collection of anecdotal reports from business contracts in all regions of the country. It is designed to give Fed officials a feel for conditions as they prepare for their next Fed meeting on June 21st-22nd. It is supplemented by more detailed reports that are not made public until five years after the meeting.

Tuesday, June 7, 2011 4:03 p.m est.

Once again it was a quiet day in the market but it did pop higher with the Dow seeing highs of +90.00 points, S&P 500 +10.00 points and the Nasdaq +20.00 points. As the day went on it pulled back though until it fell into the red after Ben Bernanke started speaking to an international bankers meeting in Atlanta. Fed Chairman Ben Bernanke said that he is doesn’t agree with economists worried about a double-dip recession as he defended the central bank from accusations it’s fueled a boom in commodity prices.

Although he acknowledged the economy has been surprisingly weak so far this year and there have been recent signs of a loss of momentum in the labor market, Bernanke was steady on his outlook, saying that both jobs and growth would pick up in the final six months of the year. “I expect hiring to pick up from last month’s pace as growth strengthens in the second half of the year,” Bernanke said.

Bernanke blamed the poor outlook for the April-to-June quarter on the effects of the Japanese earthquake but this is likely to dissipate in coming months, he said. At the same time, there is some prospect of lower gasoline prices as they have pulled back except where I live! Basically he says that, “growth seems likely to pick up somewhat in the second half of the year.” The fact that Bernanke did not sound overly alarmed about a slowdown was taken as a sign that the Fed would be in no hurry to launch another asset buying program, or quantitative easing plan, once its current $600 billion program ends in June and that may b e why the market started to fall closing at lows of the day in the red. The thing that he did indicate though was that he was also in no hurry to exit, saying that the zero-interest rates and bond purchase plan are still needed. “Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established,” Bernanke said.

The Fed chairman spent a large portion of the speech trying to calm market fears about inflation. The latest data show that inflation “should moderate” assuming that commodity prices stabilize and inflation expectations remain stable, he said.

Bernanke ended his remarks by stressing the central bank would remain alert for signs that inflation may flare up. “Most Fed members see the recent increase in inflation as transitory and expect inflation to remain subdued in the medium term,” he said. “Should that forecast prove wrong, however, and particularly if signs were to emerge that inflation was becoming more broadly based or that longer-term inflation expectations were becoming less well anchored, the Fed would respond as necessary,” he said.

At the close the Dow was down -19.00 points to 12,070.00, S&P 500 -1.00 points to about 1285.00, S&P 100 -2.00 points to 571.00 and the Nasdaq Composite -1.00 points to about 2702.00. Oil was lower all day but turned around midday to close up a mere +.08 cents to close up about $.10 to close around the $99.00 level.

Monday, June 6, 2011 4:03 p.m est.

The market started the week quietly with slight gains but as the day went on and volume was transparent it moved down with lows hit in the final hour. The Dow saw lows of -75.00 points, S&P 500 -15.00 points and the Nasdaq -25.00 points.

At the close the Dow was down -61.00 points to 12,090.00, S&P 500 -14.00 points to about 1286.00, S&P 100 -6.00 points to 573.00 and the Nasdaq Composite -30.00 points to about 2703.00. Oil took a hit today as Saudi Arabia is pushing for more production to lower the price so it will take pressure off of developing new technologies. It closed down about -$1.50 to close around the $99.00 level. The market has now been down for five weeks and working on its sixth with today’s sell off and is starting to get quite oversold even though it hasn’t pulled back very much. This indicates that were in a rolling correction and so were likely to remain seeing mostly sideways action this week. I wouldn’t be surprised to see a slight up week by the end as we’ll then be moving in a quarterly expiration traded week!

Friday, June 3, 2011 4:03 p.m est.

Yesterday the market bounced which wasn’t surprising considering how hard it went down the day before but it wasn’t all that much and by the close it was near the unchanged level and mixed with the Dow and S&P down and the Nasdaq up +4.00 points. Today the employment report was abysmal finishing off a week of very poor economic data indicating that the economy may be headed for a double dip! This caused selling to take hold and the market cratered at the open with the Dow seeing lows of -150.00 points, S&P 500 -15.00 points and the Nasdaq -40.00 points.

The market almost worked its way back to positive as the day went on and volume was low but selling in the final hour took it back near lows once again. At the close the Dow made it five weeks in a row lower with today being down -97.00 points to 12,151.00, S&P 500 -13.00 points to about 1300.00, S&P 100 -5.00 points to 578.50 and the Nasdaq Composite -40.00 points to about 2733.00. Yesterday oil was flat and it was again today although early on it was down hard after the poor employment report moving under the $97.00 level but going into the weekend it rallied back to close up about +$.10 to close around the $100.50 level.

Today it was reported that Job growth fell sharply in May with Employment increasing by only +54,000, much lower than the +150,000 gain expected by economists. This is the smallest increase since September. The unemployment rate also ticked higher to 9.1% in May from 9% in the previous month. Economists forecast the unemployment rate to fall to 8.9%. Average hourly earnings increased +6 cents, or +0.3% to $22.98. Economists had been expecting a +0.2% gain. Earnings are up only +1.8% in the past year. The average workweek was steady at 34.4 hours. The factory workweek rose 12 minutes to 40.6 hours while factory overtime was unchanged at 3.2 hours. Labor Department officials said they found no evidence that tornadoes or floods in the Midwest and South affected the data which means that the economy isn’t looking good at all, conditions should be getting better not slowing down.

Growth in the Service Sector was little changed in May, according to a survey of senior executives. The Institute for Supply Management said its services index edged down to 53.6% last month from an upwardly revised 53.7% in April. Readings over 50% indicate more firms are expanding than contracting. Economists expected the services index to come in at 54%.

Yesterday it was reported that Jobless Claims fell slightly last week to 422,000 from 428,000, the Labor Department. The prior week's number was revised up from an originally reported 424,000. Economists had expected initial claims to decline to a seasonally adjusted 418,000. The average of new claims over the past four weeks, considered a more accurate measure of employment trends, fell by -14,000 to 425,500, the lowest level in more than a month. Continuing claims was barely changed, totaling a seasonally adjusted 3.71 million. The total number of people receiving some kind of state or federal benefit, which is reported with a two-week lag, fell by -56,742 to 7.68 million.

The productivity of businesses rose +1.8% in the first quarter, slightly faster than previously reported. The government originally reported an increase in first-quarter productivity of 1.6%. Real output was revised slightly higher to 3.2% from 3.1%, while the increase in hours worked was unchanged at 1.4%. Unit labor costs rose a smaller 0.7% in the first three months of the year, compared to a prior estimate of a 1.0% increase.

Wednesday, June 1, 2011 4:03 p.m est.

Oh oh, its looking ugly on the economic front. China revealed that things are slowing down with manufacturing activity expanding in May at its weakest pace in three quarters and the economy is facing headwinds of high inflation. The official China Federation of Logistics & Purchasing Managers Index eased to 52% from 52.9% in April, marking the slowest pace of growth in nine months. Then you have Greece still sitting on the fence about defaulting along with a bunch of other European countries so markets overseas were hurting this morning. Finally with economic data over here absolutely abysmal indicating that the economy is actually slowing down again its understandable why the market was down today. When Auto sales were released company by company today with just about every one of them seeing double digit losses the market seemed to fall even more. The Dow saw lows of -290.00 points, S&P 500 -32.00 points and the Nasdaq Composite -70.00 points just before the close which may make for a bad day tomorrow.

At the close the Dow was down -280.00 points to 12,290.00, S&P 500 -31.00 points to about 1315.00, S&P 100 -13.00 points to 584.00 and the Nasdaq Composite -66.00 points to about 2769.00. Oil fell hard with everything else closing down about -$2.60 to close around the $100.00 level.

The report that really started the selling today was just after the open with the Institute for Supply Management said its gauge of manufacturing activity fell to 53.5% last month from 60.4% in April. Any reading over 50 indicates that more manufacturers are expanding instead of shrinking. The manufacturing sector has expanded 22 straight months, though growth has slowed over the past three months. Economists had forecast the index to fall to 57.1%, mirroring a trend in regional manufacturing surveys.

Companies added fewer workers than forecast in May, a sign that job growth is struggling to gain momentum, data from a private report based on payrolls showed today. Employment increased by only +38,000 last month, the smallest increase since September, from a revised +177,000 in April, according to figures from ADP Employer Services. The estimate was for a +175,000 advance for May. Such gains in employment are insufficient to help the world’s largest economy accelerate after a surge in food and fuel costs earlier this year. Estimates for the ADP data ranged from increases of +125,000 to +200,000. Over the previous six reports, ADP’s initial figure was closest to the Labor Department’s first estimate of private payrolls in February, when it understated the gain in jobs by +5,000. The estimate was least accurate in December, when it overestimated the increase in employment by +184,000.

Another report today showed employers announced fewer job cuts in May than a year earlier, signaling the labor market is improving. Planned firings dropped -4.3% to 37,135 last month from May 2010, according to figures from Chicago-based Challenger, Gray & Christmas Inc. Government and nonprofit agencies had the most cutbacks. Today’s ADP report showed a decrease of -10,000 workers in goods-producing industries, which includes manufacturers and construction companies.

Employment at factories fell by -9,000. The highly-anticipated Employment report is out on Friday. The economy is expected to have added +190,000 jobs, pushing the unemployment rate down to 8.9% for the month of May from 9% the prior month.

Construction spending improved in April, rising +0.4% to $765 billion. Construction spending was forecast to fall -0.3%. That said, spending is -9.3% lower than the April 2010 level. The seasonally adjusted annual rate of private construction rose +1.7% in April while the seasonally adjusted public construction rate declined -1.9%.

Tuesday, May 31, 2011 4:03 p.m est.

The market rallied today on thin volume which wasn’t really surprising as it usually does during this shortened trading week. Economic data was pathetic however and it almost brought the market down but the thin volume saved the day and the market closed near its highs! The Dow saw highs of +140.00 points, S&P 500 +15.00 points and the Nasdaq Composite +45.00 points. At the close the Dow was up +128.00 points to 12,570.00, S&P 500 +14.00 points to about 1345.00, S&P 100 +7.00 points to 597.00 and the Nasdaq Composite +38.00 points to about 2835.00. Oil rallied on a weak dollar closing up about +$2.00 to close around the $103.00 level.

It appears that were in that time of year where the period from May 27th to June 3rd may be a bit more upbeat as the Memorial Day period combines with the turn of the month to give two reasons for short term traders looking for gains. Low volume usually lowers computer driven trading volatility however if there are some surprises out there economically or politically we could see some big swings. Once the rally is done within the next few days we’re likely to see a move lower if history continues to give us a guide. Looking at the last twenty years of data in and around the Memorial Day holiday there are some interesting facts, not the least of which is that the so called "Summer Rally" has been volatile.

For this week according to the history, the market is likely to rise, with the Nasdaq being the most likely to get the largest gains. Over the last twenty years, the average gain on the Nasdaq has been +1.42%. Over the last five years, the gain has been +1.37% on the index with the S&P up +.69% and the Dow +.78% respectively. After this week though as I mentioned that there could be volatility by the end of June as the gains are very likely to vanish, with the Dow losing the most at -2.39% and the S&P losing an average -2.21% in losses.

The prices of single-family homes in 20 major cities fell for the eighth straight month and confirmed that there is a double-dip in the housing market, according to the S&P/Case-Shiller home price index released by Standard & Poor's. Home prices fell a non-seasonally adjusted -0.8% in March. Prices have moved down -3.6% in the past year. Home prices declined in 18 of the 20 metropolitan areas tracked by Case-Shiller in March compared with February. Washington D.C. and Seattle were the only markets where home prices increased in March.

The Chicago PMI dropped sharply to a reading of 56.6% in May from April's 67.6%, a sign of a weakening recovery. Production, new orders and order backlogs all dropped sharply. Economists had expected a reading of 60%. "Whether by plan or by misfortune, the proportion of firms reporting buildup in inventories increased in May, showing the broadest increase seen since September 2006," the survey said. The national Institute for Supply Management's manufacturing gauge is due Wednesday.

Besides that even sentiment is turning as Consumer confidence fell in May as Americans grew slightly more pessimistic about future job prospects and business conditions, according to a closely followed survey. The Conference Board said its consumer-confidence index fell to 60.8% in May, the lowest reading in six months from a revised 66% in April. Economists had forecast an increase to 67.5%. All of this is causing analysts to downgrade the prospects for economic growth in Q2 by half a percent. The expectations index, which measures the view of consumers six months out, fell to 75.2% from 83.2% last month, the lowest reading since last October. A slightly higher percentage of consumers expect business conditions to get worse over the next six months, 15.5% versus 14% in April. 20.8% expect fewer jobs to be available, compared to 18.7% in April. For the present, however, consumers did not appear quite as pessimistic as the present situation index barely fell, at 39.3% last month from 40.2% in April. The percentage of consumers who say jobs are plentiful increased to 5.6% from 5.1% in April, although the percentage who say they are hard to get also rose slightly to 43.9%. The consumer-confidence index remains low by historical standards. In a healthy economy, the index averages about 95%. The index has more than doubled, however, since touching a record-low 25.3% in February 2009.

Friday, May 27, 2011 4:03 p.m est.

As you go about your weekend, please stop and take a few minutes to contemplate the many men and women who made the ultimate sacrifice so that our freedom and values could continue. I don't think words will ever really thank them or the families who had to live with their loss, so let's be sure to honor them first this long weekend.

The market started the day higher even though economic data was poor and stayed there as volume was nonexistent with highs hit early on with the Dow seeing +75.00 points, S&P 500 +9.00 points and the Nasdaq Composite +20.00 points. At the close the Dow was up +39.00 points to 12,442.00, S&P 500 +5.50 points to about 1331.00, S&P 100 +2.50 points to 590.44 and the Nasdaq Composite +14.00 points to about 2797.00. Oil was quiet closing up about +$.36 to close around the $100.60 level.

Pending home sales fell -11.6% in April, the National Association of Realtors reported. The pending home sales index reading of 81.9 in April came after a downwardly revised 92.6 in March, from an initial reading of 94.1. The big drop came after two monthly gains, and the NAR cited unusual weather and economic softness. "The economy hit a soft patch in April from sharply rising oil prices, widespread severe weather with the heaviest precipitation in 20 years, and a sudden rise in unemployment claims," said NAR Chief Economist Lawrence Yun. "Nonetheless, the magnitude of the fall in pending home sales is larger than can be implied by broad economic factors, so we need to see if it's just a one-month aberration." The index is -26.5% below its April 2010 peak, when buyers were trying to beat a contract deadline for the homebuyer tax credit. The data reflects contracts but not closings, which normally occur with a lag time of one or two months.

Earlier in the week it was reported that sales of distressed homes fell in the first quarter as demand remained weak, but they still made up about 28% of total sales which is bad and now that I see pending sales poor this is bad news! RealtyTrac said it was the highest amount in a year, a report said. The report added: "Distressed sales accounted for 27.5% of all residential sales, ticking up from 27% in the fourth quarter of last year, the report said. It was the highest percentage of sales since the first quarter of 2010."

Consumer spending rose by the smallest gain in three months in April, a further sign of slower spending momentum due to higher prices at the pump. Consumer spending rose +0.4% in April. Income rose +0.4% in April and has risen for seven straight months. Both income and spending were revised lower in March. The report was mixed in terms of market expectations. Spending rose less than the +0.5% expected, while the gain in income matched forecasts of economists. The core rate of inflation, as measured by the personal consumption expenditure index, rose +0,2% in April, in line with forecasts. On a year-on-year basis, the core rate is up +1.0% compared with a +0.9% rate in March.

Thursday, May 26, 2011 4:03 p.m est.

I know this sounds like a repeat but once again the market started the day lower as economic data was poor with the Dow seeing lows of -80.00 points, S&P 500 -6.00 points and the Nasdaq Composite -10.00 points. Of course the market turned around as volume was abysmal and the Fed was heavily pumping money into the system.

The final hour saw the Dow see highs of +50.00 points, S&P 500 +9.00 points and the Nasdaq Composite +30.00 points. At the close the Dow was up +8.00 points to12,402.00, S&P 500 +5.00 points to about 1326.00, S&P 100 +2.00 points to 588.00 and the Nasdaq Composite +22.00 points to about 2783.00. Oil pushed back to the $100 level closing down about -$1.00 to close around the $100.23 level.

The economy only grew at a +1.8% annual rate in the first quarter, the same growth rate as estimated a month ago. The first quarter growth rate was much weaker than expected as economists were predicting a revision to a +2.2% rate. The major surprise was a downward estimate to consumer spending, only a +2.2% annual rate from the initial estimate of a +2.7% rate. Offsetting this weakness was an expected faster pace of inventory accumulation. The core personal consumption expenditure price index rose a revised +1.4%, compared with the initial estimate of a +1.5% gain. In its first estimate, the government said Q1 corporate profits before tax increased $113.8 billion or +6.3% to $1.91 trillion.

Jobless Claims rose by +10,000 to 424,000 while the prior week's total was revised up to 414,000 from an originally reported 409,000. Economists had expected claims to decline to a seasonally adjusted 405,000. The average of new claims over the past four weeks, meanwhile, fell by +1,750 to 438,500. The four-week average is considered a more accurate gauge of employment trends because it reduces week-to-week volatility in the data. The number of people who continued to receive unemployment checks declined by -46,000 to a seasonally adjusted 3.69 million. The total number of people receiving some kind of state or federal benefit, which is reported with a two-week lag, dropped -196,976 to 7.74 million, the lowest level in more than two years.

Wednesday, May 25, 2011 4:03 p.m est.

Today is a very sad day in the financial news world as Mark Haines of CNBC unexpectedly died last night. I never knew him but after seeing him every morning for the past 20-years I feel like I have lost a co-worker. He was one of a few people I would take the mute button off for as he always stuck to real facts and never gave up until his question was answered. Besides that he showed his professionalism in covering 9/11 and making all things relevant in dire periods of stock market history. He will be sorely missed....

The market started the day lower as economic data was poor with the Dow seeing lows of -50.00 points, S&P 500 -5.00 points and the Nasdaq Composite -10.00 points.

As the dollar started to sell off and oil rallied the market turned higher with the Dow seeing highs of +50.00 points, S&P 500 +6.00 points and the Nasdaq Composite+20.00 points. At the close the Dow was up +39.00 points to 12,395.00, S&P 500 +4.00 points to about 1320.00, S&P 100 +2.00 points to 586.00 and the Nasdaq Composite +15.00 points to about 2761.00. Oil moved over the $100 level closing up about +$2.00 to close around the $101.30 level.

Orders for Durable Goods fell sharply in April, mainly because of lower demand for cars and planes. The Commerce Department said new orders for U.S.made products designed to last three years or more, such as autos or appliances, dropped -3.6% last month. Economists had expected orders to fall -3%, owing to fewer bookings for aircraft from Boeing and to parts-supply disruptions in the auto business related to Japan’s March 11 earthquake. Orders also have a pattern of declining in the first month of a new quarter. Another category of orders closely watched by economists, known as core capital goods, dropped -2.6%, a reversal after having being up +5.4% in March. That category excludes defense and aircraft and gives a better indication of longer-term trends in the private sector. Inventories of durable goods climbed +0.9% last month, the 16th consecutive increase.

Tuesday, May 24, 2011 4:03 p.m est.

Yesterday the market was down over -1% but with volume non existent it actually seemed like a quiet day. There was a lot of economic pressure on the market as an early reading of China’s manufacturing activity indicated that it slowed to a 10-month low in May. Then first thing in the morning Sony cut its net profit estimate for the just-ended business year through March 2011 to a loss of 260 billion yen ($3.2 billion), compared to its previous expectation of a ¥70 billion net profit. S&P also cut its outlook on Italian debt and was making comments about Spain and Greece defaulting once again over the weekend. The market remains on high alert about losses on Greek government debt and the likely impact on the balance sheets of the euro zone banks and the European Central Bank. Since the bailout of Portugal though, the euro zone’s major economies have avoided trouble from the ratings agencies or short sellers. It looks like the summer may be what everyone is talking about as there are other weak euro zone areas to watch out for also such as Belgium and France, with both facing some mild downgrade pressures. Add in Italy, Spain, Portugal and Greece and lookout below!

The Dow finished down -131.00 points to 12,381.00, S&P 500 -16.00 points to about 1317.00, S&P 100 -7.00 points to 585.00 and the Nasdaq Composite -44.00 points to about 2803.00.

Today the market started the day slightly to the upside with the Dow seeing highs of +30.00 points, S&P 500 +5.00 points and the Nasdaq Composite +10.00 points but when the Richmond Fed joined the Chicago and Philly Fed in releasing its area figures revealing another marked slowdown, the market started to sell off with the Dow seeing lows of -40.00 points, S&P 500 -4.00 points and the Nasdaq Composite -20.00 points. The market almost made a comeback going into the final hour but selling came once again by the close.

At the close the Dow was down -25.00 points to 12,356.00, S&P 500 -1.00 points to about 1316.00, S&P 100 -.06 points to 585.00 and the Nasdaq Composite -13.00 points to about 2746.00. Oil has remained below the $100 level closing up about +$1.90 to close around the $99.60 level.

Today it was reported that New Home sales rose +7.3% in April. The increase in new-home sales to a seasonally adjusted annual rate of 323,000 was well above the 295,000 pace expected by economists but doesn’t help much as inventories for existing homes continues to build due to bank foreclosures. New-home sales in March rose a revised +8.3% to a 301,000 level compared with the previous estimate of an +11.1% rise to 300,000. New-home sales are down -23.1% compared with a year ago. The supply of new homes fell -2.8% to a record low 175,000. The supply in relation to sales fell to 6.5 months in April from 7.2 months in March. Median sales prices have risen +4.6% in the past year to $217,900.

Friday, May 20, 2011 4:03 p.m est.

There was nothing out to move the market today and it turned out to be one of the quietest expirations in quite a while. It appears that traders are already in vacation mode so this may truly be a “sell in May and go away” scenario this year. The best news though is we were fully profitable on both sides of our trades for this expiration cycle! The Dow sold off pretty strong fist thing this morning as the dollar was strong seeing lows of -130.00 points, S&P 500 -13.00 points and the Nasdaq Composite -30.00 points. The market almost made a comeback midday but the final hour saw selling once again.

At the close the Dow was down -93.00 points to 12,512.00, S&P 500 -10.00 points to about 1333.00, S&P 100 -5.00 points to 591.00 and the Nasdaq Composite -20.00 points to about 2803.00. Interestingly oil was higher today even with the dollar up strongly so we may be seeing a bottom being put in around the $100 level which means we could continue to see gas move lower except of course where I live where it has actually gone up because of the dreaded summer luxury tax. Oil closed up about +$1.00 to close around the $99.50 level.

Thursday, May 19, 2011 4:03 p.m est.

Yesterday the market bounced back about just about 1% with oil surging back over the $100 level but the bounce was on lower volume indicating people not wanting to participate in the move. That seemed to be true as we started higher this morning with the Dow up +70.00 points, S&P 500 +6.00 points and the Nasdaq Composite +15.00 points early on. When some incredibly poor economic reports came out with Existing Home sales falling again and prices down another -5% selling took hold and the Dow saw lows of -20.00 points, S&P 500 -4.00 points and the Nasdaq Composite -10.00 points. Oil also pulled back almost -$2.00 at one point but of course as selling quieted down a low volume bounce occurred taking the market back into the green that held in the final hour.

At the close the Dow was up +45.00 points to 12,605.00, S&P 500 +3.00 points to about 1344.00, S&P 100 +1.15 points to 596.00 and the Nasdaq Composite +8.00 points to about 2823.00. Oil was lower today, down over a dollar at one point but came back with losses of about -$2.00 to close around the $98.00 level. Tomorrow is the last day of this expiration cycle and its looking like it will be fully profitable as the market isn’t moving much and volume is very low so its likely to be a quiet day to end the week.

Here are some interesting facts about the price of oil right now:
$112 million was basically stolen from consumers yesterday. It will happen again today and probably tomorrow and that is on top of the $800 Million PER DAY that is being overcharged by oil companies in America alone, according to Exxon’s CEO Rex Tillerson. He testified before Congress last week because they are looking at the price of oil and of course it didn’t make the main stream news but it should have! He said; "based purely on supply and demand oil should be in the $60 to $70 a barrel range." The reason it’s above $100 a barrel, Tillerson explained, is due to the oil majors using futures contracts to lock in current high prices, and speculation that is engineered by the high-frequency trading of quantitative hedge funds.

Other disclosures were made in last week’s testimony that is interesting:
The average cost of producing 1 barrel of oil was $11!!!! The average price of the oil in the marketplace at $100 is about 9 times the cost of getting the oil out of the ground. I believe that every company is free to make a profit but gouging is ridiculous.

Oil jumped yesterday by +$3.00 over the $100 level once again because of a supposed draw-down in oil inventories which the media proclaimed was because demand is picking up. This is so untrue because if you really take a look you see that the net drawdown of -100,000 barrels was because net Imports shipped is -1.2 Million barrels per day less than last year or -8.4 million barrels a week less oil.

Clearly there is also no shortage of oil, the U.S has 1.75 billion barrels of oil in storage, enough to offset 186 days of imports (9.4Mbd) and 60% of those imports come from Canada and Mexico, not OPEC so our 1,750 million barrels of storage would offset over 500 days worth of imports from the Middle East and Africa even if it was cut off. Existing homes and condos sale fell -0.8% in April to a seasonally adjusted annual rate of 5.05 million, the National Association of Realtors reported. The decline was a surprise as economists expected sales to rise to 5.25 million units in April, based on a surge in pending home sales in March. Sales rose a revised +3.5% in March to 5.09 million units, down from the initial estimate of a +3.7% rise to 5.1 million units. The median price of homes sold was down another -5% in April from last year at $163,700. Inventories of existing homes for sale also rose to 9.9% to 3.87 million units in April, representing a huge 9.2 months supply, up from 8.3 months in March.

Jobless Claims fell to 409,000 last week from an upwardly revised 438,000 in the prior week. Economists expected claims to decline to a seasonally adjusted 424,000. The average of new claims over the past four weeks, meanwhile, climbed +1,250 to 439,000, remaining at the highest level since November. The four-week average is considered a more accurate gauge of employment trends because it lessens week-to-week volatility in the data. Also, the number of people who continue to receive unemployment checks forever it seems, fell by -81,000 to a seasonally adjusted 3.71 million. The total number of people receiving some kind of state or federal benefit, which is reported with a two-week lag, dropped -47,124 to 7.94 million.

Business activity at manufacturing firms in the Philadelphia region grew in May but at a much slower pace compared to a few months ago, according to the survey issued by the Fed’s Bank of Philadelphia. The Philly Fed index sank to 3.9% in May from 18.5% in April, well below expectations of an increase to 20.1%! Any reading over zero in the diffusion index indicates growth but this is bad! Higher readings mean that more firms are reporting better conditions instead of worse conditions.

The pace of economic growth may be "choppy" in the summer and fall, the Conference Board said Thursday as it reported that its leading economic index fell -0.3% in April, the first monthly decline since June. Four of the 10 indicators included in the LEI made positive contributions in April, led by the interest rate spread. The largest negative contribution came from average weekly initial claims for unemployment-insurance benefits. Economists had expected the index to show no growth in April. The gauge for March was revised higher to +0.7% from a prior estimate of +0.4%. The LEI is a weighted gauge of 10 indicators that are designed to signal business cycle peaks and troughs. For the six months through April, the LEI gained +3.5%, up from +1.4% in the prior six months.

Tuesday, May 17, 2011 4:03 p.m est.

The market was lower once again today as economic data was pretty bad with the Dow seeing lows of -160.00 points, S&P 500 -10.00 points and the Nasdaq Composite -25.00 points. As the day went on the market came back with the Nasdaq Composite actually moving back into positive territory. In the short term the market is getting oversold as we move into the final three days of expiration so we may have seen the bottom for the week here.

At the close the Dow was down -70.00 points to 12,480.00, S&P 500 -.50 points to about 1329.00, S&P 100 +.25 points to 590.50 and the Nasdaq Composite +1.00 points to about 2783.00. Oil was lower today, down over a dollar at one point but came back with losses of about -$.50 to close around the $97.00 level.

Housing Starts fell -10.6% in April to an annual rate of 523,000, while permits declined -4%. Housing starts in March were revised up to 585,000 from an original reading of 549,000. Economists had expected housing starts in April to climb to an annual rate of 575,000 on a seasonally adjusted basis. Permits for new construction, viewed as a gauge of future demand, fell to an annual rate of 551,000 from March's upwardly revised level of 574,000. Permits for single-family homes, which account for three-quarters of the housing market, dropped -1.8% to an annual rate of 385,000 last month.

The output of the nation's factories, mines and utilities was weaker-than-expected in April as a parts shortage due to the Japanese earthquake led to a drop in auto assemblies, the Fed said. Industrial production was flat in April, well below the +0.3% increase expected by economists. Adding to a sense of weakness in the report, industrial output in February and March was also revised lower. Factory activity alone fell -0.4% in April, which was the first decline after nine straight monthly gains. Total motor vehicle assemblies dropped to a 7.9 million unit annual rate in April from a 9% million rate in March. Excluding motor vehicles and parts, factory production rose +0.2% in April. Capacity utilization, a gauge of slack in the economy - slipped to 76.9% in April from 77% in March.

Monday, May 16, 2011 4:03 p.m est.

Selling remained strong today with the Dow seeing lows of -70.00 points, S&P 500 -7.00 points and the Nasdaq Composite -20.00 points in the first few minutes of trading. With volume low the market came back to see the Dow up +55.00 points, S&P 500 +6.00 points but the Nasdaq was only able to make it up +5.00 points. Selling took hold once again in the final hour with new lows made in the S&P 500 of -10.00 points and the Nasdaq Composite -50.00 points.

Earnings are now basically finished and even though they came in well above expectations overall, the market is always looking forward and the reason for the selling of late may have something to do with what the future is holding because of high gas prices and a lackluster housing sector. We are also in a poor seasonal time of year and the market does need a rest from its gains of late so with this being an expiration traded week we could see a bit more downside.

At the close the Dow was down -47.00 points to 12,548.00, S&P 500 -8.00 points to about 1330.00, S&P 100 -4.00 points to 590.00 and the Nasdaq Composite -46.00 points to about 2782.00. Oil was lower all day with losses of about -$2.30 to close around the $97.40 level.

An index that measures the confidence of home builders was unchanged in May, suggesting virtually no improvement in the sideways housing market. The National Association of Home Builders said its Housing Market Index, produced in tandem with Well Fargo, remained "at the low level of 16." Economists had expected the HMI to rise to 17. It is seasonally adjusted index in which any number over 50 indicates more builders view sales conditions as good. The last time the index topped 50 was in April 2006.

Friday, May 13, 2011 4:03 p.m est.

The market bounced out of the gate after consumer sentiment seemed better than expected but it wasn’t by much and as oil slipped with the dollar gaining strength the market started to fall with lows hit midday with the Dow seeing lows of -160.00 points, S&P 500 -16.00 points and the Nasdaq Composite -40.00 points. The final hour saw an attempt at a rally as oil came all the way back to close higher because a couple of pipelines in Louisiana but selling remained so the market closed lower.

At the close the Dow was down -100.00 points to 12,596.00, S&P 500 -11.00 points to about 1338.00, S&P 100 -5.00 points to 594.00 and the Nasdaq Composite -35.00 points to about 2829.00. Oil was lower all day but came back to close with gains of about +.70 to close around the $99.70 level.

Consumer prices rose a seasonally adjusted +0.4% in April, led by higher gas costs. Core prices rose only +0.2% because it takes out that unneeded volatile food and energy costs. Remember its all about how much your plane costs every year!! Economists had forecast CPI to rise +0.4% overall, with a +0.2% increase in the core rate. Consumer prices have jumped an unadjusted +3.2% over the past year, the largest 12-month increase since October 2008. Average hourly earnings of workers, meanwhile, fell -0.3% last month after taking inflation into account. Inflation-adjusted hourly wages are down -1.2% over the past 12 months.

The University of Michigan-Thomson Reuters preliminary Consumer Sentiment Index climbed to a reading of 72.4% from a reading of 69.8% in April. Economists expected a 71% reading. The gauge hasn't been above 100% since January 2004 and was at 76.1% on the eve of the last recession.

Thursday, May 12, 2011 4:03 p.m est.

Interesting;
Hedge funds are rethinking strategies and future after the conviction of Raj Rajaratnam on 14 counts of insider trading "sent a chill down Wall Street, causing hedge funds to rethink their use of so-called expert analyst networks and also ponder the impact of the historic decision on the implementation of the Dodd-Frank regulatory bill," reported CNBC.com. The decision is expected to lead to, among other things, the possibility of lower stock trading volume on Wall Street as well as possibly influencing "billionaire" hedge fund managers with regard to deciding how to trade or whether to stay in the business at all.

The market started the day down again as the dollar was stronger and oil was almost another -$2.00. Lows were hit in the first half of trading with the Dow seeing lows of -100.00 points, S&P 500 -10.00 points and the Nasdaq Composite -25.00 points but when the dollar turned around and started moving lower the market and oil turned higher with the Dow seeing highs of +80.00 points, S&P 500 +8.00 points and the Nasdaq Composite +20.00 points. The final hour saw some profit taking once again but in the end the market came back once again.

At the close the Dow was up -66.00 points to 12,695.00, S&P 500 +7.00 points to about 1349.00, S&P 100 +2.00 points to 599.00 and the Nasdaq Composite +18.00 points to about 2863.00. Oil was lower by almost -$2.00 early on but when traders decided to pump it up it rallied at one point over the $100 level but fell back in the end to close up about +.76 to close around the $99.00 level.

Retail sales increased +0.5% in April to a seasonally adjusted $389.4 billion and is the 10th straight month of sales gains. Economists expected total sales to rise +0.7% in April. Details of the April increase were mixed. On the positive side, retail sales were revised higher in March and February but the gain in April was due in large part to higher gas prices. Sales excluding autos and gasoline rose +0.2% in April, which was the smallest gain since December. Excluding the +0.2% rise in car sales, retail sales rose +0.6%. Economists had expected a +0.7% increase.

Wholesale prices rose a seasonally adjusted +0.8% in April, once again driven by surging fuel costs. Wholesale prices have jumped an unadjusted 6.8% in the past year, the largest 12-month increase since September 2008. The more closely followed core producer index rose +0.3% in April. The core index is usually viewed by investors and the Fed as a better gauge of inflationary pressure because it excludes the volatile food and energy categories. Economists had predicted a +0.8% increase in overall producer prices and a +0.2% increase in the core rate. Wholesale energy prices climbed +2.5% in April while wholesale food prices rose +0.3%.

Jobless Claims fell by -44,000 last week to 434,000, partly reversing a large spike earlier in April. Economists had expected applications for jobless benefits to decline to seasonally adjusted 428,000 from an upwardly revised 478,000 in the prior week. The average of new claims over the past four weeks rose by +4,500 to 436,750, the highest level since November. The four-week average is considered more accurate a gauge of employment trends because it lessens week-to-week volatility in the data. Meanwhile, continuing claims increased by +5,000 to a seasonally adjusted 3.76 million. Altogether, 7.98 million people received some kind of state or federal benefits, down -31,247 from the prior week. It's the first time in several years the number has fallen below 8 million.

Wednesday, May 11, 2011 4:03 p.m est.

The market was down pretty hard today as commodities overall were sold once again and the dollar was strong. Oil trading was actually halted once as prices fell so fast. The Dow saw losses of -185.00 points, S&P 500 -21.00 points and the Nasdaq Composite -40.00 points but a little buying at the close saw losses cut a bit. Cisco’s earnings just after the close were worse then expected and they continue to see a lot of slack in the economy so it looks like trading may be rough tomorrow morning.
At the close the Dow was down -130.00 points to 12,630.00, S&P 500 -15.00 points to about 1342.00, S&P 100 -7.00 points to 597.00 and the Nasdaq Composite -27.00 points to about 2845.00. Oil closed down pretty hard about -6.00 to close around the $98.00 level.

The trade deficit widened by +6% in March to $48.2 billion. The trade deficit was above the forecast of economists for a deficit of $47.0 billion and is the largest deficit in nine months. Imports rose faster than exports in March even though as exports rose to the highest level on record while imports were the strongest since August 2008. The deficit is quite close to government estimates in the advance first quarter gross domestic product report suggesting little revision to GDP from trade. The trade sector subtracted slightly from Q1 GDP after adding 3.3 percentage points to growth in the fourth quarter.

Tuesday, May 10, 2011 4:03 p.m est.

Yesterday the market ended the day up a little less than half a percent on one of the most abysmal volume days of the year even though it looked like Greece Part 2 could be around the corner and it was reported that House prices fell -3% last quarter alone and for all of 2011, it could fall -10%.

According to The Wall Street Journal: "Europe's debt crisis has returned full circle to the problem that started it over a year ago: How to save the malfunctioning Greek state from running out of money. Greece has been slipping farther behind its targets for cutting its budget deficit and is expected to need nearly €30 billion ($43 billion) of extra financing for 2012, according to euro-zone officials." Because of this Standards and Poor’s cut Greece's credit rating to B from BB- because euro-zone officials are looking to extend the debt payment maturities of the European Commission's portion of the nation's 110 billion euro bailout.

If you thought the housing crisis was bad, think again as its actually worse then you think. New data just out from Zillow, the real-estate information company, show house prices are falling at their fastest rate since the Lehman collapse.

Average home prices are down -8% from a year ago and -3% over the quarter, and are falling at about -1% every month, according to Zillow. The percentage of homeowners in negative-equity positions with a home worth less than its mortgage has rocketed to +28%, a new crisis high! Zillow now predicts prices will fall about -8% this year and says it no longer expects the market to bottom before 2012. “There’s no way we can get to flat, from these depreciation levels, in the last nine months of the year,” says Zillow economist Stan Humphries. “Demand is a lot more anemic than we had previously thought.”

When in 2012 does Zillow see the market bottoming out even though the government spent an estimated $22 billion between 2008 and 2010 on tax breaks to prop up the housing market. They think that all it achieved was a brief suckers rally that ended last summer. “As we said at the time, it was a giant waste of money,” says Mark Calabria, economist at the conservative Cato Institute. “None of these things really turned the housing market around. They just put off the adjustment for awhile.” It’s hard to overestimate the scale of the carnage in the housing market. Zillow found prices fell in all but four U.S. metro areas. Falling real-estate prices mean spiraling hidden losses throughout the economy, from banks to homeowners. This is very similar to Japan’s “zombie banks” that were the financial institutions that stuck around during that country’s economic recovery after the 1990 crash. They continue even to this day with huge losses they can never repay. To read more about this go to;
http://curiouscapitalist.blogs.time.com/2011/05/09/will-home-prices-continue-to-fall/

Today there wasn’t much out to move the market and highs were hit in the first few minutes of trading before the market settled into a grind. Just before the final hour new highs were hit on even lower volume with the Dow seeing +100.00 points, S&P 500 +13.0

0 points and the Nasdaq Composite +35.00 points. At the close the Dow was up +76.00 points to 12,760.00, S&P 500 +11.00 points to about 1357.00, S&P 100 +4.00points to 603.00 and the Nasdaq Composite +29.00 points to about 2871.00.

Oil was volatile after closing up almost +$6.00 yesterday and by the close today it was much higher closing up about +1.30 closing around the $104.00 level. Jumping markedly for the second straight month, import prices shot up +2.2% in April, the Labor Department reported, as fuel prices surged +6.7%. That's above the +1.6% that economists had anticipated and is the first time import prices increased by more than +2% in consecutive months since June 2008. Export prices meanwhile rose +1.1%.

Friday, May 6, 2011 4:03 p.m est.

Now I know why volume has been so slow. . .Generation Xers are staying away from stocks.

According to The Smart Money.com: "Financial advisers generally recommend that Gen Xers – those 50 million