Hence, the pricing from Wednesday morning (we did have an improvement that afternoon) and this morning is only off by anywhere from 7 to 25 bps to the worse. Whew! Not too bad. This morning’s economic news releases have let a little air out of the balloon for equities from yesterday’s inflated rise upward. Advance Retail Sales for May fell 1.2%, when analysts were looking for an increase of .2% -- looks like the consumer is taking a little break from spending this past month. This is the worst drop since Sept of 2009, and excluding autos (a decline of 1.1%) it’s the worst drop since March of ’09.
Consumer Confidence continues to shine as June’s survey came in at 75.5, up from the 73.6 posted the month previous. Analysts were expecting a reading of 74.5 and continues to show that we are an optimistic bunch here in the USA. It just strikes me as a bit humorous that this confidence reading carries so much weight with traders. It’s not REAL purchases or REAL money, it’s just optimism . . . which is good, of course. From the direction of trading so far today, it’s not having much of a positive effect. Business inventory data for April showed a .4% increase short of the .5% for which the experts were looking.
The first report released this morning in regards to the US economy was the latest ADP Employment Change report which told us that payrolls from private corporations increased by 55K in May. This number was a bit of a disappointment as analysts were looking for 70K. This off 10K from the upwardly revised number of 65K in April. Tomorrow the Labor Dept reports its Unemployment figures and will tell us how many jobs were created from their analysis. Initial Jobless Claims for the week ending May 29 came in at 453,000 – down 10K from the week previous, but not much of an improvement. Continuing jobless claims actually increased 31K from last week . . . the wrong direction for those claiming the employment situation in our country is getting better.
First Quarter nonfarm productivity’s final reading showed an increase of 2.8%, down from the 3.6% in the last revision. Unit labor costs for Q1 fell 1.3%, which is good, but not as good as the 1.6% anticipated. Factory orders for April increased 1.2%, but not as good as the 1.7% expected. We have a pattern here, can you see it? The ISM Services Index for May did come in at 55.4, almost at analysts expectations of a 55.6 reading. Most of the reports this morning were disappointing, and missed expectations. Thus the weakness in equity markets today, and the subsequent quieting in credit markets.
The month of May saw the Dow drop 7.9% (the S&P 8.2%) and it was the worst May on the Dow since 1949. Pretty impressive! The Dow is now down 2.8% for the year so far having lost about 56 points for the week last week. Bullish traders, I’m sure, were hoping to have a good week last week to overcome the dismal month up to that point, but it just didn’t happen, and the Dow ended the bleak month with a 122 point loss on Friday.
As mentioned, it seemed the losses would carry right into this week and month, too, the way the markets opened this morning. But then, we rec’d word that the ISM Manufacturing Index for May came in at 59.7, just slightly above the 59.4 anticipated. Then the big surprised of the day came from the construction sector of the economy. April’s Construction Spending showed a 2.7% increase from the prior month, besting the mere .1% increase expected. These reports were enough to reverse the trend in equity markets and catapult us to positive territory.
Trading is light, though, and nobody seems to be real excited about jumping in to this volatile market, so things should stay pretty calm today with equity markets remaining lack luster through out the session. The big economic report, of course, is the unemployment report due on Friday. Analysts are all over the board with their expectations of how many jobs were created in May. www.luxfunding.com
Good Morning Everyone and Happy Friday! Equity markets are selling off once again today. The middle 3 days of this week were pretty much a wash as the equity markets see-saw’d back and forth. However, Monday’s impressive 405 point gain on the Dow was certain to make this week and winning week after the drubbing the markets took last week. The week’s gain is still in tact, despite this morning’s sell off of over 200 points on the Dow. Credit markets are vastly improved, but investors (secondary marketing pricing gurus) are slow to chase the rally again. Next week we should have some really good pricing.
I’m going to be running around today rounding up family and helping to gather everyone to Grandma’s house for the funeral tomorrow at 12:00. I’ll be back in the office on Monday all ready to go. Thank you everyone so much for all the well wishes and really kind emails that flooded into my inbox and voice mail on Wednesday. It was quite overwhelming! I’m surprised so many of you actually ready my article!
Grandpa was truly a unique man and lived up to the expression that he loved to use, “Dance with the girl that brought ya!” His secret to wealth. Young people these days get too dissatisfied too quickly and change important things about their lives. In doing so, they have to keep starting over financially and by the time they retire, they have nothing to show for all their running around in circles.
Grandma married the right girl the first time . . . he married grandma on October 12, 1939 – over 70 years ago! Lived in the same house from 1943 to 1988, and then the house in Yucaipa from 1988 to present (2 houses in 67 years!). He stayed with the same career, the same network of friends and business partners (the Italian Club of Hawthorne), kept his business at the same address for 50 years . . . Although self employed for the last 60 years, he had enough money to live comfortable in retirement for the last 25. Good advice for all of us.
Good Morning Everybody and Happy Tuesday! We have another wild day on our hands in equity markets. After the Dow gained over 400 points yesterday, it fell out of bed this morning . . . dropping almost 70 points in the first ½ hour of trading. Choppiness has been theme of the session so far, but we are now well above the unchanged mark – up over 50 points -- another 100 point swing. The Asian and European stock markets were down over 1% almost straight across the board in early morning (our time) trading. Hence the drop out of the gate for US markets, but traders are trying to focus on the US economy and the “glass ½ full.”
Wholesale inventories for the month of March increased .4%, just a tad less than the .5% for which the experts were looking. There are concerns now about the details of the bail out for Europe by the EU and the IMF. Are the underlying problems resolved that got them into this mess in the first place? This is what caused the global markets to sink over night. Gold and commodities including oil (although barely) are all up this morning. There is an auction of 3-year Notes this morning, the results of which will be released momentarily. Our pricing is within an .125 of where we were yesterday, in either direction.