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Monday, July 6, 2009

Morning Market Report

I will try this new feature daily.

The futures look weaker at the open. There is continued fears over the latest jobs report. Furthermore, VP Biden's comment, in which he said that the administration "misread the intensity of the recession, aren't helping matters either. Most of the indices look to be down about 1% at the open.

The world market were mostly down between one and two percent. The Hang Seng in China was down 1.23%, the NIKKEI in Japan was down 1.38%, and Strait Time Index in Singapore was down 1.46%. In Europe things weren't that much different. The FTSE, on the London Exchange, was down 1.3%, the DAX, in Germany, was down 1.49%, and the worst performing European index was the Italian index down 2.36%.

Currencies look mixed at the open. The Dollar looks to be stronger against the Euro, the Canadian Dollar, the Pound, the Australian Dollar, and the Swiss Franc while it looks weaker against the Japanese Yen.

Meanwhile, the bonds look to be relatively unchanged. The short term treasuries look to be opening slightly better whereas the longer term treasuries look to open with slightly higher rates. The British GILT were slightly better on the shorter term (5 years and less) and slightly worse on the longer terms. Meanwhile, the German BUND Bonds were all better. The rates to watch are the spread between the 2 year and the 10 year. Currently, the spread is just over 2.5%. The record, 2.75%, was set in May of this year. The high spread indicates upcoming inflation.

A bankruptcy judge has approved General Motor's sale of its assets to the U.S. Treasury. The second quarter earnings season kicks off this week with Alcoa on Wednesday. The meeting of the G8 will be in focus as it kicks off this Wednesday. Later today, the Institute for Supply Management releases its June numbers. The consensus expects a 46, which would be an improvement over 44 from May, though still below 50, which is the break point for expansion contraction. The ISM measures the service economy.

My analysis: Look for stocks to continue to show weakness. The jobs number was cold water on the markets. It may take several days before the market turns to something else. Bonds should be the biggest short term beneficiaries. All eyes will soon turn to earnings starting this Wednesday and until then, the jobs report will be a market eye sore.

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