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Tuesday, July 7, 2009

Morning Market Report

The markets look rather quiet this morning. The futures on the three major indices look to be down but just slightly. The Dow futures are currently down 20, S&P down 3, and NASDAQ down 1. (Dow was up 44 points yesterday, S&P was up 3, and NASDAQ was up 4 yesterday) That is an extension of the markets in the rest of the world. In Asia, most of the markets wound up down, but slightly. The Japanese NIKKEI was down .34%, the Hang Seng was down .65%, the Straits Times Index in Singapore was up by .27%. In Europe, it was mild but mostly up. The FTSE in London was up .73%, the Dax in Germany was up .41%, and the AEX in Amsterdam was up .64%. Most European indices hovered around being up .5%.

Bonds also look fairly mild today. Both the British and German bonds were all slightly higher. The German 30 year BUND gained .04 to 4.13%, the British 30 year GILT gained .01% to 4.41%. The U.S. 30 year Treasury is currently up .02 to 4.38%. The spread between the two year and the ten year is 2.58%. The record again, set in May, is 2.75%. That is a very troubling spread that indicates significant future inflation.

The U.S. Dollar looks slightly down at the open. It's losing just slightly, .06%, to the Yen, .33% to the Canadian Dollar, .35% to the Euro, while up .31% against the British Pound. Oil is taking a breather today after losing nearly three dollars to $64 a barrel. It's up 34 cents today. This looks to be a small hiccough in an otherwise downward trend for the last two weeks in the price of oil. It's lost nearly ten percent in less than two weeks.

Yesterday, the Institute for Supply Management came out with their June numbers. Their index came in at 47. That's up 3 from the previous month and one over the consensus on the street. Any index below 50 indicates that the service sector, which the ISM measures, is still contracting. The index has been constantly improving since a low in November of last year. Auto parts manufacturer Lear will file for Chapter 11 protection after laying out a plan to emerge from bankruptcy that has the blessing of most of its creditors. Three year Treasury Bonds are being auctioned today. There are no major economic numbers coming out today. Earnings begin in earnest for the second quarter tomorrow with Alcoa.

My Analysis

It looks to be a quiet day today but expect plenty of fireworks once earnings season gets started. I continue to bearish in the short, intermediate and long term. This is likely to help bonds over the next couple weeks and I see oil continuing down as well.

Disclosure:

Everything in this space should be taken as information only. All opinions are my own only and should NOT be taken as an endorsement or investment strategy. I am not a licensed investment advisor and nothing here should be taken as investment advice.

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