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Wednesday, August 5, 2009

Morning Market Report

There's breaking economic news. ADP employer services, which surveys private sector lost jobs, just released their numbers and the July numbers have a loss of 371,000 jobs. The expectations were a loss of 346000. The consensus of the full U.S. Department of Labor employment numbers is a loss of 320000. Bad employment data would pour cold water on any bulls in the market. I thought that anything over 500,000 lost jobs would bury Obama and that isn't likely to happen. So far, however, the markets haven't responded too poorly.

The markets in the Far East were all down. The Hang Seng in China was down 1.45%, The NIKKEI in Japan was down 1.18%, and the the Straits Time Index was down 1.58%. In Europe, the indices were nearly unanimously up. The FTSE in London was up .2%, the DAX in Germany was up .04%, and the Spanish index was .3%.

Treasury bond rates, however, continue to go higher. The ten year is now trading at 3.74% after getting to 3.49% on Friday. The yield spread between the two year and ten year is now back up to 2.5%. It reached an all time high at 2.75% in June and has been bouncing up and down a bit below that since. The yield spread measures the chances of future inflation. Oil continues to trade comfortably over $70 a barrel again. It's currently at $71.22 a barrel.

There is very little activity in the currency markets. The Dollar is up .09% against the Euro, it's down .26% against the British Pound, and its up .13% against the Yen.

Another ISM number comes out this morning in a couple hours and oil inventories will come out later as well.

My analysis:

Yesterday, pending home sales were up for the fifth straight month. I personally think that pending home sales is no longer a good guage of anything. That's because it is so difficult to get anything approved now. So, it's difficult to know just how many of those get closed. Normally, the difference between a pending contract and an actual sale is easy to measure. In this market, it's immeasurable. Still, the number was up.

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