The gamblers took a few chips off the table today as markets gave back most of yesterday’s gains. The S&P 500 finished lower by 1.2%. The declining Euro once again has some participants worried about the effectiveness of the EU’s bailout plan. I’ve been quite vocal with regards to the bailout and feel quite certain that this plan will do nothing to resolve the structural problems at hand. Whether the market realizes this in 2 days or 2 years is a whole different story, but at some point I am quite certain that investors will recognize that austerity combined with banker bailouts is not a resolution to structural flaws within the currency system. The Euro finished the day lower by 0.8% as the dollar index hit a new 52 week high. The EU does not appear to be winning their battle with those “evil” speculators. It looks to me like investors are beginning to realize who the “suckers” are at the poker table. Do you think the ECB and EU have realized it yet?
From Daily Futures:
U.S. Economy
The U.S. Labor Department said that jobless claims were down 4,000 to 444,000 last week, more than expected.
The U.S. Treasury sold $16 billion of 30-year T-bonds at a median yield of 4.44% with a bid-to-cover ratio of 2.60.
Grains and Cotton
The USDA said that, compared to the four-week average, last week’s net sales of:
Corn were down 41%.
Soybeans were up 24%.
Wheat were up 66%.
Cotton were up 8%.
The USDA said today that China bought 239,000 tons of U.S. corn for this season and 130,000 tons for 2010-2011. Also, 58,000 tons of U.S. corn were sold to unknown destinations for this season and another 116,000 tons for 2010-2011. July corn closed down 5.25 cents at $3.73.
July wheat dropped 12.5 cents to $4.79, the lowest close in five weeks, still pressured by Tuesday’s USDA estimate that the U.S. will have 997 million bushels left over at the end of 2010-2011.
Livestock
The USDA said that net sales of beef totaled 12,700 tons last week, down 12% from its four-week average. August cattle closed down .05 at 94.65.
The U.S. Meat Export Federation said that total beef export volume was up 11% in the first quarter from a year ago. Total pork export volume was down slightly in the first quarter from a year ago. August hogs fell .50 to 84.75.
Metals
Copper inventories in London were down 1,255 tons this morning to 485,150 tons, the lowest this year. July copper closed up 4.35 cents at $3.2315.
Energies
The U.S. Department of Energy said that underground supplies of natural gas were up 94 billion cubic feet last week to 2.089 trillion cubic feet. Supplies are now up 5% from a year ago. July natural gas ended up 5.5 cents at $4.44, the highest close in two weeks.
Currencies
Australia’s unemployment rate stayed at 5.4% in April with a gain of 33,700 jobs, more than expected. The June Australian dollar closed up .62 at 89.51.
The June euro closed down .0069 at 1.2565 with ongoing doubts about Europe’s economy after last weekend’s decision to bail out Greece.
The Office for National Statistics said that the U.K. had 7.5 billion pounds of net imports in March, more than expected. The June British pound fell 1.80 cents to $1.4639.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.