“ώμοι, πέπληγμαι καιρίαν πληγήν έσω – Alas! I am struck deep with a mortal blow!”
-Aeschylus’ Agamemnon line 1343
I think the line above sums it all up. It was a wild week on Wall Street. Stocks got torched for almost 5% this week as the sovereign debt crisis reached a whole new level. High beta names were crushed as the Nasdaq lost 8% this week and the Russell 2,000 fell 10%. There are rampant rumors of a rescue plan being put together so it will be another Sunday night rescue plan from the ECB. This is a great time, in my opinion, to move to the sideline and collect yourself. We have been horribly bearish on the market for many weeks, but the move in the last 4 days substantially alters the risk/reward scenario. In addition, the market is trading as if it is broken. That makes it incredibly dangerous on both the long and short side. You’re no longer trading or investing. You are just gambling. If that’s your game I recommend you go to Vegas where you’ll at least avoid the commissions and get a few free drinks. Enjoy the weekend and relax. You’ll probably need it come next week.
The U.S. Labor Department said that the unemployment rate increased from 9.7% to 9.9% in April, but with a net gain of 290,000 jobs, the most in four years and more than expected. The June 2011 eurodollars were unchanged at 98.68.
In March, the number of new jobs was revised up, from 162,000 to 230,000. In February, the number was revised up, from -14,000 to +39,000. The June U.S. T-bonds closed down 1.11/32nds at 122.00.
Obviously, this was a difficult week for commodities. Gold performed the best, but corn, wheat, cattle, hogs, orange juice, and silver also held up pretty well, given the panicked climate.
Grains and Cotton
According to Dow Jones Newswires, F.O. Licht predicted that the world’s corn crop will be up 1.1% in 2010-2011 and the wheat crop will be down 3.2%. July wheat was up three-quarters of a cent at $5.09.
July corn ended down a quarter-cent at $3.71 ahead of Tuesday morning’s monthly USDA supply and demand estimates.
July cotton finished up .86 at 80.71, regaining some of this week’s loss while the dollar fell lower.
After the close, the USDA estimated this week’s beef production at 507.2 million pounds, up 1.1% from a year ago. Pork production was estimated at 407.3 million pounds, down .6% from a year ago. June hogs closed up 1.42 at 85.52.
July cocoa held up fairly well this week, but fell $187 today to $3,016, the lowest close in two weeks as it succumbed to concerns about Europe.
Orange juice – Problems In Brazil?
According to Bloomberg news, an official from Cutrale, Brazil’s largest orange juice processor, said that too much rain damaged the flowering stage of citrus trees. He expects Brazil to harvest 286 million boxes of oranges this year, down from 305 million boxes last year and the lowest in seven years (see article). July orange juice ended up .0090 at $1.3600.
July silver jumped up 93.6 cents to $18.451, a sign that it may have survived this week’s panic selling.
Its been an especially tough week for crude oil, hit by Europe’s debt crisis and an increase in last week’s U.S. inventories. July crude oil closed down $1.67 at $78.51, the lowest close in twelve weeks.
Currencies – Record Jobs Increase In Canada
Statistics Canada said that the unemployment rate improved from 8.2% to 8.1% in April with a record-high gain of 108,700 jobs, many more than expected. The June Canadian dollar bounced up 1.84 cents to 95.91.
In the U.K., voters gave the most support to the Conservative Party, but because there is no clear majority, Prime Minister Brown still has a chance to form a coalition to stay in office. It should be know within a few days who will be able to form a majority. The June British pound ended up .0027 at $1.4808.
The Bank of Spain estimated that real GDP was up .1% in the first quarter of 2010, possibly ending seven consecutive quarters of contraction.
The June Japanese yen fell .0308 to 1.0941 after yesterday’s panic short-covering.
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.