What a day. Just when you think you’re living in interesting times it somehow manages to outdo itself. The Dow was down a full 1,000 points at one point today! The market rallied back to finish 3.5% lower – still a huge loss. Volume was record setting and breadth was terribly negative at 15:1. This was truly one for the record books. I’ve squared away my book after having been short for several weeks. This looks like a market that you just can’t touch as the problems in Greece are entirely unresolved. Stay tuned.
From Daily Futures:
Currencies – The Word for 2010 is “Contagion”
Greece’s Parliament approved the austerity plan that made Europe’s aid to Greece possible by a vote of 172 to 121 (see article). The June euro dropped 2.24 cents to $1.2603, the lowest close in 14 months with ongoing concerns that Greece’s debt problems will spread to other European countries. Also, the European Central Bank met and kept the interest rate unchanged at 1.00%, as expected.
The U.S. Labor Department said that non-farm productivity was up an annual rate of 3.6% in the first quarter and up 6.3% from a year ago, better than expected. Unit labor costs were down 3.7% from a year ago.
The Labor Department also said that jobless claims were down 7,000 last week to 444,000, more than expected. With Europe on investors’ minds, the June U.S. T-bonds shot up 2.26/32nds to 123.11/32nds, ahead of tomorrow’s monthly unemployment report.
Most commodities closed lower as concerns about Europe dominated the markets.
Grains and Cotton
The USDA said that, compared to the four-week average, last week’s net sales of:
Corn were up 51%.
Soybeans were up 47%.
Wheat were down 21%.
Cotton were down 33%.
July corn traded higher, but ended down 1.75 cents at $3.712.
July cotton fell 2.23 cents to 79.85, under pressure from a rising U.S. dollar.
The USDA said that net sales of beef totaled 13,300 tons last week, down from 17,900 tons the previous week. June cattle finished down .50 at 96.20.
July lumber ended down its $10 daily limit at $285.50, hurt by today’s broad sell-off in commodities.
Brazil’s government (CONAB) estimated Brazil’s upcoming coffee crop at 47 million bags, roughly the same as their estimate in January. The government estimates are typically low and some private analysts are expecting a harvest in the 50’s. July coffee fell 4.10 cents to $1.3320.
July sugar continued is descent, falling .74 to 13.67, the lowest in 14 months. Sugar is now down over 11 cents from its high of just three months ago.
The Florida Department of Citrus Processors Report said that there were 126.96 million gallons of frozen concentrated orange juice in inventory on April 24th, down slightly from a year ago. July orange juice was down 1.40 cents at $1.3510.
June gold closed up $22.30 at $1,197.30, the highest in five months, regarded as a safe haven during Europe’s debt crisis.
The U.S. Department of Energy said that underground supplies of natural gas were up 83 billion cubic feet to 1.995 trillion cubic feet. Supplies are now up 5% from a year ago. June natural gas fell 6.20 cents to $3.929.
June crude oil dropped $2.86 to $77.11, pressured by fears about Europe and yesterday’s increase in weekly U.S. inventories.
An index of services in the U.K. fell from 56.5 to 55.3 in April, still a sign of expansion. The June British pound closed down 3.19 cents to $1.4781 while the U.K. voted for its next government.
Statistics Canada said that building permits totaled C$6.3 billion in March, up 12.2% on the month and up 38.9% from a year ago.
Australia’s Statistics Bureau said that retail sales were up .3% in March, less than expected.
The June Japanese yen jumped up .0569 to 1.1249, the highest close in two months, as Europe’s problems sparked short-covering in the yen.
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.