Closing Market Commentary For 06-19-2012
The trading day came to a close without one cuss word being uttered. Well, that is because no one was around to make such utterances. Everyone decided to take the day off and come back tomorrow. I keep hoping my readers have opted to close out your dogs and put some cash aside for the bargains that are sure to be within reach by September, maybe sooner. The European and Global political and economic issues are deteriorating faster than you can say ‘bailout’. The political and financial slippery slope the Global Community is on is getting slimy as every day moves forward. Which reminds me of the G-20 politicians eating the best of the best food and adult beverages that tax money can buy. All the while making statements that they ‘hope’ things will soon resolve themselves.
The situation in Europe alone are very grim with the banking problems in France about to explode, (continued) new banking regulations that are causing major banks to cut back on lending, suicide rates jumping, general panic is in the air and the unemployment in Spain is worse than Greece. There isn’t much anyone can say until these problems are addressed. Even Ireland and Portugal need money and Italy is going to need a much larger bailout than is being addressed by the ECB. In other words there isn’t enough money set aside by the ECB to contain these issues and when that becomes evident all hell will break lose.
With French president at the helm of the ‘Titanesque’ we are witnessing a slow motion collision into reality that is absolutely impossible to stop and we know he has no real solution at hand. This is going to hurt folks.
The key headline in the overnight session was that China was willing to add a token pittance to the IMF “warchest” even as it itself is struggling to find ways to stimulate its economy. Ignore that China had demands of a complete quota overhaul that would see China nearly on par with the US in voting rights, something the US, which incidentally have exactly $0.00 to the bailout effort, would agree to.
The amount that warchest has increased to is now $456 billion. It was $430 billion in April just to keep things in perspective. Hardly the Deus Ex the EURUSD is trying hard to make it appear. In the meantime, a gaping hole, as large as $350 billion has opened in Spain. And that excludes the hundreds of billions that will shortly be needed by Italy.
Also out of Greece we get rumors that a government may or may not be formed. As to how long said pro-bailout government will last when over half the country voted against he memorandum, that is a different question entirely. Overall, expect a quiet session with everyone praying loudly that Bernanke will launch a new LSAP program tomorrow.
If the Chairman does something far less spectacular like merely expanding Twist or raising the maturity of bonds for sale from 1-3 year to 1-4 year, the market will not be happy. Lastly, the G-20 came, ordered lots of shrimp Ceviche at the best restaurants Las Ventanas and One and Only Palmilla has to offer (charge the taxpayers of course), and conquered nothing. But issued a statement that they hope things will fix themselves all over again.
The $RUT closed at 786.43 up 13.90 or 1.80%.
SPY closed at 135.69 up 1.29 or 0.96%.
The trend is up and the current bias is neutral.
WTI oil is at 84.06.
Brent crude is steady at 95.89.
Gold dropped to 1619.
The 500 at the close. Stopped at the 100 day MA.
The DOW at the close. Also stopped at the 100 MA as did SPY.
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Written by Gary