Midday Market Commentary For 06-21-2012
Not much happened after the morning reporting. The volume was red and low with the indexes melting slowly down towards yesterday’s lows. From the subdued market reaction this morning it is obvious investors were expecting the poor reports and are now awaiting some hopeful news from the EU. Then around 11 the markets tumbled on general poor news from the EU. Around 12:30 the markets took another step down with news that Greece is going to be forced out of the EU to set an example.
Greece remains unable to comply with its rescue conditions, meaning the Troika must pull the plug, possibly in December, writes Willem Buiter. Only treating Greece so harshly will convince core EU members to save Spain and Italy.
“The greatest fear of the (core) is not the collapse (of EMU), but the creation of an open-ended, uncapped transfer union,” without a surrender of sovereignty to Brussels.
The markets are dropping deeper into the red, led by tumbling energy and materials shares, amid worries that already tepid growth across many of the world’s economies may be cooling down further.
What Does Oil Know That Stocks Don’t?
With West Texas Intermediate crude oil trading with an $80 handle, near two year lows, while stocks remain within a few percent of their four-year highs, one has to question just what it is that stocks believe about our bright new future of growth and demand that the all-important energy markets do not.
Between Europe’s recession, last night’s dismal China PMI, and a significantly trending rise in US unemployment claims, it seems more likely that the global demand picture painted by the oil market is a better reflection of reality than the earnings/multiple picture painted by the nominal price of US equities.
We know that bad is good when it comes to the front-running of Bernanke’s print button but wouldn’t bad being good raise the USD-nominal price of oil also?
At 2 pm the DOW is at 12649 down 177 or -1.38%.
The 500 is at 1333 down 22.16 or -1.63%.
$RUT is at 767 down 16.75 or -2.14%.
SPY is at 133.27 down 2.22 or -1.65%.
The trend is down and the current bias is down.
WTI oil is at 78.68 trading between 81.00 and 78.48 and the bias is negative.
Brent crude is at 89.71 trading between 92.40 and 89.60 and the bias is negative.
Gold is down today at 1568, trading between 1601 and 1564 with a negative bias.
Dr. Copper is at 3.30 down from 3.37 earlier.
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Written by Gary
