Can’t Find The Handle Today But You Can Bet It Isn’t Made Of Gold

Can’t Find The Handle Today But You Can Bet It Isn’t Made Of Gold

What to make of a day when U.S. consumer spending rose its most in six years but equities worldwide, gold, and crude oil are all down? (Gold is down about $2.30 in late afternoon trading.) Additionally, currencies are trading mixed with no clear direction. Bond yields are up marginally.

The U.S. consumer spending increase in May of 0.9% was based on strong demand for vehicles and other big-ticket items. It gives further evidence economic growth is accelerating in the second quarter.

Other data on Thursday showed a modest increase in first-time applications for U.S. unemployment benefits last week but the underlying trend in jobless claims continued to suggest the labor market was rapidly tightening.

In spite of the favorable Supreme Court ruling on Obama care, health and pharmaceuticals were up only slightly, not enough to help the Dow or S&P significantly. It is probable that big health and pharma anticipated the ruling all along.

In Asia, the Shanghai index continued on its merry volatile way, down today 3.44%. It has lost more than 600 points since June 12th, but the nature of the ride has been like that of a bobsled run, twisting and turning, sometimes airborne, sometimes banging and clanging into the side ice. The road is going to get slippier and money will move into either haven bets or less volatile equities in Asia, or the U.S.

One of the main reasons everyone else is frozen in place is Greece and its stubborn debt problem. Greece seems drunk right now, unable to function and blaming the rest of the world for its woes. Its drink? Debt it incurred for apparently no good reason except to fund public entitlements. The way to pay for pensions is “as you go,” not to promise first and fund later. Our read is that Greece will exit Europe’s single currency and the whole zone will be better for it. How the tiny country will sleep off its hangover is anyone’s guess.

If they’re thinking of turning to Russia, they need to consider the old adage that says if you lay down with dogs you get up with fleas. (No offense to dogs.)

Meanwhile, we all wait to see what will happen.

Crude oil is turning into one of our most provocative markets. It slipped for a second straight day today, weighed down by weaker U.S. refined fuels markets and negative thinking of Greece's debt crisis, which could possibly affect European energy demand.

Quietly, Nigeria has replaced Saudi Arabia as the world’s largest supplier. Yet, there are worries about an energy shortage in that country. Worries of a possible glut emerging in U.S. gasoline and other oil distillates, after large builds in both last week, added to concerns on pricing. Speaking of Nigeria, millions of barrels of Nigerian crude were floating around the Atlantic Ocean looking for buyers.

This is what is wrought when there is an artificially created glut in the marketplace. Someone will be buying that oil at a distress price and it’s probably going to be the U.S.

So, call it – topsy or turvy? We’re in idle, for the most part today.

Wishing you as always, good trading,