Conflicting Data Once Again Confuses Markets

The heavyweight champ – the dollar – was up, it was down, it was back up, no, it’s back down.

Gold struggled into positive territory on and off throughout the day, but as the afternoon waned and the dollar slipped back to just about even, the yellow precious metal suffered.

It appears that regular trading action in gold is trying to push it below the crucial 1080 mark. If the dollar strengthens appreciably in coming days, gold might not be able to resist.

Crude, as well, was up then started falling fast, hitting the canvass hard. Brent North Sea is below $50 per barrel and West Texas Intermediate is down over 1.5%. At one point Texas dipped below $45 per barrel, the first time since March. It has since inched above that mark.

Treasury yields bumped up today, a sign of subsiding fears the Fed will raise rates. But, but, but…

ADP reported private job gains in July were a mere 185,000. Maybe, just maybe, the U.S. Department of Labor data will come in at combined job gains of 200,000. That number represents a kind of psychological benchmark. If U.S. job growth goes below that number, red flags concerning a rate hike will fly everywhere. Big ones.

Unfortunately, another data release drowned amidst the ADP news.

The U.S. services sector expanded at its fastest pace in 10 years said the Institute for Supply Management. The ISM said its services sector index rose to 60.3, its highest reading since August 2005. The projected expansion was supposed to be only 56 and change. (Anything above 50 represents expansion.)

ADP pulled markets one way, and the ISM pulled the other.

One of the brighter aspects of the ISM report was the employment index, which jumped to 59.6 last month, highest since August of 2005. What that stat tells us vis a vis the ADP report is that other employment sectors – construction, shipping, and manufacturing – are sluggish.

Both ISM numbers of around 60 are smoking hot. If the other job sectors tighten their slack then we will see unemployment plunge and inflation hit the hyper-drive button.

U.S. equities took the easy way out of the push-pull dilemma. They stayed put. (Although oil pricing is hurting the Dow on a regular basis.) The Dow and S&P are up very modestly. NASDAQ jumped a bit more because buyers drifted back to Apple stock and Netflix is soaring like an eagle.

To be fair, everyone is waiting for Friday’s employment data, it is summer and China jumbles the whole financial/investment picture.

Wishing you as always, good trading,