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Hey! Where Did All The Money Go?

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Granted, the euro is up over 1% today. And Asian equities ran to positive territory, although only the NIKKEI showed any real vitality as it bumped up almost 1% on the day.

Some investment money was flowing into Shanghai and Hong Kong, but no market-shaking money migration was seen.

In Europe, equities fell by 0.30% (FTSE) to 0.70% on the CAC (the French bourse) to the DAX, which fell by more than 1%.

U.S. equities are down as well in afternoon trading, but only the DOW saw a significant downdraft, off around 1%. The S&P 500 is off about 0.35% while the NASDAQ was off a tenth of a point, which is understandable because of its recent hearty moves higher.

It is Q2 earnings report time and with each day, uncertainty flings open its cape and is ready to bite into the neck of the current bull-run in stocks. Earnings are mixed and through a series of strokes of fate, it seems as if all bad news is released one day and all good news the next so the stock markets will be bouncing around for the while.

Many thought that crude oil ought to come off its dip below $50. It has, but not by very much. West Texas Intermediate is up only 0.40% to 50.59 per barrel. Brent North Sea fared slightly better. It’s up 0.60%.

Gold see-sawed on the day, is up about $2.30 in late afternoon, but all of that is due to dollar weakness. If regular trading alone were to be examined, the yellow precious metal would be down $5.70. Silver is up almost a full percent.

Back to currencies for a moment: the dollar is down against the yen today as well as against the euro. In the case of the yen it seems almost like a slight fluttering of the heart. The dollar is off against the Japanese currency by 0.25%. It is virtually unchanged against the British pound.

Most of the downside pressure on the U.S. dollar today is due to profit taking knocking the greenback off its recent highs reached Monday. We don’t look for this to be a longer-term trend. The dollar has many hidden strengths, not the least of which is the American economy. While it seems to be stuck in middle gear the U.S. has shown some very intriguing depth, especially, of late, in housing, both new and existing.

Investment is also humming along. The main drag on the world’s largest economic engine remains consumer spending and it will stay that way till wages rise.

We expect that to happen as more and more Baby Boomers retire and they have to be replaced with members of the Millennial generation moving up the ladder.

The retirement phenomenon will also affect housing. There are about 7 million more Millennials than Boomers. Those young people are becoming creditworthy. Once they leave their starter rentals, there will be a stampede toward home purchasing.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer