Fed Paints a Happy Face on US Economy

Yesterday the Fed gave the impression that economic activity is leveling out after it’s sharp and prolonged slide. Adding to the positive trading environment are reports out of Europe indicating the Eurozone economy is improving as well. It was reported that Germany and France are officially out of recession. As a result the metals rallied, the Euro climbed, and Oil surged.

The Euro jumped a little over a half cent against the Dollar with the last trade $1.4274. Crude Oil spiked on a presumed jump in future demand. Last trade on Oil $71.72 up $1.56 per barrel.

Over in Europe we find Silver up 23 cents at $14.75. Gold gained $4.00 to $954.00. Palladium jumped $9.00 to $282.00. Platinum is $1252 up $10.00 per ounce.

The Dow finished the Wednesday session up 120 points and appears to be headed for another 103 point rise this morning. The higher indications may temper somewhat as we approach the open.

We have two pieces of fresh economic data for traders to consider before the stock market opens. The Initial Weekly Jobless Claims are expected to show a slight improvement over last week with the latest estimate calling for 545,000 first time unemployment claims versus last week’s 550,000. Next comes Retail Sales for July where the picture is less bullish.

Wall Street expects to see a .7% rise is spending compared to June’s rise of .6%. That’s the good news. If however you strip out the impact of auto sales (Remember Cash for Clunkers is a temporary government subsidized bail out program) the rise in overall retail spending is up a mere .1% versus June’s rise of .3%.

Today’s economic calendar:

U.S. Initial Claims
U.S. Retail Sales
U.S. Import Prices
U.S. Business Inventories

Friday’s economic calendar:

U.S. Consumer Prices
U.S. Industrial Production
U.S. Consumer Sentiment
EZ Consumer Prices
EZ GDP
German GDP

Here’s an insightful video on why the cash for clunkers program hurts most those it was intended to help:

Crude Rebounds, Foreign Currencies React

As the NY trading day opens, it would appear that the recent panic in the Oil markets may have run it’s course. Crude Oil is trading 89 cents higher in the electronic market at $64.24. By the close of trading yesterday oil wound up losing $3.88 per barrel on trading restriction worries and a 5.1 million barrel surge in the Oil supplies. This morning’s Oil rebound is causing a corresponding bounce in the Euro as well as a number of other foreign currencies.

Last on the Euro $1.4072 up 52/100ths of cent against our Dollar. Accordingly, the metals are trading on a firmer note. Silver gained 13 cents to $13.45. Gold is $6.00 higher at $934.00. Palladium jumped $6.00 to $261.00. Platinum edged up by $2.00 and is currently changing hands at $1175.00.

Traders in all markets will be keeping a wary eye on Oil for the balance of the week for directional guidance. On the domestic front the economic calendar is light today with only the Initial Weekly Jobless claims for traders to contend with. The estimate calls for a slight improvement in the number in first time claims for unemployment compared to last week. Look for 560,000 versus 575,000. Which is again, bad but better.

As for the stock market the Dow ended Wednesday with it’s second straight day of losses. The averages slipped another 26 points. This morning the Dow is being called to open 63 points higher; more than erasing the prior two-day loss. Corporate earnings will continue to dominate the news.

The economic calendar ends the week tomorrow with a barrage of data that includes an advance look at our Gross Domestic Product (GDP), Core PCE Inflation, and the Chicago Purchasing Managers Index of Manufacturing (PMI Manufacturing).