Trading Fears Mount as Federal Deficit Expected to Top $9 Trillion by 2020

In the stock market the Dow ended yesterday with a 30 point gain, but looks about 18 points lower at the open. Traders are beginning to express concern about our mounting federal deficit. According to the Office of Management and Budget (OMB) the deficit is expected to swell by $9 trillion over the next decade. That’s an incredibly large number to try to recover.

Metals are trading flat to a shade higher over in late morning European action. Silver is unchanged at $14.29. Gold is $3.00 higher and changing hands at $947.00. Palladium is $288.00 having edged up $2.00 since yesterday’s close. Platinum is down $8.00 and trading at $1234.00 per ounce.

Background barometers are flat to lower with Crude Oil quiet at $72.07. Oil ended sharply lower yesterday as technical selling pushed prices down by $2.32 per barrel. Crude is currently up 2 cents with traders looking to see a 2.7 million barrel decline when today’s Weekly Oil Inventories get reported.

Over in the currency markets the Euro is trading a quarter of a U.S cent lower in advance of today’s U.S. economic data. Both of today’s reports are expected to show improvement. July Durable Goods are expected to show a rise of 3.2% compared to June’s decline of 2.5%. That’s a pretty good jump. Durable Goods are the more expensive items we purchase. They tend to have useful lives of 3 or more years (i.e. appliances, furniture, and vehicles). Being expensive; they tend to be more sensitive to consumer confidence and budgetary constraints. New Home Sales for July are also expected to show a slight improvement with the latest estimate sitting at 390,000 versus last month’s 384,000. The numbers continue to be weak, but they are moving in the right direction. Last on the Euro $1.4290.

On the geo-political front Lybia’s leader Muammr Qaddafi plans to visit the U.S. and stay in his diplomatic mansion in New Jersey. New Jersey is home for a number of families which lost loved ones in the Pan Am Lockerbie bombing. Sometimes you have to scratch your head and wonder. I can only imagine what the press will do with this story once Qaddafii shows up. In a final note, political icon Senator Ted Kennedy has passed away at age 77 from brain cancer.

Improvement in Consumer Confidence Expected Today – Bernanke will be Reappointed Fed Chairman

The metals are trading a shade higher in advance of this morning’s economic data, and in the aftermath of news reports that indicate Ben Bernanke will be reappointed to another term as Chairman of the Federal Reserve. It appears President Obama’s advisors decided to heed Wall Street warnings and maintain continuity.

Silver is 2 cents higher at $14.22. Gold is $947.00 up $5.00. Palladium edged up $3.00 to $285.00. Platinum down $2.00 and is presently trading at $1238.00. Our background barometers are mixed and quiet with Crude slipping 17 cents to $74.20. The Euro is 28/100ths of U.S cent higher at $1.4328.

U.S . stocks ended the Monday trading day flat with a marginal gain of 3 Dow points. We still have no clue as to why the market collapsed so rapidly yesterday. This morning the early futures indications are calling for a rise of 17 points. The indication is moot given the fact that the economic data will hit the wires long before the market opens.

As for the data; we expect to see improvement in both reports. The Case Shiller Home Price Index is estimated to clock in with home prices declining 16.4% compared to last month’s decline of 17.06%. Consumer Confidence for August is also expected to show improvement with an index of 47.9 versus July’s 46.6. Consumer Confidence is very important to the economy because it remains the key factor driving consumer spending. Spending drives our economy.

Oil Hangs On to Last Week’s Gains

Both of our day to day barometers are a shade higher with Oil hanging on to last week’s gain of $4.29 per barrel. Crude is presently up 18 cents at $74.07.  In the currencies the Euro is 11/00ths of U.S cent higher in a vacuum of fresh economic data. Last on the Euro $1.4328.

Metals are beginning the new trading week with Silver leading the way. Silver is 15 cents higher as traders lean towards an implied rise in industrial demand given last Friday’s optimistic outlook by Ben Bernanke. Last trade $14.35. Gold is down $1.00 at $953.00. Palladium is $286.00 up $4.00. Platinum slipped $22.00 to $1236.00.

In the stock markets; Both Asian and European markets closed or are trading solidly higher. On the domestic side the Dow ended the whole of last week with a gain of 184 points, and appears to be headed for a 36 points rise this morning.

On the geo-political front President Ahmadinejad is facing sharp criticism of his new cabinet nominees both at home and abroad as Iran’s internal turmoil deepens. On the other hand North Korea continues to show warming gestures to the west with the current meeting between the Koreas being extending from it’s scheduled length.

In a final note; Scotland is attempting to control the political damage from its decision to release the Libyan agent convicted of the Pan Am Lockerbie bombing. And Cash for Clunkers ends today.

Today’s economic calendar:

Canadian Retail Sales

Tomorrow’s economic calendar:

U.S. S&P/Case-Shiller House Price Index
U.S. Consumer Confidence

Traders Nervous in Advance of Bernanke’s Speech at 10AM

Metals are changing hands in a mixed and quiet fashion. Silver is 7 cents higher at $13.99. Gold is $943.005 up $1.25 per ounce. Palladium is $1.00 lower at $275.00. Platinum is down $3.00 and trading at $1239.00.

The lack of activity is being ascribed to nervousness in advance of today’s scheduled speech by Fed Chairman Bernanke at 10 am eastern. Expect Dollar volatility. The head of the Fed is expected to make remarks about the economy at the Annual Fed Symposium in Wyoming. Of greater concern should be whether Mr. Bernanke gets a second term, with President Obama to make that decision shortly. Early indications warn that a change at the helm of the Fed would cause a major stock market shake out.

Speaking of the stock market; the Dow ended Thursday with a 70 point gain and appears to be headed for another 40 point gain this morning with traders expecting to see a slight improvement in this morning’s release of Existing Home Sales. The latest estimate calls for a reading of 5 million units compared to June’s 4.89 million. Just another example of bad but better.

Meanwhile over in the energy markets the price of Oil continues to rise with electronic trading showing a gain of 76 cents to $73.74. Keep in mind the recent rise in the price of Oil is a two edged sword. Rising prices implies higher demand and greater economic activity, but rising prices also tend to divert consumer spending dollars which will ultimately hurt economic expansion.

In currency trading we find the Euro up 76/100ths of U.S cent in advance of the Bernanke speech; and in line with the weaker Dollar and higher oil. Last trade $1.4320.

In global matters; Iran has suddenly agreed to allow greater monitoring by U.N. inspectors of a uranium-enrichment facility, ending a long standing diplomatic impasse. You get the sense that Iran is trying to divert world attention from it’s current social unrest. In a final note; Cash for Clunkers will officially end next Monday.

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:

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