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.

Crude Drops $2.51 on Technical Selling

The Euro managed to regain an early session sell-off which was triggered after today’s better than expected U.S.economic data. Last trade $1.4315. As for the data; the Case Shiller Home Price Index gave economists a breath of fresh air clocking in with a price decline of only 15.44%. This was significantly better than the Street estimate of -16.4%; and the second month of improvement.

Today’s other report; Consumer Confidence also came in at a level far above expectations. Confidence was reported at 54.1. The Street expected 47.9. That is a very large positive variance.

Metals ended the day a shade higher in the midst cross currents of a weaker Dollar, but also sharply lower Oil. Silver finished the New York trading session up 9 cents at $14.29. Gold edged up $2.00 closing at $944.00. Palladium rose $.4.00 to $286.00. Platinum ended at $1238.00 down $2.00. Volume was surprisingly light given today’s almost $3.00 fall in the price of Crude. Energy traders point to technical selling after Oil failed to break and hold the psychological $75 level. A wave of pre-programmed sell orders were triggered once Crude slipped back below the $75 mark. Last trade $71.86 down $2.51 per barrel.

Stocks rallied on the data with the Dow jumping almost 100 points. Things have since quieted down on profit taking with the Dow presently up 46 points at 9555. When New York trading resumes tomorrow market participants will have three new pieces of data to digest. Durable Goods, New Home Sales for July, and the Weekly Oil Inventories will be the focus.