The Financials Pit Review: By PitGuru Kalvin O’Brian

It’s clear that the market is reacting to the problems that arise from astronomical energy costs.  Nine out of 10 S&P industries dropped, lowering the index 8.7% in June.  It was the largest monthly decline since September 2002.  Even the world’s biggest companies like Wal-Mart and General Motors fell as oil went higher than $143 a barrel.  Despite the obvious energy issue the U.S. Commerce Department reported that personal incomes were up 1.9% in May, also consumer spending was up .8%.  The comical part, I think, is that the increase is attributed to the government’s release of stimulus checks.  The University of Michigan's index of consumer sentiment decreased from 59.8 to 56.4 in June, slightly lower than expectations. Inflation which is also a key concern does not appear to be a problem just yet according to the Commerce Department’s report that the core rate of personal consumption expenditures was up .1% in May and up 2.1% from a year ago, less than expected.  Unfortunately as oil increased there is more downside potential for these markets.  Going into the holiday weekend I am not anticipating any major news and instead I am looking for quick entry and exits intra-day.

Currencies

According to Statistics Canada the industrial product price index was up .6% in May and up 2.4% from a year ago. Undoubtedly high crude and gold is helping this currency.  However it may not be enough and I anticipate the Canadian dollar will be heading back down to 97 before it turns back to test the 100 mark.  

The U.K.'s Office for National Statistics reported that real GDP first quarter estimates of 2.5% were not met.  Although real GDP was up 2.3% in the first quarter from a year ago it was weaker than expected.  Nominal GDP was up 5.3% in the first quarter from a year ago. The pound appears to still have some room to the upside.

Japan's core rate of inflation was up 1.5% in May from a year ago, marking the largest gain in a decade. Also, household spending was down 3.2% in May from a year ago. The yen climbed the most in almost a month against the euro after Moody's announced the nation's banks have avoided the worst of the credit crisis. The yen also advanced as a decline in European and Asian stocks reduced demand for higher-yielding assets funded in Japan. Stay long the yen for now.

The Energies Pit Review: By PitGuru Joe Marshall

Wednesday’s action saw the crude oil market once again test the 132.50 trend line and once again hold it. Well, it has been pretty much straight up from there. Friday’s sharp sell off from 143 late in the day makes you wonder about a failed breakout, but it had the look of profit taking. We should see 145 this week. Dips holding in the mid 130's should turn back up. Continue to buy dips.