US Stocks make a new high, Euro defies reality and the Aussie rejects the top of the Box

June 23, 2014

It’s tough to be a bear in US stocks at the moment and equally almost boring to be announcing marginal new highs almost every other day.

Such was the case as the Dow and S&P 500 set new all-time closing highs again on Friday. However marginal this new highs might be the reality is that Janet Yellen by saying this week that she didn’t believe the data has made a remarkable departure from the central banker rule book and given sellers just another poke in the eye.

But that is not to say that there are not plenty of voices and views out there that the Fed Chair is wrong and will,be caught behind the curve Yellen seems to have signalled that she and her colleagues on the FOMC are comfortable with that notion.

So at the close of play Saturday morning and with no data out the Dow was 0.2% higher at 16,947, the Nasdaq rose a similar amount and the S&P 500 was also 0.2% higher closing at 1,962.

The S&P 500 rally is unrelenting but when you look at in on a monthly basis there is one easy question to ask yourself – is it sustainable? I would refer you to a chart of Gold or Bitcoin.

In my best John Wayne voice – Is that a Bubble I see before me???

In Europe the FTSE closed higher, up 0.25% to 6,825, but on the continent it was a sea of red with the DAX down 0.17%, the CAC fell 0.48% while in Madrid stocks fell 0.29%.Stocks in Milan however crashed more than 1%.

Bonds in the US were unchanged with the 10′s closing at 2.61% while rates in Europe were up a little with Gilts at 2.76% up 2 while Spanish and Italian rates up 4 points.German 10 year bunds rose 1 point.

On the ASX the September SPI 200 futures rose 10 points to 5,391 after a really poor and somewhat unexpected hosing that we saw on the ASX on Friday when the physical finished down 0.9%. Iron ore ripped $2.50 higher on Friday so this should help the tone today.

Turning to currency markets and the US dollar came under some pressure before recovering to 102.06 against the Yen. Sterling closed at 1.7010 and the Aussie is back below 94 cents at 0.9387. Euro closed just under 1.36 even though German PPI fell 0.2% in May to 0.8% year on year. Go figure!

The Aussie has opened up weaker this morning trading at 0.9374, perhaps a little worried about Chinese flash PMI or perhaps its just sellers who reckon it can’t hold above 94 so they will sell.

Darvas would be proud!

On commodity markets iron ore was really strong Friday as noted above closing relatively strongly at $93.00 for the September contract. Newcastle coal was down 30 cents tonne to $71.10 for September. Nymex June crude was up 0.78% as things in Iraq get ugly and it closed at $107.30. Gold finished at $1314 down a little on the high in Asia on Friday while silver closed at $20.86 oz. Copper was really strong up 4 cents to $3.12 lb. It was mixed on the ags with corn up 0.61% while wheat fell 1.39% and soybeans dropped 0.35%.

On the data front we kick off today  This week in Asia kicks off with the Chinese and Japanese flash PMI’s today. Tonight we have a raft of PMI’s in Europe and the US.

It’s a quiet week but all the key data out can be found on our economic calendar here.

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