The threat of ISIS continues to dominate the media while important market-affecting factors are being set on the "back burner." Information such as the decline in consumer spending in July for the first time in six months, which could prompt a failure for the economy to match second quarter growth rate of 4.2% unless spending gains in August and September. Growth in incomes reported at 0.2% in July from 0.5% in each of the previous two months. Consumers are saving and that does not bode well for economic growth.
Currencies: The December U.S. dollar index closed Friday at 82.88, and higher against the Euro, the Japanese yen, and the British pound. Better than expected U.S. economic data and concerns over the Russian incursion into Ukraine prompted the move in the dollar. The Euro closed at $1.3148 down 45 points, the Swiss Franc 43 points lower at $1.0900, the Japanese 0.09616, down 38 points, the British pound 21 points lower at $1.6549, the Canadian dollar 16 lower at 91.75c, and the Australian dollar 92.66c down 20 points. We have favored the dollar for some time and see no reason, under current global conditions, to change our opinion.
Energies: October (NYMEX:CL_F) crude oil closed at $95.96, per barrel, up $1.41 or 1.5% prompted by continuing concerns over the escalating tensions between Ukraine and Russia. Some selling emerged tied to supply/demand but we remain on the sidelines for now. Our overall opinion remains negative for crude prices.
Precious Metals: December gold closed at $1,286.00 per ounce, down $4.40 and simply fails to respond to geopolitical events as has been its history of reaction. September silver closed at $19.44 per ounce, down 9c but rose 0.6% on the week. Our preference, for those that "must have a precious metal in their portfolio", remains silver over gold. October platinum closed at $1,424.70 per ounce, down 50c while December palladium gained $11.45 to close at $909.55 per ounce. Here again for those that prefer the "white metals" we have favored palladium over platinum.
Interest Rates: The 30 year Treasury bond closed Friday at 140 01/32nds, down 8/32nds and down 13/32nds from last Friday’s close. Consumer spending declined, but the University of Michigan/Thomson Reuters final August reading on is consumer sentiment index rose to 82.5 from a final July level of 81.8. Mixed reaction to the data provided for the sideways action in treasury yields and prices. We continue to maintain a neutral bias toward treasuries.
Stock Indices: The Dow Jones industrials closed Friday at 17,098.45, up 18.88 points and for the week gained 0.6% and 3.2% for the month. The S&P 500 closed at 2,003.37, up 6.63 points and for the month posted a 3.8% gain. The Nasdaq closed at 4,580.27, up 22.58 points, up 0.9% for the week and 4.8% for August. The Nasdaq settlement was at its highest since March of 2000. Even with the news mixed as relates to global events, the equity market continues to attract money as one of the only places that provides returns….for now. We fully expect a return to "normalcy" with a correction now estimated to "subtract" 15-20% from current values. We once again suggest strongly that holders of large equity positions avail themselves of our risk hedging strategic programs.