Dow slipped 7, advancers & decliners were even but NAZ jumped 10 as Apple (AAPL) shot up 13. The Financial Index was down a smidgen to the 197s. The MLP & REIT indices were flattish while junk bond funds inched higher. But Treasuries strengthened, bringing lower yields. Oil fell for a 2nd day on speculation the Federal Reserve won’t ease monetary policy this week to boost economic growth. Gold was little changed.
Photo: Bloomberg
Americans spent no more in Jun than they did in May, even though their income grew at the fastest pace in 3 months. The lack of growth in spending follows a decline in the previous month, suggesting consumers are staying cautious as they economy weakens. Income rose 0.5% according to, the Commerce Dept (the biggest gain since Mar) & was driven by a 0.5% increase in wages. After-taxes & adjusting for inflation, income grew 0.3%. The extra money went straight to savings. The savings rate rose to 4.4%, the highest level in a year. Slower growth in consumer spending this spring was the main reason the economy grew at an a 1.5% pace in Q2, below the 2% growth rate in Q1. In Jun, consumers spent slightly more on services, although some of that may reflect lower gas prices. There were hopes that falling gas prices would give consumers more money to spend elsewhere & boost growth in H2. But gas prices have stopped falling & even started to rise in recent weeks while this summer's severe drought is expected to push food prices up toward the end of the year.
Consumer Spending in U.S. Was Unchanged in June
Photo: Bloomberg
US consumer confidence rose in Jul after 4 months of declines, as a brighter outlook for short-term hiring offset longer-term worries about the economy. The Conference Board says its Consumer Confidence Index increased to 65.9, from 62.7 in Jun. That's the highest reading since Apr & better than the reading of 62 that was forecasted. Still, the index remains well below 90, which indicates a healthy economy. It hasn't been near that level in almost 5 years. The index fell to an all-time low of 25.3 in Feb 2009, 4 months before the recession officially ended. Consumer confidence is widely watched because consumer spending drives 70% of economic activity.
Spain's regions were urged to extend budget cuts, as efforts to prevent bank defaults adds to the gov deficit. Representatives of the 17 semi-autonomous regional govs are scheduled to convene in Madrid for a budget checkup. Data just released showed the central gov exceeded its target for the 2012 budget shortfall with half the year still to go. The biggest contributor to Spain’s economy, the Catalonia region centered on Barcelona, said it won’t take part in the meeting to protest the gov's rigid stance on deficits. The gov is struggling to avoid a broader bailout after gaining the right to borrow as much as €100B ($123B) from European rescue funds. Its budget gap, the euro area’s 3rd largest, remained almost unchanged from 2010 at 8.9% of GDP last year. The yield on Spain’s 10-year bond is at 6.62%, compared with a euro-era high of 7.75% on Jul 25. It fell after ECB President Fraghi said last week he would do whatever is needed to protect the single currency. The central gov’s shortfall surged to 4.04% of GDP in H1 from 3.41% in the 5 months thru May as it transferred funds to the rest of the public sector to prevent a liquidity squeeze. That compares with a gov target for the year of 3.5%. Spain’s overall 2012 deficit goal, which includes all levels of gov, is 6.3%. Spain needs a lot of help, not sure even the ECB will be able to solve its problems.
Spain to Urge More Regional Budget Cuts as Deficit Deepens
Markets are taking it easy, awaiting outcomes from the 2 big financial meetings. Hardly anything is moving expect for AAPL which is flying again after leaking that the new iPhone (its #1 product) will be introduced on Sep 12. Maybe there will also be a new iPad. As usual, details are not spelled out. Meanwhile, Dow is marking time above 13K, a good sign for the bulls.
AMJ (Alerian MLP) Index tracking fund)
Treasury yields:
U.S. 3-month | 0.096% | |
U.S. 2-year | 0.219% | |
U.S. 10-year | 1.476% |
| CLU12.NYM | ....Crude Oil Sep 12 | ..89.45 | ... 0.33 | (0.4%) |
| GCQ12.CMX | ...Gold Aug 12 | .....1,619.90 | ... 0.20 | (0.0%) |
Americans spent no more in Jun than they did in May, even though their income grew at the fastest pace in 3 months. The lack of growth in spending follows a decline in the previous month, suggesting consumers are staying cautious as they economy weakens. Income rose 0.5% according to, the Commerce Dept (the biggest gain since Mar) & was driven by a 0.5% increase in wages. After-taxes & adjusting for inflation, income grew 0.3%. The extra money went straight to savings. The savings rate rose to 4.4%, the highest level in a year. Slower growth in consumer spending this spring was the main reason the economy grew at an a 1.5% pace in Q2, below the 2% growth rate in Q1. In Jun, consumers spent slightly more on services, although some of that may reflect lower gas prices. There were hopes that falling gas prices would give consumers more money to spend elsewhere & boost growth in H2. But gas prices have stopped falling & even started to rise in recent weeks while this summer's severe drought is expected to push food prices up toward the end of the year.
Consumer Spending in U.S. Was Unchanged in June
US consumer confidence rose in Jul after 4 months of declines, as a brighter outlook for short-term hiring offset longer-term worries about the economy. The Conference Board says its Consumer Confidence Index increased to 65.9, from 62.7 in Jun. That's the highest reading since Apr & better than the reading of 62 that was forecasted. Still, the index remains well below 90, which indicates a healthy economy. It hasn't been near that level in almost 5 years. The index fell to an all-time low of 25.3 in Feb 2009, 4 months before the recession officially ended. Consumer confidence is widely watched because consumer spending drives 70% of economic activity.
Spain's regions were urged to extend budget cuts, as efforts to prevent bank defaults adds to the gov deficit. Representatives of the 17 semi-autonomous regional govs are scheduled to convene in Madrid for a budget checkup. Data just released showed the central gov exceeded its target for the 2012 budget shortfall with half the year still to go. The biggest contributor to Spain’s economy, the Catalonia region centered on Barcelona, said it won’t take part in the meeting to protest the gov's rigid stance on deficits. The gov is struggling to avoid a broader bailout after gaining the right to borrow as much as €100B ($123B) from European rescue funds. Its budget gap, the euro area’s 3rd largest, remained almost unchanged from 2010 at 8.9% of GDP last year. The yield on Spain’s 10-year bond is at 6.62%, compared with a euro-era high of 7.75% on Jul 25. It fell after ECB President Fraghi said last week he would do whatever is needed to protect the single currency. The central gov’s shortfall surged to 4.04% of GDP in H1 from 3.41% in the 5 months thru May as it transferred funds to the rest of the public sector to prevent a liquidity squeeze. That compares with a gov target for the year of 3.5%. Spain’s overall 2012 deficit goal, which includes all levels of gov, is 6.3%. Spain needs a lot of help, not sure even the ECB will be able to solve its problems.
Spain to Urge More Regional Budget Cuts as Deficit Deepens
Markets are taking it easy, awaiting outcomes from the 2 big financial meetings. Hardly anything is moving expect for AAPL which is flying again after leaking that the new iPhone (its #1 product) will be introduced on Sep 12. Maybe there will also be a new iPad. As usual, details are not spelled out. Meanwhile, Dow is marking time above 13K, a good sign for the bulls.
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