Futures Down, Oil Hovers Around Highs, Dollar Up
All major indexes (NYSEARCA:SPY) (NYSEARCA:QQQ) are down this morning. Some say it’s trade jitters, the common scapegoat for any negative moves recently. Others say it’s dollar strength, or the beginning signs of economic trouble or what have you. We are within 1.2 points of the 52 week high on the dollar index (NYSEARCA:UUP) hit almost exactly one year ago on July 3, 2017 at 96. On that note, the fact that oil (NYSEARCA:USO) is still climbing relentlessly despite a rising dollar and a Saudi agreement to increase production and President Donald Trump’s insistence that the Saudis increase production still further, shows potential inflationary pressures building in the economy at a rather dangerous time for inflation, considering record fiscal deficits.
Then again, sinking futures could be a function of political instability in Germany, the engine of the Eurozone as one of Chancellor Merkel’s ministers has issued a letter of resignation, or it could be the anti-establishment leftist Obrador winning the Mexican presidency over the weekend.
This week, the ADP Employment Report hits the presses on Thursday, and Non-Farm Payrolls will be out along with the unemployment rate on Friday. On Wednesday everyone will be barbecueing in honor of the 242nd anniversary of the signing of the Declaration of Independence from Great Britain, so no economic data.
Tesla Hits Production Mark
In what may accurately be described as a miracle surpassed only by the Big Bang itself, Tesla (NASDAQ:TSLA) has announced that it has finally met its own production goals for the Model 3, producing 5,000 vehicles in the last week of the second quarter. The last car was quality checked on Sunday morning, mere hours after the deadline set by CEO Elon Musk. Musk has also set the ambitious goal of 6,000 a week by next month. Let’s hope they’re all safe and they don’t explode. The goals of 7,000 Models S and X a week were also hit.
“I think we just became a real car company,” Musk wrote. Let’s see.
Inflation Hits 2.3%
The Personal Consumption Expenditures (PCE) Index, the Fed’s preferred measure of inflation, has jumped 2.3% year over year for May, and the Core PCE Index is up 2.0% on the dot, excluding high energy prices of late. The Producer Price Index for June will be released on Wednesday, July 11, and the Consumer Price Index the next day on July 12. The CPI last hit a year over year rate of 2.8%, which shows that by all measures, inflation is above the Fed’s stated 2% target. How long will this be allowed to continue? Quite a while, probably. Meanwhile, gold (NYSEARCA:GLD) continues to ignore this, trading just below $1,250 a troy ounce. Long term support is at $1,238.
Trump Delays NAFTA decision
President Trump, in a hesitation that may indicate he could be fearful of the political consequences of signing or pulling out of the North American Free Trade Agreement (NAFTA) with Canada and Mexico, has delayed his signing of the revised agreement until after the November midterm elections.
“I could sign it tomorrow,” he said during an interview with FOX Business’ Maria Bartiromo on Sunday. “But I’m not happy with it.”
The treaty was originally signed in 1994.