Daily Trading Comments - September 02, 2010

Weekly jobless claims were slightly better than anticipated, but remain worrisome. According to the labor department, first-time unemployment claims dropped from 478,000 to 472,000, while expectations were for 475,000. Markets were generally nonresponsive to this weekly figure. Pending sales of existing homes beat projections, up 5.2% month over month. Yet, new home purchases were the weakest since tracking began in 1963, with a decline of 12% in July, which equates to an annual pace of only 276,000 homes. Also, 30-year mortgages hit another record low of 4.32%. Retails sales numbers from various vendors are also demonstrating improvement, albeit from quite depressed levels, and due in large part to deep discounts. There was however a less than anticipated increase in factory orders in July, with only a 0.1% increase, yet this was clearly better than last month's decrease of 0.5%. The U.S. dollar index has struggled this week to maintain ground, and today it also inched a bit lower. This seemed to give some commodities a boost, with gold and silver now approaching their contract highs, and crude oil up about one percent. Perhaps crude was partially reacting to the somewhat optimistic economic data, as well as to the news of an oil rig explosion in the gulf.

Looking Ahead

During mid-morning there were reports of an explosion on a Mariner Energy (ME) oil rig in the gulf coast, called the Vermillion oil rig 380, all 13 people on the rig were accounted for with only one injury. Shares of ME predictably plunged by over 10%. This isn't likely to have any impact on oil production, but the headlines certainly gave traders pause. M & A developments continue, and today Dell dropped out of bidding for cloud computing firm 3Par. Burger King was bought by 3G capital, valuing the BK deal at about $4 billion, so the wheels of commerce and capitalism continue. Tomorrow's August jobless rate data from the Labor Department is expected to show, for the first time in four months, a slight increase in the unemployment rate, with an expected loss of 100k jobs. Be sure your orders are in place ahead of the open and that you offer the most lenience you are comfortable with. 

Friday’s Reports of Interest

5:30 AM PST: Employment Situation
7:00 AM PST: ISM Non-Mfg Index