Mixed economic reports from Europe!
Tuesday, May 15, 9:25 a.m. It was reported this morning that the German economy (GDP) grew by 0.5% in the 1st quarter, Austria’s by 0.2%, Finland’s by 1.3%, and Belgium’s by 0.3%. That was enough to offset the declines in other countries and keep the overall eurozone’s economy flat at 0%. However, it did not [...]

Tuesday, May 15, 9:25 a.m.

It was reported this morning that the German economy (GDP) grew by 0.5% in the 1st quarter, Austria’s by 0.2%, Finland’s by 1.3%, and Belgium’s by 0.3%.

That was enough to offset the declines in other countries and keep the overall eurozone’s economy flat at 0%.

However, it did not change the European Commission’s forecast that the overall euro-zone will be in a recession this year with its economy shrinking by –0.3%.

On the downside, France’s economy stalled, with its GDP growth at 0% in the 1st quarter. Italy remains in recession with its 1st quarter GDP shrinking by 0.8% for the 3rd straight quarter. Spain slid into recession, its 1st quarter GDP contracting 0.3%, negative for the 2nd straight quarter. Greece remained in a serious recession with its GDP negative by 6.2% in the 1st quarter. The Dutch economy shrank by 0.2% for the 3rd straight quarter. Portugal remained in recession, its GDP down 0.1%.

European countries not members of the eurozone, including Hungary, Romania, and Czechoslovakia, also saw their economies in recessionary contractions in the 1st quarter.

Meanwhile, investor confidence in Germany has declined in May for the time in six months. The ZEW Indicator of Economic Sentiment in Germany fell to 10.8 in May from 23.4 in April.

And that shows up in the charts of the German market.

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Europe is becoming the dog wagging the U.S. tail.

If you don’t believe the influence Europe is having on the U.S. market watch how the S&P futures move up and down with the European markets prior to markets opening in the U.S.

This morning was typical. European markets were quite positive in response to the better GDP report from Germany. And the U.S. futures were quite positive too.

But when the European markets reversed sharply to the downside, the U.S. futures reversed to negative territory too in spite of the better than expected Empire State Mfg Index report that had added to the positive look of the futures for awhile.

Quote of the day.

A. Gary Shilling, Money-manager & president of economic consulting firm:
”Don’t buy your first home now unless you’re willing to lose 20% of its value in the next few years. It will take a further 22% drop to return median single-family house prices to the trend identified by Robert Shiller of Yale University that prevailed until the housing bubble began. It adjusts for inflation and the tendency for houses to get bigger over time.”

Subscribers to Street Smart Report: In addition to the information in the premium content’ area of this morning’s blog, the new issue of the newsletter will be available sometime tomorrow in the subscribers’ area of the Street Smart Report website. And please stay tuned to the hotline for more potential portfolio changes!

To read my weekend newspaper column ‘Plunging Commodity Prices Are Ominous For Stock Market’ Click here.

Yesterday in the U.S. Market.

Another ugly day, with a failed mid-day attempt to recover and then a late day sell-off.

The Dow closed down 125 points, or 1.0%. The S&P 500 closed down 1.1%. The NYSE Composite closed down 1.4%. The Nasdaq closed down 1.1%. The Nasdaq 100 closed down 1.0%. The Russell 2000 closed down 1.4%. The DJ Transportation Avg. closed down 0.8%. The DJ Utilities Avg closed down 0.4%.

Gold plunged another $26 an ounce to $1,557 an ounce.

Oil closed down another $1.69 a barrel at $94.44 a barrel.

The U.S. dollar etf UUP closed up 0.4%.

The U.S. Treasury bond etf TLT closed up 1.4%.

Yesterday in European Markets.

European markets were down sharply again. London closed down 2.0%. Germany closed down 2.0%. France closed down 2.3%.

Asian Markets Were Down Sunday Night and Again Last Night.

The DJ Asia-Pacific Index closed down 0.6% Sunday night, and down 0.6% last night.

Among individual markets last night:

Australia closed down up 0.8%. China closed down 0.3%. Hong Kong closed up 0.8%. India closed up 0.7%. Indonesia closed down 0.2%. Japan closed down 0.8%. Malaysia closed down 1.0%. New Zealand closed down  0.6%. South Korea closed down 0.8%. Singapore closed up 0.4%. Taiwan closed up 0.2%. Thailand closed up 1.6%.

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Markets This Morning:

European markets gave up early gains and are now down quite sharply again The London FTSE is down 0.8%. The German DAX is down 1.2%. France’s CAC is down 1.1%.

Oil is down $.20 a barrel at $94.58.

Gold is down $2 an ounce at $1,555.

This Morning in the U.S. Market:

This week returns to being an average week for potential market-moving economic reports, which include the Consumer Price Index, Retail Sales, Housing Starts, FOMC minutes, the Fed’s Phila Fed Index, etc. To see the full list and times for each release click here, and look at the left side of the page it takes you to.

There were no reports yesterday.

This morning it was reported that the Consumer Price Index was unchanged in April, while the core rate (with food and energy costs removed) was up 0.2%. And Retail Sales edged up just 0.1% in April. But the Empire State (NY) Mfg Index bounced back to 17.1 in May from 6.6 in April.

Still to come is the Housing Market Index, which will be released at 10 a.m.

The pre-open indicators were fairly positive earlier, bounced further after the reports, but have now given up the gains as European markets have suddenly turned sharply lower.

Our Pre-Open Indicators:

Our pre-open indicators are now pointing to the Dow being down 30 points or so in the early going.

Subscribers to Street Smart Report: In addition to the information in the premium content’ area of this morning’s blog, the new issue of the newsletter will be available sometime tomorrow in the subscribers’ area of the Street Smart Report website. And please stay tuned to the hotline for more potential portfolio changes!

To read my weekend newspaper column ‘Plunging Commodity Prices Are Ominous For Stock Market’ Click here.

I’ll be back with the next regular blog post on Thursday morning at 9:25 a.m.

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