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June 14, 2012 at 09:33 AM EDT
On The Verge of Big News?
Thursday, June 14, 9:25 a.m. The situation in Europe worsens by the day. The yield on Spain’s 10-year bond has risen again, to a euro-zone era record 6.96%, touching the 7.0% that is considered the danger zone, being the level that forced the bailout of other countries. The collapse of Spain’s housing  sector continues, with [...]

Thursday, June 14, 9:25 a.m.

The situation in Europe worsens by the day. The yield on Spain’s 10-year bond has risen again, to a euro-zone era record 6.96%, touching the 7.0% that is considered the danger zone, being the level that forced the bailout of other countries. The collapse of Spain’s housing  sector continues, with the report that home prices fell at an annualized rate of 12.6% in the 1st quarter. Its recession continues to deepen, with the unemployment rate already around 25%.

The world is awaiting the important election in Greece on Sunday. Meanwhile, depositors are steadily increasing their withdrawals from Greek banks on concerns of substantial declines in their value if Greece leaves the eurozone and the drachma becomes its currency again. The Wall Street Journal reports that Greece’s largest foreign-owned bank “is making plans to just walk away from the bank if the country leaves the euro-zone”. Numerous business owners are apparently making plans to either go out of business or move to other countries.

Worries increase that the crisis is already spreading to Italy, as its government’s borrowing costs spiked up again in its bond auction today, its 10-year bond yield at 6.23%.

The bad news is that it must be panic time among officials in Europe.

The good news is that surely at this point they will bury their differences and make a massive effort to rescue their continent from the disaster that seems to be rolling relentlessly downhill toward them.

In the U.S. the Fed has been saying for some time that it stands ready to act “if it becomes necessary”. Two weeks ago I wrote that ‘The Time Has Come, Mr. Bernanke!’  (http://www.streetsmartreport.com/school/Commentaries/The%20Time%20Has%20Come%20Mr%20Bernanke.html).

Since then, the economic reports have continued to show that economists and the Fed are increasingly behind the curve of the stubborn U.S. economic slowdown.

The Fed has supposedly been holding off on the hope that somehow the dismal jobs reports of recent months were temporary.

But the reports just continue to worsen. This morning the Labor Department reported that new weekly unemployment claims jumped again last week, rising by 6,000 to 386,000 versus the consensus forecast of a decline to 376,000. And the Commerce Department reported that the U.S. current account deficit widened to $137.3 billion in the 1st quarter, the largest such deficit since 2008. These reports on top of yesterday’s report that retail sales fell again in May, the recent reports of plunging consumer confidence, pending home sales, the downward revision of 1st quarter GDP growth to just 1.9% (with these dismal reports now piling up for April and May).

I’ll say again, the time has come, Mr. Bernanke.

I won’t be surprised if the Fed now realizes that, and takes some type of action at its meeting next week, to at least extend ‘operation twist’, and probably at least promise something like a QE3 stimulus program.

So, the G-20 nations meet this weekend in Mexico. Officials in the euro-zone must surely be ready to act, will surely do whatever it takes to keep Greece in no matter how the Greek election turns out, and in the U.S. the Fed meets next week. And the Fed meets next week.

Surely some promising action will come from at least one of those potential sources.

But, the U.S. market seems to be more confident of that than markets in Europe and Asia.

Subscribers to Street Smart Report: There is a hotline and an in-depth U.S. Market report from last night in the subscribers’ area of the Street Smart Report website. We will have an in-depth ‘Global Markets’ report on the SSR site for you later today.

To read my weekend newspaper column ‘What’s Wrong With Gold?’ click here.

Yesterday in the U.S. Market.

The short-term volatility continued. The Dow was down triple-digits Monday, back up triple-digits yesterday, and back down yesterday as uncertainties in Europe and the U.S. continue.

The Dow closed down 77 points, or 0.6%. The S&P 500 closed down 0.7%. The NYSE Composite closed down 0.7%. The Nasdaq closed down 0.9%. The Nasdaq 100 closed down 0.7%. The Russell 2000 closed down 1.2%. The DJ Transportation Avg. closed down 0.6%. The DJ Utilities Avg closed down 0.1%.

Gold closed up $5 an ounce at $1,619.

Oil was down $.70 a barrel at $84.03.

The U.S. dollar etf UUP closed down 0.3%.

The U.S. Treasury bond etf TLT closed up 1.0%.

Yesterday in European Markets.

European markets closed down some on average yesterday. The London FTSE closed up 0.2%. But the German DAX closed down 0.1%. And France’s CAC closed down 0.6%.

Asian Markets closed down last night.

The Asia Dow closed down 0.6%.

Among individual markets last night:

Australia closed down 0.5%. China closed down 1.0%. Hong Kong closed down 1.2%. India closed down 1.2%. Indonesia closed down 1.8%. Japan closed down 0.2%. Malaysia closed down 0.3%. New Zealand closed up 1.0%. South Korea closed up 0.7%. Singapore closed down 0.5%. Taiwan closed down 0.2%. Thailand closed down 0.5%.

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Markets This Morning:

European markets are down again. The London FTSE is down 0.8%. The German DAX is down 0.9%. France’s CAC is down 0.6%.

Oil is up $.35 a barrel at $82.98

Gold is up $8 an ounce at $1,628 an ounce.

This Morning in the U.S. Market:

This week is a light week for potential market-moving economic reports. Only a few are due, including the Producer Price Index, Retail Sales, Industrial Production, Consumer Sentiment. 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 Monday.

Tuesday’s reports were that the Small Business Optimism Index declined fractionally in May, not a market-mover. And in Europe The U.K. reported its industrial production fell 1% in April, its 14th straight decline, and manufacturing output fell by 0.7%.

Yesterday it was that Retail Sales fell 0.2% in May, and the previously reported increase of 0.1% in April was revised to down 0.2%. And the Producer Price Index fell a significant 1.0% in May, the steepest monthly drop since July, 2009. The core rate, with the cost of food and energy removed was up 0.2%.

This morning’s reports are that new weekly unemployment claims rose by 6,000 to 386,000 versus the consensus forecast of a decline to 376,000. The four-week moving average rose to 382,000. The Consumer Price Index fell 0.3% in May, the biggest monthly decline in 42 months. The core rate rose by 0.2%.

Our pre-open indicators have been mostly flat, but have improved fractionally after the reports.

Our Pre-Open Indicators:

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

Non-subscribers: We recently updated the sample issue of the newsletter to a more recent issue that you might find interesting. Click here to view it: Sample issue of Street Smart Report newsletter.

To read my weekend newspaper column ‘What’s Wrong With Gold?’ click here.

Subscribers to Street Smart Report: There is a hotline and an in-depth U.S. Market report  from last night in the subscribers’ area of the Street Smart Report website. We will have an in-depth ‘Global Markets’ report on the SSR site for you later today.

I’ll be back with the next regular blog post on Saturday morning, as usual later than the weekday posts, probably around 11:00 a.m.

Non-subscribers: We believe we can help you not only make more profits, but just as importantly avoid losses, and at very reasonable cost!

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