U.S. retail sales came in flat for July, after a 0.3% increase in June. Analysts were expecting another 0.3% rise, but Americans refused to increase expenditures.
This sent the dollar diving into the red, as gold saw a modest spike to $1.315, recovering from overnight weakness. Silver also popped on the news, while platinum saw very volatile action overnight due to weak market volume. Platinum has been in an extraordinarily tight range this week, closely following a 24-hour pattern. Palladium has also been in a very tight range since Monday afternoon.
This behavior is unlikely to change until all the traders are back from summer vacation. This happens every August, as this is the traditional month for Europeans to go on vacation.
In Iraq, army commanders and militia leaders formerly loyal to controversial prime minister Maliki have endorsed his successor, Abadi. Abadi was asked by Iraqi president Masoum to form a new government, after months of political paralysis in Baghdad gave the terrorist army of ISIS the opportunity to seize over 1/3 of the nation. Maliki, whose sectarian policies and repression of the Sunnis in northern Iraq drove them into the ISIS camp, has sworn he will never give up power. But since the army and Shiite militias have followed the lead of Iran and the US in endorsing Abadi, there may be little he can do except start his own militia.
In Gaza, the ceasefire between Hamas militants and the Israeli Army ends at midnight local time. Negotiators from both sides are still in Cairo trying to hammer out a longer agreement, but Hamas does not have complete control over all the various militant factions in Gaza. One of them could decide to act out on its own, and scuttle the ceasefire.
The government of Ukraine said that the Russian convoy of 280 trucks headed to pro-Russian areas of Eastern Ukraine will be stopped at the border and unloaded, so the International Red Cross can verify that there are no military supplies (or soldiers) on board. While Russia is frightening the Baltic nations with airborne assault exercises near their borders, the tension along the Ukrainian border has eased somewhat.
Stocks are up on bargain hunting (if any stock can truly be called a bargain at current valuations) after recent losses. Wall St. opened higher, despite the disappointing retail sales report and lower earnings from Macys and John Deere. Bonds aren’t giving up their gains, however, with the yield on the 10-year T-note down to 2.41%.
Tomorrow on the economic front, we will see GDP numbers from France, Germany, and the EU as a whole. In the U.S., first-time jobless claims will be scrutinized for insight on the health of the labor market. Unfilled job positions were reported at a multi-year high recently, but with unemployment still as high as it is, it sounds like a case of businesses not wanting to pay what it takes to fill those positions. This may be good news going forward, as wages will need to rise to fill those positions, putting more money into the consumer economy.
Of course, that also means higher inflation pressures down the road. With gold and silver prices at seasonal lows, and bond moving with stocks more than inversely to them, this may be a good time to examine how your portfolio is balanced. As little as 5% of your total assets in gold or silver can protect from market downturns, foreign market tail risks, and currency devaluation.