danielosborne's  Instablog

The steady drip of not so positive or at best, mixed economic news has continued this week. Here is a quick recap of what has been reported so far:

• Spanish and Italian Bond Yields Soar. On Wednesday, 10-year Spanish bond yields hit a euro-era record of 7% as investors fled to assets promising more safety. Italian 10-year bond yields have also risen by five basis points to 6.3% plus Italian borrowing costs at an auction of 4.5 billion euros of new debt also soared. In other words, confidence in European debt is continuing to deteriorate.
• Foreclosure Filings Spike Higher. RealtyTrac has reported that foreclosure filings in May spiked 9% compared with April as 205,990 properties in the US received filings ranging from default notices, scheduled auctions and bank repossessions. That was the first monthly rise since January plus there was a 12% jump in foreclosure starts. Bank repossessions also rose steeply by 7% to 54,844 after hitting a four-year low the month before.
• Retail Sales Were Mixed. US retail sales fell 0.2% in April and May thanks to a sharp drop in gas prices. When volatile gas sales are excluded, consumers barely increased their spending but sales of cars, furniture and appliances did increase - suggesting that consumers could be gaining more confidence in the economy. Nevertheless, consumer spending could weaken if income growth does not show signs of reviving.
• CPI Falls Sharply. This morning, the Labor Department reported that US consumer prices fell 0.3% in May, its biggest decline in three and a half years, thanks to a fall in gas prices as the gas index sank 6.8% - its largest decline since December 2008. It was also reported that inflation-adjusted hourly wages (on average) rose 0.3% in May thanks to a 0.1% rise in average hourly earnings and a 0.3% fall in the cost of living.
• Jobless Claims Rise. The Labor Department has also reported that initial claims for unemployment benefits rose 6,000 to a seasonally adjusted 386,000 while the 4-week moving average increased 3,500 to 382,000 from the previous week's revised average of 378,500. Claims have remained in the tight band since April with job growth in May being the weakest in a year after a weak performance in April.

In other words and as we head into summer and into an election year, the economy is looking weak but not completely bleak. Hence, it will be important to keep an eye on the latest economic headlines as well as our NextCandle.com stock predictions as the stock market is bound to be in for more choppy sessions.

NOTE: THIS PIECE WAS JUST POSTED ON THE NEXTCANDLE.COM BLOG.

The rain in Spain stays mainly on the plain but lately the rain has also been spreading to Spanish ADRs (despite their global footprints) and now to the stock market as a whole. I should mention that most of the Spanish stocks that trade on US exchanges trade on (or have been recently forced to trade on) the OTC market. However, investors and traders alike looking to trade Spanish ADRs listed on major US markets should consider the following:

• Banco Bilbao Vizcaya Argentaria SA (BBVA). With a presence in 32 countries mostly in Latin America plus the USA, Banco Bilbao Vizcaya Argentaria SA (BBVA) is over 150 years old - which may or may not be reassuring for buy and hold investors. BBVA is down over 26% since the start of the year.
• Banco Santander SA (STD). As the largest lender in the Eurozone, Banco Santander SA (STD) has plenty of exposure to the European mess as a whole. Nevertheless, the Banco Santander SA (STD) dates back to 1857 and its among the top 15 financial institutions worldwide in terms of market capitalization - meaning its "too big to fail." STD is down over 21% since the start of the year.
• Telefonica SA (TEF). With a presence in 25 countries, Telefonica SA (TEF) serves over 300 million customers in Europe, Africa and Latin America. TEF also ranks sixth in the telco sector worldwide in terms of market capitalization but its still down about 30% since the start of the year.

As you can see, all of the Spanish ADRs are actually sizable and fairly solid multinationals with operations spread throughout the Spanish speaking world or globally but due to being based in Spain, the market is raining on them and will probably continue to do so.

More adventurous traders and investors should take a closer look at the iShares MSCI Spain Index ETF (EWP) - an ETF that attempts to track all publicly traded securities in the Spanish market as measured by the MSCI Spain Index. The EWP has a market cap of $132 million and it's down 24% since the start of the year - meaning it's not particularly better or worst than the three previously mentioned Spanish ADRs.

However, investors should keep an eye out for any news regarding Spanish bond auctions and ratings, especially any ratings downgrades, on Spanish bonds and debt in general. After all, a poor bond auction or a ratings downgrade will (fairly or unfairly) impact Spanish ADRs.

Finally, it might be a good idea to add the above Spanish ADRs and ETF to your NextCandle.com My Portfolio page in order to keep an eye on them. After all, there will be both trading opportunities with Spanish ADRs thanks to the volatility engulfing European markets and a good chance to pick up shares (on the cheap) in what appears to be solid companies.

NOTE: THIS PIECE WAS JUST POSTED ON THE NEXTCANDLE.COM BLOG.

Commodities rallied elsewhere in the world in part due to Europe throwing Spanish banks a lifeline but mostly due to better than expected data out of China plus Goldman Sachs issued an optimistic forecast for commodities. Specifically, the Chinese released data that showed that Chinese copper imports rose nearly 12% from April to 419,741 tones.

Of course, it should be remembered that Chinese copper demand remains lackluster. However, China still needs to import copper and restock supplies after running down inventories for some time. Traders have also noted that a global buyer is expecting higher copper prices in China in coming months and had shipped a large supply of refined copper from the United States to Shanghai in late March. That shipment may have arrived in May.

Otherwise, it should be noted that China 6 million barrels per day of crude oil, a record high, along with more iron ore in May but analysts are also warning about drawing overly optimistic conclusions. After all, actual demand from users remains weak and the bulk of oil and copper shipments could easily have been moved into storage.

Nevertheless and in early commodities trading in Asia and Europe, commodities were rallying but its worth noting that the S&P GSCI Enhanced Commodity Index fell 13% in May and is still down about 9.1% since the start of 2012 with the biggest declines being in coffee, natural gas, cotton and crude oil.

Meanwhile, Goldman Sachs (GS) issued a bullish commodities forecast saying that it expects a 29% return from the Standard & Poor's GSCI Enhanced Commodity Index over the next 12 months. Specifically, Goldman Sachs (GS) expects energy investments to rise 41%, base metals to rise 23% and precious metals to rise 18% while agriculture will loose 14%. Jeffrey Currie, the head of commodities research in New York, also noted in the report that despite macroeconomic uncertainties, the current sell-off in commodities is probably overdone with the price risks shifting to the upside.

Hence, investors and traders alike who want to take advantage of any coming overall upswing in commodity prices might want to take a closer look at the iShares S&P GSCI Commodity-Indexed ETF (GSG) which attempts to replicate the performance of the S&P GSCI Total Return Index (however, it should be noted that GSG is not registered under the Investment Company Act of 1940 - meaning an investment is highly speculative).

Likewise, investors and traders who want to bet that Monday's rally will be short lived should be looking at some of the commodity short funds offered by ProShares - a provider of leveraged and inverse funds that allow ordinary investors and traders to short the market. Fund offerings from ProShares include the ProShares UltraShort DJ-AIG Commodity (CMD), ProShares UltraShort DJ-UBS Crude Oil ETF (SCO), ProShares UltraShort DJ UBS Natural Gas (KOLD), ProShares UltraShort Gold ETF (GLL) and ProShares UltraShort Silver ETF (ZSL).

Finally and given just how volatile commodities have been, you might want to add a few of the above commodity ETF funds to your NextCandle.com My Portfolio page to keep track of our latest directional predictions and probabilities for them as there is bound to be more volatility in the weeks and months ahead - meaning opportunities for traders to profit.

NOTE: THIS PIECE WAS JUST POSTED ON THE NEXTCANDLE.COM BLOG.