Ignorance is Bliss

Ignorance is bliss today, as stocks shrug off further declines in mortgage activity and a downward revision to first quarter GDP. The key catalyst behind the rise in stocks is some Fed speak regarding the dovishness of the Fed and its plans to keep interest rates unchanged. It’s a failed factor, because the Fed’s asset purchase tapering plan speaks louder than words and the support it has until now provided to the mortgage market and the economy has been substantial, obviously. For more in-depth analysis and research visit our stock market blog.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Ignorance is Bliss

Market ETF	June 26	Year-to-Date
SPDR S&P 500 (SPY)	+0.7%	+12.1%
SPDR Dow Jones (DIA)	+0.7%	+13.6%
PowerShares (QQQ)	+0.7%	+8.6%

Economic Events

Data Point	Prior Period	Expected this Period	Actual
WEDNESDAY
GDP Q1	+2.4%	+2.4%	+1.8%
Mortgage Activity	-3.3%	NA	-3.0%

I heard a talking head speaking this morning about the revision to GDP, and brushing it off by pointing toward the date, indicating that Q2 was about to end and that Q1 was old news. That is exactly the point my dear friend, Q2 is about to close and Q1 was supposed to be better than Q2. Desperation in portfolio managers is transparent to me and a pitiful thing to witness, as all semblance of intelligence is abandoned for basic human pride. I’m not sure what makes him believe things are getting better, but I suspect it has a lot to do with the last two years’ stock market performance and the Fed’s economic forecast, neither of which reflect economic reality.

The continuation of mortgage activity decline came with further mortgage rate increases; rates moved up sharply following the Fed’s press conference last week. The decline in business took mortgage activity to its lowest point since November 2011. Though, Purchase Activity actually increased this week, perhaps on that panic driven push to market that some have expected with rising mortgage rates. I reiterate that this would be a temporary driver and unsustainable, and it is not to be counted on as a catalyst for the economy.

Overseas Markets

EUROPE	9:59 AM ET	ASIA/PACIFIC	CLOSE
EURO STOXX 50	+2.4%	NIKKEI 225	-1.0%
German DAX	+1.6%	Hang Seng	+2.4%
CAC 40	+2.1%	S&P/ASX 200	+1.6%
FTSE 100	+1.0%	Korean KOSPI	+0.2%
Greek ASE	-0.3%	BSE India SENSEX	-0.4%

The ECB’s Mario Draghi offered supportive comments this morning in France, giving European shares strength on the day. Most of Asia ex-Japan found strength as well, still benefiting from China Bank commentary from the day before. The Bank of England (BOE) produced its Financial Stability Report today, and given the 1.0% gain in the FTSE 100, the market approved.

Commodity Markets (9:49 AM ET)

WTI Crude	-0.1%
Brent Crude	+0.2%
NYMEX Natural Gas	+0.6%
RBOB Gasoline	-0.2%
Gold Spot	-3.1%
Silver Spot	-4.2%
COMEX Copper	-0.3%
CBOT Corn	+0.5%
CBOT Wheat	+0.6%
CBOT Soybeans	-0.1%
ICE Cocoa	+0.7%
ICE Sugar	-0.5%
ICE Orange Juice Conc.	-1.8%
CME Live Cattle	+0.1%

The EIA produced its weekly Petroleum Status Report this morning. The report covering the period ending June 21 showed crude oil inventory unchanged from the prior week. Inventory levels are above the upper limit of the average range for this time of year. Total motor gasoline inventory increased by 3.7 million barrels in the period, and were well above the upper limit of the average range for this time of year. Gold and silver are still dropping like rocks, and I’ll have more to say about this subject in the next few days.

Corporate Events

Company Reporting EPS	Ticker
WEDNESDAY
Monsanto	NYSE: MON
UniFirst	NYSE: UNF
Lindsay	NYSE: LNN
Park Electrochemical	NYSE: PKE
Tallgrass Energy	NYSE: TEP
Herman Miller	Nasdaq: MLHR
Casella Waste	Nasdaq: CWST
Paychex	Nasdaq: PAYX
Akers Biosciences	Nasdaq: AKBS
SCBT Financial	Nasdaq: SCBT

Monsanto (NYSE: MON) shares are lower by 1.0% as its EPS beat was not enough to contain concerns about operational issues and controls. Also, the company missed on the revenue line, which is almost always more important than the bottom line, as top line issues are harder to fix. That said, I’m a long-term fan of Monsanto’s business potential.

Today’s biggest gainers and losers were:

BIGGEST GAINERS	% Gain	BIGGEST LOSERS	% Drop
Real Goods Solar (Nasdaq: RSOL)	+25%	Synergy Pharma (Nasdaq: SGYPW)	-18%
LUXOFT Holding (Nasdaq: LXFT)	+17%	MeetMe (Nasdaq: MEET)	-11%
Raptor Pharma (Nasdaq: RPTP)	+15%	First Cash Fin’l (Nasdaq: FCFS)	-12%
Hansen Medical (Nasdaq: HNSN)	+13%	Mistras Group (NYSE: MG)	-12%
Methes Energies (Nasdaq: MEIL)	+NA%	Direxion D.G.M. Bull (Nasdaq: NUGT)	-9%
Vestin Realty Mtg. (Nasdaq: VRTA)	+11%	VS 3X Long Silver (Nasdaq: USLV)	-10%
Home BancShares (Nasdaq: HOMB)	+10%	Boston Private Fin’l (Nasdaq: BPFHW)	-10%
Direxion D.G.M. Bear (Nasdaq: DUST)	+11%	CombiMatrix (Nasdaq: CBMX)	-11%
VS 3X Inverse Silver (Nasdaq: DSLV)	+11%	National Security Grp. (Nasdaq: NSEC)	-1%
CoreSite Realty (COR.PA)	+10%	Timmins Gold (NYSE: TGD)	-9%

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