Thursday, June 14, 2007


Stocks moved ahead again as the May core PPI figures showed a mere 0.2% increase. Of course, the headline number (which includes food and energy) was up a whopping 0.9%, or an annual rate approaching hyperinflation. Traders took this information in stride, boosting stock prices for the second straight day and looking forward to a positive close for the week.

Dow 13,553.72 +71.37; NASDAQ 2,599.41 +17.10; S&P 500 1,522.97 +7.30; NYSE Composite 9,926.79 +63.29

Bonds were higher, but not startlingly so, with the 10-year note up 0.017 to end the session at 5.217. Investors are accepting just about any kind of news today and using selective reasoning to accentuate only the positive and put an optimistic spin on anything that might cause the long, long rally to derail. So it was with today's PPI number. In another time, such a huge jump might have induced panic. Not so today, as apparently, a 10.2% increase in the price of gasoline is ignored in the face of the "benign core rate." It's pretty much a specious argument, but it's what moves the markets today.

Today's upside was broad-based, with 348 new highs against 120 new lows and a 5-3 edge for advancing issues over decliners.

Once again, the US dollar improved against foreign currencies, including the Yen and Euro, reflecting a possible bottom in the long downtrend of the greenback.

With stocks higher and nobody apparently concerned about the high prices for petroleum products, oil traders sent crude futures skyward, to $67.65, a gain of $1.39 for the day. Gold and silver remain stuck in their respective channels. Gold gained $3.20 and silver rose 11 cents.

The current state of affairs certainly seems rosy, though the PPI figures cannot just easily be dismissed. Energy costs have become a major factor in the lives of every American and all businesses worldwide, without anybody lifting a finger to make needed adjustments in lifestyle or best practices. If crippling energy bills become the norm, this 53-month bull run could become memorable as the last grand hurrah.

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