Good morning. U.S. stocks ended Q2 mixed with the Dow closing 25 points lower at 16,826, the S&P 500 falling 1 to 1,960 and the Nasdaq gaining 10 to 4,408. Now for the good news. The S&P recorded its 5th consecutive month of gains and its biggest 2nd quarter since 2009. The benchmark index gained 3.9% over the month and a whopping 4.7% for the quarter. The Dow was up 1.9% for the month and 2.2% for the quarter and the Nasdaq mimicked the S&P being up 3.9% for June and 5% for the quarter. These are very, very good numbers folks.

The economic data continues to be mostly positive with the National Association of Realtors reporting yesterday that pending home sales in May were up very sharply at 6.1%. This was way above the most optimistic consensus of +3% and the largest month-on-month increase in more than 4 years. The only drawback is that pending sales are 5.2% below the level of one year ago. The other important report was the Chicago Purchasing Managers index which came in at 62.6 and well above the all important 50 level (indicating expansion) for the 13th month in a row. The only news one might find disappointing is that the consensus going into the number was for a reading of 64 but most importantly the actual number is well above 50.

Q3 is staring out very well this morning with Dow futures up a nice 50 points. The Asian markets closed mixed although Japan’s Nikkei rose sharply up 1.08% and the European markets are all trading nicely in the green and I’m talking more than marginally. Positive PMI reports out of Great Britain, France and Spain are all supporting equities.

Natural gas began yesterday morning on a weaker note but the cash market held in there and the August contract closed up 5.2¢ at $4.461, once again pulled by the equivalent gravity of the sun toward $4.50. The market continues to find equilibrium around that number with the bulls having the hottest part of the summer ahead of them as well as low storage levels and the bears touting growing production. Based on the forecast below there will be some decent air conditioning load in the east in the 6-15 day period which will support the cash market. No 100+ Bcf injection in next week’s report amigos. This morning is starting out as a yawner with natty up1.1¢.

Oil fell yesterday with WTI down 37¢ to $105.37 and Brent losing more down 94¢ to $112.36. The situation on Iraq is, as diplomats would say, “fluid.” The term structures for WTI and Brent have moved bearishly of late with the enormous averaged front month year spread moving from $8.07 backwardation a week ago to $7.03 this morning. This morning WTI is bouncing 61¢ driven by higher equities across the pond and domestically.

Gold had a nice month rising 6.1% and 3% for the quarter. Gold has been getting a bid from geopolitical tensions and more recently traders getting long thinking inflation may be creeping into the U.S. economy. This morning it’s up $5.90, 0.5%, with the cease fire in Ukraine over and the government there deploying aircraft and artillery today against pro-Russian separatist. I’m sure Israel’s attacks against Hamas in retaliation for the deaths of 3 teenagers is helping support gold. The shiny stuff always gets bid up on geopolitical strife and inflation fears.

Continuing my duty to point out how well you have it, did you know:

The average American now retires at 62. A hundred years ago the average American died at 51. Enjoy your golden years. Your ancestors didn’t have any.

Many people are worried the U.S. economy will end up like Japan’s which has been in deflation for over 20 years despite unemployment being only 5.6%. In the U.S. over that time frame the government corruption ranking has consistently improved, income per capita adjusted for purchasing power has grown and life expectancy has rising by nearly 5 years. I can think of worse scenarios.

In America infant mortality has dropped from 58 per 1000 births in 1933 to less than 6 per 1000 births in 2010. There are about 11,000 births in America each day so this improvement means more than 200,000 infants now survive each year who wouldn’t have 80 years ago. That’s like adding a city the size of Boise, Idaho each year.

And therefore, have a great day.

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