July Blog Archives 2014

Gold prices end lower on improving U.S. economic data. U.S. stocks fall on worries over Fed rate policy. Gold last traded at $1,281 an ounce. Silver at $20.41 an ounce.

The stock market is in trouble today due to a spate of negative economic news.

The Dow will finish the month of July with a loss after losing well over 200 points today, the last day of the month. The S&P 500 and the NASDAQ are both also sharply lower today.

There are a few reasons for stocks' swoon.

First, as we predicted would likely happen, Argentina defaulted on its debt payments. While the financial industry is trying to downplay this development, there is no denying it is bad news. Economic default is a serious matter.

Default is not a mere ‘technical’ condition, but rather a real and painful event that will hurt real people: these include all ordinary Argentine citizens, the exchange bondholders (who will not receive their interest) and the holdouts (who will not receive payment of the judgments they obtained in court). The full consequences of default are not predictable, but they won't be positive.

Argentina barely negotiated at all, offering only to agree to postpone the deadline for a settlement and offering the holdout bondholders the option to trade in their bonds at terms offered to those who participated in the restructurings in 2005 and 2010—the very terms the holdout investors have been fighting for years now.

This case may set a precedent with far-reaching global consequences. It proves that a handful of hedge funds may be able to impede the ability of countries around the world to borrow money or to renegotiate the terms of their loans if they fall into economic crisis. Considering how many nations in Africa, Latin America and elsewhere are under the control of corrupt regimes that would borrow funds and saddle their people with crippling debt, this is an alarming development.

Adding to the worry on Wall Street were two unexpectedly negative employment reports. After yesterday's surprisingly strong GDP report, the investment world had figured on a strong employment report. It wasn't to be. This feeds the fire of the skeptics who were dubious about the GDP report in the first place.

The number of Americans filing new claims for unemployment benefits rose last week.

Initial claims for state unemployment benefits increased 23,000 to a seasonally adjusted 302,000 for the week ended July 26, the Labor Department said today.

Worse than the report from the Labor Department was a private sector report from the firm Challenger, Gray & Christmas.

Their report indicated that U.S. employers planned to cut nearly 50,000 positions in July, meting out 50 percent more job cuts than in the prior month. The global outplacement firm said in its monthly layoff report that planned payroll reductions hit 46,887, the second highest level of the year. Included in the report were planned massive staff reductions from Microsoft and Hewlett-Packard; two of the bluest, blue-chip tech companies.

The final element contributing to the worry on Wall Street is focused on the banking sector. The Financial Times reported today that the banking industry is bracing for for the possibility of losing as much as $1 trillion in deposits if and when the Federal Reserve begins to raise interest rates.

In other news, Russia's assault on the US dollar continues apace. Yesterday the Russian central bank announced that, having been increasingly shunned by the west, it has discussed cooperation with Reserve Bank of India Executive Director Shrikant Padmanabhan. The punchline: India agreed to create a task group to work out a mechanism for using national currencies in settlements. And so another major bilateral arrangement is set up that completely bypasses the dollar.

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Gold prices end slightly lower on better-than-expected U.S. economic data. U.S. stocks end choppy session lower after a new round of sanctions were announced against Russia. Gold last traded at $1,298 an ounce. Silver at $20.58 an ounce.

The financial markets continue to hover in an uneasy holding pattern in anticipation of some significant economic events later this week.

The Federal Reserve will make a statement tomorrow at the end of its two-day policy meeting. U.S. non-farm payrolls and Gross Domestic Product figures also come out later this week.

But as the markets await these scheduled events, there is plenty to be concerned about in the interim; including a new source of worry.

Argentina admitted yesterday it may default on some of its debts, but they did their best to spin this debacle in an attempt to calm nerves.

In less than two days, some big hedge funds will be in a position to demand full payment on the Argentine bonds they are holdings. Ongoing negotiations have been fruitless.

This appears to be a repeat of what occurred some 13 years ago in 2001, when Buenos Aires stopped paying its more than $100-billion debt. That was the largest default in history. The previous episode came at a time when the world economy was arguably much healthier than it is today, but the Argentine default still contributed to the global bear market in stocks then and it is likely the fallout from the country's current financial problems will extend far beyond its shores.

Speaking of defaults, the US may be confronted with a default problem of its own, though this one bears no resemblance to Argentina's.

The US Treasury, which finances more than 90 percent of new student loans, is exploring ways to make repayment more affordable as defaults by almost 7 million Americans and other strapped borrowers restrain economic growth.

As higher-education debt swells to a record $1.2 trillion, it is difficult to ignore the parallels to the 2008-2009 mortgage crisis.

Later this week, the US government will release its Gross Domestic Product figure for the 2nd quarter. Many observers have been saying for some time that the number will be robust, predicting a sharp rebound from the 1st quarter's dismal decline. Others aren't so sure.

Economist Gary Shilling believes those who anticipate such a sharp rebound are setting themselves up for severe disappointment.

Shilling believes the predictions of 3% GDP growth are sadly wrong. He forecasts an anemic 1% GDP growth and doesn't rule out another negative quarter.

We often report on the views of economist Marc Faber, who has been saying for some time now that investors should exit the stock market and get into gold. Yesterday, Faber got very specific with his predictions.

He told a CNBC TV audience he expects stocks to drop 20 percent 30 percent by October.

Finally, there are two geopolitical developments worth mentioning as each has implications for the financial markets.

First of all, Israel is making it clear it has no intention of stopping its offensive against HAMAS in Gaza. In fact, the Israelis seem to be escalating their defiance of calls from the UN and the US to agree to a cease-fire.

Second, the outgoing head of America's Defense Intelligence Agency, Lt. Gen. Michael Flynn, says the US is no safer today, 13 years after 9/11, than it was in 2001.

Flynn says America is less safe today in large part because of the emergence of terrorist groups like the Islamic State, formerly know as the Islamic State of Iraq and the Levant. And far from being on the run, as President Obama claims, the ideology behind Al Qaeda and its allies is "exponentially growing."

Two thoughts come to mind on this issue:

1. America has spent trillions of dollars and fought major campaigns against enemies in Iraq and Afghanistan, yet we are less safe. That is disheartening to say the least.

2. If America is less safe and the enemy is getting stronger, that at least offers up the possibility that America could be struck again. History tells us that the economic and financial fallout from such an event would be profound, if not completely catastrophic.

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Gold prices end lower as investors continue their focus on equities. U.S. stocks slightly higher. Jobless claims lowest in more than 8 years. Gold last traded at $1,290 an ounce. Silver at $20.42 an ounce.

Two authoritative--and controversial--sources are expressing concerns about the economic outlook today.

The International Monetary Fund (IMF), lowered the growth forecast in its World Economic Outlook in an announcement this morning.

The IMF did so based on the sharp drop in U.S. first quarter GDP and less optimism about growth in several emerging markets. The potential of financial market overreaction to the expected Federal Reserve tightening is also a key downside risk, the IMF said.

The other source, former Fed Chairman Alan Greenspan, has also joined the chorus of those expressing concerns over the US economy.

Greenspan, 88, who was chairman of the U.S. central bank for more than 18 years, from 1987 to 2006, suffered a remarkable fall from grace after leaving office and has apologized for trusting big banks too much.

In an interview with MarketWatch today, Greenspan expressed worries that we are currently in an asset bubble and that all bubbles eventually "collapse."

There is also fresh evidence that one asset--real estate--may be in for trouble. New sales of single-family homes fell 8.1% in June. Revised figures for March, April and May also show the industry's spring performance was weaker than previously estimated, the Census Bureau reported Thursday.

Sales fell from May in every region of the country, led by a 20% decline in the Northeast.

The median price of homes sold last month was $273,500, down 3.2% from May.

While monthly figures can be volatile, more reliable quarterly averages show the new home market's weakness. Second-quarter sales were 6.4% below the pace in last year's second quarter.

Finally, we can now count one more US ally to the growing list of nations moving away from the dollar as an international medium of exchange: Turkey.

The Russian Ministry of Economic Development issued a press release stating that Turkey was quickly moving away from their reliance on the dollar as the global reserve currency, and is seeking increased trade with Russia in a mutually beneficial exchange of self-contained sovereign currencies.

Turkey has begun to move away from its U.S. alliance and has started seeking increased trade agreements with America's primary adversary, Russia. Already the eighth ranked trading partner for Russia, Turkey is proposing an even greater share of this pie and is willing to accede to Russia and China's agenda for a de-dollarized trade system that cuts out the reserve currency from most, or all, transactions.

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Gold prices end lower as safe haven demand ebbs. U.S. stocks higher, boosted by better-than-expected inflation and housing reports. Gold last traded at $1,306 an ounce. Silver at $21.00 an ounce

There can hardly be any denying that inflation is making a comeback in the US economy. We received further confirmation of this with the latest Consumer Price Index report from the US Labor Department this morning.

The CPI increased by 0.3% in June, after climbing 0.4% in May.

Apologists are blaming the rise on gasoline prices, as if that should comfort Americans who have to drive every day. The gasoline index rose 3.3% in June.

Food prices rose 0.1% in June and core prices ticked up 0.1% as well.

As is so often the case, the devil is in the details. And the details when it comes to food prices are not particularly encouraging.

The prices of beef and bacon hit all-time highs in the United States in June. Ground chuck cost $3.91 per pound and bacon cost $6.11 per pound.

A decade ago, in June 2004, a pound of ground chuck cost $2.49, which means that the commodity has increased by 57 percent since then. Bacon has increased by 78.7 percent from the $3.42 it cost in June 2004 to the $6.11 it costs now.

The implications of higher inflation should not escape the attention of investors. Historically, higher inflation has resulted in higher gold prices, as gold serves as a hedge against high inflation. High inflation has also historically been quite unfavorable for stocks and bonds.

But inflation isn't the only concern confronting the financial markets.

Jeremy Grantham, co-founder and chief investment strategist of GMO, a Boston-based firm with $117 billion in assets under management, is warning investors that another horrific stock market crash is coming, and the next bust will be “unlike any other” we have seen.

Grantham pulls no punches when assigning responsibility for the coming financial carnage. In a recent interview with The New York Times, he calls Federal Reserve Chair Janet Yellen “ignorant” and says the Federal Reserve all but killed the economic recovery.

Grantham isn’t the only one worried about a market collapse.

“We have no right to be surprised by a severe and imminent stock market crash,” explains Mark Spitznagel, a hedge fund manager who is notorious for his hugely profitable billion-dollar bet on the 2008 crisis. “In fact, we must absolutely expect it."

In addition, respected fund manager Sebastian Lyon, who oversees the Personal Assets investment trust and the Trojan fund, is holding cash and gold until stock markets fall. One of Lyon's primary worries: increased government involvement and interference in the world economy and financial markets.

Lyon is not the only analyst who is turning his attention to gold.

Bank of America/Merrill Lynch, who started 2014 bearish on gold, is shifting its outlook. Its analysts believe the worst days for the precious metal may be over.

In a note to clients this week, metals strategist Michael Widmer notes how gold prices have stabilized this year thanks to steady physical demand from emerging markets — China and India absorbing mine and scrap supply — which has helped compensate for investor selling. In the future, he says, that balance will sway in gold’s favor.

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Gold prices head for biggest gain in four weeks on increased Ukraine-Russia tensions. US stocks opened lower on poor housing data and weak jobless claims. Gold last traded at $1,318 an ounce. Silver at $21.17 an ounce.

The markets were rattled today as concerns grow over the conflict between Russia and Ukraine. Investors originally woke up to news that a Ukrainian fighter jet was shot down by missiles from a Russian plane. Only to find later it was a Malaysian Airlines commercial jet shot down in Ukraine near the Russia border with almost 300 passengers a on board. One the news hit, investors immediately sold stocks, sending U.S. indexes down modestly to fresh session lows.

Tensions have also been growing in Israel as Prime Minister Binyamin Netanyahu directed the IDF to send ground troops into Gaza to strike the terror tunnels into Israel. This operation was approved after Israel agreed to the Egyptian cease-fire proposal, which Hamas rejected. A statement by authorities was released announcing that Hamas even fired rockets during the five-hour humanitarian cease-fire. “In light of Hamas' continuous criminal aggression, and the dangerous infiltration into Israeli territory, Israel is obligated to act in defense of its citizens,” the statement said.

During this time of turmoil and conflict investors flocked to gold, a traditional shelter for investors during times of uncertainty. Gold prices surged as much as 1.9% today, their biggest one-day jump in four weeks. So far this year gold has rallied 9.5%, outperforming commodities, equities and Treasuries; as the violence in the middle east and hostilities between Ukraine and Russia boosted demand for a safe haven asset.

Markets have also been feeling the pressure in other ways. A newly released report from the Bureau of Labor Statistics shows year-over-year gains in some food products at the producer level have increased greatly. Some examples include a 33.9% increase for eggs, 28% increase for pork and a 10.7% jump for dairy products. American families are struggling to keep up since paychecks are not going up at similar rates.

Companies are feeling the pressure too, Hershey's just announced that the price of all its chocolate bars is going up about 8 percent due to the increased cost of their ingredients. Hershey's isn't the only one either. Last month J.M. Smucker, the largest coffee producers in the U.S. announced their plan to raise coffee prices by about 8% and Starbucks has announced several price increases of their own.

Chairman of Swiss America, Craig R. Smith was on Fox News this week discussing this jump in inflation costs. Check out the interview here. In his interview Smith responds to the government claims that the inflation rate is only 2% per year, saying the government is manipulating the inflation numbers and keeping them low so they can benefit. By keeping the numbers low "there's less adjustments to social security, less adjustments to Medicare and less adjustments to cost of living increases" says Smith.

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Gold closes below $1,300 on a stronger U.S. dollar and technical selling. U.S. stocks closed mostly lower after dovish comments from Fed Chairwoman Janet Yellen. Gold last traded at $1,297 an ounce. Silver at $20.89 an ounce

Earlier today Federal Reserve Chairwoman Janet Yellen gave her testimony to U.S. senators saying the economy is still not strong enough. Wages are rising too slowly while too few Americans are participating in the job market. "We judge that a high degree of monetary policy accommodation remains appropriate," Yellen stated.

Critics have been arguing that the Fed could easily pump too much money into the economy, which could trigger a bubble or broader inflation. CNBC's Rick Santelli is one of those critics. He explains that by keeping interest rates artificially low, the Fed has encouraged reckless government borrowing and spending while crushing savers, especially retirees. The Fed also focused its efforts on making the rich even richer through Quantitative Easing while middle class Americans suffer.

With stock markets at all time highs, it seems the Fed is correct about the economy for the moment. But many market experts know its fake and artificially propped up though the efforts of the Fed. According to new research by financial consultant Andrew Smithers, chairman of Smithers & Co., we are in a massive stock-market bubble. According to Smithers, U.S. stocks are now about 80% over valued on certain key long-term measures and we are currently in the third biggest bubble in U.S. history.

Aside from stocks being overvalued, the U.S. also risks a fiscal crisis if it doesn't get the growing federal debt under control, according to a report from the Congressional Budget Office. In its new long-term budget outlook, the CBO said federal debt held by the public is now 74% of the economy and will rise to 106% of GDP by 2039.

If federal debt grows faster than GDP, the path will be "unsustainable" for the economy, risking a crisis where investors would doubt the government's ability to pay its debt obligations. “Such a fiscal crisis would present policymakers with extremely difficult choices and would probably have a substantial negative impact on the country,” the report says.

In other market news, the anti-dollar movement being led by Russia and China is growing. The anti-dollar alliance among the BRICS nations have successfully created a "mini-IMF." According to BRICS, "We remain disappointed and seriously concerned with the current non-implementation of the 2010 International Monetary Fund (IMF) reforms, which negatively impacts on the IMF’s legitimacy, credibility and effectiveness."

Putin explains this is a part of "a system of measures that would help prevent the harassment of countries that do not agree with some foreign policy decisions made by the United States and their allies." The BRICS will be providing their own funding. Basically, the role of the dollar will no longer exist. One expert says its "game over" for the dollar.

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Gold prices settle at the highest level in almost four months on safe haven demand following new developments in Europe. U.S. stocks close lower despite positive job reports. Gold last traded at $1,338 an ounce. Silver at $21.47 an ounce.

Stock markets in Shanghai, Tokyo, London, Frankfurt, Paris and New York have all dropped sharply over the past 24 hours, especially on news of a banking crisis in Portugal.

Portuguese conglomerate Espírito Santo International this week delayed payments to some of the holders of its short-term debt securities.

Its Swiss banking arm, Banque Privee Espirito Santo, is at the center of the concerns after it failed to pay some of its clients earlier this week.

Investors holding the commercial paper issued by Espírito Santo International have been asked to swap their debt securities for shares. By Thursday, the country's Economico news publication reported that Espírito Santo was seeking judicial protection against its creditors.

To make matters worse, the company initially blamed the crisis on an IT glitch; which appears to have been a lie. This is yet another reminder that gold alone is an asset in its own right, not dependent on anyone's promises!

There are real concerns that Espírito Santo's problems could impact all of the Portuguese debt markets and filter out into the rest of Europe. What we are seeing in Portugal today is simply a continuation of the European financial crisis of the past two years that was falsely believed to be a thing of the past.

Nothing has truly been resolved and the crisis is still very much with us.

Banking in Portugal isn't the only place where the industry is in trouble. Here in the US the profit outlook for the banking sector is poor. Financials broadly, and banks in particular, find themselves struggling against the twin headwinds of increased regulation and uncertainty regarding monetary policy. Bank executives have been preparing investors, with warnings from JP Morgan Chase and Citigroup regarding substantial trading losses that will impact earnings.

This only feeds the narrative that the economic fundamentals do not support lofty stock market levels. More and more analysts are forecasting a drop in the stock market.

Meanwhile, as might be expected, gold is sharply higher, reaching a 4-month high on safe-haven buying. Gold has in fact proven its value as a safe haven this year both in geopolitical and financial crises.

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Gold prices end slightly lower amid chart consolidation and profit taking. U.S. stocks fall, May job openings rise to 4.64 million. Gold last traded at $1,316 an ounce. Silver at $21.01 an ounce.

The financial markets are awaiting the release of minutes from the Fed's June policy meeting on Wednesday to gauge the central bank's view on interest rates and economic strength. This release will likely set the pace for the rest of the week, though geopolitical factors could also weigh in to impact the various financial markets as well.

The stock market is also trading tentatively today in anticipation of the start of the 2nd quarter "earnings season." Stock market valuations are decidedly rich and traders are waiting to see if earnings catch up or lag behind.

In the interim, there is fresh evidence American business is less than optimistic about the outlook for the US economy.

U.S. small business sentiment weakened in June because firms felt less confident the economy would improve in the coming months.

The National Federation of Independent Business (NFIB) said on Tuesday its Small Business Optimism Index fell 1.6 points to 95 last month.

Six of the NFIB's 10 indicators decreased, with about half of the decline in the overall index due to less confidence in future business conditions. The index also saw a deep slide in business expectations, which plunged by 10 points during the month. Real sales expectations, meanwhile, fell four points to 11 percent.

The NFIB index is often seen as a leading indicator for the economy and is a truly independent index, immune from the government meddling and rigging so often seen in the Labor and Commerce Department reports.

The Obama years have been plagued by economic stagnation for various reasons. One reason given for dismal economic performance in the winter of 2013-2014 was unusually bad, cold weather.

But a new report from economist John Lott suggests the weather cannot be blamed for that bad performance. Lott's historical research does not support the administration's claims that bad weather is to blame for a bad economy. Going back to 1947, 4 of the 5 the worst winters actually experienced economic growth. Moreover, there is no correlation between low temperatures and GDP growth.

One of the reasons the US economy is strapped is because there simply aren't enough Americans working. Today, in the Obama economy, only 47.7% of US adults are working full-time. That minority has to carry the burden of the rest of America and it's just too much.

We cannot expect sustained economic improvement until the fiscal and monetary factors underpinning this situation are reversed.

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Gold prices end lower on profit taking and upbeat economic data. U.S. stocks higher, Dow tops 17,000 on higher than expected jobs data. Gold last traded at $1,320 an ounce. Silver at $21.14 an ounce.

Irrational exuberance has returned to the US stock market.

The Dow Jones Industrial Average is now trading at over 17,000, ostensibly after a positive US employment report which showed the unemployment rate in the US has dropped to 6.1%.

But as we have so often pointed out in the past, when it comes to the unemployment report, the devil is indeed in the details.

In this case, we have seen still more Americans drop out of the work force, which contributes to a lower unemployment rate. The number of Americans 16 and older who did not participate in the labor force climbed to a record high of 92,120,000 in June, according to data from the Bureau of Labor Statistics (BLS). This means there were 92,120,000 Americans 16 and older who not only did not have a job, but did not actively seek one in the last four weeks.

That is up 111,000 from the 92,009,000 Americans who were not participating in the labor force in April.

In June, according to BLS, the labor force participation rate for Americans was 62.8 percent, matching a 36-year low. The participation rate is the percentage of the population that either has a job or actively sought one in the last four weeks.

In December, April, May, and now June, the labor force participation rate has been 62.8 percent.

Before December, the last time the labor force participation rate sank as low as 62.8 percent was in February 1978, when it was also 62.8 percent. At that time, Jimmy Carter was president.

At no time during the presidencies of Ronald Reagan, George H.W. Bush, Bill Clinton or George W. Bush, did such a small percentage of the civilian non-institutional population either hold a job or at least actively seek one.

While the number of Americans not in the labor force increased, the unemployment rate dropped -- from 6.3 percent in April to 6.1 percent in June.

But that's not all. In June the BLS reports the number of full-time jobs tumbled by 523 thousand to 118.2 million while part-time jobs soared by 799 thousand to over 28 million! Strong economies are not built on the part-time unemployed.

Why are part-time jobs growing while full-time jobs are contracting? One big reason is Obamacare. Businesses don't want to take on full-time employees in the current, uncertain environment created by the passage and approaching implementation of Obamacare.

This is not the stuff bull markets in stocks are supposed to be made of, but Wall Street is oblivious to reality. Meanwhile, inflation is making a real comeback this 4th of July.

Rising prices for beef, ice cream and lettuce mean Americans will spend the most ever for Fourth of July barbecues this year.

An index tracking U.S. retail prices for seven foods commonly consumed while grilling climbed 5.1 percent in May from a year earlier to the highest ever for the month, the latest data from Bureau of Labor Statistics show.

Prices for ground beef are 16 percent higher than a year earlier, while ice cream climbed 1.7 percent and tomatoes soared 12 percent, government data show. Fuel costs have also hit a high this 4th of July holiday season not seen in years.

In fact, as Americans drive to barbecues and the beach in coming days, they will be paying more for gas than on any Independence Day weekend since the record highs of 2008.

A gallon of unleaded gasoline cost an average of $3.67 Wednesday, almost 20 cents above last year's price, according to automobile club AAA. In California, drivers have been paying well over $4 a gallon for weeks.

Prices at the pump are tracking a sharp rise in oil prices over the past month after Islamist militants took control of several cities in Iraq. Investors and traders have worried that the spreading insurgency poses a threat to the country's oil production.

Higher fuel prices come at a delicate time for the U.S. economy, potentially stretching consumer budgets and weighing on growth as the Federal Reserve is rolling back stimulus.

Drivers "might cut back on other things, like shopping or dining or going out," said Michael Green, a AAA spokesman. The high cost of gas "really just affects their budget, and the amount they can spend on everything else when they're traveling."

This is the stuff stagflation is made of and stagflation has not historically been associated with bull markets in stocks. In fact, just the opposite. The first time stagflation hit in the 1970s, the S&P 500 fell 45% in 21 months.

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Gold prices jump higher Tuesday, hitting the highest close since mid-April, on growing tensions in the Middle East. U.S. stocks climb higher on strong manufacturing data. Gold last traded at $1,326 an ounce. Silver at $21.12 an ounce.

The second quarter of 2014 officially ended yesterday and it was the second consecutive quarter in which the price of gold advanced.

In fact, gold ended the quarter with a flourish during the month of June, with its biggest monthly gain since February. Gold was up more than 6% for the month and 3% for the quarter.

Gold is also starting the 3rd quarter positively as the US dollar is down against a basket of foreign currencies as the new quarter commences.

One of the chief factors driving gold higher during the 2nd quarter was a rash of geopolitical tensions in Ukraine and Iraq.

Heading into the 3rd quarter, those tensions show no signs of abating.

Earlier this week, ISIS declared a caliphate in parts of Iraq and Syria and today paraded a Scud missile for the first time.

Fighting once again flared up in Ukraine as the Ukrainian government called an end to the 10-day old cease fire there and launched an offensive against pro-Russian forces.

Now there is yet another factor with the discovery of the bodies of three Israeli teenagers kidnapped three weeks ago. Israel has launched raids in retaliation and HAMAS has issued threats of escalation as well.

Another factor driving investors to gold has been the disappointing performance of the US economy in the face of the cheerleading from the financial media, outright propaganda from the Obama administration and shockingly inaccurate reports from the Federal Reserve.

Once again, as we enter the 3rd quarter, we have seen more of the same.

The pace of growth in the U.S. manufacturing sector slowed in June.

The Institute for Supply Management said its index of national factory activity was 55.3 in June, down from May's 55.4 reading. The report was also lower than the 55.8 reading expected by a Reuters poll of economists.

The employment component of the gauge was unchanged at 52.8, below expectations for a read of 53.2.

A separate report showed U.S. construction spending rose less than expected in May, which could prompt a further downgrading of second-quarter economic growth estimates.

Construction spending edged up 0.1 percent to an annual rate of $956.1 billion, the Commerce Department said.

Economists polled by Reuters had expected construction spending to advance 0.5 percent.

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