This week may be July “Jobs Week”, but before we even think about what will transpire in a few days’ time, I think that we’ve got some wood to cut. There’s a lot on your table today, and it’s best that we waste no time, and get working. Start the music.
First off, there are a couple of international items impacting global markets this morning that you may want to stick in the back of your pretty little head as we proceed. It would be impossible to miss the continued weakness in Chinese equity markets this morning, after both the CLFP (Friday night), and the Caixin (Markit) (Last night) Manufacturing PMI’s failed to impress. C’est la vie. In fact the Caixin number printed deeply in contraction. On top of that, Greek market re-opened this morning, allowing investors to get out of their frozen positions. Rubbing salt in the wounds, Markit released their Greek Manufacturing PMI as well this morning. The number came in with a “30” tag, when something in the mid-40’s was expected. Yikes. Greek stocks opened down more than 20%, but are currently off of their lows
Let’s get to some domestic macro, shall we? Some key data will be released by the Bureau of Economic Analysis at 08:30 ET. That’s when we’ll see June numbers for that timeless rivalry between Personal Income, and Consumer Spending, and top it off with the ever important (to the FOMC) Core PCE. Most economists are expecting to see a noticeable drop in the pace of growth for both Income, and Spending this month. Before you go getting all bent out of shape, May brought home an unusually large pop for both of these items, so this consensus view would sort of just bring us back in line with where we were two months ago. We look for month over month increases of 0.4% for Income, and 0.2% for Spending. The projection for Core PCE is just a m/m 0.1% increase, which should leave the y/y print right around the 1.2% level, which is where it has been stuck. This may make Janet Yellen nervous, but as a child of the 1970’s, I’m OK with a lack of inflation. Yay, gasoline.
We all know that China has two manufacturing PMI’s, and so do we. The one released by Markit (also known as the one nobody looks at) will print at 09:45 ET. The highly visible one, known as the ISM Manufacturing Index will print their July number at 10am ET. Expectations are for a headline of 53.6, which would be just a smidge of an increase in the pace of growth seen in June. This item has been known to move the marketplace, so keep your helmet on. We will also get a look at June Construction Spending at 10am. Throughout the day, the different auto makers will be releasing their unit sales for July, which will immediately impact those individual stocks.
Today also brings us a pretty healthy day on the earnings front. Among the many firms reporting today, you will hear from DO, NBL, and TSN before the opening bell, and ALL, AIG, and THC after the close. I am flat all of these names, as well as their derivative products. All of that creates quite a puzzle for any brain to work through.. Take your time, think about what you’re doing. Do everything that you do for a reason that you could explain to a child. Have an escape plan. Carry on.
Sarge’s TRADING LEVELS
SPX: 2125, 2116, 2110, 2101, 2094, 2083
RUT: 1249, 1244, 1239, 1234, 1227, 1221