Market Recon Tuesday

Good Morning,

                      The European economy is roaring?  Well that may be something of an exaggeration, but the numbers that we are seeing this morning are impressive.  Flash PMI’s for both the Manufacturing & Service sectors out of France? Beat, beat.  Germany? Beat. beat.  Ok, how about the EMU in general? Beat, beat……no way.  Here’s a good one….Italian Retail Sales?  Beat !!…and beat solidly.  Like the fictional ballplayer Roy Hobbs in the movie, “The Natural”, these guys are suddenly hitting every pitch they see.  Maybe they’ll take a swing at the latest pitch from Greece.  We have a full plate of macro here on this side of the pond today.  Let’s see if this trend can continue.

                     As far as that plate of macro goes, there are several items on the menu today.  We’ll start out at 08:30 ET with a fairly high focus release, and that would be May Durable Goods Orders.  When it comes to this one, the core print, which omits transportation, is the key print.  Without transportation we are looking for month over month growth of 0.6%.  With it, the expectation is for -0.6% m/m.  For the core print, if it works out this way, that would put together a three month winning streak.  Winning streaks rule.  Next, the retail crowd will get their Redbook at 08:55 ET.
                     At 9am, we’ll see the FHFA House Price Index for April, and at 09:45, Markit will print their Flash Manufacturing PMI.  Our Flash PMI’s are not the market impacting events that Europe’s are.  The crowd will notice neither of these items, so you don’t have to either.  What you will have to be cognizant of will be May New Home Sales at 10am ET.
                     We’ve already seen encouraging May data for Housing Permits, and Existing Home Sales, so why not an improvement in this space to something like 525K, from last month’s 517K on a seasonally adjusted, annualized basis?  The skew slightly favors a miss on this today, but it is very close.  You will also get the Richmond Fed Manufacturing Index at 10am.  This one can go either way.  Sometimes the crowd notices it, and sometimes they don’t.  For some background, this month has already seen a miss for the Empire State, and a Beat for the Philly Fed.  We are looking for a positive 3 here today.
                     Just a heads up.  You do have one Fed speaker on the docket today, and it’s an early one.  Federal Reserve Gov. Jerome Powell will speak from Washington D.C. at 8am about decisions currently facing the FOMC, so it will be relevant.
SPX: 2147, 2135, 2128, 2120, 2113, 2106
RUT: 1304, 1299, 1293, 1288, 1283, 1278