What’s going on in China? It’s hard not to notice July’s y/y decline in exports of 8.3%, coming after the positive pop seen in June for that same data-point. Imports also fell by more than 8%. At least June sported no such optimistic head fake in that department. On top of all of this, the Chinese PPI, which always seems to contract, contracted more than usual….and more than expected for July. So, what does the Shanghai Composite do? Why it soars of course…. to the tune of almost 5%. There seems to be two obvious reasons for this surge of strength in Chinese equity prices. One of those, we all know very well, “Bad news is good news”, when a central bank with room to maneuver is involved. Yes, with all that the PBOC has done, they still do have that kind of room. Two, the government controls a lot of these companies. That said, they can control consolidation, if it makes sense to them, and it soon likely will.
We do not have any domestic macro to get you fired up today, but we do have Fed speakers. Federal Reserve Vice Chair Stanley Fischer is scheduled to make some comments via satellite at 07:15am this morning, but he will not be the main event. Remember what Atlanta Fed Pres. Dennis Lockhart do to the marketplace early last week? Well, he is on the docket to speak twice today. First, at 9am from the Fed’s own Atlanta branch, then at 12:25 from the Atlanta Pres Club’s luncheon. At that little get together, there will be a question and answer session, so that’s where you’re likely to hear something unpredictable.
Later this week, July Retail Sales will be the focus, as will quarterly earnings that will be released by several retailers, but today, the focus will be food. Before the open, DF, and SYY both report on what one might call a slow day for data. I am flat both of those. We’ve been range bound since February, gang. Last week we slid toward the lower end of the range, but there still is some downside room to be had, if we need it, without having to label this range as “broken”. I do not think that it is time to panic, but I am not stupid, at least that’s what my Mom says. There’s nothing wrong with taking a shot at certain levels, if you have a reason (and some tolerance for risk), just spend the extra few bucks and protect yourself. Now, go get ’em.
Sarge’s TRADING LEVELS
SPX: 2103, 2094, 2087, 2082, 2076, 2068, 2057
RUT: 1221, 1217, 1211, 1206, 1200, 1195, 1189