Oil is up this morning…along with almost all of your favorite Asian, and European equity market indices. That correlation is done, right? Another day….another story. There are competing forces pushing Crude prices around as WTI edges it’s way past 30 and a half in the early hours. Going back to last week…. rig counts continued to fall, inventories continued to set records, and then, this morning… China. This morning the GAC (The Chinese agency that tracks this stuff) reported that January imports of Crude dropped 4.6% y/y. Guess, as awful as that number is a as a reflection of Chinese demand, the news was both expected, and simply trumped by the idea of US producers taking a powder, while OPEC, and non-OPEC producers continue to act like they may give credence to plan coordinating a freeze at January levels. If somebody unexpected even pretends to go along here, we’ll likely see a test of $33 for the WTI. If not…well, you know.
This will be a very busy week for the macro-nerd inside. You’ll have all kinds of fun tracking home prices, Durable Goods, PCE inflation, GDP, Spending, and Income. Yes…. tons of fun, just not today. All you’ll get a peak at today is the Markit Flash for Manufacturing PMI. Markit’s numbers in this space have consistently run a bit hotter than the ISM’s numbers, which is what most Americans watch. Expectations for today are for a 52.5-ish print, and I don’t think that market participants will even notice this release if it comers in anywhere from slightly below the expectation to well above. The only way it catches attention will be with a severe miss. BTW, the EMU is general, and Germany in specific both suffered severe misses in this space earlier today. Germany barely printed in expansion.
Retailers will remain the earnings focus for the week. Interesting pattern started developing last week. We’ll see if it continues, being the sample was just the two higher profile releases. It appears that at least in spots, if you’re unhedged, and a lot of home-gamers are not, that the shares have been ripe for selling ahead of the print, and if you still believe the story that buying them back after the next open has been working. Obviously, this is not advice, because I never give any, but seeing if it continues to work, is acutely interesting.
Just a heads up, I’ll remind you tomorrow. Market Recon will not be published this Wednesday thru Friday.
Monday’s Earnings Highlights
Before the Open: AGN (3.32), DF (.34)
After the Close: DDS (2.48), FIT (.25), THC (.34).