Market Recon Tuesday

Good Morning,
                        Don’t know if anyone noticed….. but, Matt Harvey was actually Matt Harvey last night.  Hope we see this guy again.  You smell that??… Nothing else in the world smells like that.   That smell, that gasoline smell ….. “Jobs Week”.  Already ??  Seems like we just did this, no ??  Sure does kids, and there’s a lot of macro to look at this week, not just jobs data, so let’s tape on the foil, and button down the back of your jersey..  You’re going to have to skate through this shortened week with your head up.  One immediate positive… less Fed speakers lurking in the shadows this week, at least until Thursday, and we’ll be watching the ECB by then anyway.
                       In order to foam the runway for this morning’s landing, you are going to need to know that Chinese stocks roared.  The reason for this was a report released by Goldman that portrayed, in their opinion, the increased likelihood that Chinese A-shares will be included in MSCI’s June rebalancing.  I though this was pretty much a foregone conclusion, but apparently such expectations were not exactly priced in just yet.
                      You also need to know that a lot of macro hit the tape in Europe this morning, and there was some good, but largely, it was outweighed by the negative.  For one, German Retail Sales for April missed very badly… for the third month in a row.  Secondly, Italian Unemployment unexpectedly mover the wrong way, and last… but certainly not least…. consumer level inflation for the Euro-Zone remained stuck in neutral.
                     There’s something special about your first day back at work after a vacation.  Almost as exciting as your first day on vacation.  Almost.  Two fists, gang.  You only have four days to earn five days keep.  Let’s go.
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Bunch O’ Macro
 
08:30 ET
 
PCE Price Index (April):  Here, you have what is probably the single most influential macro-economic data-point that we have, from an FOMC perspective.  We’ll look at all of the data here, but the single most important item will be the Core year over year print.  For March that one hit the tape at 1.6%, in comparison to the CPI’s Core 2.1%.  Moving closer to 2% in this space could cement market perception that the Fed will move by July.  When measured month over month, we look for 0.3% at the Headline today, and 0.2% at the Core.  Both of those would be moves higher from identical 0.1% increases in March.
Personal Income (April):  With the exception of the anemic growth seen in February, this item has maintained an average increase of close to 0.4% for nearly a year.  Doesn’t feel like it, but that’s what the numbers say.  That’s also what we are looking for in the April data.  The very lowest prediction I see is for 0.3% m/m growth, so a failure to show an increase for this print could be taken very poorly by the futures market.
Consumer Spending (April):  Who isn’t rooting for the US consumer, buyer of all things both necessary, and simply desired ?? Well, the consumer has been dragging their feet for a number of months.  I root for people to bring in more than they spend.  It’s better for families in the long run, and it breeds discipline.  However, that said… the consumer appears ready to pop.  Consensus view for this space this morning is for a dramatic 0.6% m/m print.  The range runs from a still strong 0.4% to a very robust 0.9%.  To put this in perspective, 0.6% would be the strongest upward move for one month since last June, and 0.9% would be the strongest since the cows came home (March 2014).
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09:00 ET
 
Case-Shiller HPI (March):  Some folks were disappointed in February’s 5.4% y/y increase for home prices.  They’ll be even more unhappy then when they see March’s expected 5.1% growth, if economists in general are correct.  Hey…. I wouldn’t get too worked up about this number (…and I’m a home owner), it’s still 5% plus print, which would be the eighth in a row, after bouncing around in the high fours until last Autumn (indicating a “pace of growth” bottom, that could be retested).  On top of that, the skew for this print today is to the high side, and anybody following April housing data, I think… would have to be encouraged regardless of what this March number says.
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09:45 ET
 
Chicago PMI (May):  To be honest with you…. you might as well pick red or black, your favorite number, and spin the wheel when it comes to the Chicago PMI.  Consensus opinion for this item is rarely even close to what actually prints, so I’ll just give you the range, which is 48.5 to 52.5.  Hard to miss with that range ?? Yeah, right.
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10:00 ET
 
Consumer Confidence (May):  Oh, that rascally US consumer.  This item missed in April with a still very confident (imho) 94.2.  In fact, the Conference Board’s number has not come in below 90 since September 2014.  We’re looking for the same 96.3 that we were looking for last month when we missed.  This one can impact market trajectory upon it’s release.  Reminder… the University of Michigan number disappointed mildly on Friday.
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10:30 ET
 
Dallas Fed Manufacturing Survey (May):  Those that follow the regional Fed district manufacturing reports know that Dallas has been paid a special long-term visit by the “Ugly Stick”.  Dallas has printed in continual contraction for every month since December of 2014.  Dallas has also put up the weakest print of the five majors (Empire State, Philly, Richmond, Kansas City) in 13 of the last 16 months.  Most economists that I see are looking for something close to -14 for Dallas in May.  That would complete the sweep, with all five of these prints in contraction for the month, ending a two month streak where that dubious feat had been avoided.  The big disappointment had to be the severe miss for Richmond, which suffered from an unforeseen drop-off in shipments, and capacity utilization in last week’s release.
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Tuesday’s Earning’s Highlights
Before the Open: MDT (1.26)
After the Close: TIVO (.09)