Market Recon Tuesday

Good Morning,
                       Don’t look now, but the British Pound, and the Euro are both stronger this morning, and that’s a good thing.  We used to gripe about the S&P 500’s correlation to WTI Crude.  Now, it’s the Pound.  Currency valuations really are the engine that either drives, or impedes corporate earnings growth for many of the higher profile firms in our country.  Quite frankly, the lower DXY in 2016 was symbol of shining hope for some of these firms.  That’s why the thought of prolonged uncertainty in Europe is such a big deal.  It’s not just reduced demand, it’s reduced demand for US goods and services because they become unaffordable.  It’s also why the Fed’s expected path of normalization has been forever changed.
                      Speaking of the S&P 500, that was a truly impressive triple bottom that formed yesterday at 1991.  Not only did that level become suddenly important, the fight at that spot came on respectable volume in comparison to the candles around the skirmish all three times.  If you didn’t notice, the algos surely did.
                      Standard & Poors, and Fitch both cut their credit rating for the UK yesterday.  There was mention of probable reductions in GDP, and possibly less reliance upon the Pound by central banks as a reserve currency (In 2015, the GBP accounted for only 4.9% of total reserve currency holdings), which may all be true.  But, the credit rating ??  Really ??  With their own central bank, their own control over money supply, and interest rates ??  They’ll pay their bills, gang.  For this guy, the bond market gets the final say on this, and the bond market appears to have vetoed that decision.
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Macro
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08:30 ET
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GDP (Q1 – f):  At last, we’ll finally get our last look at Q1 GDP.  We expect to see a small upward revision from 0.8% to 1.0% q/q when measured in a seasonally adjusted, annualized format.  Paltry ?? yes, but actually better than we thought when our first look at this item came in at a mere 0.5%.  The final revision to Q4 2015 landed at 1.4%, so we’ve had some pretty tough sledding to get though in the US for a good half year.  Today’s number will actually represent the best first quarter for the US since 2013, and Q2 looks (ahhh, did look) a whole lot better.  the Atlanta Fed’s GDPNow forecaster is currently tracking Q2 2016 at 2.6%.  Then again…. Brexit has thrown us a curveball.
08:55 ET
Redbook (Weekly):  You know what I always say about the Redbook data.  Keep the year over year print at growth of 0.5% or better, and this one flies under the radar.  Last week, the number came in at a slightly healthy 0.9% y/y.  Not that worried about this item.
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09:00 ET
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Case-Shiller HPI (April):  There are many regional sub-components within this data, and then there’s also the month over month numbers.  For our newcomers, when market pros refer to the Case-Shiller in general terms, they mean the 20 city, non-seasonally adjusted, year over year print.  This number has been mired in a pace of growth of between 5% and 6% ever since bottoming out in the mid 4%’s about a year ago.  The expectation is for more of the same today, with a range spanning from 5.3% to 5.8%.  I think a miss here could hurt the market more than a beat could help.  The last thing markets need right now is a sign of weakening domestic macro, even if it is slightly dated.
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10:00 ET
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Consumer Confidence (June):  This item has printed in decline for two months running, badly missing expectations in both months.  On top of that, the similar Consumer Sentiment (U of Michigan) missed consensus for June last Friday.  Therefore, it is with some hesitation that I report today’s expected bounce from 92.6 last month to something like 93.4.  Equity markets tend to react to consumer related surveys at the time of their release.  For that reason, if the Brexit romp seems sort of stabilized at 10am, you want to pay attention to this one.
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Richmond Fed Manufacturing Index (June):  Richmond fell into contraction last month after what had been a very strong two month run.  All of the major components (new orders, backlog orders, shipments, and capacity utilization) that make up the core of manufacturing surveys took serious hits.  The hope for today is that this one sneaks into expansion.  It should be close, with consensus just at +2, after May’s -1 print.  NY, KC, and Philly all hit the tape with positive numbers this month, leaving only Dallas below the Mendoza line.
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Earnings
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AM: CCL (.38)
PM: NKE (.48)