Market Recon Friday

Good Morning,
                     Today is Flash PMI day.  Flashapalooza.  Not a big deal in the US, but a pretty big deal around the globe…..especially in Europe given that this is the first true post-Brexit read.  These numbers were a little tough to truly interpret.  French Manufacturing contracted, the German Manufacturing & Service sectors both showed expansion (yet their ZEW numbers were awful this week.)…in fact, EMU numbers in aggregate grew, and landed close enough to consensus as to not cause much alarm.  Where there might be some cause for concern were in the British data.
                     The UK Manufacturing & Service arenas both printed in a state of contraction, and for the service sector, it was deep into contraction.  The UK, much like the US depends very heavily on the service economy.  What does this mean to the trader?  It means that the British Pound took an immediate hit.  Mark Carney spoke about easing Bank of England monetary policy in August earlier this week, and if these figures are not northerly revised by the end of the month, the MPC (the UK’s FOMC) may actually have to go ahead and do it.
                    While the Pound tests 1.31 support, you’ll notice that the Euro, and the Yen are also weaker this morning, though to lesser degrees.  This has put early pressure on the commodity complex, including your favorites, Gold & Oil.  WTI Crude shows signs of retreating through the 44.50 support level again.  In fact, the level has been pierced a couple of time now, but not in significant fashion.  Should that spot become resistance, you could be talking about $38 Oil again in the not too distant future.  As for Gold, you know that I’m a closet bug.  It has not threatened the 1305 spot recently.  One thing to keep in mind is how crowded the “long the miners” space has become.  When Gold moves, it moves like lightning.  When the commodity hits 1305, it could just as easily hit 1275.  That may be a buy signal for the underlying commodity, but the move lower for some of these mining names will be exacerbated to the downside if that happens.  With the BOJ stepping to the plate next week, this trade is probably already priced at a premium.  If you are already sitting on found money, why wouldn’t you take some off?  Just thinking like a guy with a P/L.
                    The G-20 meets this weekend in Chengdu, China.  On the docket ?? Greece, Italy, Brexit… oh, and Jack Lew also warned against central banks’ competitive currency devaluation.  Key word…competitive.  Didn’t say anything about coordinated, did he?  Keep in mind that China, the host, has been on again, off again, aggressive on this front.
.
Macro
.
09:45 ET
.
Markit’s Manufacturing Flash PMI (July -p): Expected 51.7, Prior 51.3.  This data-point usually does not catch much attention in the marketplace.  The revised print is released alongside the highly focused upon ISM print, so traders don’t really look at it at all.  Due to the fact that the Flash number has no competition, and that we’ve seen mixed signals from the Empire State, and Philadelphia releases, there could be some reaction if we see something way out of bounds here.  I would not bet on that happening though.  The range today runs from 50.5 through 52.5.
.
13:00 ET
.
Baker Hughes Rig Count (Weekly): Prior 447 total / 357 Oil.  There has been steady growth in both the total number of US rigs in operation, and also in the number of rigs solely involved in the production of Oil. Natural Gas is not going to move the marketplace, so the Oil rigs are what we focus on. I would think that with Crude well off of it’s peaks, and struggling to hold the 44.50 support level that this weekly increase will likely slow if not this week, then very soon.
.
Friday’s Earnings Highlights
.
Before the Open: AAL (1.66), GE (.46), HON (1.64), SWK (1.71), WHR (3.37)
After the Close: Stuff guys my age shouldn’t eat or drink.