Market Recon Tuesday

Good Morning,
                     Hiruhiko Kuroda threw Japanese investors a curveball last night. The Nikkei 225, -0.6% this morning is the worst performing major equity index in Asia. The Bank of Japan Governor spoke last night on Information Technology and Financial Services, and he stuck to the topic. Kuroda didn’t go near monetary policy. Those who post on Japanese trader blogs were disappointed, forced to unwind and the US dollar fell well off of it’s highs versus the Japanese Yen.
                     European shares are green across the board this morning, after a plethora of Flash PMIs were released, both for the manufacturing, and service sectors. It’s not that the numbers were great, though they were, for the most part expansionary. I think that the relief is that, we are now into August, and generally speaking… these numbers appear unaffected by the outcome of the Brexit referendum in the UK. At least for now that is, and most economists felt that you would see broader negativity at this point. We will not see British PMI data until the end of next week (We’ll be worried about Non-Farm Payrolls by then), but the pressure seems to abating somewhat for both Mario Draghi, and Mark Carney.
                    The focus remains on WTI Crude prices today, despite the fact that William Dudley, John Williams, and Stanley Fischer all seem worried about inflation. We’ll worry about that in a couple of days. After yesterday’s announcement by Iraq on increasing production, and the bout of profit taking that ensued, the question for oil becomes where does this commodity find a bid? Holders of Energy stocks may not like the volatility, but technically, nothing is yet broken. After the run of the last two weeks, support would have to be tested in order to move higher. The spot to worry about right now is 45.75, which is still about a dollar away this morning. Should that area fail a serious test, the door could swing open to prices as low as 39. That’s not to scare you, it’s to inform you. Hedge appropriately.
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Macro
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08:55 – Redbook (Weekly): Last Week 0.2% y/y.  This weekly is coming uncomfortably close to flat-lining from last year.  Last week, was the third week in the last five that year over year growth dipped below 0.5%.  In fact, last week showed the poorest y/y growth in this space in 2016. At this point, this release will start giving us clues as to the over-all health of the back to school shopping season. Retailers need to see this number improve from last week, after what was a rough July for retail sales.
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09:45 – Markit Flash Manufacturing PMI (August): Expecting 52.7, July 52.9.  This number will not get much media, nor market attention today. If it sees any at all, it will be solely due to the fact that there is no flash ISM print.  The Richmond number in fifteen minutes will carry at least as much weight as this item.
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10:00 – New Home Sales (July): Expecting 580K, June 592K SAAR.  This will be the marquee macro-economic data-point of the day, thanks to the dramatic multiplier effect that New Home Sales have on the broader economy. Housing is once again becoming a strength in the US, as on a seasonally adjusted, annualized rate, June was the strongest month in this space since 2008. The last three months in fact, have averaged 583K, and even if we see a slight pull-back to the 580K that is expected, this item will remain on trend.
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10:00 – Richmond Fed Manufacturing Index (August): Expecting 6, July 10.  Richmond has been one of the healthier regional Fed districts as far as manufacturing is concerned. This index has printed in expansion in five of the last eight months. In my opinion, the headline numbers have not always jived with the underlying components for these data-points. Watch for growth in New Orders, Shipments, and Inventories. If they look alright, pricing and employment should fall into place.
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Tuesday’s Earnings Highlights
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Before the Open: BMO (1.83), BBY (.43), SJM (1.73), TOL (.61)
 After the Close: LZB (.29)