Daily Market Color 05/09/2013

Daily Market Color

05/09/2013

Economic Reports &Headlines

Last night the economic reports were positive and hardly had any effect on capital markets. Chinese consumer prices were slightly higher than expected in April, 2.4% Vs 2.2%.

April’s Producer prices in China came in lower than expected, -260bps Vs 220bps.

Over in Australia, the labor force survey came in better than expected on both fronts. The jobless rate was lower than economists’ estimates, 5.5% Vs 5.6%. The number of jobs added to Australia’s economy surpassed estimates as well, 50k Vs 11k         

The Bank of Korea cut their interest rate 25bps to 250bps. The move surprised markets.

Heading over to Great Britain, Industrial Production in March beat economists’ aggregate forecast on a month over month basis, 70bps Vs 20bps.

The Bank of England issued their monetary policy announcement which was in line with consensus. Economists forecasted that the BoE will leave their key rates and the level of their asset purchases unchanged.

On the domestic front, jobless claims in the US dropped more than expected and exceeded analysts’ most optimistic estimates from Econoday’s consensus range, 323k Vs 335. This is a five year low according to Bloomberg.   

According Realty Trac, US foreclosures hit a six year low. One in 905 housing units received a foreclosure notice.

Future Reports

Tomorrow we will get Germany’s trade report, economists’ are expecting a 17.5bn surplus in Europe’s strongest economy.

Great Britain will release their trade report as well. Their deficit is expected to come in at 9.0bn.

On the domestic front, Ben Bernanke is expected to speak at a Chicago Fed Banking Conference.  

Trade

According to a report from Reuters, 440 S&P 500 companies reported earnings, so earnings season is practically over. A significant amount of S&P 500 constituents either missed Wall Street’s revenue estimates or came in line with them. This may lead analysts to lower their revenue expectations for the forthcoming earnings season. Lower revenue expectations may allow S&P 500 companies to beat estimates on the top line. However, since a proportionate amount of S&P 500 companies beat earnings expectations, analyst may now increase their earnings estimates and make it harder for companies to beat on the bottom line. The lag between the end of this earnings seasons and the beginning of the next earnings season should shift markets attention economic reports and media headlines. Nonetheless, I will remain long S&P 500 futures.