Daily Market Color 05/28/2013

Daily Market Color

05/28/2013

Economic Reports & Headlines

Today turned out to be a positive day for the economic calendar according to an increase in the value of risk assets. The majority of the reports were released in the US. March’s SP Case-Shiller 20-City Home Price Index beat economists’ expectations on a year over year basis, 10.9% Vs 10.2%. This is the first double digit gain since May 2006.

The Conference Board released their Consumer Confidence report for May. The consumer survey beat analysts’ estimate, 76.2 Vs 71.5.

The Dallas Fed released their Manufacturing survey for May, which contracted more than expected, -10.5 Vs -8.0.

Heading over to the increasingly popular island nation of Japan, last night their government released April’s Retail Sales report. The report came in better than expected, but still contracted on a year over year basis, -10bps Vs -30bps.      

Future Reports

Tomorrow will be a relatively light day for the economic calendar. Markets will get an updated read on unemployment and consumer prices in Germany.

The Bank of Canada will make their monetary policy announcement.

Trade

Once again, the sharp sell-off in the Nikkei, the rise in the Yen and the decline in the SP 500 will be short lived in my opinion. The fundamentals warranted to reverse the trend in these assets are absent. China’s Flash PMI was bad; however, when you take a look at China’s economic data collectively, you could easily conclude that last week’s global asset moves were overdone. Nevertheless, a temporary trend reversal is possible this week. Japan will release their Consumer Price Index report and the US will release their first quarter GDP report on Thursday. I will continue to stay long US stocks and short the Yen against the US dollar.