Daily Market Color 06/05/2013

Daily Market Color

06/05/2013

Economic Reports & Headlines

The global economic agenda for today is filled with service PMI reports. I’ll start off in the European region. France service PMI contracted at 44.3, which was in line with consensus.

Germany’s service PMI came in slightly lower than expected, 49.7 Vs 49.8.

The Eurozone’s service PMI missed consensus and contracted more than expected, 47.2 Vs 47.5

Markit/CIPS’s service PMI report expanded better than expected 54.9 Vs 53.0.

First quarter GDP in the Eurozone contracted 20bps on a quarterly basis. This contraction was in line with consensus.

Eurozone retail sales came in lower than expected on a month over month basis in April, -50bps Vs -20bps.

On the domestic front, ADP’s employment report showed private sector employment increasing below consensus in May, 135k Vs 171k.

The US department of commerce factory orders report missed consensus in April on a month over month basis, 1.0% Vs 1.4%.

ISM’s Services PMI expanded slightly lower than expected in May, 53.7 Vs 53.8.

Trade

In aggregate, economic reports global were disappointing. The ADP employment report was bad, but market participants could perceive the poor report as a bullish sign for risk assets. Poor economic reports on the domestic front could make fed monetary tighten fears fade away momentarily. Despite the poor reports I will remain long the SP 500 and short the Yen. The catalysts that could reverse this sell off in risk assets could be the next Fed meeting on June 19^th.

Daily Market Color 06/04/2013

Daily Market Color

06/04/2013

Economic Reports & Headlines

The Reserve Bank of Australia made their monetary policy announcement 12:30am New York time. The central bank left their key rates unchanged as expected.

Markit/CIPS released their construction PMI report which expanded surprisingly, 50.8 Vs 49.8.

Producer prices in the Eurozone declined more than expected on a monthly basis, -60bps Vs -30bps.

On the domestic front, the US trade deficit was smaller than expected in April, -40.3bn Vs 41.2bn.

Japan’s            service PMI composite, in May, registered an expansion and it beat consensus by a wide margin, 54.8 Vs 51.7.

First quarter GDP for Australia came in lower than expected on a quarterly basis, 60bps Vs 80bps.

HSBC’s services PMI report for China came in mixed. The composite level was missed consensus, 50.9 Vs 51.1. The services level expanded marginally higher than consensus, 51.2 Vs 51.1.

Trade

China’s report should influence market participants to proceed with caution when trading risk assets. Although the reports from China are not horrid, the slowdown could be the catalysts for a correction in US and Japanese equity markets. Nevertheless, I will remain long SP 500 stocks and short the Yen because the fundamentals are the same. 

Daily Market Color 06/03/2013

Daily Market Color

06/03/2013

Economic Reports & Headlines

Over the weekend, Federal Reserve chairman, Ben Bernanke, gave a commencement speech at Princeton University.  The Chairman did make any comments about monetary policy.

Australia retail sales for April were released on Sunday. The report came in slightly lower than expected on a monthly basis, 20bps Vs 30bps.

China’s manufacturing PMI contracted unexpectedly, 49.2 Vs 50.4.

Manufacturing PMI in France contracted less than expected in May, 46.4 Vs 45.5.

Manufacturing PMI in Germany contracted less than expected as well in May, 49.4 Vs 49.0.

Manufacturing PMI in the Eurozone contracted less than expected in May, 48.3 Vs 47.8.

Manufacturing PMI in the UK expanded more than expected in May, 51.3 Vs 50.5.

On the domestic front, motor vehicle sales in May came in faintly higher than expected, 15.3m 15.2m.

Manufacturing PMI in the US expanded slightly more than expected in May, 52.3 Vs 52.1.

ISM’s manufacturing PMI for the US unexpectedly contracted in May, 49.0 Vs 51.0

Construction spending in April rose less than expected on a month over month basis, 40bps Vs 100bps.  

Trade

The PMI reports from the European region were generally better than expected. On the domestic front, the economic reports disappointed. The poor figures could lead to market participants feeling less strongly about the Fed tapering bond purchases within the near future. In light of that, I will remain long the SP 500 and short the Yen. 

Daily Market Color 05/31/2013

Daily Market Color

05/31/2013

Economic Reports & Headlines

Germany retail sales in April missed consensus and unexpectedly contracted on a month over month basis, -40bps Vs 20bps

Consumer prices in the European Union for May rose in line with consensus, relative to last year, 1.4% .

The jobless rate in the European Union stood the same at 12.2%. However, joblessness still increased by 95k.

On the domestic front, personal income and outlays for April disappointed. Personal income was flat on a month over month basis. Consumer spending decline 20bps and core prices were flat as well.

Chicago PMI was robust for May by beating consensus by a large margin, 58.7 Vs 50.0. The report could have been skewed by a low sample size.

The University of Michigan Consumer Sentiment Index, for May, beat analysts’ expectations, 84.5 Vs 83.7.

Just north of the US, Canada released its first quarter GDP report, which came in higher than expected on an annualized basis, 2.5% Vs 2.2%.

CLFP manufacturing PMI expanded unexpectedly in May. Economists’ were forecasting a slight contraction according to econoday consensus, 50.8 Vs 49.9.    

Trade

The Chinese report should bring a bit of relief to the market since market participants been on ease following tepid economic reports from China. The personal income and outlays report would most likely be used to support dovish FOMC members in their stance to prolong their monthly asset purchase program. The fundamentals are the same, so I will continue to be long equity markets and short the Yen. 

Daily Market Color 05/30/2013

Daily Market Color

05/30/2013

Economic Reports & Headlines

The global economic calendar kicked-off in the UK with Nationwide’s House Price Information. The report showed that home prices in the UK rose unexpectedly in May relative to consensus on a monthly basis, 40bps Vs -10bps

Heading over to the Eurozone, the European Union released its economic sentiment report which beat economists’ estimates, 89.4 Vs 88.4.

On the domestic front, GDP in the US rose less than expected relative to last quarter’s report, 2.4% Vs 2.5%.

Jobless claims missed consensus and came in higher than expected, 354k Vs 340k.

The National Association of Realtors released April Pending Home Sales report which disappointed by widely missing consensus on a monthly basis, 30bps Vs 140bps.

Back on the international front, Japan, the world third largest economy released four reports. The first was Markit’s Manufacturing PMI report which was in line was with April’s report, coming in at 51.5.

Consumer prices in Japan 40bps on a year over year basis (excluding food). This was in line with consensus.

Japan’s household spending increased well below consensus in April, 1.5% Vs 2.9%. 

Japan’s jobless rate remained unchanged at 4.1%.

Japan’s Industrial production in April blew past market expectations on a monthly basis, 1.7% Vs 0.6%.

Trade

It sure was not the best day for Japan and the US after hearing practically all of their economic reports come in below expectations. Despite the dismal day on the economic reporting front, I forecast the decline in the Yen to continue and the rise in the Nikkei and SP 500 to continue as well. Poor economic reports should influence the Fed to stay dovish. A slowdown in spending and manufacturing in Japan should influence the BoJ to pursue an even more aggressive monetary policy. On that note, I will stay long the sp 500 and stay short the Yen.