If you have to come to work for just one day this week, make it today. Thursday is the day in which a couple data points have a chance at moving stocks. Already, overseas data deterioration has investors looking to the world's central banks for salvation. That actually supported shares in Asia and Europe this morning, until the Europeans got to thinking about the limitations of such efforts. U.S. catalysts exist today, and the S&P 500 futures are lower on the compilation of risk. Yesterday, the SPDR S&P 500 (SPY) inched higher by 0.1%. A lot depends on data this morning, as September Fed hopes are beyond reach at this point.
Factory output increased at the slowest level since 2009 in China, as inflation eased. Some are looking to this combination as a welcoming of new Chinese stimulus, with hope that it might support the global economy. Stocks in Asia found life on the speculative driver this morning. China's consumer price inflation (CPI) marked a 30-month low of 1.8% in July, while its factory order increased 9.2%. Asian shares rallied on the news. Yesterday, the iShares FTSE China 25 Index (FXI) gained by 0.2%, and looks set for a stronger day today.
S&P/ASX 200: -0.1%
EURO STOXX 50: -0.6%
Hang Seng: +1.0%
FTSE 100: -0.2%
Shanghai Shengzhen CSI 300: +0.9%
NIKKEI 225: +1.1%
CAC 40: -0.4%
The Bank of Japan issued its latest monetary policy this morning. The BOJ kept rates unchanged though pledged to continue its gradually increasing asset purchase program. The bank warned of European issues, where it notes the world's focus should be. The BOJ also mentioned deceleration in the U.S. and nascent issues in emerging economies (read China). It notes Japanese activity has been supported mostly by reconstruction efforts post the earthquake that devastated the nation a year ago. However, it also indicated that export activity had moderated due to external issues. That said, domestically, the nation was seeing better housing and auto demand. Prices remained deflated, and so accommodative measures remain appropriate. The BOJ just can't do much with its already low rates, but an increasing number of market mavens are starting to think that the Fed is not in much better of a position. Japan, like the U.S., faces the pressure provided by European weakness.
European shares started the day higher, but have since drifted into losses. The same driver that had enthused Asian shares lifted European stocks early. The European Central Bank's (ECB) lip service that started a rally in Europe a month ago is wearing thin though. The market continues to wait on September and help from the U.S. Federal Reserve, plus the ECB and now the Chinese central bank. For Europe, much hinges on September, when the German Constitutional Court determines whether to approve the European Stability Mechanism. I suppose European excitement gave way when investors considered how much help central banks have provided thus far, which has effectively not been enough of the tangible sort. Yesterday, the iShares S&P Europe 350 (IEV) was about unchanged.
U.S. Economic Drivers
A few weeks ago, I suggested investors consider selling stocks on Wednesday afternoons in anticipation of bad news some Thursday soon. That potential market moving news would theoretically be found in the Weekly Initial Jobless Claims Report. We're looking for the data point to one day soon spike over 400K, and drive stocks down like lightning. Last week, claims edged higher by 8K to 365K.
New International Trade data is expected to show the trade deficit narrowed in June, to $47.5 billion, from $48.7 billion in May. Both imports and exports are easing, though, which is a bad sign for the global economy.
Bloomberg's Consumer Comfort Index is up for report at 9:45 AM EDT. Last week, the consumer sentiment measure deteriorated 1.2 points to negative 39.7. It's hard to say what this weekly measure will do from report to report, but over time, the trend should be getting worse.
Wholesale Trade data is due at 10:00 AM EDT for the month of June. Economists expect wholesale inventories grew 0.3%, just like they did in May, however, the range of views runs from no change to +0.4%. Also, it will be more important to note the change in the inventory-to-sales ratio, because it puts wholesale conditions into better perspective. The ratio rose last month to 1.18 from 1.17, which is bad news, because wholesale sales decreased by 0.8% as inventories rose.
EIA's Natural Gas Report will show the latest change in stores of the commodity at 10:30 AM Thursday. Last week's data showed the natural gas store increased by 28 Bcf to a level 407 Bcf above the five-year average for this time of year. The gas glut continues…
Look for the latest earnings news from the likes of Kohl's (KSS), NVIDIA (NVDA), Nordstrom (JWN), CareFusion (CFN), DeVry (DV), ACCO Brands (ACCO), 21st Century Holding (TCHC), Abraxas Petroleum (AXAS), Advance Auto Parts (AAP), Alliant Techsystems (ATK), Amtech Systems (ASYS), Arena Pharmaceuticals (ARNA), Assured Guaranty (AGO), Bacterin Int'l (BONE), Bombardier (BBD-B.TO), Briggs & Stratton (BGG), Brinker Int'l (EAT), Brooks Automation (BRKS), Capstone Turbine (CPST), CECO Environmental (CECE), China Lodging (HTHT), Chyron (CHYR), Clean Diesel Technologies (CDTI), Cooper Tire & Rubber (CTB), Craft Brew Alliance (BREW), Edelman Financial (EF), Elizabeth Arden (RDEN), Full House Resort (FLL), Gramercy Capital (GKK), Investment Technology Group (ITG), James River Coal (JRCC), Jones Soda (JSDA), Koppers (KOP), Kronos Worldwide (KRO), Nektar Therapeutics (NKTR), Olympic Steel (ZEUS), OSI Systems (OSIS), Progenics Pharmaceuticals (PGNX), Rentrak (RENT), Royal Gold (RGLD), Scott's Miracle-Gro (SMG), Superconductor Technologies (SCON), Teekay (TK), Wendy's (WEN), Tim Horton's (THI), U.S. Physical Therapy (USPH), U.S. Concrete (USCR), Wave Systems (WAVX), Windstream (WIN), Zhongpin (HOGS) and more.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.