Today started with 161k ESU and 900 SPU traded on Globex, trading range was 1687.90 – 1682.00. Monday’s regular trading hours (RTH’s), pit session trading range was 1686.00 – 1676.70 before settling at 1652.50, down 4.1 handles. European sentiment on the rise. China injects funds into money markets, quelling fears, but cost of capital is higher: 4.4% for 7-day vs 3.35% in Feb, and European sentiment continues on the upswing. More M&A Community Health to buy Health Management for $3.9 billion. Case Shiller checked in with May up 1.05%, versus expectations of 1.40%, and previous 1.72%. Month end is here! Shall it be risk on or risk off? Early morning tee times are booked as few want to get trapped in a GDP position in front of the central banks’ coming releases.
[COH] U.S. same-store sales DOWN last 2 of 3 quarters – closed 4 stores in U.S. Roger_S (07:38) Is there a big market in counterfeit Coach goods? FrogMan (07:41) Must be, u can find everything in the counterfeit market, including counterfeit plane spare parts! Scary… The Chinese buy the real thing, the Europeans buy the fake thing… tells u where the money is…Another interesting thing when u walk in luxury shopping districts in Europe: everywhere the same Chinese and Russian are the one buying luxury stuff, the local have bags from mass affluent retailers (dutti, Zara, benetton)…Well you’d expect consumption to be more impacted given the European slowdown… but u have a fair point. The rise of the black market…. hear things are bit better in Spain. Adjustment in labor cost means people have been located some business there. Real estate still massively depressed. Will report more in coming weeks as I will be in there. Thing to watch out in Spain: political risk of a secession of Catalonia and what would happen to sovereign debt… remember European banks massively long of Spanish sovereign paper.
Today’s pit hours gapped 4 handles higher to 1686.50 – 1686.80 traded up to 1688.00, topping yesterday’s high before fading to a new low of 1684.20. william_blount (08:38) weekly pivot 1683.90. The Nasdaq and financials remained firm in front & back of the consumer confidence, checked in at 80.3 versus expectations of 81.4, last month data was revised to 82.1 from 81.4. The financials were fading while the U.S. dollar and the nazzy were trending quietly sideways to higher. The nazzy was posting new daily highs as the European markets were closing – while the S&P was posting modest new lows at 1683.20 and bouncing shy of the opening range. On the ensuing pullback another new low was squeezed in at 1682.70 by 11:30. The 5.3 handle morning price action was adding up to consolidation, as many traders left early in front of the busy calendar of events starting with the GDP and FOMC tomorrow.
The equities continued to leak during the lunch hour(s) on light volume. Some suggested it was risk off/profit taking in front of the pending news and month end window smashing. Either way, the equities stepped quietly lower, trading a series of lower lows and lower highs through the midday, printing 1677.50 by 12:45 – testing yesterday’s low of 1676.70 before grinding back up to 1684 area when the closing imbalance showed $1.2B to the sell side. The spoos backed off to 1681 before trading 1682 area on the cash close and settling at 1684.70, up 2.2 handles on the day.
We have arrived… GDP in the morning, FOMC decision at 1:00 pm CT, BOE decision Thursday 6 am CT, ECB decision 6:45 am CT, followed by the U.S. jobs report, 185k consensus on Friday at 7:30 am CT. Also, the final PMIs will check in – China (Wed night) and the US/Europe (Thurs morning). Data from these latter two countries has generally been moving in the right direction and the formal July prints will likely continue that trend. China is the big wild card – the Markit flash reading deteriorated further in July, although the official government NBS calculation is a bit different and thus could hold in better.