It was only Tuesday that the Chinese Premier told investors and citizens alike that the government would take necessary steps to ensure a growing economy. Wednesday the clouds of concern gathered in the Asian giant as the flash PMI fell for the third consecutive month. Demand both externally and internally has slumped. The index fell from 48.2 in June to 47.7 in July. This was materially below expectations of unchanged at 48.2. Just as importantly, it is below the growth separator for the index at 50. But it is evidence of a turnaround in the eurozone that rescued the world’s bourses from the Asian disappointment. That and a good showing from Apple earnings Tuesday has helped markets enjoy a boost. Factory output increased for the first time in over a year. Output in both France and Germany hit multi-year highs.
The API last night showed a very bullish report if it is to be confirmed by the government Wednesday. All components of the report showed inventories drew. More importantly for the flat price of WTI, Cushing showed a 2.1 mm barrel draw. It appeared in the report that runs were down slightly as well giving a shove higher to the products – posted by Stanton_Analytics.
Today started with a light 186k ESU and 700 SPU traded on Globex, trading range was 1695.00 – 1687.20. Tuesday’s regular trading hours (RTH’s), pit session trading range was 1686.50 – 1694.00 before settling at 1688.30 down 2 handles. China’s flash PMI checked in light, but yesterday’s comments by Premier Li Keqiang indicate China will act to support expansion if needed offset the shock. Europe checked in better along with a fair amount of hopium that they are turning the corner and heading out of recession. The U.S. flash PMI rose to a 4-month high, checking in at 53.2 vs exp 52.6. However, a major disappointment was [CAT] earnings checking in way light and lowering guidance. “World economic growth slowed in the first half of the year, and we are revising our growth estimates downwards,” they said. “Although we expect some improvement in the second half, the improvement will be less than previously expected. Currently, we expect that world economic growth for 2013 will be a little over 2 percent, slightly slower than in 2012.” “We’ve had temporary factory shutdowns, rolling layoffs, reductions in our flexible workforce, and we reduced discretionary costs.” Sounds like our government leaders should try this hard to cut their costs.
Today’s pit hours gapped 5.5 handles higher to 1694.300 – 1693.70, marking the high before fading back to close the morning gap at 8:53 and on to a new low of 1686 when the June new home sales checked in +8.3% at 497k vs exp of 482k – the prior data was revised to 450k from 476k. After quickly bouncing to 1688 the index flopped to a new weekly lows of 1683 by 9:10. The SPU clawed up to 1685.50, but could not convert yesterday’s low 1686.50 and pulled back to a new low 1682.50. william_blount (09:10) keeping price of 1689 spot converted = good tell minor wave 4 in progress. william_blount (09:25) look, FIND THE AM LOW — the SPILL WAS THERE — 1681.5 next SPOT. We are making the first hour low — mid a.m. should be a high. Bottom line – we are in the long awaited MINOR WAVE 4 – AS LONG AS 89 IS CONVERTED. Going into the European close 1686.50 area was trading when william_blount (10:35) so, if ya took the long — and just closed out — you know where the risk begins being ‘soapish’ for the gazillionth time since 1343 cash. Surprise, surprise back to 1681.80 – new lows by 11:12, followed by the morning low of 1680.20, down 8.1 handles. And all this with [AAPL] oddly enough holding the Nasdaq modestly in the green and the [DJIA] down 55 points.
President Obama updated the nation on the economy from Knox College and the SPU was trading 1680 area. The president gave his first economic Knox College speech in June 2005; the unemployment rate was at 5%. A new intraday/weekly low of 1678.50, then 1677.70 (last Thursday’s low 1678.00 and Friday’s low 1678.80) greeted President Obama as he stood at the podium. Full text of President Obama’s remarks on the economy at Knox College (as prepared for delivery) http://wapo.st/15fXwQl Sam_E (12:35) es bounces at 77.50 or its an abc down that does so at 73.75 which i like a lot. Surprise, surprise a small rally followed President Obama off stage as he seemingly left focused on the dwindling middle class and the “forces that conspired against the middle class.”
The SPU was unable to convert 1682 following the speech and traded sideways during the midafternoon session in the 1680 area. The closing imbalance was a modest $258M to the sell side, the S&P traded 1681 area on the cash close. [QCOM] [BIDU] [V] [FB] moving higher and the SPU traded an afternoon high of 1684 in the closing range before settling at 1683.80, down 4.5 handles on the day. redliontrader (15:10) look at this short cover in the close .. way way too many on the short side. Looking to next week – keep in mind that as soon as we get through the peak of earnings this week we have a bunch of big “macro” events next week – including an FOMC decision, ECB decision, US jobs report but after that things will probably get very slow until Jackson Hole (Aug. 22-24).