The economic calendar has been slow lately. With the news vacuum, stocks have hovered in a narrow trading range and may well continue to do so as positive news continues to support "green shoots" talk while there is enough uncertainty and lack of progress to support "yellow weeds" counter arguments. This week however... we have a handful of employment and manufacturing reports between Tuesday and Thursday that will tell us exactly what the economy has been doing the past month. Should be interesting. The Dow is on a 2 week losing streak but minimally so and still well off March lows.
Dow start = 8438
TUESDAY = Case-Shiller Composite Index at 9am... This report showed moderating declines. This index tracks monthly changes in real estate/residential prices and showed very slight declines. I like the year-over-year comparisons particularly and that showed an improvement actually, with price declines of -18.1% compared to this time in 2008. This was up 0.6% from the last two months!
Chicago PMI at 9:45am (expectations are for a reading of 40. This is better than last month's reading of 34.9 but still shows that, since its below 50, business activity is contracting, not growing)... And thats exactly the reality. The reading came in at 39.9. New orders (a particular interest of TSM) rose again, but still below 50 and only marginally (from 37.3 to 41.6).
WEDNESDAY = ADP Employment Report at 8:15am. This report came out with an estimated job loss number for June of -473,000. This is the private companies number and government is expected to typically add jobs (i.e. the Obama agency creations, census hirings, etc), so tomorrows number should be better than this, but this is still above expectations of numbers in the high -390,000s.
ISM Manufacturing Index at 10am (again, expectations are that the index will remain in negative territory but IMPROVING or "less negative". Expectations are for a reading of 45, up from 42.8 last month). And that's exactly what you get, a number that continues to creep toward positive/expansionary indications of above 50 but is still below and in contractionary indication range. The reading was 44.8.
Construction spending at 10am (expectations are for spending to decrease by -0.5%); Construction spending decreased by -0.9% - a strong indication that new construction is suffering. This is a good thing overall in TSM's opinion considering we have too many residential and commercial buildings and real estate inventory on hand already. More interestingly, the year-over-year number shows construction spending for June fell -11.9% from June 2008.
Pending Home Sales at 10am. Pending home sales rose for the 4th straight month which is a strong positive. Note however that these are PENDING sales and we've seen a trend recently of closings that fall apart at the last second due to borrowing problems or (more likely) what one side or the other considers an improper assessment value for the home. Pending home sales rose 0.1%.
THURSDAY = Employment report at 8:30am (expectations are for joblosses in June to have been -350,000, which would be on line and consistent with the -345,000 reported in May; unemployment is expected to jump to 9.6%). While unemployment only spiked to 9.5%, the actual number of job losses for June came in well above expectations at -467,000, revealing a job market that continues to deteriorate in a significant way and showing that signs of slower deterioration may not be slowing quick enough.
Initial Jobless Claims report at 8:30am. Initial jobless claims fell 13,000 and came in at -614,000 initial jobless claims for the past week. This number is an improvement on the prior week of -627,000 but continues to show significant numbers of workers claiming unemployment week to week for the first time.
Factory Orders at 10am (expectations are for a rise in factory orders of 1.4% month-over-month. This would follow last month's rise of 0.7%, which was largely attributable to orders of durable goods and some business inventory restocking). Factory orders came in with a rise of 1.2%, pretty much in line with expectations. Good news but a far cry from anything that constitutes economic recovery and shouldn't be seen as a number that changes the landscape to any noticeable degree.
FRIDAY = MARKETS CLOSED FOR HOLIDAY
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