We Are Literally In Uncharted Waters

If all else fails, we all should be booking our Greece vacations this fall

Intro: Investors will continue to watch developments in Greece as the results of the countries referendum get digested. Domestically we will see ISM Index, Consumer Credit and Wholesale Inventories

Greece: Over the weekend, Greece voted No in a referendum on the terms of the bailout. Since we are entering unknown territory, we will wait to see what the Troika decides on the results from the referendum. Eurozone countries are due to meet on Tuesday (7/7) to discuss the results of the referendum. Any next steps for Greece this week have the potential to move markets in either direction based on the latest developments

FOMC Meeting Minutes: On Wednesday (7/7) the latest FOMC Minutes are released. Investors will be looking closely at the language to see what may have changed from the previous FOMC minutes


Nuclear Talks: Negotiations between Iran and the six-nation group led by the US had the deadline pushed back one week to July 7. If some of the sanctions are lifted, we could see an additional million barrels hit the market further pushing the price of crude lower

 

MONDAY (7/6)

  • 10:00 AM ET – ISM Services - Jun
  • Canada Ivey PMI

 

TUESDAY (7/7)

  • 8:30 AM ET - Trade Balance - May
  • 10:00 AM ET – JOLTS Job Openings - May
  • 10:00 AM ET – Consumer Credit - May
  • New Zealand Business Confidence
  • Reserve Bank of Australia Rate Statement
  • Great Britain Manufacturing Production
  • Canada Trade Balance
  • Euro Summit
  • G8 Meetings

 

WEDNESDAY (7/8)

  • 10:30AM ET – Crude Oil Inventories
  • 2:00 PM ET – FOMC Minutes – Jun -
  • Great Britain Annual Budge Release
  • Canada Building Permits
  • FOMC Member John Williams Speaks
  • Earnings: Alcoa

 

THURSDAY (7/9)

  • 8:30 AM ET - Weekly Jobless Claims
  • Australia Unemployment Rate
  • Bank of England Official Rate Statement
  • FOMC Member Lael Brainard Speaks
  • Earnings: Pepsico, Walgreens

 

FRIDAY (7/10)

  • 10:00 AM ET – Wholesale Inventories - May
  • Canada Unemployment Rate

Greece & Germany, Thunder Buddies For Life??

Intro: Investors will be watching the latest developments in Greece as both sides continue to work on preventing a Greek default during the holiday shortened week

The first week of the month is always filled with a ton of data from across the globe. In addition to the Unemployment Rate and Nonfarm Payrolls, domestically we will see ISM Index, Consumer Confidence and Construction Spending

Greece: Over the weekend, Greece surprisingly called for a referendum for July 5th. In reaction, the ECB decided not to extend emergency financing and Greek banks are now closed all week. Because of the latest events, we should expect volatility in global markets. Any news this week has the potential to move markets in either direction based on the latest developments 

Non Farm Payrolls & Unemployment Rate: Because of the Fourth of July holiday, Non-Farm Payrolls and the Unemployment Rate will be released on Thursday (7/2).

Nuclear Talks: Negotiations between Iran and the six-nation group led by the US are reaching their June 30th deadline. If some of the sanctions are lifted, we could see an additional million barrels hit the market further pushing the price of crude lower

Consumer Confidence: On Tuesday (6/30), data on Consumer Confidence is released. If readings come in higher than expected, traders will associate it with consumer’s making bigger purchases and improving market conditions

Construction Spending: On Wednesday (7/1), we get the latest construction spending data. If the results come in better than expected, Investors will point to improvements in payrolls and the labor market.

 

MONDAY (6/29)

  • 10:00 AM ET – Pending Home Sales - May

 

TUESDAY (6/30)

  • 9:30 AM ET – Chicago PMI – Jun
  • 10:00 AM ET – Consumer Confidence - Jun
  • ANZ Business Confidence
  • Great Britain Current Account
  • Reserve Bank of Australia Governor Glenn Stevens speaks
  • Canada GDP

WEDNESDAY (7/1)

  • 7:30 AM ET - Challenger Job Cuts - Jun - Prior = 41K
  • 8:15 AM ET – ADP Employment Change - Jun
  • 10:00 AM ET – ISM Index - Jun
  • 10:00 AM ET – Construction Spending - May
  • 10:30AM ET – Crude Oil Inventories
  • 5:00 PM ET – Auto Sales – Jun
  • China Manufacturing PMI
  • China HSBC Manufacturing PMI
  • Japan Final Manufacturing PMI
  • Australia Building Approvals
  • European Final Manufacturing PMI
  • Great Britain Manufacturing PMI
  • Earnings: General Mills, Constellation Brands

 

THURSDAY (7/2)

  • 8:30 AM ET - Weekly Jobless Claims
  • 8:30 AM ET - Nonfarm Payrolls - Jun
  • 8:30 AM ET - Unemployment Rate - Jun
  • 8:30 AM ET – Hourly Earnings - Jun
  • 10:00 AM ET – Factory Orders – May
  • New Zealand GDT Price Index
  • Great Britain Construction PMI

 

FRIDAY (7/3)

  • US banks will be closed in observance of Independence Day
  • China HSBC Services PMI
  • Great Britain Services PMI

 

 

 

Lions, Tigers and Greeks

Intro: Investors will continue to watch the latest developments in Greece as both sides continue to work on preventing a Greek default. Domestically, we will be turning our attention to Existing Home Sales, Durable Orders and Personal Spending

Greece: As of 6/22, Greece and its creditors have not been able to come to an agreement. We may see increased volatility as Greece nears the deadline. At times, the markets have shrugged off the events in Greece. However, as the deadline gets closer, we may see more of a trading reaction. There is also the possibility that the Greek banks may not be able to open up during the week. Should this occur, expect volatility in global markets

GDP: On Thursday (6/25) 1Q GDP is released. Should GDP come in lower than expected, investors will look for the central bank to potentially delay raising interest rates. Should GDP show positive growth, expect the central bank to stay on course for raising rates

PMI Readings: Additionally on the data front, PMI readings from across the globe are due out this week. We should continue to see some positive readings as global markets have been far outpacing domestic markets so far this year. If we see this trend continue, we could expect to see additional capital flow in to its respective economies

IPO’s: This week is the busiest week this year so far for IPO’s with 14 companies expected to debut including TransUnion

 

MONDAY (6/22)

  • 10:00 AM ET – Existing Home Sales - May
  • Chinese banks will be closed in observance of the Dragon Boat Festival
  • Eurogroup Meetings

 

TUESDAY (6/23)

  • 8:30 AM ET – Durable Orders – May
  • 10:00 AM ET – New Home Sales - May
  • China HSBC Flash Manufacturing PMI
  • Japan Flash Manufacturing PMI
  • European Flash Manufacturing PMI
  • European Flash Services PMI
  • FOMC Member Jerome Powell Speaks
  • Earnings: Carnival

 

WEDNESDAY (6/24)

  • 10:30AM ET – Crude Oil Inventories
  • 8:30 AM ET – GDP 3rd Estimate – 1Q
  •  Japan Monetary Policy Meeting Minutes
  • German IFO Business Climate
  • Earnings: Monsanto

 

THURSDAY (6/25)

  • 8:30 AM ET - Weekly Jobless Claims
  • 8:30 AM ET – Personal Income - May
  • 8:30 AM ET – Personal Spending – May
  • Earnings: Nike, Accenture, Micron

 

FRIDAY (6/26)

  • 9:55 AM ET - Michigan Sentiment - June 

WWJD II

What Would Janet Do????

Intro: Investors have an important week ahead as they turn their attention to the Federal Reserve. On the economic calendar Building Permits, CPI and the Philadelphia Fed are scheduled to report. We will also continue to track the latest developments on Greece

Fed & Rate Fears: On Wednesday, the Fed will release a statement where everybody will be waiting to see if and when rates will rise. If the Fed does raise rates, we can expect to see significant volatility following the statement release. Some of the results of an interest rate increase include a strengthening in the US Dollar, a spike in Utilities & Financial companies, a weakening of foreign currencies, oil and metals. We would also see mortgage rates go up as Treasury yields will increase. If they decide not to raise rates, traders will look for hints as to the timing of a rate hike.

Central Banks: Last week, two Central banks (New Zealand and South Korea) lowered interest rates. Traders will be listening for announcements of any additional monetary easing to further strengthen their nations’ economies as multiple central banks make statements during the week

Greece: Last Thursday (6/11), the IMF walked out on talks with the Greeks on terms to release additional bailout funds to keep Greece from going into default. Should talks continue to be deadlocked, expect European and US markets to trade lower

Housing Starts: After a stronger than expected retail sales number last week, traders will be watching to see if Housing Starts also come in stronger than expected. If it does, this will imply that consumers are allocating their extra cash to housing

European Court of Justice Ruling: The ECJ is announcing a ruling regarding the constitutionality of the European Central bank’s Outright Monetary Transactions Policy. Should the ECJ rule against the ECB’s policy, we can expect in the future significant issues with bond buying programs pushing yields on European bonds lower

US Treasury Yields: Investors will continue to watch US Treasury yields as last week witnessed the 10 year yield jump to 2.5%. Investors will be monitoring the June FOMC Meeting and comments made thereafter by Janet Yellen

 

MONDAY (6/15)

  • 8:30 AM ET – Empire Manufacturing - Jun
  • 9:15 AM ET – Industrial Production – May
  • 9:15 AM ET – Capacity Utilization – May
  • Canada Manufacturing Sales
  • ECB President Mario Draghi Speaks

 

TUESDAY (6/16)

  • 8:30 AM ET – Housing Starts – May
  • 8:30 PM ET – Building Permits - May
  • Reserve Bank of Australia Monetary Policy Meeting Minutes
  • Great Britain CPI
  • European Court of Justice Ruling
  • German ZEW Economic Sentiment
  • Earnings: Adobe Systems

 

WEDNESDAY (6/17)

  • 10:30AM ET – Crude Oil Inventories
  • 2:00 PM ET – FOMC Rate Decision
  • 2:30 PM ET – FOMC Press Conference
  • New Zealand Global Dairy Trade
  • Great Britain Unemployment Rate
  • European Final CPI
  • Earnings; Oracle, FedEx

 

THURSDAY (6/18)

  • 8:30 AM ET - Weekly Jobless Claims
  • 8:30 AM ET – CPI - May 
  • 8:30 AM ET – Philadelphia Fed – June 
  • 10:00 AM ET – Leading Indicators - May 
  • New Zealand GDP
  • Swiss National Bank Libor Rate
  • Swiss National Bank Press Conference
  • Great Britain Retail Sales
  • ECB Targeted LTRO
  • Eurogroup Meetings
  • Earnings: Kroger

 

FRIDAY (6/19)

  • Bank of Japan Monetary Policy Statement & Press Conference
  • ECONFIN Meetings
  • Canada CPI and Retail Sales

My Big Fat Greek Tragedy

"The problem with socialism is that you eventually run out of other people's money" - Margaret Thatcher

 

Intro: Investors have a light week ahead highlighted by Retail Sales, PPI, and Michigan Sentiment. Investors will also continue to track the recent bond selloff

 Greece: Last Friday (6/5), Greece skipped a debt payment to the IMF. However, they legally have until the end of the month to make the payment and are planning to bundle with other payments to the IMF. As investors remain weary on Greece , Should Greece fail to pay its debt obligation, expect global markets to trade lower and heightened volatility in the currency markets

 Retail Sales: On Thursday (6/11), Retail Sales are released. Should the figure come in better than expected, it would continue to signal an improving economy to the FED, indicating that the average US consumer can absorb an interest rate hike 

Import Prices: On Thursday (6/11), import prices are released. Should import prices increase for the month, investors will point to rising energy costs

Bond Yields: Last week, we witnessed a major selloff in bonds across the world following comments by Mario Draghi, stating that markets should get used to volatility. Yields on 10-year German Bonds jumped to 0.99% and 10-year US Treasury yields hit highs for the year. Analysts are blaming a lack of liquidity for the bond selloff. Should we continue to see volatility in global bond markets, investors believe that it could spill into the equity markets

U.S. Treasury Yields: After the stronger than expected jobs report, we witnessed U.S. Treasury yields jump as investors believe that a June rate hike to occur in 2015 is potentially still in the cards. Investors will be monitoring U.S. Treasurys as we are now one week away from the June FOMC Meeting

Oil Rigs: Last week, the number of rigs drilling for oil in U.S. oilfields fell by 4 lowering the total to 642. This is the 26th consecutive week of declines. On the news, oil jumped 5% for the day. Traders will watch to see the if Baker Hughes weekly oil rig count lowers again, which could put upward pressure on the price of oil. Down 894 oil rigs for the year.

MONDAY (6/8)

  • Japan GDP
  • China Trade Balance
  • G7 Meetings
  • Canada Building Permits

 

TUESDAY (6/9)

  • 10:00 AM ET – Wholesale Inventories - Apr
  • 10:00 AM ET – JOLTS Job Openings - Apr
  • National Australia Bank Business Confidence
  • China CPI & PPI

 

WEDNESDAY (6/10)

  • 10:30AM ET – Crude Oil Inventories
  • 2:00 PM ET – Treasury Budget - May
  • Reserve Bank of Australia Governor Glenn Stevens Speaks
  • Bank of England Governor Mark Carney Speaks
  • Great Britain Manufacturing Production

 

THURSDAY (6/11)

  • 8:30 AM ET - Weekly Jobless Claims
  • 8:30 AM ET - Retail Sales - May -
  • 8:30 AM ET - Import/Export Prices - May
  • 10:00 AM ET - Business Inventories - Apr
  • Reserve Bank of New Zealand Rate Statement
  • Australia Unemployment Rate
  • China Industrials Production
  • Bank of Canada Governor Stephen Poloz Speaks

 

FRIDAY (6/12)

  • 8:30 AM ET - PPI - May
  • 8:30 AM ET – Michigan Sentiment - Jun

 

 

I wanted to add a little bit on Greece as we continue to see Greece kick the can down the road but it seems the can kicking may stop fairly soon. This past Friday, the Greeks didn't make their scheduled payment to the IMF and will bundle the payment with other payments due at the end of the month. This play is completely legal but shows the desperation by the Greeks as the situation is dire but Greece has few options.

From my CFA studying, we learned that for a government to get itself out of a recession, the administration has to do 3 steps.

1. Cut taxes

2. Increase government spending

3. Depreciate the currency

 

Greece has the capability of the first two, but because of their inclusion in the European monetary union, they have no control of depreciating their currency. If they were to bring back the Drachma, they could devalue that currency but at this juncture they are unable to do that.

The Germans and the rest of the EU have the Greek economy on life support with their previous bailouts but unfortunately won't pull the plug and kick them out of the currency. On the flip side, the Greeks do not want to give up their pensions owed to their workers and continue to expect handouts amid a continued dysfunctional tax collecting mechanism                             

But just like the US, Greek politicians made promises they obviously couldn't keep and are long gone from the political sphere and just pushed the problem on to somebody else. Well it's now been passed on enough and in which they've screwed the pooch (the Greek population) to keep receiving money for doing nothing. And you can't blame Europe for not wanting to support the Greeks way of life, and create an environment that doesn't support innovation.

So we will see in the next few weeks the outcome of the negotiations, but we all expect another band aid on a massive wound solving nothing. This will be in the form of temporary extensions which obviously solve nothing but kick the can, but the can kicking may be over as the Greeks are broke. In the words of Margaret Thatcher, ”The problem with socialism is that you eventually run out of other people's money"

 

 

Bonds, Bonds, Bonds

Intro: Investors will watch to see if the global bond sell-off we witnessed last week continues. On the economic front, we have a heavy week highlighted by, Retail Sales, PPI and University of Michigan Sentiment

Treasury Sell Off: In the previous week, Treasury’s spiked higher with the 30 year yielding more than 3% for the first time this year. Longer dated maturity Treasury’s witnessed the steepest decline over the week. If yields continue to climb, it will signal that the US economy is stronger and make the Fed rethink their timing on raising interest rates. Conversely, the rise in rates will negatively affect Utilities, REIT’s and other interest rate sensitive industries. However, the move upward may be a little late compared to what the Fed may be deciding for their June meeting.

Global Bond Sell Off: Also last week, we witnessed a major selloff of bonds across the world. Yields on 10 year German Bunds jumped from 0.059% to 0.79%. If we continue to see government yields increase, along with the price of oil increasing, concerns about deflation will start to subside. Furthermore, if yields continue to rise in Europe you could see potential talk of the ECB reevaluating their bond buying program. Any amendments to the bond buying program could affect global markets

Retail Sales: On Wednesday (5/13), Retail Sales are released. Should the figure come in better than expected, it would continue to signal an improving economy to the FED, indicating that the average US consumer can absorb an interest rate hike.

Greece: On Tuesday (5/12), Greece is due to make its next payment of €750 million to the IMF. If Greece is unable to make the payment and default’s on its debt, we have the potential for another global market sell off and further depreciating of the Euro. Also during the week, the Eurogroup has meetings in Brussels to discuss Greece and its reforms to stabilize its financial position. If the two sides are unable to come to an agreement, one of the outcomes could potentially be Greece leaving the European monetary union. The most likely outcome of the talks is another can kicking session without any concrete agreement

13F Filings: By this Friday (5/15), all institutions with $100M in assets under management have to file their 3/31 ownership positions. Should some well known investors declare new sizable positions in a certain company, you can expect that stock to have a bump higher.   

 

MONDAY (5/11)

  • National Australia Bank Business Confidence
  • Eurogroup Meetings
  • Bank of England Interest Rate Statement
  • Earnings: Actavis, Dish Network

 

TUESDAY (5/12)

  • 10:00 AM ET – JOLTS Job Openings - Mar
  • 2:00 PM ET – Treasury Budget - Apr -
  • Great Britain Manufacturing Production
  • FOMC Member John Williams Speaks
  • Earnings: McKesson

 

WEDNESDAY (5/13)

  • 8:30 AM ET - Retail Sales - Apr
  • 8:30 AM ET - Import/Export Prices - Apr
  • 10:00 AM ET - Business Inventories - Mar
  • 10:30 AM ET – Crude Oil Inventories
  • Reserve Bank of New Zealand Graeme Wheeler Speaks
  • China Industrial Production
  • German, French & Italian Prelim GDP
  • European Flash GDP
  • Great Britain Unemployment Rate
  • Bank of England Governor Mark Carney Speaks
  • ECB Monetary Policy Meeting Accounts
  • Earnings: Cisco, Macy’s

 

THURSDAY (5/14)

  • 8:30 AM ET - Weekly Jobless Claims
  • 8:30 AM ET – PPI – Apr
  • Swiss, German and French banks will be closed in observance of Ascension Day
  • Earnings: Applied Materials

 

FRIDAY (5/15)

  • 8:30 AM ET – Empire Manufacturing - May
  • 8:30 AM ET – Industrial Production – Apr
  • 8:30 AM ET – Capacity Utilization – Apr
  • 10:00 AM ET – Michigan Sentiment - May
  • Canada Manufacturing Sales