TradeTheNews.com US Market Update: US Employment Data Spooks Already Unhinged Markets
Thursday, May 31, 2012
TradeTheNews.com US Market Update: US Employment Data Spooks Already Unhinged Markets
DJIA -74 S&P500 -9.6 NASDAQ -29
***Economic Data*** - (IS) Israel Apr Unemployment Rate: 6.7% v 67.1% prior - (US) May Challenger Job Cuts: 61.9K v 40.6K prior; Y/Y: 66.7% v 11.2% prior - (BR) Brazil Apr Industrial Production M/M: % v 0.0%e; Y/Y: % v -2.4%e - (US) Jun RBC Consumer Outlook Index: v 47.6 prior - (PL) Poland May NBP Inflation Expectations: % v 4.2%e - (ZA) South Africa Apr Trade Balance (ZAR): B v -5.0Be - (US) May NAPM-Milwaukee: 57.7 v 53.4e - (US) May ADP Employment Change: 133K v 150Ke - (US) Q1 GDP (Second Reading) Q/Q Annualized: 1.9% v 1.9%e; Personal Consumption: 2.7% v 2.9%e - (US) Q1 GDP Price Index: 1.7% v 1.5%e; Core PCE Q/Q: 2.1% v 2.1%e - (US) Initial Jobless Claims: 383K v 370Ke; Continuing Claims: 3.242M v 3.250Me - (CA) Canada Q1 Current Account: -C$10.3B v -C$10.9Be v -C$10.3B prior - (CL) Chile Apr Manufacturing Index: 2.6% v 2.5%e - (CL) Chile Apr Total Copper Production: 445.4KK v 423.1K tons prior - (CL) Chile Apr Retail Sales Y/Y: 7.1% v 8.2%e - (BR) Brazil Apr Primary Budget Balance (BRL): 14.2BB v 16.5Be; 4B prior; Nominal Budget Balance: -3.0B v -9.7Be; Net Debt to GDP ratio: 35.7% v 36.0%e - (US) May Chicago Purchasing Manager: 52.7 v 56.8e
- US jobs data is forcing equities lower on both sides of the Atlantic this morning as traders fret about the state of the US economy. The May ADP data was weaker than expected, while the weekly initial jobless claims ticked up to their highest levels since April 21st, suggesting that tomorrow's payroll number could be ugly. The current consensus estimate for the headline May non-farm payrolls number is +150K. In addition to the jobs data, the May Chicago PMI reading hit its lowest level since September 2009, with worrying softness seen in the new orders sub index. Note that there were few surprises in the US preliminary Q1 GDP data, which roundly met expectations. And in a rebuke to all the "housing is bottoming" news recently, RealtyTrac reported that short sales of US homes rose to a three-year high in Q1, +25% y/y. In Europe, it remains unclear how Spain will bail out its banks now that the northern European nations have totally rejected a recapitalization from the bailout funds. Irish voters are at the polls voting in referendum on the EU fiscal pact. Initial results are expected later this evening. Investors are desperate for safe haven again this morning, and the yield on the German 30-year Bund dipped below the 30-year JGB yield for the first time ever. Meanwhile, the yield on the 10-year UST is not far from 1.5%. The slow implosion of the euro continues, with EUR/USD making fresh two-year lows below 1.2360 while USD/JPY tested below its 200-day moving avg of 78.60.
- In M&A news, Sycamore Partners got a nice discount on its acquisition of Talbots this morning. Just a week ago, the two firms broke off their exclusivity deal in their pending merger agreement at $3.05/shr. Then this morning Talbots agreed to a lower price, at $2.75/shr. Morgan Stanley said it would acquire another 14% of Citigroup's stake in the firms' Morgan Stanley Smith Barney brokerage venture, keeping with the timetable the two firms agreed upon three years ago. MS owns 51% of the JV, and has option to acquire the remainder between 2012 and 2014.
- The May same-store sales numbers out of major retailers were pretty good, with notable strength among apparel names. The numbers seems to disprove a common thesis that there would be possible disruptions to later 2012 sales from the early arrival of spring. Discount chains TJX, Steinmart and Ross Stores saw especially strong comps, widely beating consensus expectations. JCPenny no longer reports monthly numbers, although the CEO Johnson was on the wires this morning reiterating his commitment to the firm's pricing policy changes. The major department store names were more in line with analysts' projections, with one notable exception. Kohl's saw a big slide in its comps. Executives didn't give any good explanation for the decline, but did warn that they now expect Q2 SSS to be modestly negative.
***Looking Ahead*** - (IE) Ireland votes on Fiscal Compact - 11:00 (US) Weekly DOE Energy Inventories - 11:00 (US) Fed to purchase $1.5-2.0B in Notes - 11:00 (BR) Brazil to sell 2013, 2014 and 2016 Bills - 12:00 (CO) Colombia Apr Urban Unemployment Rate: 10.8%e v 11.0% prior - 12:00 (EU) EU President Van Rompuy - 13:00 (EU) EU Commissioner Rehn - 13:00 (PT) Portugal Fin Min Gaspar speaks at Oporto University Event - 15:00 (AR) Argentina Apr Construction Activity M/M: No est v 6.8% prior; Y/Y: No est v 5.6% prior - 21:00 (CH) China May PMI Manufacturing: 52.0e v 53.3 prior - 22:30 (CH) China May HSBC Manufacturing PMI: No est v 49.3 prior
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