• US stock market, economy and companies update (June 23, 2015)

    US equities are more or less flat on the day while European indices closed off their highs hours after the Greeks appeared to cave in to the Eurozone's demands. As of writing, the DJIA is up 0.05%, the S&P500 is down 0.05% and the Nasdaq is off 0.10%.

    This morning the guessing game regarding the chances of the tentative Greek deal has begun, even as many air doubts that the plan's higher taxes and pension contributions could get past domestic Greek opposition. At the most basic level, the program looks like it will extend the current bailout by nine months and may involve the negotiation of a third bailout, valued somewhere around €30 billion. Capital controls may or may not be part of the program. Note that the final tranche of the existing bailout would only be enough to meet repayments due to the IMF and ECB through the end of August, with no funds left for September and October. EUR/USD halted its rapid slide around 1.1135 and bounced up to around 1.1190 during the US session while bond trading has been suspiciously calm.

    Moderate Fed Governor Powell warned that the US economy has slowed down in 2015 even as there are more signs of wage increases in the labor market. According to Powell, rate hike conditions could be satisfied as soon as September, making for a 50/50 chance of a rate hike as soon as September. He said markets are starting to bake in a path of gradual rate hikes, making it less important to focus intently on when rate liftoff occurs.

    May new home sales looked even stronger than the May existing home sales released yesterday. New home sales rose to their highest rate since February 2008, and the very good April reading was revised even higher. The supply of new homes was unchanged at 206K and remains less than half of what it was at the height of the housing boom.

    The May durable goods report was mixed. The decline in the headline reading was a bit worse than the revised April figure (-1.8% v -1.5% m/m), with orders in both months dragged lower by weak aircraft orders. Ex-transport, the May figure saw a little growth, while the core capital goods component returned to growth in May but missed expectations (+0.4% v -0.3% m/m). Business investment in equipment is on track to make another small positive contribution to GDP in Q2. In addition, the preliminary Markit manufacturing PMI reading was a bit soft.

    In earnings, Darden is up 2.6% but well off its highs after the firm turned in a decent showing in its fourth quarter and offered a strong initial forecast for FY16. In addition, Darden's board approved a plan to separate a portion of its remaining real estate assets as a REIT that will be become an independent, publicly-traded company. BlackBerry is also well off its highs, down 3% or so after robust premarket gains after a mixed earnings report and a big new patent cross-licensing deal with Cisco.

    **Looking Ahead***
    - 13:00 (US) Treasury to sell $26B in 2-Year Notes
    - 15:00 (AR) Argentina May Trade Balance: $0.4Be v $0.3B prior
    - 16:30 (US) Weekly API Oil Inventories
    - 17:00 (CO) Colombia Apr Trade Balance: -$1.0Be v -$1.0B prior; Total
    Imports: $4.6Be v $4.6B prior
    - 19:50 (JP) Japan May PPI Services Y/Y: 0.5%e v 0.7% prior
    - 19:50 (JP) Bank of Japan (BOJ) May 21-22 meeting minutes


    ***Economic data***
    - (UK) Jun CBI Industrial Trends Total Orders: -7 v +2e (lowest since July 2013)
    - (TR) Turkey Central Bank (CBRT) left Benchmark Repurchase Rate unchanged at 7.50%
    - (US) Goldman Economist Chain Store Sales w/e Jun 19th w/w: +1.6%; y/y: +1.5%
    - (HU) Hungary Central Bank (NBH) cut Base Rate by 15bps to 1.50%, as expected
    - (US) May Durable Goods Orders: -1.8% v -1.0%e; Durables Ex Transportation: 0.5% v 0.5%e; Capital Goods Orders (Non-defense/ex-aircraft): 0.4% v 0.5%e; Capital Goods Shipments (Non-defense/ex-aircraft): 0.3% v 0.5%e; Durables Ex-Defense: -2.1% v +0.2% prior
    - (US) Weekly Redbook Sales w/e Jun 19th: +1.6% y/y, Jun MTD m/m: -1.6%; Jun MTD y/y: +1.3%
    - (US) Apr FHFA House Price Index M/M: 0.3% v 0.5%e
    - (US) Jun Preliminary Markit Manufacturing PMI: 53.4 v 54.1e
    - (US) May New Home Sales: 546K v 523Ke
    - (US) Jun Richmond Fed Manufacturing: 6 v 4e

    [I]Contributed by Trade The News[/I]
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