Caution After FOMC, Before July Jobs

Economic Data

- (ZA) South Africa Jun PPI M/M: 0.3% v 0.5%e; Y/Y: 8.1% v 8.4%e
- (IL) Israel Jun Unemployment Rate: 6.3 v 6.0% prior
- (IT) Italy Jun PPI M/M: +0.1 v -0.1% prior; Y/Y: -1.9 v -1.7% prior
- (CZ) Czech Central Bank left both its Repurchase Rate and CZK currency floor unchanged at 0.05% and 27.00 respectively, as expected
- (US) July Challenger Job Cuts: +46.9K v 31.4K prior; Y/Y: +24.4% v -20.2% prior
- (US) Aug RBC Consumer Outlook Index: 51.5 v 50.5 prior
- (PL) Poland Central Bank (NBP) July Inflation Expectations Survey: 0.1% v 0.2%e
- (ZA) South Africa Jun Trade Balance (ZAR): -0.2B v -6.3Be
- (BR) Brazil Jun PPI Manufacturing M/M: -0.1% v -0.2% prior; Y/Y: 5.0% v 6.6% prior
- (US) Q2 Employment Cost Index: 0.7% v 0.5%e
- (US) Initial Jobless Claims: 302K v 300Ke; Continuing Claims: 2.539M v 2.49Me
- (CA) Canada May Average Weekly Earnings Y/Y: 2.6 v 3.2% prior
- (CA) Canada May GDP M/M: 0.4% v 0.4%e; Y/Y: 2.3% v 2.3%e
- (US) July ISM Milwaukee: 63.9 v 61.0e
- (US) July Chicago Purchasing Manager: 52.6 v 63.0e
- (US) Weekly EIA Natural Gas Inventories: +88-90 bcf vs. +94 bcf expected range

- The potential Argentina default, hawkish notes in the FOMC statement and caution ahead of tomorrow's July jobs report are all giving participants reasons to sell this market. The DJIA is down triple-digits, down 1.1%, the S&P500 is off even more, down 1.4%, and the Nasdaq is leading the charge lower, down 1.6%.

- Regional factory reports out today have been mixed. The Chicago July PMI fell ten points to a 13-month low of 52.6, while the Milwaukee July PMI moved in the opposite direction, gaining 3.3 points. Tomorrow we will see the July ISM manufacturing survey. The weekly initial jobless claims rebounded back into the 300K handle this morning, suggesting that the prior report's big slide lower was a seasonal aberration.

- Exxon's second-quarter income rose nearly 30% y/y thanks to higher oil prices plus asset sales proceeds, however total production fell slightly in the quarter. EPS and revenue topped expectations. Conoco's production rose slightly in its second quarter, while earnings only slightly beat consensus expectations. Shares of both XOM and COP are down 2% or so today. Independent driller Occidental is up slightly thanks to solid earnings and revenue outperformance, driven by higher crude prices, although production declined slightly y/y. Marathon Petroleum is up nearly 5% thanks to very strong revenue outperformance and a dividend increase.

- Shares of consumer names Kellogg and Colgate are down sharply this morning, -4% and -2.5%, respectively. Both firms missed revenue expectations and Kellogg cut its FY14 guidance outlook. Kellogg saw revenue sag in key North America markets, while overall revenue fell slightly. Agribusiness giant Bunge doubled profits y/y, and earnings crushed expectations. BG is up 6.6%. Shares of YUM are down 5.6% and not recovering after disclosing last night that it has seen a significant negative impact on sales at KFC and Pizza Hut in China in the wake of the OSI scandal.

- Samsung Electronics reported lower-than-expected profit for its second quarter, with net income down 20% y/y. The electronics giant said it was uncertain if handset business profit would improve during the third quarter. In addition, Samsung said it would boost DRAM production in the third quarter, which is hitting shares of Micron and Sandisk. MU is down 8%.

- 3D printing daring 3-D Systems missed top- and bottom-line expectations. Inventory levels climbed more than projected and gross margins were lower. Note that last night, the company said it would acquire Simbionix, a 3D virtual reality surgical simulation firm, for $120M in cash. DDD sank more than 14% before the open, but has recovered to -10% in the first hour of cash trade. SYSS is down 2% in sympathy

Looking Ahead

- 11:15 (BR) Brazil to sell 2015, 2016 and 2018 Bills
- 12:00 (CO) Colombia Jun National Unemployment Rate: No est v 8.8% prior; Urban Unemployment Rate: 10.1%e v 10.0% prior
- 15:00 (AR) Argentina Jun Construction Activity M/M: No est v -2.9% prior; Y/Y: -4.3%e v -4.6% prior
- (CO) Colombia Central Bank Interest Rate Decision: Expected to raise Overnight Lending Rate by 25bps to 4.25%
- 21:00 (CN) China July Manufacturing PMI: 51.4e v 51.0 prior
- 21:35 (JP) Japan July Final Manufacturing PMI: No est v 50.3 prelim
- 21:45 (CN) China July Final HSBC Manufacturing PMI : 52.0e v 52.0 prelim