Good Claims Data, Weak June Home Sales, Major Earnings Drive Choppy US Trading

Economic Data

- (IE) Ireland Jun Property Prices M/M: 2.9% v 2.3% prior; Y/Y: 12.5% v 10.6% prior
- (RU) Russia Gold and Forex Reserve w/e Jul 18th: $472.5B v $476.7B prior
- (US) Initial Jobless Claims: 284K v 307Ke (lowest since Feb 2006); Continuing Claims: 2.50M v 2.51Me (lowest since June 2007)
- (MX) Mexico May Economic Activity Index Y/Y: 1.4% v 2.0%e
- (CL) Chile Jun PPI M/M: -0.7% v +1.7% prior
- (US) July Preliminary Markit Manufacturing PMI: 56.3 v 57.5e
- (US) Jun New Home Sales: 406K v 475Ke
- (US) Weekly EIA Natural Gas Inventories +90 bcf v +94-98 bcf expected

- US equity trading has been choppy this morning as major earnings and some surprising US data keep participants on their toes. As of writing, the DJIA is up 0.10%, the S&P500 is up 0.17% and the Nasdaq is up 0.13%.

- Weekly jobless claims took an unexpectedly big dip, with initial claims falling to their lowest level since the beginning of 2006. The four-week average dropped to a seven-year low. Analysts warned of seasonal distortions for the big slide, although hawkish analysts took it as just another piece of evidence that Fed tightening would be needed sooner rather than later.

- The June new home sales results were weak, with sales dropping 8% q/q. The weak June number followed very good results seen in April and May, although the May figure was revised downward by 12%, to 442K from 504K prior. Major homebuilders are down 4-5% on the report.

- In FX, cable plunged lower this morning, with GBP/USD falling from 1.7035 in the Asia session to as low as 1.6970 as of writing. The break below 1.7000 is being ascribed to the weak June UK retail sales numbers, diluting some of the prior optimism about the fledgling UK recovery.

- American Airlines announced its first dividend since 1980, at $0.10/shr, based on record quarterly profits of $1.5 billion in Q2. American's revenues grew 75% y/y as the company has soared out of bankruptcy. United has recovered very well from its first quarter losses, with earnings that topped expectations. Southwest beat expectations on solid profit growth. JetBlue's results were right in line on modest growth. Shares of all four had traded up in the days ahead of earnings, and traders are selling the news in shares of AAL, JBLU and LUV. Shares of UAL gained 7% in the premarket but are rapidly losing altitude in mid-morning trade.

- Ford and General Motors are taking different roads this morning. Shares of Ford are up 1.5% after the company beat earnings expectations on modest profit growth. Ford also reaffirmed its 2014 outlook. GM's results were hampered by the previously announced pre-tax charges of $1.3 billion for its various recalls, but even before accounting for recalls profits were down sharply y/y. CEO Mary Barra said the company had already substantially addressed the major outstanding recall issues for autos going back to the 1990s. GM is down 3.5%.

- Shares of Facebook pushed out to $76/shr just after the open of cash trading, their highest level ever and up approximately 100% from the IPO price. Facebook's user metrics sustained double-digit gains, and disclosed 1.5 million active advertisers, up from 1 million last June. Earnings grew more than 60% y/y.

Looking Ahead

- (RU) EU Ambassadors meet to discuss Russian sanctions
- 11:15 (BR) Brazil to sell 2015 and 2016 Bills
- 13:00 (US) Treasury to sell $15B in 10-Year TIPS
- 15:00 (AR) Argentina May Economic Activity Index M/M: No est v 0.6%prior; Y/Y: No est v -0.5% prior
- 17:00 (KR) South Korea July Consumer Confidence: No est v 107.0 prior
- 19:30 (JP) Japan Jun National CPI Y/Y: 3.5%e v 3.7% prior; CPI Ex Fresh Food Y/Y: 3.3%e v 3.4% prior; CPI Ex Food, Energy Y/Y: 2.3%e v 2.2% prior
- 19:30 (JP) Japan July Tokyo CPI Y/Y: 2.8e v 2.2% prior; CPI Ex Fresh Food Y/Y: 2.7%e v 2.8% prior; CPI Ex Food, Energy Y/Y: 2.0%e v 2.0% prior
- (BR) Brazil Jun Total Federal Debt (BRL): No est v 2.122T prior
- (JP) BOJ Gov Kuroda in Thailand