Soft China & Europe PMI Data Weight on Global Equities

Economic data

- (BR) Brazil July FGV Consumer Confidence: 82.0 v 83.9 prior
- (IN) India Weekly Forex Reserves w/e July 17th: $353.3B v $354.4B prior- 08:00 (CL) Chile Jun PPI M/M: No est v 2.2% prior
- (BE) Belgium July Business Confidence: -4.1 v -4.1e
- (MX) Mexico Jun Unemployment Rate (Seasonally Adj): 4.4% v 4.3%e; Unemployment Rate NSA (unadj): 4.4% v 4.4%e
- (US) July Preliminary Markit Manufacturing PMI: 53.8 v 53.6e
- (US) Jun New Home Sales: 482K v 548Ke

The DJIA is seeing is fourth consecutive session of declines, while the S&P500 and Nasdaq are slumping for a second session. Weak PMI data out of Europe has compounded worries about the global economy after the very poor flash Markit China PMI reading. The 10-year yield is pretty much flat on the day, steady around 2.27%, while European yields are broadly lower. As of writing, the DJIA is down 0.37%, the S&P500 is off 0.44% and the Nasdaq is down 0.06%.

Crude oil has plunged into a bear market this week with prices stuck around $48 as the week draws to a close, more than 20% off the highs seen in early May. The front-month WTI contract fell more than 1% yesterday and contined falling today. Earlier in the session, WTI tested below $48, but has moved back up to around $48.30 as of writing.

June new home sales fell for the third month in a row, -6.8% y/y to an annualized rate of 482K, and the May figure was revised lower. Nevertheless, the new home sales rate is still up 18% y/y, suggesting the housing recovery remains on track. Homebuilders are seeing some big losses on the report, with shares of HOV down more than 7% on the session, PHM down 3% and LEN down more than 2%.

The Federal Reserve said it inadvertently released confidential economic projections prepared by its staff for the June 16-17 FOMC meeting. The leaked staff projections say the year-end 2015 fed funds rate would be 0.35%, implying one rate hike this year, and 1.26% by the end of 2016. The staff projections suggested inflation would remain below the 2% target rate though at least 2020. Note that EUR/USD crept back up toward European session highs around 1.0995 on the release.

Amazon rose 20% after the close yesterday and remains up 16% today, sending its market cap soaring above Walmart's. The online retailer's earnings absolutely crushed expectations, on a big turnaround in operating income and margins. Shares of Starbucks rose nearly 5% yesterday after hours, but most of those gains are gone this morning. Pandora is even higher, up 14%, after strong results last night. American Airlines saw premarket gains after beating expectations on strong profit growth, but shares are down 1.8% as of writing.

Looking Ahead

- 13:00 (US) Weekly Baker Hughes Rig Count
- 16:00 (AR) Argentina May Economic Activity Index (Monthly GDP) M/M: No est v 0.1% prior; Y/Y: 1.4%e v 1.7% prior