Keystone's Key Events and Market Movers Week of 7/2/12

Keystone presents the following underlying market currents, sometimes subtle, sometimes turbulent, that move global markets in real time.  The key dates and times below typically correspond to market pivot points. The four key events this week are the ISM Mfg Index at 10 AM EST Monday, shortly after the open; the July 4^th Independence Day holiday to take time for hot dogs, apple pie, flag-waving and fireworks; then quickly back to work with the ECB rate decision early Thursday morning before the U.S. open; and the Monthly Jobs Report on Friday morning with three bad months in a row now on the books and only five reports remaining until the U.S. presidential elections in early November. Traders need rest on the Wednesday holiday since Thursday and Friday will be non-stop fireworks.

Key Dates and Times for the Week Ahead:

·         Monday, 7/2/12:  The European debt crisis drama continues.  Merkel must sell the Euro Summit agreement to the German people and more clarity is needed as to what the agreement is actually saying (there may be disagreement between the leaders). Spain and Italy formed an alliance to cause Germany to flinch.  The agreement has created calm in Europe but this week will show if it lasts more than just a couple days.  Draghi (ECB) was hesitant at lowering rates to apply pressure to the politico’s so now that there is movement towards developing solutions, the ECB is poised to produce at least a 25 basis point cut on Thursday morning. It is up for debate, however, as to what affect the move will have on the euro. The U.S. cutting rates results in the dollar weakening, but the euro may actually strengthen on a rate cut. If the ECB cuts by a quarter, it is already priced into equities markets. If they do not cut, equities markets will sell off. If the ECB cuts by more than 25 basis points, equity markets should rally. Bank runs remain a major concern for Greece, Spain and Italy but may be placed on the back burner after the Euro Summit agreement. Continue watching the European spreads closely; Spain-Germany, Italy-Germany, and France-Germany especially to directly gauge the contagion of the European debt crisis (France representing the socialistic direction and Germany representing the austerity and fiscally prudent direction). If the spreads increase, the turmoil in Europe is getting worse. If the spreads tighten, the tensions in Europe are diminishing. Watch the U.S.-Germany spread moving forward as well. Also, focus on the Spain 10-year yield 7% level. The yield jumped above 7% to signal that the wheels were falling off in Europe and then the Euro Summit agreement news occurred that immediately pushed the Spain yield back under 7% restoring calm.  The European news flow dictates global market direction. Congress is in session, for the most part, thru 8/3/12, so this is a market negative for the next month. Watch for further China easing measures such as lowering triple R’s which will bounce equity markets. Watch confessional season over the next couple weeks where companies will preannounce any changes to Q2 earnings projections.  If there are few, this will create market buoyancy, but, it already appears the companies are lining up with lower guidance including MCD, Samsung, Phillip-Morris, PG, FDX, ORCL and CSCO to name a few, thus, the negative guidance should contribute to market negativity.  PMI Manufacturing Index 9 AM.  Construction Spending and ISM Mfg Index 10 AM-expect a market pivot point-watch the energy markets. Earnings: SABA, TIK.

·         Tuesday, 7/3/12: Motor Vehicle Sales (Auto’s and Trucks).  Factory Orders 10 AM. Markets (NYSE) Close Early at 1 PM due to the July 4^th Independence Day holiday. SIFMA Rec. Early Close 2 PM EST.

·         Wednesday, 7/4/12: Eurozone Retail Sales. Markets (Bonds and Equities) are Closed in Observance of the July 4^th Independence Day holiday  5-Year Note Auction 1 PM.

·         Thursday, 7/5/12: BOE and ECB Rate Decision and Press Conference (reference discussion above). U.S. markets reopen for trading. Mortgage Purchase Applications 7 AM (delayed one day due to holiday). Challenger Job Report 7:30 AM. ADP Employment Report 8:15 AM. Jobless Claims 8:30 AM. By 8:30 AM, the three job reports will provide an early read on the Monthly Jobs Report tomorrow. ISM Non-Mfg Index 10 AM-look for a market pivot. Natty Inventories 10:30 AM.  Oil Inventories 11:00 AM (delayed one day due to holiday).  Fed Balance Sheet and Money Supply 4:30 PM.  Earnings: XRTX.

·         Friday, 7/6/12:  Monster Employment Index. Monthly Jobs Report 8:30 AM-the last three releases are a debacle starting with Good Friday, 4/6/12. This report is one of five remaining before the presidential election in November. Treasury STRIPS 3 PM.

·         Wednesday, 7/11/12: 10-Year Note Auction 1 PM. FOMC Minutes 2 PM.

·         Thursday, 7/12/12: 30-Year Bond Auction 1 PM.

·         Friday, 7/13/12: Friday the 13^th. PPI 8:30 AM. Consumer Sentiment 9:55 AM-market pivot point.

·         Monday, 7/16/12: Retail Sales 8:30 AM.

·         Tuesday, 7/17/12: China GDP.

·         Wednesday, 7/18/12: Housing Starts 8:30 AM. Beige Book 2 PM.

·         Thursday, 7/26/12: FB earnings.

·         Friday, 7/27/12: GDP 8:30 AM.  Consumer Sentiment 9:55 AM-market pivot point.

·         Tuesday, 7/31/12: EOM. FOMC Meeting Begins.

·         Wednesday, 8/1/12: ISM Mfg Index 10 AM-market pivot point and watch energy markets. FOMC Meeting Announcement 2:15 PM.

·         Friday, 8/3/12:  Monthly Jobs Report 8:30 AM-this report is one of four remaining before the presidential election in November.