Final 2Q Non-farm Productivity is estimated at -1.9% versus a prior estimate of a -.9% decline.
Final 2Q Unit Labor Costs are estimated at +1.2% versus a prior estimate of a +.2% gain.
Initial Jobless Claims for last week are estimated to rise to 475K versus 473K the prior week.
Continuing Claims are estimated to fall to 4450K versus 4456K prior.
10:00 am EST
Factory Orders for July are estimated to rise +.2% versus a -1.2% decline in June.
Pending Home Sales for July are estimated to fall -1.0% versus a -2.6% decline in June.
Upcoming Splits
None of note
Other Potential Market Movers
Bernanke's testimony before the Crisis Inquiry Commission, the Fed's Rosengren speaking, Fed's Pianalto speaking and the ICSC Chain Store Sales report for August could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by technology and commodity shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.
North American Investment Grade CDS Index 110.05 bps -3.25%
European Financial Sector CDS Index 123.02 bps -6.78%
Western Europe Sovereign Debt CDS Index 149.0 bps -4.28%
Emerging Market CDS Index 255.85 bps -2.38%
2-Year Swap Spread 18.0 unch.
TED Spread 17.0 unch.
Economic Gauges:
3-Month T-Bill Yield .13% unch.
Yield Curve 207.0 +8 bps
China Import Iron Ore Spot $141.80/Metric Tonne +.21%
Citi US Economic Surprise Index -43.20 +9.9 points
10-Year TIPS Spread 1.58% +3 bps
Overseas Futures:
Nikkei Futures: Indicating +163 open in Japan
DAX Futures: Indicating -17 open in Germany
Portfolio:
Higher: On gains in my Tech, Biotech, Retail, Ag and Medical long positions
Disclosed Trades: Covered all of my (IWM)/(QQQQ) hedges, some of my (EEM) short and added to my (MOS) long
Market Exposure: Moved to 100% Net Long
BOTTOM LINE: Today's overall market action is very bullish as the S&P 500 breaks substantially higher from its recent range despite mixed economic data and a -.6% decline in the Shanghai Composite overnight. On the positive side, Road&Rail, Hospital, Paper, Steel, Oil Service, Coal, Bank, Disk Drive and Computer shares are especially strong, rising 3.75%+. (XLF) has outperformed throughout the day. Cyclicals and small-caps are also outperforming. Copper is jumping +2.97% and the S&P GSCI Ag Spot Index is rising +2.2%. Moreover, the 10-year yield is rising 11 bps to 2.58%, which is also a big positive. The European Investment Grade CDS Index is dropping -6.21% to 104.33 bps and the US Muni CDS Index is dropping -2.65% to 228.29 bps. As well, the Spain sovereign cds is dropping -5.6% to 230.52 bps, the Portugal sovereign cds is falling -4.33% to 319.56 bps and the Ireland sovereign cds is dropping -3.86% to 327.91 bps. On the negative side, Gold, Telecom and Food shares are underperforming. The Japan sovereign cds is rising +2.1% to 70.75 bps. With S&P 500 1,040 holding, investor pessimism high, recent weak economic data mostly priced in and hedge fund market exposure low, I suspect stocks can build on today's large gain over the next few weeks. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, bargain-hunting, less economic fear, diminishing sovereign debt angst, declining financial sector pessimism, buyout speculation and technical buying.
The ADP Employment Change for August is estimated at +15K versus +42K in July.
10:00 am EST
ISM Manufacturing for August is estimated to fall to 52.7 versus a reading of 55.5 in July.
ISM Prices Paid for August is estimated to fall to 55.3 versus 57.5 in July.
Construction Spending for July is estimated to fall -.5% versus a +.1% gain in June.
Afternoon
Total Vehicle Sales for August are estimated to fall to 11.55M versus 11.85M in July.
Upcoming Splits
(TSCO) 2-for-1
Other Potential Market Movers
The Fed's Duke speaking, Fed's Fisher speaking, Fed's Evans speaking, weekly MBA mortgage applications report, Challenger Job Cuts for August and the Morgan Stanley Industrials Conference could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by industrial and commodity shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 75% net long heading into the day.
