Empire Manufacturing Below Estimates, Empire Outlook Healthy,

- Empire Manufacturing for June fell to -8.7 versus estimates of -2.0 and a reading of -3.2 in May.

- Net Long-term TIC Flows for April rose to $115.1 billion versus estimates of $63.3 billion and $79.6 billion in March.

BOTTOM LINE: Manufacturing in the NY region shrank slightly more than forecast in June, Bloomberg reported. The New Orders component fell to -5.5 from -.5 the prior month. The Inventories component rose to -2.3 from -6.5. The Prices Paid component fell to 66.3 from 69.6 in May. The Overall Outlook component, for the next 6 months, rose to 32.2, the highest this year and up from 19.44 in January, from 23.9 in May. The Hiring Outlook component, for the next six month, rose to 16.96 from 7.49 in May. The Capital Expenditures Outlook component, for the next six months, rose to 22.09 from 13.04 in May. Economists now expect 2Q GDP growth of .5%, up from estimates of a .1% increase a few weeks ago. I still think 2Q GDP will exceed this new estimate. Manufacturing gages should continue to trend higher through year-end.

Foreign buying of US financial assets rose more than forecast in April to an 11-month high as investors snapped up Treasuries and corporate debt, Bloomberg reported. Total purchases of Treasuries increased a new $80.3 billion, versus a net gain of $53.6 billion in March. The difference between the trade deficit and securities purchased by foreigners is an indication of how easily the US can finance its external debts. The large net gain in long-term flows was almost twice the size of the April trade deficit. International sales of US stocks totaled a net $15.9 billion in April versus net purchases of $10.8 billion in March. Foreigners accumulated a net $25.1 billion of US corporate bonds versus net sales of $4.6 billion in March. I expect foreign demand for US assets to remain strong over the intermediate-term.