Are we in a recession?

• JUN Global Manufacturing PMI (49.4 = worst reading since 2012),
• MAY German Factory Orders (-8.6% YoY = worst reading since SEP ’09)
• US Factory Orders (-1.2% YoY = worst reading since AUG ’16)

If companies are not producing, that is a good leading indicator that people may not be able to buy things in the future.  At least not as much.

Jobs Report was nothing special.

• According to the Labor Department, Nonfarm payrolls rose 224,000 in June, above market expectations of 165,000,
• The unemployment rate edged higher to 3.7%.
• Wage growth was 3.1% year over year, below market expectations of 3.2%

We are in a Growth slowing and inflation raising environment.  So we ask, what is working? Looking at the chart below, (Real Estate, Energy, and Utilities) have been leading this market higher.  The real questions is can these sectors continue to keep market point in the up direction without the Feds involvement?  I am not sure they can for very long.  The Fed seems to be on the path of easing rates in July.

Happy Monday. Good Luck out there this week.

Global Spotlight

It’s a Go for Iran’s Nuclear Program. Iran has followed through with its threats to reduce its implementation of the Joint Comprehensive Plan of Action (JCPOA) nuclear deal due to the European Union’s inability to protect Iranian interests in the JCPOA and the United States leaving the pact.

EU Nominates New Leaders. Germany and France took the European Union’s two top leadership prizes on July 2 after a marathon summit.

Rome Escapes Sanctions Over Debt. A European Commission entering the final months of its mandate decided that picking a fight with Italy was not a good idea, and chose to believe Rome’s promises that Italy’s deficit will be lower than originally thought.

Market Access in China. All eyes will turn next week to the revived U.S-China trade talks to determine how long the fragile truce lasts. Sticking points swirl around U.S. restrictions on Huawei, as Congress debates how to deal with President Donald Trump agreeing to loosen some curbs on the Chinese telecom giant, while Beijing makes the easing of the U.S. ban on Huawei a condition on which to resume agricultural purchases.

Sharing the Power in Sudan. African Union and Ethiopian mediators announced a breakthrough power–sharing agreement in Sudan on July 5, sending Khartoum and other major urban areas into a state of revelry.

Stratfor.com

Economic Calendar

Briefing.com has a good U.S. economic calendar for the week. Here are the main U.S. releases.

Briefing.com

Last Weeks Numbers

Review Last weeks numbers here.

Earnings

Refinitiv,  I/B/E/S

Aggregate Estimates and Revisions

• Second quarter earnings are expected to decrease 0.0% from 18Q2. Excluding the energy sector, the earnings growth estimate is 0.2%.
• Of the 21 companies in the S&P 500 that have reported earnings to date for 19Q2, 85.7% have reported earnings above analyst expectations. This compares to a long-term average of 65% and prior four quarter average of 76%.
• 19Q2 revenue is expected to increase 3.4% from 18Q2. Excluding the energy sector, the growth estimate is 3.9%.
• 76.2% of companies have reported 19Q2 revenue above analyst expectations. This compares to a long-term average of 60% and an average over the past four quarters of 63%.
• For 19Q2, there have been 85 negative EPS preannouncements issued by S&P 500 corporations compared to 23 positive, which results in an N/P ratio of 3.7 for the S&P 500 Index.
• The forward four-quarter (19Q3 –20Q2) P/E ratio for the S&P 500 is 17.1.
• During the week of July. 8, three S&P 500 companies are expected to report quarterly earnings.

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