Investor’s first read - Brooksie’s edge before the open
Monday, July 2, 2012 9:09 a.m. ET
DJIA: 12,880.09
S&P 500: 1362.16
Nasdaq Comp.: 2935.65
Russell 2000: 798.49
It looks like when push comes to shove, the Europeans will step up to the plate to save their euro. Problem is, it took more than a dozen pushes and shoves to jolt them out of their lethargy.
Germany was the tipping point. Without its capitulation, last week’s summit would have gone the way of the 12 that preceded it – inaction.
So the 17 euro-area nations have edged closer to getting on the same page.
If the euro fails, it won’t be because their leaders didn’t try to avert contagion and save it.
That’s huge!
The issue won’t go away, but this was ground breaking stuff.
The euro can now step aside and yield the spotlight to other issues, primarily U.S. issues – our economic growth, the November elections, and the issues comprising the fiscal cliff, mandatory spending cuts, the complete, partial or non extension of the Bush era tax cuts, and another raise in the debt ceiling.
With European contagion off the table for now, the stock market will have to find a new level to discount the value of its components.
Friday’s market action suggested the extent of any decline from these levels is reduced and the stage set for another leg up when the remaining uncertainties are taken off the table.
CONCLUSION: The ball is back in our court. Clarification is needed to lift the lid the three uncertainties referred to above have on stock prices.
The effort to preserve the euro gives credibility to June’s support level DJIA: 12,450 (S&P 500: 1310). With some help from U.S. economic reports an upmove to DJIA 13,200 (S&P 500: 1392). We will get a good read on that this week, especially Thursday and Friday (see below).
With the potential for contagion in Europe greatly lessened, the “confidence” factor here and abroad should get a boost having a greater impact in the August/September economic indicators.
Facebook (FB): Failed to participate in the big boom Friday – not good. Stock desperately needs a friend in high analytic places or it will slide down below 30.
ECONOMIC REPORTS:
MONDAY:
Markit PMI Manufacturing Index (9:00)
ISM Manufacturing (10:00) – – The Index slipped to 53.5 in May from 54.8 in April, however New Orders were up 1.9 points to 60.1.
Construction Spending (10:00) – Gained 0.3% in April following a revised gain of 0.3% in March.
TUESDAY:
Factory Orders (10:00) – April orders dropped 0.6% after March’s Revised drop of 2.1%.
WEDNESDAY: Holiday
THURSDAY:
ADP Employment Report – Private payroll employment gained 133,000 in May.
Jobless Claims – Claims dropped 6,000 for the June 23d week to 386,000 bringing the 4-week average to 386,750.
ISM Non-Manufacturing Index – Rose to 53.7 in May from 53.5 in April, however, New Orders rose 2 points to 55.5
FRIDAY:
Employment Situation – Rose a disappointing 69,000 in May after a rise of 77,000 in April.
George Brooks
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The writer of Investor’s first read, George Brooks, is not registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. Readers are expected to assume full responsibility for conducting their own research pursuant to investment decisions in keeping with their tolerance for risk.
