Views From The Hill

Bullish and Bearish Market Events: July-16-2014

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An overwhelming amount of positive economic news and earnings buoyed today’s stock market prices. The S&P 500 benchmark index closed @ 1981.57 (+8.29 / +0.47%) and continues to maintain its daily uptrend while currently undergoing a consolidation phase. The technology laden Nasdaq Composite closed @ 4425.97 (+9.58 / +0.22%) and appears to be consolidating its key bullish reversal which it initiated at the start of the week. Still displaying negative divergence from larger cap stocks after stalling at a double-top, the small-cap Russell 2000 index closed @ 1151.55 (-2.26 / -0.20%) and continues to struggle in a short-term downtrend and cling to the support of its 50-day moving average @ 1151.45.

 

Bullish Events

  1. Positive Earnings: Abbot Labs (ABT) reported $0.54 EPS vs. consensus @ $0.51 and sales of $5.55bn vs. estimates @ $5.52bn. Intel (INTC) reported $0.55 EPS vs. consensus @ $0.52. Blackrock (BLK) reported $4.89 EPS vs. consensus @ $4.46.
  2. USA / Economy / Inflation: The U.S. Producer Price Index mth/mth rebounded to 0.4% vs. estimates @ 0.3% and previous month @ -0.2%.
  3. USA / Energy: The EIA Petroleum Status report indicated a -7.5mm drop in Crude Oil inventories, which is its largest draw since January-2014. With refineries running @ 93.8% capacity, the highest level since pre-recession 2008, it reflects the underlying strength of the economic recovery.
  4. USA / Real Estate / Residential: The NAHB Housing Market Index crossed above 50 for the first time since January-2014. Builder confidence for July displayed an optimistic outlook with a reading @ 53 vs. forecasts @ 50 and previous month @ 49.
  5. USA / M&A / Entertainment & Media: The NY Times reported that Rupert Murdoch’s Twenty-First Century Fox made a rejected bid valued @  $85 per share for Time Warner Cable last month.
  6. Asia / Economy / China GDP: Q2-2014 GDP for China increased 7.5% yr/yr after 2 consecutive quarters of declining growth. GDP qtr/qtr increased 2.0% vs. estimates @ 1.8% and previous quarter @ 1.4%.
  7. Asia / Economy / China Production: China’s Industrial Production grew 9.2% yr/yr in June vs. estimates @ 9.0% and previous month @ 8.8%.
  8. Europe / Economy / UK Employment: Unemployment Claims in the UK fell by -36.3k vs. forecasts @ -26.5k and previous period @ -27.4k to reflect solid progress in its labor market. The Unemployment Rate remains relatively stable and low @ 6.5% vs. forecasts @ 6.5% and previous period @ 6.5%.
  9. Europe / Banking / Portugal Debt Crisis: A return of confidence in Portugal’s sovereign bonds led to a rise in Banco Spirito’s stock price and a 78 bps decline in credit default swaps on its senior debt after shareholders expressed a willingness to provide more capital.

Bearish Events

  1.  N/A

Neutral Events

  1. USA / Economy / Industrial Production: June-2014 Industrial Production in the U.S. was somewhat softer than expected. It showed a 0.2% increase vs. consensus @ 0.4% and previous month @ 0.6%.
  2. USA / Economy / Fed Reserve: Fed Chair Janet Yellen spoke before the House Financial Services Committee with no significant deviation from her remarks yesterday’s testimony to the Senate.

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