The market opened as I expected it would, drifting into the red zone. The news about US and Europe getting on to sanctions for Russia’s behavior in Ukraine is bad news that bites hard in this current market environment. Even the good news, (actual news, really) from the Fed is not enough to inspire this summertime market.
- The Fed’s Beige Book, meanwhile, stated the pace of economic growth is split between moderate and modest across its 12 districts, with most districts maintaining an optimistic outlook for growth. The Beige Book also noted labor market conditions improved, while some districts are having difficulties in finding workers for skilled positions.
Even more good US economic data can’t bring the market to extend its recent rally, which is probably good, for now. Let’s see more earnings coming in.
- Firms responding to the Philadelphia Fed Business Outlook Survey indicated continued expansion in the region’s manufacturing sector in July. The Business Outlook Index for July was reported at +23.9, which was well above the consensus for a reading of +16.0 and last month’s +17.8.
The report itself was upbeat and positive, but the one takeaway for me that I found impressive, even if the market has not, yet, is the eyeball on the future.
- The future general activity index increased 6 points and is at its highest reading since last October.
And, of course, the conclusion of the report I found supportive as well.
- The current new orders and shipments indexes increased notably this month, increasing 17 points and 19 points, respectively. Both unfilled orders and delivery times indexes were positive for the second consecutive month, suggesting continued strengthening conditions.
Not much else going on here today, other than me watching the market for any signs of a dramatic change. I see both gold and the VIX, two fear gauges, are up this morning, with gold showing the larger pop. Along with the major indices hanging firmly in the red, these two indicators moving up is something to keep an eye on.
No worries, though. We still have more earnings coming and I suspect the current positive trend will continue, both in earnings and, thus, the market.
- Morgan Stanley profit more than doubles, beating estimates
The above is not bad for a financial company that almost went under in 2008. Even though the company bottom line benefitted from a tax break this quarter, the new and improved Morgan Stanley made its money the old-fashioned way – it earned by being a broker.
- The bank posted better results in businesses including merger advisory, stock and bond underwriting, and investment management.
I like the above more than the earnings beat because it is just one more sign that business activity in the US is picking solidly. With that, I bid you adieu for today …
Trade in the day; invest in your life …
