Premarket News: Obama Inspires Hope

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Premarket News: Obama Inspires Hope

President Obama gave a historic speech today in Egypt, at the University of Cairo, where he compared the common characteristics of the Western and Middle Eastern worlds. It was one of those addresses to remember, the kind that live on in the history books.

Obama sought to turn the tide of Islamic sentiment toward one of hope and vision, and away from the perilous path the two cultures have been on for decades. One can only hope that this fire for peace will be safely-kept from those who might extinguish it, and that it not spread to those who might abuse it. You can see Obama's effect on financial markets today in the turn from an early Asian market decline to a reversal in Europe.

We expect the market will also find positive news from the ongoing unemployment claims improvement noted this morning, as these continuing claim filers declined by 15,000. Still, the wise will point to the pending impact from GM, its dealers and supplier fallout. We still find today's news mostly positive, and we like the sign that even the labor market, a lagging indicator, seems ready to stabilize.


Overseas Markets

Asia:

1. MSCI Asia APEX 50: -1.45%


2. Japan NIKKEI 225: -0.75%


3. Hong Kong Hang Seng: -0.4%


4. China CSI 300: +0.49%


5. India BSE SENSEX 30: +0.93%

Europe:

1. DJ Euro STOXX 50: +0.46%


2. UK FTSE 100: +0.05%


3. France CAC 40: +0.7%


4. Germany DAX: +0.64%

(Prices as of hour of publishing, which may not be the close)

European Central Bank (ECB) & Bank of England (BOE)

Over there on the other side of the pond, where we will shortly commemorate the 65th anniversary of D-Day, central bankers at the Bank of England and ECB announced their latest monetary policy decisions. The BOE said it would keep its official bank rate paid on commercial bank reserves steady at 0.5%, while maintaining its asset purchase program of 125 billion pounds. The BOE reiterated that the extent of asset purchases remained flexible and would be monitored as conditions persist. We will call this a neutral market factor for today's trading.

The ECB also kept rates steady, announcing the interest rate on its main refinancing operations and interest rates on the marginal lending facility and the deposit facility will remain unchanged at 1.00%, 1.75% and 0.25% respectively. At time of publication, we were still awaiting the ECB President's news conference and Introductory Statement. We expect details will be shared regarding the ECB's own nonstandard measures to boost the regional economy.

The Bank of Canada held its key rate to 0.25%, while Russia's central bank cuts its rate by 0.5%, to 11.5%. This marked the third rate cut since April in Russia.

Economic Reports

Monster Employment Index

Thursday's economic slate here at home began with the release of the Employment Index from Monster Worldwide (NYSE: MWW). Monster's measure of online job demand (from the employer's perspective) deteriorated to a level of 118 in May, versus the 120 measure taken in April. In our "Week Ahead" copy, we said, "We suspect the metric will shed a point or two this time around, if it does not stick at the current mark, as temporary and part-time work serve to stabilize the supply of overall employment opportunities."

To provide some perspective, at this time last year, the MEI stood at 166. Every region of the country declined, while 19 of 28 metro markets fell. However, Monster notes signs of stabilization. We took note that job losses seem to be weighing in ancillary business segments, or those that support main operations. Monster noted weakness in engineering, IT and legal functions. We suspect ancillary position layoffs follow the major segment shedding and fat cutting in recession, as companies realize their smaller size allows for less support; also as they stretch job cuts. Thus, for the deep thinker, we view this report a net positive. The market does not give it much weight anyhow, so its likely negative impact should not be market moving.

"Continuing Claims decreased by 15,000, signaling to us that the labor market wants to stabilize here. However, this disregards General Motors' bankruptcy, dealership closings and parts makers' fallout to come."

Weekly Jobless Claims

The regular Weekly Jobless Claims Report showed 621K initial jobless claims, versus the expected 620K. This week's claims compared against the prior week's revised 625K mark. There was an energizing green shoot in the report this week, so take note. Continuing Claims decreased by 15,000, signaling to us that the labor market wants to stabilize here. However, this disregards General Motors' bankruptcy, dealership closings and parts makers' fallout to come. So, unemployment that might have otherwise started stabilizing in June, may have another month of increase left in it. Just the same, we can see the light... and this is a lagging indicator, so it's an especially encouraging sign.

Productivity & Costs for Q1

The Department of Labor also produced its Productivity and Costs Report at 8:30. We expected both metrics to benefit from favorable revision after the improved reporting of Q1 GDP. With capacity lighter and hours still softening, any positive change in economic activity (even from bad to less bad) allows for improved Productivity and Unit Labor Costs. Revised Q1 Productivity improved 1.6%, compared against the economists' forecast for a revision to +1.2%. The result also marked an improvement from the initially reported +0.8%. Unit Labor Costs, however, only improved to a +3.0% change, versus the expected +2.8%, and off of the +3.3% initially reported. We'll call this market driver a net neutral, because labor costs are still reminding us of the coming inflation threat.

Fed Parade and Natural Gas Report

Federal Reserve Messengers Bernanke, Pianalto and Dudley will each address regional audiences in a sort of Fed parade of their own. The Fed will also report on the state of its balance sheet at 4:30 p.m. The regular EIA Natural Gas Report is due at 10:30.

Retailers will mostly report May Chain Store Sales today. However, Wal-Mart (NYSE: WMT), the nation's critical retailer, recently decided against offering monthly updates.

The day's EPS slate includes ABM Industries (NYSE: ABM), Analogic (Nasdaq: ALOG), Bio-Reference Laboratories (Nasdaq: BRLI), Cantel Medical (NYSE: CMN), Cascade (NYSE: CAE), Ciena (Nasdaq: CIEN), Conn's (Nasdaq: CONN), CorVel (Nasdaq: CRVL), Guess (NYSE: GES), Jos A. Banks (Nasdaq: JOSB), KMG Chemicals (Nasdaq: KMGB), Krispy Kreme Donuts (NYSE: KKD), Medical Action (Nasdaq: MDCI), Navisite (Nasdaq: NAVI), SeaChange Int'l (Nasdaq: SEAC), Signet Jewelers (NYSE: SIG), Teekay Corp. (NYSE: TK), The Cooper Cos. (NYSE: COO), Ulta Salon (Nasdaq: ULTA), Uroplasty (AMEX: UPI), UTI Worldwide (Nasdaq: UTIW), Vail Resorts (NYSE: MTN), Valence Technology (Nasdaq: VLNC), Wind River Systems (Nasdaq: WIND), Xinyuan Real Estate (NYSE: XIN) and more.


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