Friday, August 10, 2012
The domestic economic calendar is on the thin side today, but
China's international trade data for July out today provides
further confirmation of a slowdown in that country's economy. This
adds to Thursday's decelerating inflation and industrial production
numbers out of that country. All of these data points improve the
odds that China's monetary and fiscal authorities will remain in
easing mode, but the interest rate cuts and new spending plans
announced already have yet to show up in economic data.
China's trade surplus shrank by more than expected in July, with
both exports and imports taking a big hit. Exports to Europe were
the weakest while sales to the U.S. also decelerated sharply from
the month before. Problems in Europe are no doubt a big
driver of the slowdown, but there are other factors at play as
well. The prices of China's mostly undifferentiated goods are also
becoming less competitive as a result of rising wages and other
input costs and the appreciating currency.
The challenge for the Chinese authorities is to offset the
weakening international demand backdrop with a favorable domestic
scene. The combination of today's soft trade data with Thursday's
industrial production numbers almost guarantees that the
authorities will be ramping up easing measures in the coming days.
On the earnings front, we got positive guidance from
Nordstrom
(
JWN
), after the retailer came out with better than expected earnings
on in-line revenues after the close on Thursday. Results from
J.C.Penney
(
JCP
) were weaker than expected, raising doubts about the struggling
retailer's turnaround plans. The second quarter reporting season is
effectively over, with less than 45 of the S&P 500 companies
still to report results. Most of the remaining companies are in the
retail space, though we do have a number of major (old) technology
firms like
Cisco
(
CSCO
) and
Dell
(
DELL
) also among the still-to-report group.
Sheraz Mian
Director of Research
CISCO SYSTEMS (CSCO): Free Stock Analysis
Report
DELL INC (DELL): Free Stock Analysis Report
PENNEY (JC) INC (JCP): Free Stock Analysis
Report
NORDSTROM INC (JWN): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment
Research
Want the latest recommendations from Zacks
Investment Research? Today, you can download 7 Best Stocks for the
Next 30 Days. Click to get this free report