Monday, July 2, 2012
Better-than-expected manufacturing sector data out of China and
Europe should help stocks sustain the positive momentum from
Friday's Europe-inspired gains, at least at the start of today's
trading action. But the gains may not have much staying power
should domestic data, particularly the June Manufacturing ISM
reading, turn out to be disappointing.
Spain's spectacular victory over Italy in Sunday's Euro Cup final
may have established the country as the undisputed king of Soccer,
but that is no help to the country's fiscal woes. What will help
the country instead will be positive follow-through from Friday's
Euro-zone announcements. Yields on Spanish (and Italian) government
bonds are down again today, building on the new emerging trend from
Friday.
We will have to wait and see whether this trend will remain in
place over the coming days and weeks, but some optimism over the
Friday announcement is definitely warranted.
Whether the Euro-zone crisis is the cause of the ongoing global
economic slowdown or not, it is nevertheless a net drag on the
growth outlook. Today's PMI readings confirm the impact of the debt
crisis on the region's economy and its impact on China through the
trade channel. China's PMI reading from over the weekend, while
better than expected, showed the sharp deceleration in the
country's export machine.
The U.S. economy has been showing a lot more resilience in the face
of these headwinds, but the expectations for today's June
Manufacturing ISM report is to show a pullback from last month's
level. We have a number of other major economic reports on the
docket this holiday-shortened week as well, but the focus will be
on the labor market with the June non-farm payroll report coming
out on Friday.
The expectation is for job gains of close to 100K in June, but we
will have to wait until Friday to find out if even this lowered
expectation can be met.
In corporate news,
Bristol-Myers Squibb
(
BMY
) is acquiring diabetes drug maker
Amylin Pharmaceutical
(
AMLN
) for $5.3 billion in cash. In other deals,
Ingram Micro
(
IM
) is acquiring the wireless equipment maker
Brightpoint
(
CELL
) for $622 million.
Sheraz Mian
Director of Research
AMYLIN PHARMA (AMLN): Free Stock Analysis
Report
BRISTOL-MYERS (BMY): Free Stock Analysis Report
BRIGHTPOINT INC (CELL): Free Stock Analysis
Report
INGRAM MICRO (IM): Free Stock Analysis Report
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