The domestic economic calendar is on the thin side today, but
China's international trade data for July provides further
confirmation of a slowdown in that country's economy. This adds to
Thursday's decelerating inflation and industrial production numbers
out of China.
All of these data points improve the odds that China's monetary
and fiscal authorities will remain in an 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
???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
On the earnings front, we got positive guidance from
), after the retailer came out with better-than-expected earnings
on in-line revenues after the close on Thursday. Results from
) were weaker than expected, raising doubts about the struggling
retailer's turnaround plans.
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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
) also among the still-to-report group.