Stocks stalled out in the last couple of sessions after
reaching milestone levels, essentially reflecting a lack of
catalysts that could push them over the hump. The key question
for the market at present is handicapping the timing of the Taper
announcement, with Wednesday's minutes of the last Fed meeting
keeping the December option on the table.
Pre-open sentiment remains positive, despite more weak retail
sector earnings results this morning and less than positive data
out of China. Sentiment was positive even before this morning's
in-line PPI and Jobless Claims data on the home frontt, but this
could be nothing more than a modest reversal at the open after a
couple of down sessions that may not be able to sustain itself
throughout today's trading session.
A key private sector gauge of China's manufacturing sector showed
loss of momentum in this key sector of the country's economy. The
preliminary HSBC manufacturing PMI for November came in lower
than October's final reading, though it still remained in
expansionary territory. A key source of weakness was on the
export orders front, which is surprising given the strong export
growth in October following the unexpected decline the month
before. Perhaps the renewed signs of weakness in the Euro-zone, a
major market for Chinese exporters, has started showing up in
Chinese data. The country's economic growth appeared to have
picked pace in Q3, with GDP growth improving from the first
half's pace. But if today's PMI data is reflective of current
trends in the economy, then that improving trend may have stalled
On the earnings front, we have another set of uninspiring
retail seector reports this morning.
came short of expectations, though it's hard to pick the
retailer's outlook for the holiday shopping season as we were
able to with
) report a few days back.
) missed expectations on the top- and bottom-lines as well. The
Target earnings release isn't easy to decipher, but the company's
numbers confirm all the disconcerting elements that we heard
about from Wal-Mart earlier. What this all boils down to is that
the bottom rung of the consumer economy isn't doing that good.
) earlier and
) today, while not true comparables for Wal-Mart and Target,
nevertheless lead in that direction. This is surprising as many
of us expected the recent drop in gasoline prices to have been
particularly beneficial to that consumer segment.
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It is perhaps reasonable not to extrapolate the weak-looking
results from these discount retailers to the broader retail space
or the entire consumer economy. After all, we know that
) and others are a lot more upbeat about their outlook, which
means that higher-end consumers are holding out better. That's
nothing new, as we have lived with this bifurcation for a while.
But does it mean that the economy is in good enough shape for the
Fed to start tapering its bond purchases? Nobody knows the answer
to that question, perhaps not even the Fed. But we will find soon
enough as December FOMC meeting is just a few weeks away.