OVERVIEW
· Market Update – futures spent most of the overnight session approximately flat, sold off at 8:30amET after the weak retail sales report, but have bounced back and are essentially flattish again heading into the afternoon. Europe is performing a lot better – the DJ Euro Stoxx went out the day up 1.13% and is up ~3% for the week. Europe outperformed today on back of the Moody’s bank report (Moody’s conducted a stress test of Europe’s largest banks and concluded that capital would be OK even under very stressed sovereign scenarios), the Spain/Portugal assistance denials, and more successful sov sales (Italy was the latest today). In the US, the SP is still up ~1.6% on the week (which will be the largest weekly gain since the 5 days ended 5/14) and there is some small profit taking occurring into the weekend on back of Thurs’ ~3% ramp. Volumes/activity are VERY quiet, hurt by the slow summer seasonality, the lack of major corporate news (as companies enter their quiet periods ahead of earnings), and the World Cup. The weakness today is being blamed on the retail sales numbers, but it’s really more a lack of buyers. Technically, we are in purgatory somewhat, above the critical 1040-1050 levels but below the 200day MA (1107) – people aren’t willing to make a major stand in either direction until we make headway out of the above range.
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