Overnight price action is relatively quiet again after another quiet day yesterday. Earnings later this week and speculators returning from vacation should give a boost to volumes. Overnight, SPX futures rallied 10 handles shortly after the European open as the ministers announced an accelerated timeline for the Spanish bank aid, and are now unchanged as of 8:23am. Italian and Spanish yields lower by 15 and 25 bps respectively, European banks are up for the first day in 5, but the Euro still can’t catch a bid trading below 1.23 vs the U.S. $. Commodities are all hovering close to unchanged, as are most currency crosses.
AMD pre-announced weaker revenues for the second quarter last night and the stock is down more than 10% in the pre-market. What was the reason? Once again, weaker Chinese and European sales. It is becoming painfully obvious that global slowing is affecting all industries, and the two weakest regions are China and Europe, comprising 35% of global GDP. Chinese import data overnight came in weaker than expected, though export growth was actually a bit better than expected. Quiet data week throughout the world this week.
Earnings season will give us an even better feel for how domestic U.S. demand is holding up in the face of global pressures. I am placing my bets on the re-coupling rather than the de-coupling.