And just like that, the financial crisis in Greece is all over.
Well, not exactly, but it sure felt like that on Tuesday. Worrying headlines eased, and the markets responded favorably. While I think this situation is far from being permanently resolved, and deserves hour-to-hour attention by traders (less so investors), there are some other things on tap this week. Chief among them is a June jobs report that could be the first stone cast in the debate on whether the Fed lifts rates in the fall instead of 2016.
Keep this quote in mind:
"The pace of job gains picked up," said the FOMC in its last policy statement, also noting the "underutilization of labor resources diminished somewhat" from April.
The Fed is itching to get going on rate increases, so here is how to decode the report as soon as it hits the wires.
-- If the pace of the energy-sector (can only cut jobs so much before having to rehire) jobs feels as if it has bottomed, the market could read it as unfriendly. In this case, yes, good news may be bad news for investors.
-- A spike in construction jobs, which is possible due to the strength in new and existing home sales, could be met harshly by the market.
-- I think jobs in the leisure and hospitality industry will come in strong based on my discussions with cruise line and travel execs. Demand for summer vacations has been strong, and interestingly, Europe has remained resilient. These companies are hiring for services to accommodate visitors, but also in back-office support such as marketing.
Into the jobs report, the market wants to trade lower. Stocks have not yet shown, I think, they want to see Fed members talk more aggressively about a fall rate hike following the June jobs report. The wild card here is this: If a much-better-than-expected jobs report is received, stocks could trade higher as it would signal we are able to weather the EU's woes. I place that reaction at a low probability and, absent a deal on Greece, would approach jobs day with a sense of caution.
What to Look for From General Mills
For a large packaged-food company, I like what General Mills (GIS) has done to reduce its workforce, introduce new organic products under the Annie's banner and clean up its ingredient lists. Yes, the company is no Hain Celestial (HAIN) or Whitewave (WWAV), which are pure-play organic companies, a great space to be in today. However, I believe the company deserves more credit than it's getting from investors, who are comparing it to laggards Campbell's Soup (CPB) and Kraft (KRFT).
I will be covering the numbers, here is what's on my checklist:
-- U.S. snack sales have been strong. Solid numbers here could mean good numbers from Pepsi's (PEP) snack business later this month.
-- Any hints of shedding unproductive assets, especially in frozen foods. I believe an announcement in this regard is coming soon.
-- Insight into how the company is working with Target (TGT) and Wal-Mart (WMT), both of which are making stepped-up commitments to organic food while reducing space to traditional packaged foods. (Target and Whitewave are part of TheStreet's Action Alerts PLUS portfolio.)