Last week was bookended by the end of the June quarter and the Fourth of July holiday. If we were to look at the week as if it were a football game, it was half time of the year. I hope you had a great holiday weekend with your family, friends and loved ones.
Even though last week was a shortened one, we received more data that point to the continued month-over-month improvement in the U.S. economy. Markit Economics and HSBC reported their monthly Purchasing Managers Indexes (PMI) figures for China, the eurozone and the United States. All regions continued to grow, with the U.S. posting the strongest month-over-month growth, while Chinese manufacturers signaled the first improvement in overall operating conditions over the last six months in June.
The improving U.S. economy was echoed by the ISM manufacturing report that was also out last week, which showcased continued strength in new order growth and the better-than-expected headline number for the June employment report. While much above consensus expectations, the labor participation rate was little changed. But the mix of jobs created was better than it has been in several months. Also surprising on the upside was June auto sales, particularly for General Motors (GM), which continued to buck all the headline issues over the last few months.
I realize I must sound like a broken drum, but the above is bullish for companies like General Electric (GE), Honeywell (HON), Parker Hannifin (PH) and others that serve the industrial markets, as well as automotive components suppliers such as TRW Automotive (TRW), Dana Holding (DAN) and others.
Bookending the monthly jobs data, we'll get the JOLTS, the job openings report for May, on Tuesday. Aside from the regular weekly data (see the economic calendar below), the most meaningful piece of data ahead of us will be the FOMC minutes from its June meeting. Compared with last week, this coming week will be pretty quiet on the economic data front and that means the start of corporate earnings will be in focus. It all kicks off with Alcoa's (AA) earnings report after Tuesday's market close. While there are other companies, such as Fastenal (FAST), Wells Fargo (WFC) and Family Dollar Stores (FDO) issuing their June quarter results next week the real deluge happens over next few weeks.
As we start to get those reports, my advice is to use the growing information flow to touch up your investment mosaic. For example, a few weeks back I recommended shares of American Railcar (ARII) to Real Money Pro subscribers as way to play rebounding rail traffic and the need for tank cars. Last week, The Greenbrier Companies (GBX) reported strong quarterly results, highlighted by a pick-up in orders, particularly for tank cars. While it signals that transport activity is rising, which is a good sign for the economy, Greenbrier's results also mean subscribers should continue to hold shares of both American Railcar and Trinity Industries (TRN).
The following is a more detailed look at what you can expect over the next several trading days. Be sure to check back midweek for the Corner of Wall & Main, in which Lenore Hawkins and I dish on the first half of the trading week and other key matters and thoughts, as well as how to play it all.
Economic Calendar
Tuesday, July 8
JOLTS -- Job Openings (May)
Consumer Credit (May)
Wednesday, July 9
MBA Mortgage Index (Weekly)
Crude Inventories (Weekly)
FOMC Minutes (June)
Thursday, July 10
Initial & Continuing Jobless Claims (Weekly)
Wholesale Inventories (May)
Natural Gas Inventories (Weekly)
Friday, July 11
Treasury Budget (June)
Earnings Calendar
Monday, July 7
Penford (PENX)
Tuesday, July 8
Alcoa
AeroVironment (AVAV)
Container Store Group (TCS)
Wednesday, July 9
Bob Evans Farms (BOBE)
WD-40 (WDFC)
Thursday, July 10
Barracuda Networks (CUDA)
Family Dollar Stores
Joe's Jeans (JOEZ)
Friday, July 11
Fastenal
PriceSmart (PSMT)
Voxx International (VOXX)
Wells Fargo
