Are Thursday's U.S. economic data "good enough" for the Federal Reserve to taper?
It's a tough call. U.S. bond yields moved up, stock futures moved down a bit as revised second quarter gross domestic product checked in better than expected at 2.5 percent. However, the key may be the 331,000 jobless claims number for the week, which remains near the low end of where it has been for the last several weeks.
Judging by the reaction of the 10-year yield, which moved up a couple basis points, the bond market seems to believe these numbers are "good enough."
1) Global stocks markets are mostly up as both the timing and extent of an attack on Syria remains uncertain, despite weaker U.S. futures.
Traders seem to believe that if the Syrian strike is a largely symbolic gesture (ship-launched missiles) with limited damage — one that will not lead to regime change — than there will be little additional downside to stocks.
The timing is a major source of speculation this morning. There was expectations that an attack would occur before this weekend. However, a demand by the U.N. Secretary General that the U.S. wait for the report of weapons inspectors has thrown that timetable into doubt. The Conservative British government, which is still burned by its involvement in Iraq, is also getting blow back from the opposition.
How long will the report from the weapons inspectors take? It's not just them leaving Syria, it's waiting for the report. No one knows how long a report could take, but there are guesses it could be a week away. And it's not clear if they will even name who is responsible, even if they find evidence of a chemical attack.That's not good.
How long can the U.S. afford to wait? Now there are reports that Russian President Vladimir Putin and Germany's Chancellor Angela Merkel have discussed the Syrian crisis by phone, and the Kremlin says they are both backing diplomatic efforts.
Then there's another stall date: the G20 is meeting in St. Petersburg in a week—September 5th and 6th. Most think it's unlikely that an attack will happen during the meeting.
That now pushes the timetable into NEXT weekend. Yikes!
2) Several internal metrics indicate a heightened sense of awareness but no panic. Volume is moderate (no selling panic), the put/call ratio is roughly 1, indicating no aggressive push into buying protection (put/call ratio in panic situations can go to 1.5 or even higher); and another metric of fear — the CBOE Volatility Index (VIX) — is up this month but not even close to the more elevated levels we saw in June.
Still, there's an old saying on the floor— you can go broke on low volume — and it's true. Beneath the placid exterior, there is a slow accumulation of technical damage.
4) Shares of Guess up roughly 15 percent after reporting second quarter profit and revenue well above Street estimates. The results helped by strong North American sales but the company sees challenges in Europe and China. While the retailer is projecting current quarter guidance below expectations, it raised its full year profit forecast. They could use a good day: the stock is down almost 20 percent this month.
Signet Jewelers' shares are down 4 percent after reporting mixed earnings. U.S. same store sales at Kay Jewelers and Jared helped results but the company continues to see weak sales in the UK. The Mother's Day calendar shift also impacted sales since it was in the first quarter this year. The jeweler's current quarter guidance is below analysts' forecasts.
—By CNBC's Bob Pisani