Trader Talk

Global Data Still Weak

The August HSBC China manufacturing purchasing managers' index(PMI), at 49.8, was higher than expected, though below 50 still indicates contraction. The HSBC data is supposed to preview the "official" PMI.

More weakness in Europe: Euro zone manufacturing PMI at 49.7 printed its first sub-50 reading since September 2009. Services PMI was also weak at 51.5, its lowest since September 2009.

He said the "QE3" word....St. Louis President James Bullard said in an interview in Japan's Nikkei newspaper that a third round of quantitative easing was possible, though he added that he would not commit to a long string of purchases.


1. I got a flurry of notes from traders at the close Monday trying to draw conclusions from the fact that the SPDR Gold Trustexchange traded fund (ETF) had passed the SPDR S&P 500 ETF as the largest of all ETFs. The SPDR S&P 500 has seen outflows, while the SPDR Gold Trust has seen inflows recently.

Wells Fargo recently sent out a note insisting gold was not in a bubble, citing, among other reasons, that the price of gold was still below the "real" (inflation adjusted) price of $1,952 seen in January 1980.?

2. Corporations continued with the tone of conservative guidance:

Williams-Sonoma beats by a penny on a stronger-than-expected 6.5 percent rise in same-store sales. However, the home furnishings retailer cautions "there is clearly more uncertainty in the economy now" and sales guidance for the rest of the year is a bit more conservative, with the third and fourth quarter same-store sales estimates cut to up 1 percent to 3 percent. Third-quarter earnings are seen between 36 cents a share and 39 cents a share, mostly below 39 cents a share consensus.

Heinz first-quarter earnings tops estimates (79 cents a share vs. 76 cents a share consensus) on slightly better-than-expected revenues. Organic sales grew 3 percent, led by 8 percent organic growth in ketchup sales and a 13 percent increase in organic emerging markets sales. However, its guidance disappoints the Street with its second-quarter outlook inline or slightly above last year’s 78 cents a share (below 85 cents a share consensus). Full-year guidance also is below estimates ($3.24 a share to $3.32 a share vs. $3.34 a share consensus). ?

3. Citing a recent pickup in bookings and lower oil prices, Bank of America Merrill Lynch upgrades AMR and US Airways to "neutral" and "buy," respectively.

4. Coal producer Alpha Natural Resources announced a $600 million stock-buyback program, about 9 percent of its stock’s market cap.

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