The First Week of June
First, let's touch on the equity markets coming out of May. I currently remain "invested," having moved in late May from "underweight" back toward "market weight." Remember that we drive three speeds in 2010: underweight, market weight, and overweight -just don't get off the track completely. The names I have acquired are all defensive, not the go-go Hedge Fund VIP list names. A weekly close below 1040 in the S&P 500 Index will encourage further downside momentum but obviously by my positions I more inclined toward "hanging above."
S&P 500 Index
The first week of June presents many critical economic data points
Tuesday June 1
ISM manufacturing: 10am Last month, the ISM accelerated to 60.4, the highest level since 2004. The improvement in ISM, and dramatic 2009 surge, was a leading indicator for the 2009 capital markets recovery. Now I expect moderation, with 60 becoming a "resistance" level. That's ok though, we will take it. Remaining above 50 is what is critical over the next few months; we don't want to slip below 50 which would signal contraction in manufacturing. The Street is looking for Tuesday's figure to come in at 58 to 59.
Wednesday June 2
MBA Mortgage Applications: 7am - last week +11.3%
Pending Home Sales: 10am - month-on-month the street is expecting +5.0% versus last month +5.3%
Domestic Vehicle Sales: early afternoon - last month 8.78 million, this month 8.90 million - annual rates
Mortgage Apps surged last week on the drop in mortgage rates. However, I still expect all housing numbers to soften - a soft patch ahead - with the expiration of the government homebuyer tax credit.
Domestic Vehicle Sales should increase modestly. The most relevant development in the past week is the that U.S. Treasury is seeking a lead underwriter for a General Motors IPO. Taxpayers own 61% and will unload those shares by the end of this year. This will be a positive development for the capital markets. I for one will be a buyer of some IPO shares. Why not? I am the proud owner of two GM Vehicles.
Friday June 4
Change in Nonfarm Payrolls: 8:30am
Within the report, private sector jobs matter most to me. Goldman Sachs, which I believe has the most accurate forecasting economic team, is expecting a headline figure around 500,000 and private sector jobs creation @150,00. GS also expects the unemployment rate to move from 9.9% to 9.7% - the capital markets will be the most "at risk" on a miss.