May Trade Deficit Up

The big data/short week narrative continues this morning, two days ahead of the big June Jobs Report that investors and economists will be watching very closely. Until that time, we have plenty to chew on.

Today ahead of the bell we see a May Trade Deficit in the U.S. of $41.1 billion, up from April’s read of $37.4 billion. No alarm bells sounded in he immediate aftermath; the Dow, Nasdaq and S&P 500 were -101, -29 and -12 points, respectively, ahead of the release, and are -108, -31 and -13 since.

We will spend more time considering the results of ISM Services (Non-Manufacturing) data at 9am CT today, These numbers have been trading downward as of late, and analysts are looking for a figure somewhere around 53 (over 50 indicates expansion). The ISM Manufacturing survey last Friday surprised to the upside, but the U.S. economy is far more Services than Manufacturing driven these days, so today’s report is the more consequential.

Later today — 1pm Central, to be exact — the latest minutes from the Federal Open Market Committee (FOMC) will be released, giving some insight into why the Fed resisted raising interest rates another quarter percent. This most recent meeting last month followed the heavily disappointing May Jobs Report, which showed the U.S. only gaining 38K jobs, more than 100K off estimates. Many observers maintain that this poor employment showing helped seal the fate to keep interest rates unchanged in June (and perhaps all summer, maybe beyond), but today’s minutes will tell us for sure.

Normally in the first full week of a new month, Wednesday awaits the ADP (ADP) private sector jobs report, but this Independence Day-shortened week is pushing this read back until tomorrow. Part of the big jobs miss last month was due to the May ADP read which saw 173K private sector jobs in the month. We look to either see a big adjustment either when ADP reports these June numbers before the bell or on Friday’s BLS non-farm payroll report. Over time, these two reports tend to move in line.

We are still a week away from the big first week of Q2 earnings, but we get a taste this morning with Walgreens Boots Alliance (NASDAQ:WBA) (WBA) posting sales improvements year over year, but lower than consensus expectations. Earnings were down year over year, but Walgreens is operating with lots of moving parts these days: it has ended its alliance with maligned pharma company Theranos, as well as the $9.4 billion acquisition of Rite Aid (expected to close sometime in 2H 2016) and Walgreens attempt to buy a significant stake in AmerisourceBergen (NYSE:ABC) (ABC).


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