Stocks were indicating a higher opening today, as increasingly, investors must acknowledge the economic situation is improving. Today, a further confirmation of the view could arrive in the form of a very important economic data point, Leading Economic Indicators. Otherwise, the European Central Bank (ECB) statement and press conference has the potential to impact the relative value of the U.S. dollar and commodities, and influence U.S. securities markets.
Leading Economic Indicators (LEI) will be reported for June this morning. Economists expect LEI increased 0.4%, versus the 0.3% increase in May (and 0.2% in April). The LEI is a composite measure of 10 components which seek insight into the prospective future of the economy. Thus, an above par reading here should be enthusing to equity investors. It would imply corporate earnings and dividends should improve along with personal income and spending. Stocks, as a result, should appreciate on a good read.
The other bit of potentially hazardous or helpful data scheduled today is the monetary policy decision of the European Central Bank. The ECB seemed to walk back investors after a robust reaction to its last meeting, so I expected a cautionary yet hopeful tone today. In fact, the ECB kept interest rates steady and left its policy statement language unaltered.
In June, the ECB adapted its policy language to introduce the idea of a gradual unwinding of its extraordinary stimulative measures. Every ECB meeting henceforth carries with it kinetic energy, given the central bank’s presence at a policy inflection point. The press conference was still forthcoming as I submitted this report, but the statement on its own should not prove problematic for U.S. markets. Furthermore, make note that if U.S. economic data firms as I expect, then a better Europe might not harm the U.S. dollar, but work with it.
Other economic data which could influence equities markets today, though they are unlikely to in my view, are Initial Jobless Claims, the Philadelphia Fed Business Outlook Survey, Bloomberg’s Consumer Comfort Index and the EIA Natural Gas Report.
Highlighted earnings today include Visa (NYSE: V), Microsoft (Nasdaq: MSFT), Capital One Financial (NYSE: COF), E*TRADE Financial (Nasdaq: ETFC) and many others. Visa gives investors a good bead on consumer spending and retail, inclusive of ecommerce.
In conclusion, look to the ECB message and the market’s interpretation of it. However, your key guide today will most likely come from U.S. data, and the Leading Economic Indicators. A good LEI read feeds the market to another new record in my view, assuming there are no other surprises. For more of my work on markets, readers are welcome to follow the column here at Seeking Alpha.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.