Looking for the Time to Strike
Market Commentary
By Charles Payne, CEO & Principal Analyst

The rally attempt happened too soon in the session, and nobody took the bait. I'm not surprised by that, but it does set things up for a possibly very dramatic finish. I'm not sure what could spark another rally attempt, so this will have to be one of those moral victories where the losses are limited. I like the action in oil and precious metals, which lends to speculation that if Greece stays in the Euro the ECB will have to play a role. Mario Draghi has strongly stated ECB policy and balance sheet will not be compromised because Greece doesn't want to live less lavishly. I don't buy it and think Greece will stay and money will be printed.

Stocks Moving Sideways
By Carlos Guillen

Stocks are overall trading fairly flat so far during today's trading session as the economic data is somewhat mixed, with continuing signs of a Chinese stimulus, stabilizing initial claims, and slowing manufacturing sectors in major economies.

Initial Claims data posted earlier today was a bit mixed, as the result showed a slight improvement but it was assisted by a revision. According to the Labor Department, initial claims during the week ended May 19 totaled 370,000, decreasing from the 372,000 revised figure reported for the prior week, but landing above the Street's estimate of 365,000. The prior week's result was revised up from 370,000, so had it not been for the revision initial claims this week would have been flat. A bit more encouraging was that the four week moving average of initial claims data, considered to be a forward looking indicator, also declined to 370,000 from 375,500. While not exactly great, the fact that initial claims has been flat for the past four weeks may be indicating a slight improvement in the pace of job growth. As it stands, nonfarm payroll employment forecasts are calling for a 175,000 increase, which is much higher than the disappointing 115,000 achieved in April.

Data from China was also mixed as the region's manufacturing sector looks to have contracted for the seventh consecutive month, but also helps to raise the likelihood that the government will step up stimulating actions. The HSBC Holdings Plc and Markit Economics purchasing managers' index May preliminary reading landed at 48.7, lower than the 49.3 reached in April. If this level holds accurate in the final reading, it would make for the longest period that the index has been below the 50 since March 2009 when the index had been under 50 for eight months. So far all indications are that some form stimulus is on the way in China, and another month of a weakening manufacturing sector may be the last straw for Chinese leaders.

In all, stocks still look oversold, and while anything is possible in Europe with respect to Greece, it is encouraging that the Dow Jones Industrial Average looks to be bottoming for now.

World Production Pause
By David Urani

Markit gave us a pretty good picture of the global manufacturing economy this morning with its PMI results for France, Germany, China, and for the first time the USA. I think you could say that the global trend right now is deceleration, as each of the countries slowed from April to May. Germany in particular put up a valiant fight over the last couple of years as a leading exporter in Europe, separating itself somewhat from the carnage in the rest of the euro zone. However, over the past few months it's become obvious that Germany can no longer hold itself above water; the latest drop in its PMI down to 45.0 puts it firmly on the contraction zone (a reading of 50 separates growth from deterioration). Yet, France's drop in May was larger than Germany's. Altogether then it's no surprise that the whole Eurozone reading was negative at 45.0.

Obviously Europe is having its troubles, and looking at the results from China and the USA it seems that this has become a global issue. China's manufacturing sector has now, according to Markit, been contracting for seven months straight as exports to Europe slow. After ticking up near breakeven in April to 49.3, it relapsed back down to 48.7 this month.

And then there's the USA, which has been doing well to stay in its own growth bubble. We've really been displaying our relative strength on the global stage over the past several months, and it's no coincidence that the dollar and treasuries are in high demand. Yet, while Markit's manufacturing index for the USA did stay positive it also decelerated, down to 53.9 from 56.0. If Europe and China were to continue to contract for a couple of months more you would really have to question if we could continue to stay in the growth zone.

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