EmailIt's all in the details -- or so it is said. The problem for the equity market, and for capital markets in general, is that the details are lacking.
There are still no agreed-upon details with respect to the debt limit.
The House is reportedly going to hold a vote Tuesday on a "cut, cap and balance" proposal, yet that is considered to be little more than a grandstanding exercise. Rumor has it that a "stop, drop and roll" drill will be held in the House chamber immediately thereafter for all members of Congress to prepare them for the firestorm that will come if the debt ceiling isn't raised by August 2 (see The Big Picture page for additional insight on the debt limit showdown).
There are still no details on the bailout plan for Greece. Leaders are slated to meet Thursday to discuss, um, the details.
There are details for the European bank stress tests. They were out during Friday's trading, but after European markets had closed. It does not appear this morning, however, that the European markets are sold on the rigors of the stress tests.
Call it post-traumatic stress syndrome, but most of the major bourses in Europe are down at least 1.0%.
We are getting some details on the second quarter earnings reporting season. So far, the results have been mostly better than expected, but the real rush of reporting begins this week, starting with IBM (IBM) after the close.
Roughly 20% of the S&P 500 will report results this week for the June quarter, so there will be lots of earnings details by the close of trading on Friday.
The question now is, can better-than-expected earnings supplant macro concerns as the main market driver? Probably not, but what they will do is lay a foundation for a robust relief rally in the event a palatable deal on the debt limit can be reached and EU leaders can pacify participants with a plan that stems debt contagion concerns in the eurozone.
Separately, housing data will dominate the economic calendar this week, starting today with the NAHB Housing Market Index for July and followed by the Housing Starts, Existing Home Sales, and FHFA Housing Price Index reports later in the week.
There are a lot of loose ends for the market right now that need to get tied up. Accordingly, uncertainty hangs in the air as participants are also cognizant that the devil is in the details too -- or so it is said.
The prognosis for the market in the immediate term is day-to-day.
At the moment, it is looking sickly. The S&P futures are down 0.4%, which is setting the stage for a lower open for the cash market.
--Patrick J. O'Hare, Briefing.com
Patrick J. O'Hare is the Chief Market Analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial please email researchsales@briefing.com.
