Don't Understate The Role Of Technology Today: Global Week Ahead

The first week of any month is the same regardless of the passage of time. What matters most to stock traders? The all-important U.S. nonfarm payroll report.

Why? Nonfarm payroll is the major summary statistic on the performance of the entire U.S. economy.

In July, economist consensus looks for for +180K U.S. job additions after a spike to +287K in June. A Wednesday report from the ADP private payroll company for the U.S. looks to print a similar +160K.

If U.S. monthly job additions stay above +100K -- on a moving average basis over the past 3 months -- there is little to no worry about a U.S. recession. That looks to be the case for July.

On Thursday, a super-low weekly unemployment claims report looks for 265K. That’s really, really low claims data, too.

Market actors don’t talk often about the U.S. insured unemployment rate.

This is more subterranean data. It shows economists how many people actually collected unemployment checks each week. Last week on July 28th, 2016 the 4-week moving average was 2,135,250. This makes for a 1.6% U.S. insured unemployment rate.

How low is that? The 1.6% mark for collecting checks is the lowest level for the U.S. insured unemployment rate average going back to November 11, 2000. That is the time of the top of the U.S. Tech/Internet bubble.

Amazing! Imagine how hot the U.S. labor market really is.

It’s been said by many -- The impact of technology is overstated in the short term and understated in the long term.

The latest on hot labor market data bears this out. According to a blog in Oklahoma, Technology delivers big for 2 areas inside the economy of today–

A. Communication with Customers

First and foremost, technology affects a firm’s ability to communicate with customers.

In today’s busy business environment, it is necessary for employees to interact with clients (increasingly) quickly and clearly.

• Websites allow customers to find answers to their questions after hours.
• Fast shipment options allow businesses to move products over a large geographic area.
• When customers use technology to interact with a business, the business benefits. Better communication creates a stronger public image.

B. Efficiency of Operations

Technology also helps a business understand its cash flow needs and preserve precious resources such as time and physical space.

• Warehouse inventory technologies let business owners understand how best to manage the storage costs of holding a product.
• With proper technology in place, executives can save time and money by holding meetings over the Internet instead of at corporate headquarters.

My message: Technology use -- which emerged around the year 2000 -- reaches deeper and deeper into day-to-day activities of the U.S. and global economy here in 2016.

New Zacks Rank #1 Strong Buys:

As the U.S. nonfarm payroll report for July hits, look at U.S. stocks for the action:

(1) Dixie Group (NASDAQ:DXYN) . This small cap commercial and residential carpet seller beat big on its EPS report last week. It’s a Zacks VGM of A and captured a Zacks #1 Rank (Strong Buy) this week. The stock trades at below $4 a share.

(2) United Rentals (NYSE:URI) . This building and construction industry stock is both a Zacks VGM of A and a Zacks #1 Rank (Strong Buy). The stock trades at $80 a share.

(3) Finally, take a look at the big +17% share price jump at TTM Tech (NASDAQ:TTMI) made last week. The stock is a Zacks #1 Rank (Strong Buy) this week. This company still holds a Zacks VGM score of A after the leap, as its stock trades at $10 a share.

TTM Technologies, Inc. provides time-critical, one-stop manufacturing services for highly complex printed circuit boards. Its printed circuit boards serve as the foundation of electronic products such as routers, switches, computer memory modules and communications infrastructure equipment.

Here are the key global/macro indicators out —

Headline news should be made by the Bank of England rate cut on Thursday. Keep an eye out for statements from IMF Head Christine LaGarde on Thursday, too. She speaks in Brazil.

Hitting on both sides of that BoE rate meeting, an ADP payroll report from the USA on Wednesday (looking for 160K) will get scrutiny, as will the Federal nonfarm payroll out on Friday (looking for +180K).

Remember: USA job additions are the key macro data, both stateside and globally!

On Monday, the official China PMI manufacturing index came out at 49.90, versus expectations for 50.20.

The smaller-company private Caixin China PMI manufacturing index came in at 50.60. This was much better than the prior 48.60 and the consensus for 49.0.

For India, the PMI manufacturing index was 51.80 versus a prior 51.70.

In the Eurozone, the final manufacturing PMI index was 52.0 versus a consensus for 51.90. France came in at 48.60. Germany came in at 53.80. Italy came in at 51.20.

The final CIPS/Markit U.K. manufacturing index came in at 48.20 for July, versus a prior 52.10. The post-Brexit consensus was for 49.10.

The Markit PMI for Brazil manufacturing was looking for 46.50, up from a prior 43.20.

The final PMI for USA manufacturing was looking for 52.50.

On Tuesday, the Reserve Bank of Australia (RBA) overnight rate should be posted. Look for 1.75%.

The forecast for U.S vehicle sales looks strong at 17.20 million annually.

The CIPS/Markit construction PMI index for the U.K. is looking for a 43.60 reading, down from a prior 46.00 reading. Brexit is showing up here, too.

The Fed’s Kaplan speaks in Beijing.

On Wednesday, the Services PMI for the Eurozone should be final at 52.90, while Germany is at 54.60, France is at 50.20, and Italy is at 51.90.

The final composite Eurozone PMI (Both services and manufacturing included) looks to be 52.70.

The final CIPS/Markit services PMI for the U.K. looks to be 47.40.

Eurozone retail trade should be growing at 1.6%.

The APD employment survey for the USA comes out. Look for +160K after a prior +172K.

The Brazil Markit composite PMI should get to 45.10 from 42.30.

The BoJ releases minutes from last week’s meetings.

On Thursday, there is an important U.K. BoE Monetary Policy Committee meeting and rate decision. The Base Rate should fall to 0.25% from 0.50%.

U.S. initial unemployment claims should be 265K.

Special: The IMF’s LaGarde speaks in Brazil.

On Friday, there will be an RBA statement on monetary policy out of Australia.

The all-important U.S. nonfarm payroll number for July hits the tape. Look for +180K in July after a prior reading of +287K in June.

The U.S. unemployment rate should be unchanged at 4.9%