Tuesday Morning Cheat Sheet: 3 Stories Moving Markets

Source: http://www.flickr.com/photos/dlajholt/

Source: http://www.flickr.com/photos/dlajholt/

It’s Tuesday, November 19, and U.S. stock futures were mixed ahead of the opening bell. At 8:35 a.m., Dow futures were up 0.04 percent, S&P 500 futures were down 0.12 percent, and Nasdaq futures were up 0.01 percent.

Here are three stories to keep an eye on.

1. U.S. employment cost index

Compensation costs in the United States increased 0.4 percent in the third quarter of 2013, according to the Bureau of Labor Statistics. This is consistent with economist expectations and follows a 0.6 percent increase in the second quarter. Total compensation costs for both the private and public sector increased 1.9 percent in the third quarter, flat compared to the previous four quarters.

Civilian wages and salaries, which account for about 70 percent of total compensation costs, increased 1.6 percent on the year in the third quarter. Benefits increased 2.2 percent. In private industry, wages and salaries increased 1.8 percent, while benefits costs increased 2 percent. Private-industry health benefit costs increased 2.7 percent.

The employment cost index has increased 19.5 points since December 2005, to 119.5.

 2. German economic sentiment

“Economic expectations for Germany have been hovering at a high level for months,” said ZEW President Clemens Fuest in the November reading of the ZEW Indicator of Economic Sentiment. “The slightly improved economic outlook for the Eurozone might have contributed to this development.”

The expectations index increased from 52.8 to 54.6, edging out economist expectations for a more modest increase to 54. The current conditions index was not so optimistic, falling from 29.7 to 28.7 and missing expectations for an increase to 31. The index of current economic conditions in the eurozone as a whole fell by 0.7 points to -61.6. The index for the economic outlook of the eurozone increased 1.1 points to 60.2.

All told, the indicators show the same thing they have shown over the past few months, as Fuest mentioned. The current situation is bad, but expectations remain positive. As Europe’s largest economy, Germany often sets the tone for business and economic sentiment across the euro region.

The ZEW index measuring the current economic situation in the United States increased 9.6 points to 8.4, while the U.S. expectations index increased 2.7 points to 49.2.

3. Australian economy

“Data released over the past month suggested that growth in Australia’s major trading partners remained around the average of the past decade,” said the minutes from the November 5 meeting of the Reserve Bank of Australia. “The pace of growth in China had increased a little through the year and was consistent with the Chinese Government’s target of 7½ per cent. Consumption and investment spending continued to grow strongly, with the latter contributing to strong demand for resources imports.”

The RBA decided to leave the benchmark cash rate unchanged at 2.5 percent when it met earlier this month, noting that there “was mounting evidence that monetary policy was supporting activity in interest-sensitive sectors and asset values, and given the lags with which monetary policy operates, the stimulatory effects would likely continue coming through for some time.” At the same time, labor market conditions appear underwhelming although stable. At 2.25 percent on the year, inflation was slightly higher that expected in the September quarter.

“Members noted that the US economy appeared to have been growing at a moderate pace,” said the RBA. “The increase in payrolls had been a bit lower over recent months than earlier in the year. In addition, while house prices had risen further, housing starts and mortgage applications for purchases had declined since earlier in the year. The government shutdown was expected to reduce growth only slightly in the December quarter.”

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