And so it goes on, another day and more record highs in the US stock market yesterday, even if the S&P managed to end the day lower. This rally appears to be being driven by the sight of companies beating lowered earnings targets, and markets staying exuberant because they've navigated a lower bar. Disappointing economic data of the like we saw from the Richmond Fed yesterday doesn't appear to matter that much. Yesterday's speculation about further Chinese stimulus is likely to be reinforced this morning after the latest HSBC manufacturing PMI came in at 47.7, at 11 month lows a significant decline on the previous 48.2, given we were expecting an improvement to 48.6. As such we can expect to see Europe's markets to open slightly higher this morning as we look towards French and German PMI data. Improving business confidence in France and a bullish forecast on Q2 GDP from the Bank of France yesterday had the French finance minister Pierre Moscovici come out swinging in a radio interview, saying the French recession was over after two years of stagnation. Whether you believe him or not the PMI figures seen so far this year would seem to suggest that this is unlikely in the extreme. Today's latest manufacturing and services PMI data for July are expected to show slight improvements on the previous readings but they are still expected to come in well below 50 at 48.9 and 47.7 respectively. Given that both readings have averaged in the mid 40's for most of this year this confidence seems somewhat misplaced, but then this is the same government that saw President Hollande state that the European crisis was over a few weeks ago. The French economy has been in the doldrums for some time now and given the PMI readings seen so far this year you would have to think that there had been some significant data manipulation to get any type of growth with the readings seen since January. Even the latest German manufacturing and services PMI's are expected to come in fairly weak despite recent improvements in ZEW and the IFO which is due tomorrow. Small improvements to 49.3 and 50.7 respectively point to an economy stagnating, though even here we've seen the Bundesbank also come out fairly bullishly about a Q2 recovery. The broader European measures are also expected to improve, but only slightly to 49.1 and 48.9 respectively. Tuesday saw a mixed response to earnings reports. Peabody Energy gained 6.3% on a positive surprise, while Texas Instruments climbed 4.1%. On the other hand, Travelers sank 3.4% despite beating the street while Netflix fell 3.5% as the street responded more to soft subscribers than an earnings beat. This action suggests that overall, traders aren't rushing to take on new positions unless it's a major surprise, and in many cases continue to look for excuses to take profits. Apple's numbers were a mixed bag with iPhone sales beating expectations with iPad sales slipping back along with MacBook sales. Wednesday is another very busy day for news around the world. Facebook is scheduled to report earnings after US markets close. The street is expecting adjusted EPS of $0.13 on revenues of $1.61B. As has been the case since the company went public, the success of its mobile business is likely to come under the most scrutiny, particularly with the launch of the Facebook home set of mobile apps during the quarter. The shares still appear richly valued at 43x earnings and could be vulnerable to a big miss, but they are also trading in the lower half of the $22.00 to $32.00 channel that has prevailed over the last year, so there is room for a rally if the company can get out of the doghouse and deliver on its potential. Big pharma GlaxoSmithKline is expected to report adjusted EPS of $0.26, pretty much flat with last quarter which beat the street slightly. The shares have been rolling over in recent sessions and broke through 50-day average yesterday suggesting that the street may already be pricing in a miss. The bribery scandal in China is also likely to invite questions from concerned shareholders. It is also a big day for reports from automakers around the world. Expectations include: Nissan Motor ¥111 up 36% over last year Daimler AG adjusted €4.75 down 11% from last year Volvo adjusted SEK 1.07, down 55% from last year Ford Motor adjusted $0.37, up 22% over year, stock trading near 52-week high, may have just completed a double top, could be very vulnerable on a shortfall. More Dow component companies also come into focus Wednesday. Boeing is expected to post GAAP earnings of $1.30, up slightly from last year. Results could be impacted though depending on how much of the cost of dealing with the 787 battery problems is booked in the quarter. Comments on order flow and the recent investigation into an aircraft fire at Heathrow could also impact trading. Shares have been steadily advancing since March and are currently trading near their 52-week high, suggesting high expectations. Construction and mining equipment producer Caterpillar is expected to report EPS of around $1.07, down about 33% from last year. Guidance and comments whether order flow from the struggling mining industry may have a big impact on sentiment. Shares are trading in the lower half of the $80-$100 range that has prevailed over the last year, but could still be weighed down by a miss. Other senior US companies reporting tomorrow include Visa, Eli Lilly, Citrix and Qualcomm. Today is also the first big day for earnings reports out of Canada with Rogers, CP, Agnico-Eagle, Loblaws, and EnCana all on the docket. CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. 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