What’s Happening: Tragedy Strikes France


European stocks are taking a hit following the tragic terror attack in Nice, France.

Travel stocks are notably weak.

However, there isn't much of a flight to safety. European 2 and 10-year yields are up again today, gold is flat, and the yen is down.

UK constructuion fell -2.1% in May, missing by a mile, and folks assume it will get worse because of the Brexit.

China's Q2 GDP rose 6.7%, edging out the 6.6% consensus. Industrial output, retail sales, new yuan loans, and aggregate financing also beat expectations.

Of course, some folks are out saying China basically makes up its numbers (not out of the question), and of course it looks a little funny that GDP squeezed by with a 0.1% beat.

And SPX futures are actually up now, which means we could be heading for the 5th straight all-time high in a row.

In earnings news, US Bancorp (USB) beat expectations, which puts another bank in the win column with JP Morgan (JPM).  Wells Fargo (WFC) is getting hit despite an in-line report.

Swatch missed by a mile, extending the huge losing streak in luxury/retail/apparel.

Remember, Swatch doesn't just sell $75 watches, they sell fancy stuff like Omega, Tissot, Harry Winston, and Blancpain.

Crude oil sentiment is weakening. A number of strategists are out warning of a coming. Oil production is coming back in Canada, and Nigera is also restoring output. Libya may also increase exports. Remember, a big part of the oil boom was based on production cuts, so common sense tells us increasing output could push oil down.

But I'm holding on to my positions in the closed-end energy funds KYN and BGR — they're for the long run.

Now, things do feel a little stretched, but sentiment is very mixed.

The CBOE equity put-call closed at 0.53 yesterday, which is about as low as it's gotten this year:

This implies very bullish sentiment, but other measures (AAII, ISE Sentiment) imply that the picture is more mixed.

Typically, that's a good recipe for a sideways grind, and I think we could see one similar to April and May, which were painfully boring.