http://www.businessinsider.com/employment-cost-index-triggers-sell-off-2014-7

         Expectations range from +218K to +306K.    We believe a number above +250K will send the bonds reeling again.  Today’s damage was considerable and with a short rest tomorrow a strong number on Friday could lead to another massive selling wave across fixed income.  More on the expectations for Friday’s data here.  From Doug Short: http://www.advisorperspectives.com/dshort/updates/Anticipating-the-Friday-Employment-Report.php

This morning’s Q2 GDP report came in well above expectations.  More here from the Bureau of Economic Analysis:

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 4.0 percent in the second quarter of 2014, according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 2.1 percent (revised).

The Bureau emphasized that the second-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 3 and “Comparisons of Revisions to GDP” on page 10). The “second” estimate for the second quarter, based on more complete data, will be released on August 28, 2014.

The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, nonresidential fixed investment, state and local government spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

       The Dow Jones Transportation Index is once again signally trouble ahead.   Approximately six weeks ago the Transports made a similar breakdown type move but was able to quickly recover.   We’ll know soon if a repeat is coming but for now today’s trendline violation should be viewed as a warning.   Shares of UPS were responsible for the bulk of the indexes damage as the stock fell over 3.5% on extremely heavy trade.  A disappointing earnings report sparked a massive downside gap that dropped the stock down it its 200 day moving average.  UPS closed below this key long term moving average for the first time since December of 2012.  Without question, an incredible amount of damage in one session.  We expect more of the same from the stock in the near term.  This will certainly have a negative affect on the Transport Average.    We believe the Transports will be in big trouble if the current July lows are taken out.   A close below $8100.00 could open the floodgates. 

Is the growth in margin debt signaling a market top?  It certainly did in 2007.  More here from Doug Short: http://www.advisorperspectives.com/dshort/updates/NYSE-Margin-Debt-and-the-SPX.php

Quote of The Day: 

Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.

This is known as “bad luck.”

A classic from Robert Heinlein.