A week ago the sky was falling as England left the European Union (EU), markets bled out 3.6%, the ¥ fell below 100. It is amazing how much changes in a week…

A week after the sky fell, the S&P 500 grew 3.22%. This bounce back allowed the S&P to recover nearly all the losses caused by ‘Brexit’. There were several items that contributed to the quick recovery.

Initially, and likely the largest catalyst, came from the Bank of England’s Governor, Mark Carney. He stated a willingness to do anything necessary to support the British economy. This was perceived by markets that the governor is likely to cut rates and perhaps re-instate their quantitative easing program in an effort to smooth choppy waves. The news was received positively as the likelihood of a rate hike this summer has increased to 85% for the BOE.

US Data
In addition to the BOE governor remarks, US markets enjoyed a swath of supporting data:

• 1^st Quarter GDP revised up to 1.1%
• S&P/CS Home Prices (20 city) increased 5.4%
• Consumer Confidence increased to 98.0
• ISM Manufacturing PMI came in at 53.2[1]

US Jobs
The June jobs report comes out on July 8^th. The importance of this report cannot be under sold. After a weak showing in the month of May, the June report will tell us if a negative jobs trend is brewing. More importantly it could give us an indication if full employment for this expansion has already been reached.

Conclusion
While this week was a great rebound, that was all it was. The real determinant of market direction in coming weeks will be the start of the 2^nd quarter earnings season. Projections are for a healthy rebound as consumer spending has been strong and earnings have been on a negative slope for a year. A rebound in earnings could mean a great deal to our economy and markets.

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[1] www.investing.com – economic calendar