Previewing Tomorrow's Economic Data: All Eyes On Canada

I'm sad to say it, but the economic data docket is rather bleak tomorrow, so for once stocks will trade on fundamentals and rumors. However, the Canadian data calendar is much busier, and for those looking for a more current read on the US economy, look no further; Canada is considered a levered play on the US, so traders will be watching for economic signals after Bernanke today and the weak Non-Farm Payrolls report last week.

The data kicks off at 8:15 tomorrow morning, as the Canadian housing starts number is released, but the real data point to watch is the 8:30 release of the employment change. The last two months have seen extremely strong employment trends in Canada, with an increase of 82,300 in March and 58,200 in April on expectations of 10,000 and 7,000 respectively. Also released is the unemployment rate. This month, the market is expecting a gain of 10,000 jobs and a drop in the unemployment rate from 7.3% to 7%, and strength will surely boost the likes of Potash POT, Rogers Communications RCI, and the Canadian Dollar FXC.

On the US side of the border, we have the trade balance data for April and wholesale inventories. The market is expecting a trade balance of -$49.5 billion following March's -$51.8 billion. Do note that these numbers are volatile and large orders of equipment can throw them off. The dollar UUP will be on watch here, as will industrials XLI. For inventories, the market is expecting a gain of .4% for April as compared to March's gain of .3%. Higher inventories now signals that companies will have to slow down production in the future to sell out the inventories.

Speaking of data, the US Consumer Credit report for April was just released. Credit grew $6.515 billion compared to estimates of $11 billion. Also, March's reading was revised lower to +$12.4 billion from +$21.3 billion. This marks eight consecutive gains in consumer credit, which is good for the economy, however this number rarely moves markets.