Data Round-up….Some Good News
I’m traveling so updates are light, but here’s a brief round-up of some of today’s news:
- The labor report was much better than expected. Private payrolls jumped 172K vs expectations of 110K. The unemployment rate jumped to 8.3%. The bottom line is: this is not recessionary data by any means. It’s not a great expansion, but it’s also not contraction. Muddle through continues.
- The ISM Services report showed a 52.6 reading. That was better than the 52 analysts expected. Again, this is expansionary data. Econoday has a nice summary:
“The great bulk of the nation’s economy is moving steadily forward, based on ISM’s non-manufacturing sample where the composite index rose 5 tenths to 52.6. This level isn’t that strong but details in the report are encouraging led by new orders which rose 1 full point to 54.3. This is right in line with the 4-month average of 54.2. Business activity, which is an indication on output of goods and services in the sample, really took off, up 5.5 points from a depressed June level to 57.2 in July for the best rate of monthly growth since March.
A negative in the report is a 3 point fall in the employment index to 49.3, a sub-50 level, which is the first of the year and which indicates that the ISM’s sample, on net, cut back on their workforce in July. But the rise in new orders hints at a snap back for this reading in the months ahead.”
Overall, the US economy continues to look like an okay house in a really bad neighborhood. The labor report in particular was nice to see, but I have to admit that it’s sad that the market could become so exuberant over such an OKAY reading. But that’s the economy for you. Everyone has been expecting a disaster scenario or a recession scenario so “not horrible” is the current version of “better than expected”.
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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Today’s rally added to the 2-day rally late last week is bringing the SPX very close to the April 2nd high of 1422. To me, the key to the next 3 to 5 months will be whether or not this rally will succeed in going to a new high, over 1422. You have to admit that this bull rally is climbing a wall of worry.
“Seasonal Adjustments” were better than expected
The Story of the Day
http://www.bloomberg.com/news/2012-08-03/merkel-s-coalition-members-signal-acceptance-of-ecb-bond-buying.html
Although my viewpoint is bearish, I have to admit, there are some hot embers under the mound of ashes that refuse to die. I’ve been trading long for several days now. The market seems to want to go higher. Maybe because the extreme bearishness has run the weak hands out of the market. Maybe people just view stocks as the least worst option. Regardless, I won’t allow my macro view to cause me to miss a rally. As the saying goes, “I’ve been wrong before”:)
Any time an explanation for a rally (or a decline) is detached from fundamentals (profits), I know that it won’t last…
Market moves are frequently detached from reality. The trend works until it doesn’t. Then trade the new trend.
let me guess, workers will continue to disappear from bls statastics and jobs gains will be continue right on through the election.
We need term limits for congress to eliminate career politicians who are bought and paid for and have squandered “for the people and of the people” representation for the greed od self enrichment!
” but I have to admit that it’s sad that the market could become so exuberant over such an OKAY reading…”
But that’s the whole point. The market has been expecting disaster scenarios on 3 continents (Euro break-up, China hard landing, US earnings slowdown) that moderately bad news will send it higher, and neutral/good news will send it much higher.
lol, i guess the market should be selling at twice its growth rate then.