MIXED DATA CAN’T DERAIL THIS MARKET
Stocks are trading marginally higher again today despite weaker than expected data. This morning’s ADP report is calling for a decline of 23,000 jobs. Investors were expecting gains. While this might be viewed as a negative, it actually sent the dollar lower which was likely due to expectations of continuing accommodative Fed policy. As I’ve said before, a weak payrolls number on Friday might not be bad news. It’s a 200K+ number that might spook the market. Good news is bad news now.
Chicago PMI came in well below expectations, but remains relatively robust. Econoday has the details:
“General business activity in Chicago remains robust, according to area purchasers whose index came in at a very strong 58.8 to signal significant growth relative to February. But the pace of the month-to-month growth did slow slightly vs. robust 60-plus readings in February and January. But the March number remains well above the break-even level of 50 and is led by a sixth straight plus-60 reading in the leading component of new orders which came in at 61.8.”
Factory orders came in better than expected. The recovery in manufacturing has been impressive thus far:
“Factories are no doubt humming right now given strong orders in February that followed even stronger orders in January and December. Factory orders rose 0.6 percent in February reflecting an upward revised 0.9 percent month-to-month rise in durable goods orders and a 0.3 percent rise in non-durable goods. The upward revision in durable orders from an initial 0.5 percent gain is very positive. Orders in this group are led by aircraft but also include other key industrial areas such as machinery and fabrications. The rise for non-durable goods is very likely to accelerate in March’s data given the significant month-to-month rise for fuel costs. In yet another positive, February’s overall rise comes on top of an even stronger January where total orders have been revised 8 tenths higher to plus 2.5 percent.”
All in all, the market appears to be in a holding pattern until Friday’s jobs report which markets won’t react to until Melt-up Monday.
TPC: Have to disagree. Do you think that Bernanke has a reall effect on AD? I don’t. I don’t think the market would be where it is if consumer spending had fallen off a cliff. A bad jobs bill combined with little appetite for more serious fiscal stimulus is the real threat. I think we’re through with the hall of mirrors market. It’s time to put up or shut up.
Sorry…that’s bad jobs report, not jobs bill.
Well, I would agree. If we get a very weak jobs recovery and the government pulls out sooner rather than later then things could double dip quite quickly, but I think the two go hand in hand. That is, Bernanke’s Fed and Treasury won’t stop the accommodative policies until they see a recovery in jobs. So, my concern is this: we start seeing consistently higher jobs data, economy looks to be picking up steam, markets continue higher and the Fed pulls the rug out before the consumer is really on sound footing.