WHAT’S ON TAP
26 May 2009 by TPC
2 Comments
Earnings have essentially ended, but the week ahead is heavy in economic news. Housing data will be front and center:
- Tuesday: S&P/CaseShiller housing price index, May consumer confidence index
- Wednesday: April existing home sales.
- Thursday: April new home sales, durable goods orders, initial jobless claims
- Friday: Q1 GDP, Chicago PMI, revised May University of Michigan consumer confidence
Costco, Tiffany, J Crew, Ralph Lauren, Dollar Tree and Dell report earnings so the U.S. consumer will be in the spotlight again. The GM deal should be the news of the week. The likelihood of a bankruptcy is increasing as the possibility of a deal with bondholders appears unlikely. I still believe stocks represent a poor risk/reward trade on the long side.
From MarketWatch:
“A reading on U.S. consumer confidence jumped to 54.9 in May from an upwardly revised 40.8 in April as expectations for jobs improved, the Conference Board reported Tuesday.”
I don't know what to make of this, even those calling for the end of the recession admit that unemployment will continue to rise for many months and businesses will be very slow to rehire. Is this a misplaced confidence? Of course the market loves it (and ignores that home values continue to plunge).
The consumer confidence number is all about the stock market rally and the surrounding mini-capitulation to the idea of a recovery that’s taken place recently. Not many have wanted to stay so negative in the face of a rising market. Even Roubini and other realistic bears have moderated their public rhetoric a bit. Just enough to get people to think that the bulls must be right, despite all the real evidence to the contrary.
That combined with the seasonal (spring) tendency to be positive following on the heels of an awful winter (economically) gives rise to this improved cons conf #. It won’t last, sorry to say.
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