The market opened down this morning – no surprise there. Cypress is the pronounced reason, but the real reason is the ongoing battle between the bulls and the bears. It is all good, as the market needs this time of trading back and forth to build its base at this higher level. Consolidation is happening because the market understands that the US and global economy (minus the EU) are getting stronger.
- The American Institute of Architects (AIA) reported that the February Architecture Billings Index (ABI) was reported at 54.9, up from last month’s reading of 54.2. The reading indicates strong demand for design services and bodes well for commercial real estate.
- The National Association of Realtors reported that Existing Home Sales for the month of February rose by +0.8%. On a year-over-year comparison basis, sales were up +10.2%, which is the 20th straight monthly increase.
- The Philadelphia Fed Business Outlook Index was reported at +2.0 in March, which was well above the consensus for a reading of -1.3 and represents a reversal of the last two month’s weakness (Feb: -12.5, Jan: -5.8) .
- HSBC’s Flash Purchasing Managers Index or PMI for China, which is a preliminary reading and the month’s earliest indicator of China’s manufacturing activity, indicated that the sector expanded again in the month in March.
- US Manufacturing growth quickened in March and the pace of hiring increased, suggesting the sector will contribute to stronger overall growth in the first quarter, an industry survey showed on Thursday.
- The US manufacturing output index eased to 56.8 in March from 57.3 the prior month, but the pace of incoming orders from domestic customers increased, while overseas demand grew slightly after contracting in February.
- The four-week moving average for new claims, a measure of labor market trends, fell 7,500 to 339,750, the lowest level since February 2008. That could bode well for job growth in March.
- The Conference Board reported that their Leading Economic Index rose +0.5% in February which was above the consensus for a reading of +0.4% and in line with last month’s revised (higher) reading of +0.5%. Ataman Ozyildrim, an economist at the Conference Board said, “This month’s increase in the U.S. LEI – the third consecutive – was widespread and driven by a majority of its components.
- The Senate on Wednesday approved legislation to avert a government shutdown next week, freeing Democrats and Republicans to spend the next few months arguing over deeply divided strategies to shrink longer-term budget deficits.
But what about those weak numbers Caterpillar just reported and what about the weak economic data out of Europe, you might ask?
- Caterpillar Inc. said Wednesday that global sales of its heavy equipment fell 13 percent for the three-month rolling period that ended in February, hurt by a steep drop in Asia Pacific demand.
- Markit’s Flash Euro zone Composite Purchasing Managers’ Index (PMI), which makes up around 85 percent of the final reading and is seen as a reliable economic growth indicator for the bloc, fell to 46.5 in March from February’s 47.9.
There is no getting around the numbers, but one can look at both of these bad reports as a follow through on the weak 4th quarter of the overall global economy. I still believe the EU will begin to recover this year and I suspect Caterpillar’s numbers will rebound as China continues to stimulate its economy.
In any case, the US seems to be carrying the global economic ball quite well and China is still gearing up while keeping its inflation down. Now, if Japan just stays on the track it is now on, the market might soon enough give up its ambivalence and the up and down battle will end, more or less.
Trade in the day; Invest in your life …
