Polcari: Will Q2 Be A Blowout For The Economy?

The S&P tried it again…..stocks rose on Monday after a range of ‘nothing negatives’……. ISM reported that factory orders rose for the first time in 8 months, a couple of better than expected earnings reports and an essentially higher global mkts all adding to the mood.

Now this is complete contrast to what last week looked like……for those couple of days – traders and institutions clicked the sell button as the anxiety level went on a bender causing those players to raise cash ahead of the new month…..but the selling was muted and met with buyers each time we tested support……The mkt has been bouncing between support (50 dma trend line – currently at 2068) and resistance (currently at 2120) for the past 7 weeks……….unable to break lower or push higher….in what is a very clear sideways trading pattern as investors/traders reconciled weakening economic data.

But – May is a new month and the mkt is now trying to focus on – what is now being billed as ‘the blowout second quarter’ – Eco data this week will be the focus as analysts try to point to ‘better than expected’ results that clearly paint the 1Q as an outlier……Yesterday’s ISM report was the first data point – reflecting a surprise reading of 58.1 vs. last month’s read of 50 – it made no difference that the almost all of the entire gain came from airplane orders up 49%……a product that is not seen in every driveway across the nation….February manf orders were also revised lower – making now 5 consecutive months of disappointing reads – suggesting recession…..which means that the FED isn’t going anywhere causing the mkt to celebrate……

Today we get ISM Non Manf PMI (this is a read on the service sector of our economy) – remember our economy is 80% service sector jobs….so this is an important read…the number to beat? 56.2.

Wednesday brings us The ADP employment report of +200k job created, Thursday we get the usual suspects of Init Jobless Claims and Cont Claims and Friday brings us the official Non Farm Payroll report and this is the talk of the town……Recall that last month this report fell off the radar screen coming in at +126k….well below the expectation…..so this month the expectation is for a snap back – consensus calls for +230k jobs created and an upward revision to last month’s dismal report….if this happens – then we will clearly hear about how we should just toss the 1Q data in the circular file……No longer important!

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