It's a busy day for U.S. data today and so far the readings
are "OK," but after several large "bellwether" companies warned
of weak sales this week, should be take these economic numbers
be taken with a grain of salt?
We have all been following the relatively positive trends in
jobs. ADP and BLS both had strong showings in February and
trends have been stable. BLS showed the U.S. has added an
average of more than 200,000 jobs a month in the past four
ADP trends have also shown consistent growth. If you
include revisions, this is the 9
month the ADP report has beat consensus estimates, averaging
180,000 jobs per month.
The low weekly jobless claim filings have been supporting
those reports and this week we continued to stay the
Initial jobless claims rose by 2,000 to a seasonally adjusted
336,000 in the week ended March 16. Estimates were for
claims to rise to 340,000 from a revised 334,000 in the prior
The four week average of new claims declined by 7,500 to
339,750; the lowest level since February 2008.
In fact, claims have been below 350,000 for five of the past
six weeks. The last time that streak occurred was in late
2007, just before the Great Recession began.
On the housing front, sales and prices have been stable, but
not earth shattering. S&P Case Shiller recently warned
that the longer term outlook is still foggy.
This morning, the Federal Housing Finance Agency reported home
prices climbed a seasonally adjusted 0.6% in January, and
increased 6.5% from the same period in the prior year. The
data is compiled using only mortgages backed by Fannie Mae and
Lastly we saw Flash PMI come in just short of analyst
expectations for 55.1, with a reading of 54.9. Flash PMI
readings have been declining over the last three months, but
still show moderate expansion.
Does it matter?
I am on board with the "stall speed" recovery, and the Fed
driven market rally. But when companies like FedEx,
Caterpillar, Cintas and even Oracle offer dismal sales and slash
forecasts; one has to wonder about the real state of things.
Doesn't it all come back to earnings at some point?
Surveys and samples can be deceiving and often have large
margins of error, but when companies like FedEx or Caterpillar
report real, major declines in sales and slash guidance, I pay
Do you think they are anomalies?
Personally, I don't feel as though earnings momentum has been
very strong (perhaps non-existent is more apropos) nor do I feel
comfortable that the aforementioned companies are issuing poor
guidance from already lowered expectations.
I think the mediocre data will not be enough to support the
markets during the next earnings season and the warnings we saw a
sprinkle of will become more prevalent and turn this euphoric
**There will be exceptions of course
What are your thoughts?
Do you think that overall data is just fine?
Were those warnings from FedEx, Cat, Cintas and others just
anomalies in an otherwise healthy market?
Do you think earnings will indeed be strong in Q1?
CATERPILLAR INC (CAT): Free Stock Analysis
CINTAS CORP (CTAS): Free Stock Analysis
FEDEX CORP (FDX): Free Stock Analysis Report
ORACLE CORP (ORCL): Free Stock Analysis
SPDR-SP 500 TR (SPY): ETF Research Reports
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