Economic reports this week, with a focus on the labor market,
have the potential to push stocks to new highs. A positive surprise
for the February non-farm payroll report coming out this Friday,
which will be the third strong monthly jobs report in a row, will
most likely serve as the catalyst to stocks to new highs. We will
get a preview of the Friday government jobs report through the ADP
report on Wednesday.
On the docket today is the February non-manufacturing ISM survey
coming out a little later, with the market looking for a modest
pullback in the composite reading, showing a still-expanding
economy. Given the negative surprise in last week's manufacturing
ISM report, it will be interesting to see how the much larger
service sector performs today.
Also in the news today is the so-called lower economic growth
target from China. The Chinese premier announced a 7.5% economic
growth target for the economy, down from the previous target of 8%.
Please keep in mind that the Chinese economy grew at a 9.2% pace in
2011 and the growth rate was even higher in the preceding years.
The prime minister's address also highlighted inflation target and
the government's commitment to orient the economy towards domestic
consumption. The inflation target of 4% for 2012 is down from last
year's 5.4% actual and inline with the previous target, but appears
to be a tad higher than what the market was looking for this year.
Overall, there is little new in today's Chinese news as most of
these ideas have long been discussed by official sources in the
In corporate news,
) reached a settlement with the plaintiffs in the very complex Gulf
of Mexico oil spill case over the weekend. The company plans to pay
out the estimated $7.8 billion cost of the settlement out of the
$20 billion funds it set aside cover the cost of claims related to
the spill. This is a net positive for the oil giant as it settles
the thousands of claims from residents and businesses along the
Gulf Coast, but is unlikely to be the end of all of its spill
related liabilities as it still needs to go through a protracted
legal battle with the Federal government.
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