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MIXED DATA LEAVES MARKET LITTLE CHANGED

Mixed economic news and  tumbling stocks have done little to sway the bullish opinion of equity investors.  Stocks are trading modestly higher as I write despite more bad news on the housing front.   Investors are clearly looking forward to tomorrow’s non-farm payrolls data as a positive.  As JP Morgan previously noted, the bad news won’t necessarily be bad news….Let’s take a look at the actual news today.

Pending home sales showed continued weakness as the sales index  fell 7.6% month over month.  Housing is becoming a real concern as the tax credit expires in April.  I fully expect a last minute surge in housing data, however, barring a third stimulus, the real estate market is on the ropes.

Comparable store sales were much better than expected as 82% of all retailers outperformed analyst estimates.  Overall, sales were up 4% vs expectations for a 2.9% increase.   Results were positive across the board.  Despite record high household debt, the US consumer appears to be making a stand with credit card in hand.

We got more good indications for tomorrow’s job’s data as the Monster Employment Index jumped to 124 from 114.   Monster attributes part of the gains to seasonality, however, the pick-up is still notable.   Jobless claims came in slightly better than expected at 469K vs expectations for 475K.  Continuing claims fell to 4.5MM.

Productivity and unit labor costs continue to reflect the environment of corporate cost cutting we have been in for the prior two years.  We remain in a world where companies expect greater productivity and reduced costs to drive the bottom-line.  Of course, this is an unsustainable business model, but does lay the foundation for corporations to benefit when growth returns.

All in all, equities appear to like the news, though marginally.

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