Personal income and spending data was a bit mixed this morning. Personal incomes rose just 0.1% month over month versus expectations of 0.4%. Spending came in better than expected at 0.5%, but was largely due to sales of gasoline. The price index was flat month over month.
ISM manufacturing data came in a bit weaker than expected, but showed some underlying signs of strength. Of special note were employment and new orders. Employment improved to 56.1 while new orders eased a bit to 59.5 – positive readings for both. This week’s employment data (due Friday) could very well be overlooked as we continue to see signs of thawing in the job’s market and investors attribute the weakness in February payrolls to horrendous weather. All in all, the ISM manufacturing data showed signs of easing a bit from very robust levels, but continues to show an expanding economy. Manufacturing remains one of the few bright spots in the economy.
In other news, construction spending was down 0.6%, but was slightly better than analyst expectations of -0.8%. Equities are moving higher on the day as investors increase their exposure to risk on the back of strong global equities. Asian stocks were up sharply overnight as tightening fears eased. In addition, a deal between Prudential and AIG is giving investors increasing confidence that the credit crisis is truly over. Today was another mixed day of analyst upgrades as we see 1 upgrade for every 1 downgrade today. M&A news in the biotech area also helped to bolster equity prices. It looks like the “buy Friday’s close and sell Monday’s open” trade is still working.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.