At this point with the repeating pattern of a market that is parabolic once more, it appears that the only thing that will be able to bring back a bit of sanity to this market will require an act of God. I know this because everything has been thrown at this market, and it doesn’t even shutter at bad economic data, or world events.
Let’s look at what transpired last week. After memorial day we did have some good news in regards to durable goods orders being much higher than the expectations. Home prices did grow, albeit at a slower pace than last month. Consumer confidence was steady, and the jobless claims were lower. All good signs for the bulls.
On the other hand we have the Q1 revision of the GDP numbers which came in at a -1.0%, yes…after the initial estimate of 2.6% growth that was lowered to an estimate of 1.2% growth due to the weather. The initial number came in at .1% growth. That number is now revised to the aforementioned -1.0%. This is the first time in three years that the GDP number has shown a negative growth for the economy. Along with that, we have consumer spending (the driving engine for the economy) coming in at a -0.1%.
After a 60+ month bull run, with waning economic growth by the largest measurements, we have a market that shakes it off as it was a piece of dust on its shoulder. No worries…all is well. This is why I say that it would require an act of God to bring this market down. Because all the acts of men and nature haven’t diminished the power of this raging bull market.
Coming up this week we have the start of a new month. With that, we will have new monies for the fund managers to invest and continue to drive the markets higher.
Economically speaking we have the Markit PMI, ISM and construction spending numbers to start off June. All the numbers look to exceed previous numbers with their current estimates. More fuel for the bulls if this holds true.
Tuesday we have factory orders and motor vehicle sales. Both estimates are very close to their previous month’s numbers.
Wednesday we have the ADP employment numbers. This will be one of the big reports for the week, and one the market will be keyed into. Another item of note on Wednesday will be the Beige book numbers that come out at 2;00EST.
Thursday’s only number are the jobless claim numbers. The forecast is for 311K, which is higher than last week’s 300K, but less than last week’s estimate of 322K.
Friday will be the big end to the week with the non-farm payrolls and unemployment rate. Both estimated results for these reports are anemic with 200K on the payroll numbers, and a jump up to 6.4% on the unemployment rate. How much longer can they keep blaming bad numbers on the weather? At some point the numbers have to stand for themselves as the reality of what is.