Thursday, May 01, 2008

Awaiting the important economic data

The economic data on Wednesday was mostly about as expected. The Federal Reserve FOMC gave the market the modest rate cut that was expected and Q1 GDP actually came in a little better than expected but in the expected ballpark. The ADP payroll employment report was a little better than expected and actually showed a very modest rise in employment for April. But the really juicy data comes on Thursday, with personal income and spending for March, construction spending for March (both residential and non-residential), the ISM Manufacturing report for April, and the latest weekly view on unemployment insurance claims. And then on Friday we get the employment numbers and unemployment rate for April.

The S&P Case/Shiller housing price report was very gloomy on Tuesday, but that report covered February, two months ago. We have already seen the gloom of February play out in a wide range of economic reports before this week. Also, Case/Shiller only covers the major urban areas, so it does not pick up non-urban housing prices.

There is clearly a fair measure of gloom in all of this, but the overall economic numbers have been actually much better than the outlook being loudly proclaimed by the pundits. It will be quite interesting to see how the numbers shape up on Thursday and Friday.

Meanwhile, oil, gasoline, gold, and other commodities seem to be running out of steam, so we could see inflation come down a bit and other investment sectors perk up as speculators and traders selectively rotate money out of commodities and into other asset classes.

-- Jack Krupansky

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