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With the QE3 uncertainty now firmly behind us, attention shifts this week back to the economy, with a number of manufacturing and housing reports on deck for release this week. This will likely spotlight the disconnect between economic realities and the stock market’s strong gains all summer long, pushing stocks to new multi-year highs. 

One would expect investors to question the sustainability of market gains given the  ongoing synchronized global slowdown. Central bank hopes had hidden this disconnect in recent days, but it’s doubtful that momentum can be sustained in the absence of a turnaround in ground conditions. The sharply weaker New York Fed’s Empire State survey of regional manufacturing conditions in September this morning is just the latest in a long line of recent reports showing the weak state of the nation’s manufacturing sector. Friday’s weak industrial production report followed back-to-back sub-50 readings on the monthly ISM surveys and manufacturing job losses in the August non-farm payroll report.  Unlike manufacturing, housing has been a relative bright spot for the economy lately, with QE3 expected to give it a bit more nudge in the right direction. We will see if the August housing starts, permits and sales data coming out this Wednesday will maintain the positive momentum of recent months. In corporate news, Apple (AAPL - Free Report) reportedly experienced the biggest first weekend of pre-orders for the newly announced iPhone 5, likely answering skeptics who doubted the demand for the new device. According to AT&T (T - Free Report) , iPhone 5 pre-orders over the weekend set a new record for the carrier relative to previous iterations for the smartphone.


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