March 26, 2013
(This is Mark Vickery substituting for Sheraz Mian this morning and all this week.)
February Durable Goods Orders just reported a 5.7% increase for the month, higher than the 4.6% expected and a big swing from the January adjusted number of -3.8%. Volatility would seem to describe this number. Why?
Airplane sales. We were -24% in non-defense aircraft in January, and the February number came in +95%! Non-defense, ex-aircraft, the durable goods number in February was -2.7%, a percentage point and a half worse than expected. Then again, we're probably better off with new airplanes once in awhile, right?
Business investment does seem to be improving overall, however, offering another feather in the cap of market bulls. Whether that's already baked in the cake is less certain, but we don't expect a major sell-off with this better-than-expected durable goods number.
Later today, we expect plenty of other macro grist for the mill: January's Case-Shiller Home Price Index (the gold standard for home pricing, albeit far less than a leading indicator), February New Home Sales and the Conference Board's March Consumer Confidence. With a quiet day in company earnings reports (Q1 earnings season doesn't pick up til 2 weeks from now), these will be the indicators for whether the markets will keep the gains in the futures markets or give them back, like they did yesterday.
The Cyprus bailout early Monday gave a boost to the markets early, but the Dutch Finance Minister indicating that we may see a Cyprus-style bailout elsewhere in the Eurozone led to a mild sell-off by the end of the trading day. This helped the S&P 500 shy away from all-time highs, though the pullback was not severe, and the S&P might be expected to continue this dance for the rest of the week.
We're also in a shortened trading week, and it's also spring break in many sections of the country. Not that bikini-clad college kids in Daytona Beach have much to do with the investment culture (they're going to need a few years), but the point is, we expect relatively low volume overall this week, barring any major catastrophes.