torsdag 26 februari 2009

More good news

Today, a slew of yet more dismal economic data were unveiled. Continued unemployment claims in the U.S. topped 5 million. Orders for durable goods plunged more than expected.

And the reaction in the futures market for equity indices? Decidedly positive. Although some market observers might imply that the upbeat tone largely stems from talk that the United Kingdom's goverment intends to insure bank assets, protecting the financial institutions from disruptive losses, I believe something else, and of greater importance, is taking place-- the positioning of ´smart money´ in anticipation of an economic recovery and stock market bottom.

It must be understood that employment statistics, and in particular claims for initial and coninued unemployment, are coincident indicators. These indicators tend to be at the weakest data point just before the recession ends. Hopefully, this downturn is no different than other, previous business cycles, (except for the depth and speed of the contraction) and this summer it will be clear a bottom has been struck in the stock market and broader economy.

Thus, keep hoping for more bad (good) news to be published.

More later today on New Home Sales.

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