DJIM #19 2011
Monday, May 9, 2011 at 06:52AM March Global Eco’ data surprised with little impact seen from Japan/crude spike, but here we speculated it would lag and show up in April’s data. So far, excluding even Japan impact, the numbers are sharply down and the premise for a correction back when written first here is unfolding. We’ve already seen a ‘historic’ commodity correction last week as a warning. Even, if the drags on the economy are only “transitory’ per Bernanke, it doesn’t mean the market can’t correct before 2H economic strength resumes. If you want to argue the NFP# 200K++ surprise offsets the recent downtick in eco data, go ahead, but action on Friday’s tape which included a big gap and even bigger fade job of 20pts from peak to trough tells you it’s not going to be solely about jobs numbers going forward, …”a surprise closer to 200k will likely generate a bounce. Still, we’d expect it to be short-lived … A few reasons possible to bounce, but it wouldn’t signal a trend change”. Last weekend, we guided it would be about USD for the week and it certainly was for the markets as we saw a big unwind in the USD short trade. Interestingly, the thing to watch this week to give clues where this economic tug of war is going, is the ‘retail sales’ /real consumption figures.
In all, including technical weakness, a cautious premise from last week is maintained.