Nothing new or catalytic caused the gap up. Global PMI’s just reiterated the consistent ‘growth’, but risk related assets actually lagged some early and then led equities lower by close. Bank stocks in Europe and here don’t lead off PMI’s as was the case today. Maybe every financial was rumored to be running the Facebook IPO!. In all, it wasn’t the standard rotation trade of 2012 as the safety sectors had money flow as well. Maybe it was just fresh money being deployed broadly and indiscriminately at the start of the month, just to be in the game.
As far as PMI’s, U.S inline numbers were a win –win situation. If we had ‘better than expected’ headlines, it may have invoked some QE debating. A weak number and QE aspirations would rise because it would suggest growth is waning. In those two scenarios today, the market likely would not have gone higher, thus just being inline was enough as it keeps all factors of 2012 going as far as economy (is strong enough) and QE speak (eco’ not robust enough) is concerned. An example is probably China’s #, it’s PMI curbed easing chatter and it’s market fell 1 % off the ‘better than expected’ print despite ‘hard landing’ off the table. This chance was noted last week in “better than expected” PMI’s selling off. The fact it was only China, selling luckily only stayed in Asia. All in, the bullish macro landscape from December still exists today with CB accommodative policies helping ‘risk on’ around the world, especially in fixing Europe through LTRO, which has brought down Italian and Spanish yields greatly and kept Eurozone economies from falling into pieces.
As good as today seemed, (maybe because it’s one of the few nice gains since the first trading day of the year), we are still about 10 handles off the recent top and in a range tug of war.