Into the trading week, (March 19- )
Sunday, March 18, 2012 at 11:24AM If the repetitive question here (economic recovery vs. QE) throughout March was getting tiresome, you missed what transpired and led to the largest weekly '12 gain (SP> 2.3%) and a 14% move in TSY’s (caused by ‘growth’ aspirations and not inflation), as the question was being answered. The SP move is even more impressive considering there has been only been one negative week so far in '12.
Simply, we saw seismic activity between asset classes as investors began showing belief in an economy sustaining recovery/growth path without a need for further QE additives. It's also 'falling fears'/ reduced risk of economic downside that is just as important. It’s hard to believe an investor can live with sub 2% GDP with QE expectations diminished, but for now that’s the signal as long as NFP# and other tier 1 data keep showing momentum. You won’t need QE’s, if NFP#’s roll into 300K is the layman way to explain what has likely taken hold in the market mindset. In this view, it could be a tricky game as volatility may loom ahead if hiccups in data over April begin to emerge. Still, rather trade a market dependant on economic data than any (ie), European debt crisis to deal with over the coming months. Also, consider this is likely not a full blown asset relocation, just an initial position not be left behind you could say. There is no evidence (volumes) all those now gun shy investors coming out in droves to put money back into equities.
A few earnings of note this week in ORCL TIF FDX ACN will cover a broad look at how things were shaping up in February, notably for next season earnings ahead in April, (which are March Q end.) *Recall the first 2 names disappointed last Q. Some reports from last week added to trading list include MIDD BTH JVA (back and crazy as ever, only if you can watch all day) and GWRE, which has the best potential to hang around through '12.
A whole lot of FED member chatter will garner attention due to QE. On the US economic front it will be daily ‘Housing’ data. Globally, it’s ‘flash” PMI’s later in the week. All in, as noted last week… “…we will start to think about month end/ Q end soon enough to keep equities in further demand”
