Economic Data This Week Kind of Stunk…S&P500 Practically Unchanged, What Am I Missing??

by Dan May 27, 2011 8:26 am • Commentary

Not  a great week for the economy, in my opinion, as most of the data reinforces my belief that we will most definitely see a slowdown in economic activity in the 2nd half of this year, lead by inflation/higher rates, slowing demand, a jobs picture that really hasn’t gotten a ton better and a housing market that has not hit bottom……. 

Lets take a quick tally of the economic data that we had this week……Tues, new home sales that were better than expected, Wed, durable goods orders that were worse than expected,  Thurs GDP that was worse than expected and weekly jobless claims that were worse than expected…..waiting on personal spending at 8;30am and then U. of Michigan Consumer confidence at 10:00am…not expecting any positive surprises there……

On the earnings front it was a bit of a mixed bags, TECD a wholesale tech distributor started off with a disappointment and the stock got punished on Monday, AMAT on Tuesday that offered disappointing guidance, COST also on Wed putting up a decent qtr but stock came in a little, NTAP met already lowered quarterly guidance and guided up and stock ripped to TIF knocking the cover off the ball an stock making new all time highs……In general it was mixed and I don’t think there was a clear take away just from those announcements……

MY TAKE on some of the price action, post earnings, is one of caution. Let’s take a look at retail for instance, in the last week we have seen specialty retailers such as ARO, GPS, AEO, GES and TIF all have 10% plus moves in response to earnings…..I don’t think this is very constructive action when you consider investors sell the crap out of losers like GPS and then buy up stocks like TIF, pushing it to all time highs, up from 20 to 76 in 2 years…..where the heck do investors think it is going to go? It is a high end retailer that basically sells expensive blue boxes.

All of this when the bank stocks can’t get out of their own way and some tech stocks such as AAPL and GOOG feel very heavy…..Additionally CAT, the poster child for “global growth” also feels like it wants to test key support at 100…..I remain bearish and maybe too much so……stocks like CAT are tough ones cause it is either going to 90 or 115 soon and there is money to be made, just need to figure out how!