For once, Asia, Europe, oil spills, Israel, sovereign debt, CDSs, rating agencies, and even the domestic economic data weren’t the talk of the town. Talk about getting a bum deal. Aramondo Galarraga of the Detroit Tigers pitched a “perfect game”. Since the beginning of baseball, only 20 pitchers have had the distinction of having pitched a perfect 9 innings. Just 27 batters without giving up a walk, a hit, or an error. There he was with two outs in the 9th and a picture perfect play to first to end the game resulted in a blown call by the umpire. If only this had happened a day earlier, it would likely have been Warren Buffet’s defense for why even the biggest and brightest missed the impending disaster that hit Wall Street and Main Street in September 2008. Human error. A bad call. It happens, and there is no instant replay in life, just as there isn’t an instant replay in baseball. I may compare the beatings the market takes to boxing more often than any other sport, but if I were to write a book on life, I’d be comparing it to baseball more often than anything else. If you have a very stressful and frustrating life, you might compare it to golf, but that’s still another story. Will Baseball Commissioner Bud Selig reverse the call? I doubt it. You can’t go backwards and change history, can you? You can strip Barry Bonds of his homerun title and keep him out of the Hall of Fame, but you can’t go back and reverse every game. If all else fails, I’m sure Congress will assign a special committee to interrogate everyone involved, spending tax dollars trying to understand why they didn’t know how to stop the financial collapse, the BP oil spill, or the bad call made by Jim Joyce.
Baseball was the perfect diversion from a day that was, and should have been, a day of waiting for the important news. Wednesday’s big rally had many factors moving stocks. However, the rally only helped push the S & P Index to its 200-day moving average at 1105. After a midday dip, the S & P rallied right back to 1105 to tuck in just under the breakout point for the night. The Dow’s 200-day is at 10,295. The index crossed the ink to 10,315 in early trading, but finished the day under resistance. Financials and Basic Materials were the two groups plaguing the rally attempt, as the Euro slipped below the 1.22 level. It didn’t break anything, but it was a disappointing close. The positive spin goes to the Tech sector. The strength in a broad range of Tech stocks was likely driven by all of the news coming out to the All Things Digital Conference. There have been several big names making presentations over the past two days and the action in the sector shows that the enthusiasm is real and quite bullish. The NASDAQ gained nearly 1% yesterday, adding to the 2.64% it rallied on Wednesday. The NASDAQ is well above its 200-day moving average (2233), its high from last week (2278), the opening gap down from May 19th (2298), and its 10-week moving average (2392). This is a market nervously awaiting news and very cautious about what it does know, yet the sector that would benefit strongly from an economic recovery, a resilient consumer, a recovery in business spending, and a bull market rally led the way in this most recent rally phase.
The economic news was nothing to write home about. ADP projects private sector job growth of just 55,000. Expectations were for 70,000. ADP tends to aim low, so it was taken with a grain of salt. Besides, they expect the prior month’s revision to jump to 65,000 from 32,000, so it was at least mixed news. The same can be said of the weekly jobless claims data. The 453,000 reading was slightly below the estimate for 455,000, but the prior week was revised up to a disappointing 463,000. Speaking of disappointing revisions, 1st quarter Productivity was revised down from 3.6% to 2.8%. It was expected to be revised to 3.4%. Unit Labor Costs were also revised down to -1.3 from -1.6. The rest of the news was a mixed bag. Factory Orders for April rose just 1.2%. Expectations were for a gain of 1.8%. However, March was revised from up just 1.3% to up 1.7%. Therefore, the April gain was on top of a stronger March, pretty much balancing the two months out. The ISM Non-manufacturing Index was flat at 55.4, just below the 55.6 reading anticipated. This is a May number, so stability isn’t bad. New orders slipped and inventories rose, but the Employment Index crossed over 50 to 50.4 from 49.5. Overall, the economic data were mixed and did not provide a catalyst to either the bulls or the bears.
All eyes are on the Employment Report for May. Expectations are for 533,000 new jobs. Okay, many expect the total number of census workers to fall in the 400,000 to 450,000 range. Add the usual 25,000 to 30,000 additional government workers and you have 425,000 to 480,000 jobs that many will choose to overlook. At the high end of the government created jobs projection, the estimate would mean only 53,000 new private sector jobs (which gives us ADP’s estimate). Analysts will likely rip whatever number we get apart, but don’t lose sight of the fact that the weekend headlines are still likely to read “A Half Million Jobs Created”, even if they are temporary. Consumer sentiment is fragile, and a positive headline is good news. Temporary work may not fix the economy, but it may provide a short-term “stop-gap” for a slide into a double-dip recession. Like all good excuses, there is fact behind it. What’s important is the direction of jobs, which should be toward further growth. If private sector growth exceeds the pre-ADP estimate of 70,000, we’d expect the market to resolve this consolidation to the upside. The S & P only needs to cross 1105 to gain some Technical support heading into the weekend.
For once, Asia, Europe, oil spills, Israel, sovereign debt, CDSs, rating agencies, and even the domestic economic data weren’t the talk of the town. Talk about getting a bum deal. Aramondo Galarraga of the Detroit Tigers pitched a “perfect game”. Since the beginning of baseball, only 20 pitchers have had the distinction of having pitched a perfect 9 innings. Just 27 batters without giving up a walk, a hit, or an error. There he was with two outs in the 9th and a picture perfect play to first to end the game resulted in a blown call by the umpire. If only this had happened a day earlier, it would likely have been Warren Buffet’s defense for why even the biggest and brightest missed the impending disaster that hit Wall Street and Main Street in September 2008. Human error. A bad call. It happens, and there is no instant replay in life, just as there isn’t an instant replay in baseball. I may compare the beatings the market takes to boxing more often than any other sport, but if I were to write a book on life, I’d be comparing it to baseball more often than anything else. If you have a very stressful and frustrating life, you might compare it to golf, but that’s still another story. Will Baseball Commissioner Bud Selig reverse the call? I doubt it. You can’t go backwards and change history, can you? You can strip Barry Bonds of his homerun title and keep him out of the Hall of Fame, but you can’t go back and reverse every game. If all else fails, I’m sure Congress will assign a special committee to interrogate everyone involved, spending tax dollars trying to understand why they didn’t know how to stop the financial collapse, the BP oil spill, or the bad call made by Jim Joyce.
Baseball was the perfect diversion from a day that was, and should have been, a day of waiting for the important news. Wednesday’s big rally had many factors moving stocks. However, the rally only helped push the S & P Index to its 200-day moving average at 1105. After a midday dip, the S & P rallied right back to 1105 to tuck in just under the breakout point for the night. The Dow’s 200-day is at 10,295. The index crossed the ink to 10,315 in early trading, but finished the day under resistance. Financials and Basic Materials were the two groups plaguing the rally attempt, as the Euro slipped below the 1.22 level. It didn’t break anything, but it was a disappointing close. The positive spin goes to the Tech sector. The strength in a broad range of Tech stocks was likely driven by all of the news coming out to the All Things Digital Conference. There have been several big names making presentations over the past two days and the action in the sector shows that the enthusiasm is real and quite bullish. The NASDAQ gained nearly 1% yesterday, adding to the 2.64% it rallied on Wednesday. The NASDAQ is well above its 200-day moving average (2233), its high from last week (2278), the opening gap down from May 19th (2298), and its 10-week moving average (2392). This is a market nervously awaiting news and very cautious about what it does know, yet the sector that would benefit strongly from an economic recovery, a resilient consumer, a recovery in business spending, and a bull market rally led the way in this most recent rally phase.
The economic news was nothing to write home about. ADP projects private sector job growth of just 55,000. Expectations were for 70,000. ADP tends to aim low, so it was taken with a grain of salt. Besides, they expect the prior month’s revision to jump to 65,000 from 32,000, so it was at least mixed news. The same can be said of the weekly jobless claims data. The 453,000 reading was slightly below the estimate for 455,000, but the prior week was revised up to a disappointing 463,000. Speaking of disappointing revisions, 1st quarter Productivity was revised down from 3.6% to 2.8%. It was expected to be revised to 3.4%. Unit Labor Costs were also revised down to -1.3 from -1.6. The rest of the news was a mixed bag. Factory Orders for April rose just 1.2%. Expectations were for a gain of 1.8%. However, March was revised from up just 1.3% to up 1.7%. Therefore, the April gain was on top of a stronger March, pretty much balancing the two months out. The ISM Non-manufacturing Index was flat at 55.4, just below the 55.6 reading anticipated. This is a May number, so stability isn’t bad. New orders slipped and inventories rose, but the Employment Index crossed over 50 to 50.4 from 49.5. Overall, the economic data were mixed and did not provide a catalyst to either the bulls or the bears.
All eyes are on the Employment Report for May. Expectations are for 533,000 new jobs. Okay, many expect the total number of census workers to fall in the 400,000 to 450,000 range. Add the usual 25,000 to 30,000 additional government workers and you have 425,000 to 480,000 jobs that many will choose to overlook. At the high end of the government created jobs projection, the estimate would mean only 53,000 new private sector jobs (which gives us ADP’s estimate). Analysts will likely rip whatever number we get apart, but don’t lose sight of the fact that the weekend headlines are still likely to read “A Half Million Jobs Created”, even if they are temporary. Consumer sentiment is fragile, and a positive headline is good news. Temporary work may not fix the economy, but it may provide a short-term “stop-gap” for a slide into a double-dip recession. Like all good excuses, there is fact behind it. What’s important is the direction of jobs, which should be toward further growth. If private sector growth exceeds the pre-ADP estimate of 70,000, we’d expect the market to resolve this consolidation to the upside. The S & P only needs to cross 1105 to gain some Technical support heading into the weekend.