After the feel-good day yesterday, the equity market is down
more than 1%. Disappointing April
pending home sales released earlier this morning certainly did not help.
April pending home sales declined 5.5% from the prior
month. This was significantly below the
0.6% increase that the market was looking for.
In addition, March's sequential growth rate was revised down by 30bps to
3.8%.
We certainly try to estimate most of the widely followed and
market moving economic indicators. We
must say that playing a guessing game is a bit risky, and for this reason, we
post estimates in which we have enough confidence. Yesterday we posted our estimates for Q1 GDP
(which we had also posted during the second week of April) and manufacturing
ISM, 1.9% and 54.5, respectively.
After looking at the initial claims data, along with results
of some of the Federal Reserve Bank districts' business surveys, and the
current ADP consensus, we're estimating NFP of 152K for May, slightly above the
150K consensus. If the official NFP
count does represent an addition of 152K, we do not think it is significant
enough to turn around the current risk-off attitude. In addition, when analyzing responses to surveys
regarding business conditions six months from now, it appeared that many are
expecting to slow down hiring.
Worries about Greece, Spain, Italy (which has taken a
backseat the last few months but will likely be on the front pages again soon),
the overall downturn in Europe and a slight slowdown in China's growth rate
will likely overtake the possibly better than expected ISM and employment
results.
S&P 500 is at 1313, down 1.4%. FB is trading at $28.29/sh, down nearly another 2%. Gold is up nearly $14. Lastly, we thought to give you a clearer picture
regarding how some sectors have performed YTD, this past month, and since we
posted our less risky proposition in early March. The simple table is below.
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