Update ... Q1 GDP & May ISM Estimates ...

This short week will certainly be filled with some market moving economic indicators.  With the way the equity markets shot up this morning, it appears that many were expecting either significantly better than expected economic indicator results, or significantly worse, which may start more talk/rumors about QE3.  When there's some type of insurance such as the QE's, although not providing 100% coverage, most tend to take more risk.

Let's start with last week's economic numbers.  As we had guessed, they were pretty much mixed.

MBA Mortgage index went up 3.8% compared to prior week's 9.2%.  While the refi applications increased 5.6%, the home purchase applications were down for the second week in a row, -3.0%.

New home sales print for April was 343K, above the 339K expectation.  There was m/m increase in every region except the South.  All regions reported Y/Y growth in new home sales.  Month's supply, basically inventory, went down to 5.1 from 5.2 in March.

Initial jobless claims were again disappointing, 370K versus estimates of 365K.  Not surprisingly, the previous week's figure was revised higher by 2K to 372K.  It was amusing to see many headlines asserting the "decline" in initial claims.  By the way, in addition to continuing claims data for week of May 7 being about 10K more than expected, the prior week's data (week of April 30) was revised higher by 24K to 3,289K. 

Both durable orders for April were disappointing.  Overall durable orders went up 0.2% from March, lower than the 0.3% estimates.  Excluding transportation, that figure was -0.6%, significantly below the market's 1.0% expectation. 

University of Michigan/Reuters consumer confidence figure surprised to the upside, coming in at 79.3 versus the 77.5 consensus.

This week got off to a mixed start with the Case/Shiller 20-city house price index coming in about 20bps better than expected.  The index declined 2.6% in March.  However, the Conference Board's consumer confidence index was pretty disappointing, 64.9 versus the 69.4 estimate.  In addition, the Dallas Fed May manufacturing survey result of -5.1 (released this morning) was worse than last month's -3.4.  

Other data to be released this week includes pending home sales (tomorrow), MBA mortgage index (tomorrow), Challenger job cuts (Thursday), initial jobless claims (Thursday), ADP Employment Change (Thursday), Q1 GDP (Thursday), Chicago PMI (Thursday), state of employment (Friday), ISM manufacturing (Friday) and PCE prices (Friday). 

We have not yet come up with a projection for non-farm payrolls (basically the state of employment report due out on Friday), but will likely do so at some point tomorrow, and it may be followed up by minor adjustments on Thursday morning after the ADP release. 

Regarding the Q1 GDP, we stated a while back (in a post discussing Alcoa) that Q1 GDP will likely be around 1.9%.  Initially, the median estimate on the Street was around 2.25%.  The first estimate came in at 2.2%.  For Thursday's GDP data release, the Street expects 2.0%. 

The May ISM manufacturing consensus is 54.0, which basically means the Street is expecting a decline from April's 54.8.  We also expect a decline, but a slightly lesser one.  We think ISM manufacturing will come in at around 54.5.  Of course the market's reaction will depend on the job numbers which are also released on Friday.  Again, we will post our initial non-farm payrolls estimate tomorrow morning. 

The S&P 500 is still up, although not nearly as high as it was earlier this morning.  After almost hitting 1335, it has come down a bit to 1325, but is still up around 0.6% for the day.  NASDAQ was up over 1.5% earlier but now it is up only around 0.45%.  FB is down 8%, below $30/sh.  Gold is down another $11 today at $1557.6.