The U.S. Leads, Europe Churns, and China Expands - Analyst Blog

The U.S. Leads

The “bad news” came out for the U.S. on Wednesday.  It did not shake share markets. A 2nd estimate for U.S. GDP in the first quarter of the year was -2.9%, the lowest reading in five years.  A -1% preliminary GDP growth estimate already damped expectations.  

The lame GDP reading showed an economic parallel to the temperature on most U.S. thermometers during a brutal ‘polar vortex' winter.  In light of this, comfortable temps ruling all U.S. days now are surely coming with a pop in GDP growth.  

U.S. initial claims for unemployment came out Thursday.  Data came in a 312K, meeting expectations for 310K.  Personal income grew +0.4%, meeting expectations there too.  The core CPI came out Wednesday. Once again, the +1.2% reading met expectations.  Inflation at +1.2% annually meets the Fed's target zone.  No worries there.

For the U.S.-- the Case-Shiller composite housing index on Tuesday showed house prices expanding at a +10.8% annual clip over the last year.  I feel demand for U.S. houses should keep momentum alive for a broad summer boost. Summer is the time when the housing market performs well.

Europe Churns

Outside the U.S., Monday was the big data dump day.  Markit PMIs for Europe showed an expanding Germany and a weakening France, together still creating enough oomph to deliver a 52.8 reading for Europe overall.  Current conditions in Germany on Tuesday confirmed with a hot 114.8, where the level of 100 is the line where optimism breathes some life.  

China Expands

In Asia, the big news was an HSBC/Market flash PMI of 50.8 for China.  That's the first sign of an expansion in China going back to December.

SUMMARY:  All three advanced global regions expanding is a sound backdrop for global share markets. What should investors care about? China is expanding. That was the ‘new news' for markets this week.  Does it have an impact on U.S. share markets? Yes. It helps keep the “Risk-On” tone in play here too.