Morning MoneyBeat: Blame the Weather
MARKET SNAP: At 6:00 a.m. ET, S&P 500 futures up 0.2%. 10-Year Treasury yield higher at 2.76%. Nymex down 39 cents at $102.36. Gold 0.2% lower at $1320. In Europe, FTSE 100 up 0.2%, DAX flat and CAC 40 up 0.2%. In Asia, Nikkei 225 up 2.9% and Hang Seng up 0.8%.
WATCH FOR: January Existing Home Sales (10:00 a.m. Eastern Time): seen -3.5% at 4.7 million; previously +1.0% at 4.87 million. Charter Communications, Dish Network, Donaldson and Ecolab are among companies scheduled to report quarterly results.
THE BREAKFAST BRIEFING
Exactly one minute after a bleak manufacturing report was released Thursday morning, Andrew Brenner of National Alliance Securities blasted an email to his clients. The body of the note was blank. The subject line was succinct: “Philly Fed awful…probably weather related.”
The market, like Mr. Brenner, shrugged off the bad news.
Despite the brutal winter weather and bleak economic figures, the S&P 500 has risen in eight of the past 10 days and is approaching a new record high. The market has been unfazed by the weather, even as the discouraging data pile up.
Disappointing construction, manufacturing and housing data? It’s all the weather’s fault. A pair of lackluster jobs reports? Blame it on the polar vortex. Downbeat retail sales? People don’t shop when it snows.
Wal-Mart Stores Inc., which pointed to winter storms as one of the reasons U.S. sales declined during the fourth quarter, said it temporarily shuttered 200 stores due to bad weather.
“It’s not an excuse, it’s an explanation,” Wal-Mart U.S. President Bill Simon told reportersThursday. Wal-Mart shares dropped 1.8% Thursday, while the broad market rose.
The question now is once the weather heats up, will the economy follow suit? The economy finished 2013 with its best second half of the year in terms of GDP growth since 2003. Will those positive trends resume, or is the recent blip the beginning of a new slowdown?
Many investors remain optimistic.
“The good news is that this is likely only transient noise, and that rising temperatures in March and April should revive everything from auto sales to factory activity, helping the U.S. economy return to its improving trend,” said Scott Minerd, global chief investment officer at Guggenheim Partners.
He’s taking a glass half-full approach to the situation, noting that “pent-up consumer demand should re-accelerate growth in the spring.” He expects GDP growth of 3.5% or more this year, which would be the strongest since 2004.
Investors are likely to keep ignoring much of the upcoming economic data until the weather becomes less of a factor. Meanwhile, the S&P 500′s path back to record highs has a clear forecast ahead.
Morning MoneyBeat Daily Factoid: On this day in 1965, Malcolm X was assassinated at the Audubon Ballroom in New York City. The human rights activist was 39 years old.
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Friday, February 21, 2014
Morning MoneyBeat: Blame the Weather
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