The macro and the micro are coming together this morning to drive a positive bias in the futures market. To that end, China posted some better-than-expected economic data, and earnings results since yesterday's close have been better than expected in most instances.
If there is one thing missing in the good macro and micro news, it is the strong conviction of bulls following the good news.
At this juncture, the S&P 500 futures are up eight points, which leaves them 0.3% above fair value.
That's not bad by any means, yet it feels like the broader market is being short-changed given that China reported a better-than-expected 6.4% yr/yr increase in Q1 GDP and reported an acceleration in the growth rates for industrial production, retail sales, and fixed asset investment in March.
It feels like the market is being short-changed given that Netflix (NFLX), IBM (IBM), CSX. Corp. (CSX), United Continental (UAL), Morgan Stanley (MS), Abbott Labs (ABT), and PepsiCo (PEP) all topped first quarter EPS expectations.
Granted there were some soft spots in some of the corporate guidance, but on balance, the earnings news was good.
In the same vein, the Trade Balance report for February was good, too. The trade deficit narrowed to $49.4 billion (Briefing.com consensus -$54.0 billion) from -$51.1 billion in January, as exports were $2.3 billion more than January exports and imports were $0.6 billion more than January imports.
The key takeaway from the report is that exports and imports increased in February. That will help temper concerns about the U.S. economy being at risk of slipping into a recession in the near future.
To a certain extent, the market has come to accept that idea already, which is perhaps why the response to the good news on trade has been relatively muted.
The inference from the behavior of the futures market this morning, then, seems to be that a good chunk of this good news has been priced in already. Importantly, though, there isn't selling on the news, which also suggests an abiding appreciation that "things" are still okay and that there haven't been any major headline disturbances to upend the uptrend.
That is clear to see in the Nasdaq 100 futures. They are up 42 points and are trading 0.6% above fair value.
Accordingly, the 20.6% year-to-date gain in the Nasdaq 100 is going to get padded at the open, helped by a 2.9% gain in Netflix following its earnings report and a 6.8% gain in Qualcomm (QCOM), which is everyone's new darling following the news yesterday that Qualcomm and Apple (AAPL) have settled their licensing dispute on terms investors find most favorable for Qualcomm.