Everything seems to be in order for another positive day for the stock market.
- General Electric (GE) issued a fiscal 2019 earnings warning.
- Boeing's (BA) 737 MAX 8 and 9 planes have been grounded.
- China reported the slowest pace of industrial production growth (+5.2% yr/yr in January) since 2002.
- Germany's Ifo Institute lowered its 2019 growth forecast for the German economy to 0.6% from 1.1%.
- Bloomberg reported a summit between President Trump and President Xi is apt to be pushed back to late April, if it happens at all.
- Facebook (FB), according to the New York Times, is under criminal investigation for some of its data deals.
What's not to like about that lineup? We're being facetious, but in the face of that lineup of news it's remarkable that the S&P futures are up two points and are trading 0.2% above fair value. The Nasdaq 100 futures are up nine points and the Dow Jones Industrial Average futures are up one point, leaving them modestly above fair value, too.
When a market is rallying like this one this week, it's easy to do some smoothing.
For example, one can spin GE's bad earnings news as good news based on the position that it is probably overly-conservative given the microscope GE is under. China's softening industrial production growth, meanwhile, can be spun one of two ways: it should invite policy stimulus or it's in a bottoming phase.
See how it's done?
Anyhow, this market, which we said yesterday was acting as if it didn't have a care in the world, still seems to be clinging to its insouciant manner.
Some economic data this morning has helped, as the weekly initial claims report and the Import and Export Price Index for February have tag-teamed to paint a picture of an economy that is running firm on the labor market front and soft on the inflation front.
Initial claims for the week ending March 9 increased by 6,000 to 229,000 (Briefing.com consensus 225,000) while continuing claims for the week ending March 2 increased by 18,000 to 1.776 million.
The four-week moving average for initial claims fell by 2,500 to 223,750. The four-week moving average for continuing claims decreased by 1,000 to 1,766,250.
The key takeaway from the report is that there were no wide swings to disrupt the view that employers are generally reluctant to cut staff due to tight labor market conditions.
Separately, import prices and export prices were both up 0.6% month-over-month in February. Excluding fuel, import prices were flat. Excluding agriculture, export prices were up 0.7%.
The key takeaway from the report is that the year-over-year readings reveal no inflation pressure. Nonfuel import prices were down 0.6%, versus a 2.0% increase for the 12 months ending February 2018, while non-agricultural export prices were up just 0.3%, versus a 3.4% increase for the 12 months ending February 2018.
The Treasury market hasn't reacted much to the data, probably because it has already sniffed out inflation moderating on the back of weakening global growth.
Either way, the case remains that both Treasuries and stocks are showing continued resilience to selling interest this morning for reasons that are mutually exclusive.