Wednesday, February 5, 2014
Economy/Stock Market: Ignore The Weather
The stock market shows a similar pattern. The S&P 500 is volatile reflecting a risk-on risk-off behavior. Coincidence?
Maybe not. Bad weather also takes its toll in some economic numbers. It seems that the disappointing recent manufacturing & job market reports (ISM manufacturing & ADP report) are a tribute to the winterly conditions. Low temperatures and traffic problems are hampering production in some industries.
We don`t need a crystal ball to know that the weather soon will get better. I believe the stock market will do the same. In the moment the sentiment is spoiled by disappointing economic numbers from the U.S., problems in a row of emerging markets and the ongoing taper of the monetary stimulus programs. But the global economy is still in a sound growth mode. This morning we learned that Europe´s manufacturing is getting better (ISM manufacturing). We also heard that the U.S. service sector (ISM services), that covers around 2/3 of the economy, is still solidly growing.