The Conference Board US consumer confidence data for March has shown a useful uplift during March to 52.5 from 46.4. The turn in the employment cycle is clearly helping to improve sentiment. The other marginally positive news today was that the S&P Case-Shiller House Price Index showed a seasonally adjusted gain of 0.4% in January. Not that significant in the grand scheme given the sorry state of the US housing market. However it does at least provide evidence of some stability.

The final estimate for Q4 UK GDP has been further revised up to 0.4% from 0.3% whilst the year on year growth rate was revised to -3.1% from -3.3%. The peak to trough decline in GDP remains unrevised with a -6.2% drop from Q1 2008 TO Q3 2009. This makes the 0.4% Q4 gain look relatively insignificant when comparing it to the over fall in GDP. It will be several years before the UK gets back to where it stood in Q1 2008.

At the time of writing the FTSE100 is off by 30 points and having struggled to make headway during the last couple of sessions a degree of consolidation is inevitable. We find it hard at present to see what catalyst will push the market much higher in the short term. Most of the major sectors look to be trading around fair value.

This week is all about the Non Farm Payrolls in the US with the first big positive reading expected since mid 2007. The consensus is expecting a gain in employment of 200,000 during March (due for publication on Friday) which should bring the unemployment rate down a little from the previous level of 9.7%. Also on the employment front the ADP employment report for private payrolls during March will be published on Wednesday. The consensus is looking for a more modest gain of around 40,000. The government will be recruiting people in large numbers for the decennial census count which will be one major reason for a big difference in the trend with the Non Farm Payroll data.


On Tuesday in the US we get the Conference Board Consumer Confidence data for March which is expected to show an improvement to 50 from the previous level of 46. Most consumer confidence data took a modest hit in Jan/Feb partially due to the bad weather and ongoing poor jobs outlook. On Wednesday in the US data for February factory orders will be published with the consensus expecting an improvement over the month of 0.4% after a January gain of 1.7%. The weekly initial jobless claims published last week provided further evidence of an improving jobs situation in the US with claims falling to 442,000 and another decline in this number is expected this week when the data is published on Thursday. The other major US data scheduled is on Thursday with the Institute for Supply Management Manufacturing data for March. There is a clear revival in the US manufacturing sector with the last number for February at 56.5 and the consensus is expecting a degree of consolidation with a move back to around 56.0.

Elsewhere we have had industrial and consumer confidence data for Europe today which was broadly in line with expectations. Tomorrow in the UK the final estimate for Q4 GDP data will be published. The last estimate was 0.3% and the incumbent government will be hoping for no downward revisions.

On Wednesday German unemployment data for March will be published and we will also get the European CPI figure for March. On Thursday we see the publication of the Purchasing Managers Index for March covering Europe, UK and Germany plus German retail sales for February.

In the absence of any bad news the market has continued to make strong progress. In the UK retail sales data for February has surprised on the upside with a 2% gain during February although the January data was revised down to -3%. Given the heavy January decline the February data should not be considered the start of consumer resurgence and instead was a month of catch up.


The US weekly initial jobless claims were a little better than expected with claims at 442,000 compared to expectations of 450,000. Whilst not a massive improvement it does continue to suggest that the nonfarm payrolls may well post a small positive number next month.

Tomorrow in the US look out for the University of Michigan consumer sentiment data for March. The consensus is looking for a modest improvement on the previous level of 72.5. We also get the final estimate for Q4 2009 GDP which is expected to give the same reading as before at 5.9%.

Not surprisingly the budget today has provided no surprises especially as most of it was leaked last night. There is certainly nothing that is going to influence the market this afternoon. In the US the Durable goods order for February was a little less than expected at 0.5% compared to expectations of around 1.0%. This data is notoriously volatile and subject to what are sometimes big revisions. The January data was revised from +2.6% to +3.9%. Sales of new homes in the USA fell 2.2% to an annualised rate of 308,000 compared to expectations of 315,000. The bad weather undoubtedly had an impact but at the same time the jobs outlook is clearly impacting on activity in the housing market.


The Euro Zone PMI estimate for March showed that manufacturing and the service sector is continuing to rebound. The manufacturing index hit a 39 month high of 56.3 compared to the previous level of 54.2 in March. Anything above 50 indicates expansion. Whilst the services index rose to a 28 month high of 53.7 compared to the previous level of 51.8.

Sainsbury’s delivered its Q4 trading statement today. It was a little ahead of expectations with like for like sales growth excluding fuel up 1.7%. This was a big fall compared to the previous quarter but not unexpected given recent industry data. Overall there is little in the way of a catalyst to push the Sainsbury's share price higher but we also view the downside as limited given the asset backing, yield and background takeover talk that never quite goes away.

The UK CPI for February has fallen a little further than expected to 3.0% in February from the 3.5% registered in January. There does not appear to have been any delayed impact from the January VAT increase and if anything retailers appear to have absorbed some of the increase rather than pass it on. With so much spare capacity in the economy any inflationary pressures are going to be very limited and we can expect the CPI to drift lower over the coming months. From the perspective of monetary policy it does seem highly likely that rates will remain on hold for most if not all of 2010.


You have to go back to June 2008 to find the FTSE100 at levels it currently stands at. It is very difficult to assess if it has the legs to make much more progress and with a general election now only weeks away the uncertainty over the outcome is likely to hold the market back. Furthermore once a new government is formed attention is going to start focusing on spending cuts and increased taxation which is not going to help UK plc. Further gains may be made over the next few weeks but a period of range bound trading seems the best outcome and if anything a pull-back seems more likely.

A quiet day on the economic front and markets started the day heavily in negative territory although they seem to be clawing back a lot of the lost ground at the time of writing.


This week we get February CPI data for the UK with the core rate expected to remain around the 3% level still considerably above the Bank of England's target rate of 2%. Expectations are for the rate to come back below 2% over the coming months and we are unlikely to see any movement in the base rate for some time to come. The CBI has painted a downbeat picture for the UK today with growth of only 1.0% With this level of growth it is hard to see any change in the base rate until 2011.

Also on Tuesday we get US existing home sales for February which is not expected to show much change from the previous reported figure of 5m units on an annualised basis.

The main US economic news of the week will be the Durable Goods orders for February with expectations of a 1.0% gain after the 2.6% gain during January although excluding transportation the January figure declined by 1.0%. Also on Wednesday in the US we get new home sales for February which are expected to show an annualised sale rate of 315,000 compared to the previous level of 309,000. Concerns that the housing market in the US is starting to reverse once again could prove to be well founded if the housing data this week disappoints.

In Europe on Wednesday the Purchasing Managers Index for services and manufacturing will be published for March. The UK Budget on Wednesday will be very much in focus.

Thursday brings UK February retail sales and in the US Fed Chairman Ben Bernanke’s will be giving a testimony before the house Financial Services Committee hearing on "Unwinding Emergency Federal Reserve Liquidity Programs and Implications for Economic Recovery." His comments may well impact on the market during Thursday afternoon.

On Friday we get the final estimate for Q4 US GDP which is not expected to change from the previous reported level of 5.9%. The University of Michigan Non Farm Payroll data is due to be published on Friday for March with an improvement to 73.0 from 72.5 expected.

Today we have day traded Reed Elsevier with a typical swing trade. The shares were showing good relative strength first thing until the market sold off heavily providing a good opportunity to buy ahead of the afternoon rally which we thought there was a good possibility of. We will continue to monitor the shares and look to trade them again if the opportunity arises.

The CPI inflation data for February helped to allay any fears of resurgence in inflation at least in the short term with no change month on month during February whilst the year on year rate fell from 2.7% to 2.2%. The initial weekly jobless claims in the US were broadly in line with expectations with a fall of 5,000 to 457,000 compared to last week.


In the UK, the government's finances received a shot of relatively good news with the PSNBR for February coming in lower than expectations at £12.4bn whilst the disastrous January figure was revised from £4.3bn to just £43m (January is typically the strongest month of the year and normally generates a healthy surplus). Total borrowing for the year lies at £132bn which is double the amount of last year. The UK's deficit remains very significant and no matter what government is formed in May they will have to make significant cuts. Nevertheless this is unlikely to stop the current Chancellor from using today's news to offer some election boosting incentives in his forthcoming budget.

We have today closed out our long position in GlaxoSmithkline taken earlier this week.

The Fed continued with the same language last night with rates set to remain ‘exceptionally low’ for an ‘extended period’. The tone of the statement was a little more upbeat with comments that ‘economic activity has continued to strengthen’ and that ‘the labour market stabilising’. There was also mention of the fact that bank lending is continuing to contract although business spending on equipment and software is showing good signs of recovery. The debate over when the first rate hike will come continues to rage amongst the investing community but what is clear is that any move in stance is a long way off and it is not impossible that rates will remain where they are for all of 2010 and possibly even 2011.


The Fed mentioned yesterday that with a significant amount of resource slack there is little in the way of inflationary pressures in the system and this was confirmed yet again today with a 0.6% decline in producer prices during February, primarily due to lower fuel costs.

In the UK unemployment over the last 3 months has again fallen with a drop of 33,000 in the number out of work over the last 3 months which was the fastest decline in unemployment since 1997.

The minutes from the latest Bank of England interest rate meeting were published today with as expected a unanimous vote in favour of keeping rates at 0.5%. The Committee stated that inflation is expected to remain above target for several months to come (the January CPI was 3.5%). With the weakening pound there was some concern however that further inflationary pressure may enter the system.

Economic data is light on the ground today with housing starts for February due in the US this afternoon. Expectations are for a dip to around 560,000 units on an annualised basis from the January level of 590,000 units. We also have the US FOMC meeting today and investors will be looking at the detail in the accompanying statement. In Europe CPI data and the German ZEW Economic Sentiment index will be the main talking points.


The market is struggling to make much progress above the 5,600 level and it is difficult to see what the catalyst will be to take it much higher. A period of consolidation and range bound trading seems a more likely outcome in the short term.

AstraZeneca is holding an investor’s day today where there will be much focus on the growth opportunities in the emerging markets. This may well provide a boost to the pharmaceutical sector during today's trading.

This week inflation will be dominating the headlines with the Eurozone CPI data for February due tomorrow along with CPI for Italy and France. Overall in Europe prices are expected to have risen during February although the year on year rate is likely to remain under 1%. The US CPI for February is due to be announced on Thursday with prices expected to be unchanged month on month. The German ZEW economic sentiment index for March will also be published tomorrow and this is expected to show a modest improvement on the previous report of 45.1.


In the US we have had the Empire State Manufacturing index for March today which basically gives a snap shot of manufacturing activity in New York State. Expectations were around the 22.0 level and the actual result was 22.86 which suggest that the bounce in the manufacturing sector has continued. We have also had Industrial Production data today for February which grew by 0.1% against expectations of no change. Overall there has been nothing in the data today to upset the market. The FOMC are meeting tomorrow and as always all eyes will be on the accompanying statement and reiteration of recent statements that the funds rate will ‘remain low for an extended period’.

In the UK on Wednesday look out for the publication of the minutes from the latest Bank of England MPC meeting. Quantitative Easing remains on hold but a weak recovery may yet prompt the Bank of England to turn on the taps yet again.

The direction of trading this afternoon will be dependent on the February retail sales data and consumer sentiment numbers due out in the US. An upset looks unlikely given that expectations for retail sales are for a drop following the bad weather and the consumer sentiment number looks likely to show a modest bounce after the unexpected decline in the previous reading. Sentiment is likely to show some improvement with employment expectations starting to improve and the recent rally in the stock market will have undoubtedly helped.

The weekly initial jobless claims in the US have confirmed what appears to be an improving trend in the jobs market and we are certainly getting closer to the point at which we start to see net job creation in the US. However, this news has been overshadowed by concerns over inflation in China with the CPI having moved up to 2.7% on an annualised rate during February from an annualised rate of 1.5% during January. Inflation has started to impact on service prices due to wage pressures amid higher inflation expectations. Industrial Production growth in China remained strong at an annualised rate of 20.7% during January- February although the rate of growth fell to 12.8% year on year in February. China remains an engine of growth for the world economy but at some point that growth will need to be reigned in if inflation is to be contained. The implications of this are that interest rates will be hiked sooner rather than later in China and this is something that may well unsettle world equity markets especially if inflation starts to be exported to the rest of the world.


Tomorrow the market moving data due out in America is retail sales for February with the consensus expecting a drop of around -0.2% with a negative figure likely due to the impact of the bad weather. Next month we should see a reasonable rebound as consumers start to make up for lost ground over the last month or so. We also get the University of Michigan Consumer sentiment data for March tomorrow. After a decline in this index and other comparable indices over the last month or so expectations are for a modest improvement on the last reported number of 73.6.

Another directionless day with little in the way of economic announcements to provide any form of direction. In the UK the Industrial Production numbers for January were disappointing with a month on month decline of -0.4%. Manufacturing production during January declined by 0.9%. Both numbers were far off what the consensus was expecting but not a great deal can be read into these numbers given the impact of the harsh weather during January. However, what it does mean is that the Q1 GDP number will be held back and it is unlikely that we will see much if any improvement on the Q4 GDP number of +0.3%.


In the US today wholesale inventories declined in January by 0.2%. This has been taken as a positive sign that suppliers are failing to keep up with demand. It will also mean that inventories will have to be replaced at a faster rate which has positive implications for GDP growth over the near term.

Yesterday we did a quick trade in Sainsbury’s which came about due to the 40 point decline in the market during the day which provided a swing trade opportunity after Sainsbury’s fell by over 1%. The subsequent rally late in the day provided a good opportunity to take a quick profit.

The UK trade deficit widened during January to £3.8bn from £2.6bn in December. The economic recovery will certainly need to benefit from export growth which is yet to show up based upon these figures. Total exported goods volume dropped by 8% over the month.

The retail sector looked a little healthier during February according to the BRC retail sales figures for February which showed a 2.2% gain against the -0.7% registered during January. However the better than expected figure may well be down to delayed purchases from the previous month due to the bad weather.

With little in the way of major economic data in the US today and tomorrow we may have to wait until Thursday and the publication of the weekly initial jobless claims before the market starts to find some direction.

A quiet day today and with the market at its high for the year investors and traders are likely to exercise a good degree of caution. As always when markets rally to new highs it becomes a good deal more difficult finding trades where the downside risk is limited in the event of a market selloff.

The US economic calendar this week is very quiet this week. The weekly initial jobless claims on Thursday always attract attention but with the employment situation starting to show an improving trend they are unlikely to provide an upset. The main data for the week will be US retail sales for February due out on Friday. The consensus is expecting a modest weather induced decline of -0.2%. The University of Michigan Consumer Sentiment index for March will be published on Friday. The more recent consumer sentiment data has been a little disappointing and the market will be looking for an improvement on the February level of 73.6.


In the UK look out for the NIESR GDP estimate for the 3 months to February which is due out on Wednesday. The January data showed a GDP run rate of 0.4% and with the recent upward revision to Q4 GDP this data will make for interesting reading.

Monetary policy in Europe was in focus yesterday with both the MPC and the ECB meeting to discuss interest rate policy and quantitative easing/liquidity measures. The Bank of England is continuing with the suspension of its QE policy and with rates on hold there is still considerable uncertainty as to whether any new measures will be taken. With growth likely to remain sluggish at best and with the prospect of fiscal tightening from a new government there is a real possibility that further measures may yet be required to keep the economic recovery on course. The ECB has started to limit some of its liquidity measures and has kept its interest rate on hold. They upgraded their growth forecast for 2011 to 1.5% and left their 2010 forecast unchanged at 0.8%. Interest rates look set to remain on hold for most if not all of 2010 in Europe.


The main event this afternoon are the Non Farm Payroll figures. The consensus was expecting a decline of 50,000 and the actual loss was 36,000 jobs. The unemployment rate remained at 9.7%. Construction continued to lose jobs but as expected the number of temporary jobs increased no doubted boosted by hiring for the census count. The market reaction has been generally positive and with trends showing signs of improvement some forecasters are expecting a positive number next month.

Yesterday we closed our long position in GlaxoSmithkline that was taken earlier in the week. The shares have fallen back today but we are holding off from taking a further position for the time being with two FDA meetings scheduled for next week that could result in headlines that impact on the share price.

The US service sector has surprised on the upside today with the Non Manufacturing ISM Index coming in above expectations at 53.0 against the consensus which was expecting a figure of around 51.0. The constituent parts provide grounds for optimism. In particular the employment index registered a 4 point improvement to 48.6 which suggests that we are not far short of job creation in the US. In fact the ADP private payroll data published today confirmed that with 20,000 jobs lost last month in the private sector. The trend certainly appears to be shifting and whilst a negative number for the Non Farm Payrolls is still likely when published on Friday (the bad weather during January may actually create a worse than expected figure) we should start to see positive numbers coming through over the coming months.


In Europe retail sales data for January was broadly as expected with a -0.3% decline. Inflation for the Euro-Zone reported yesterday for February was relatively soft with the annualised rate dropping from 1.0% to 0.9%.

The market is continuing to rally this afternoon and with the better than expected ISM data today this should provide further short term support to valuations.

The market is staging another comeback and it will be interesting to see if it has the legs to push on past the highs reached in January. This week so far the economic data has been okay but we have yet to see the big data due tomorrow (ISM Non Manufacturing) and Friday (Non Farm Payrolls). The Manufacturing ISM for February reported yesterday was a little less than expected at 56.5 but still firmly in growth territory.

Today there is little on the agenda with the market more interested in the PRU deal than the economy. Tomorrow if the ISM Non Mnaufacturing data creeps further above 50 we may yet see more from the current rally.

This week is all about the economic data in the US. The data last week was disappointing and the only positive if you can call it that was the fact that Q4 US GDP was revised upwards a little to 5.9% from the initial estimate of 5.7%. With the poor durable goods orders announced last week for January (-0.6% excluding transportation) it looks likely that Q1 GDP will be lower than the Q4 inventory restocking driven figure.


This week we start with the Non Manufacturing ISM data for February. The index has been firmly in positive territory with the manufacturing sector showing good signs of recovery. The index read 58.4 in January and the consensus is looking for a slight decline from this level to 57.5.

Wednesday brings us the Non Manufacturing ISM Index for February which is the important element of the ISM data given that the service industry makes up around 90% of overall economic output. The index has been struggling to get far above the 50 level and last month registered just 50.5 with the consensus expecting 51.0 for February.

Unemployment will be very much in focus in the US this week with the all important non farm payrolls due out on Friday for February. With the initial weekly jobless numbers showing no real sign of improvement and in fact deteriorating during the last two weeks we can again expect a negative number. The consensus is expecting a further decline in employment of -50,000 but the figure could be as high as -100,000. Any significant further decline will only add to the worry of an ongoing jobless recovery which has real implications if the economic recovery is going to have any sustainability later in the year. We will have an indication of where the non farm payrolls are headed with the publication of the ADP private payroll data for February on Wednesday.