European markets are on track at present to deliver two consecutive days of gains although given how fragile sentiment is this is by no means certain but at the time of writing most European markets are up by the best part of 2% today. The US rally yesterday in typical fashion lost all of its gains in the last hour or so of trading. This time the culprit was rumours that the Chinese are considering selling their European bond holdings although they have since dismissed this rumour.


On the economic front the US did come out with some relatively positive economic data yesterday which demonstrates that the economic recovery is still on course. The durable goods numbers for April surprised on the upside with a gain of 2.9% compared to consensus expectations of a gain of around 1.5%. On the negative side the gain was solely down to a big gain in transportation orders which when stripped out leaves a negative number of -1.0%. However the equivalent number for the previous month was +2.8% and overall given the volatility in this data some comfort can be taken from these figures.

Also yesterday we had the existing home sales report for April which were up 14.8% at 504,000 on an annualised basis compared to expectations of a number around the 425,000 level. With the expiry of tax credits on the 30th April not a lot can be read into this surge and the key will be the May data which will almost certainly show a drop but to what extent is unclear. Home prices in the US fell during the first quarter which may well be the start of a longer term trend in the absence of any government support.

It is worth mentioning the US Conference Board consumer confidence index for May published on Tuesday which was ahead of expectations at 63.3 compared to the consensus which expected a figure of closer to 59.0. Clearly the US consumer is responding to the apparent improvement in the jobs outlook although the more recent declines in the stockmarket may well reverse this.

A further support to the market came with the OECD world growth forecasts for 2010 and 2011 published yesterday. They continue to expect good growth this year driven on by Asia with 4.6% forecast and 4.5% for 2011. They have even increased their forecast for Europe from 0.9% to 1.2% for 2010 with 1.8% forecast for 2011. The US is expected to achieve growth of 3.2% in 2010. Overall a mixed bag with sub trend growth outside of Asia expected but nevertheless growth should still be achieved.

This afternoon we have the second estimate for US Q1 GDP with most forecasters predicting a small upward revision to the previous number of 3.2%.

The decline in world stock markets continues with little sign of a catalyst to bring a return of stability. Worries over developments between North and South Korea have unsettled Asian markets overnight and with inter-bank lending rates now on the rise, fears of a second liquidity crisis are making the headlines once again. Spanish banks continue to hit the headiness with the news this morning that four savings banks have been forced to merge following on from the rescue of the Spanish bank, CajaSur at the weekend. All of these headlines bring back memories of 2008 and clearly sentiment for the time being is likely to remain firmly in negative territory. Financial markets do need to stabilise soon to prevent this current crisis from damaging an already fragile European economic recovery which would have serious implications for the world economic recovery.


The second revision to UK Q1 GDP data was published this morning with a modest upward revision to +0.3% from +0.2%. This afternoon in the US we get the Conference Board consumer confidence index for May which may well have some bearing on trading this afternoon. The consensus is looking for a figure close to 59.0 which would be a modest improvement on the previous reported level of 57.9. Disappointment may well exacerbate the falls we are currently seeing in the Dow futures which currently stand at down 200 points.

We enter another trading week that is likely to be dominated by yet more volatility. After the roller coaster ride on Friday markets did initially make some progress today but all have slipped back into negative territory at the time of writing and some European markets are closed today for a bank holiday. The overriding factor is fear rather than fact at present. The volatility and turbulence in world markets may well soon start to impact heavily on business confidence which would impact on business investment and hiring decisions at a crucial point in the economic recovery. Uncertainty over whether the austerity measures needed in Europe will push us back into recession have driven expectations for growth lower and whilst as this stage it is unlikely to bring about a second recession, the risk remains and the longer the turbulence continues the greater the risk to growth.


This week we have several economic announcements that will be in focus. In the US Last week we had several data announcements all of which were relatively soft suggesting that the outlook for growth and unemployment in the US remains uncertain. It does seem likely that US growth during the second half of 2010 will tail off considerably. The main event in the US this week will be the durable goods orders for April which is due for publication on Wednesday. Most forecasts are for a gain of between 1.3% and 1.5% after the -1.2% drop in March.

Today in the US the only major data is existing home sales for April which is expected to show an improvement to an annualised rate of around 5.6m from the March level of 5.35m. Very little can be read into this number given the boost to sales that will have occurred from the expiry of the home buyers’ tax credit. Tuesday in the US brings the Conference Board’s consumer confidence index for May which is expected to show a modest rise to around the 59.0 level from the previous report of 57.9 for April. On Thursday we get the second stab at Q1 US GDP. The first estimate came in at 3.2% annualised and the market is looking for a modest upward revision to around 3.5%. Also on Thursday keep a look out for the usual weekly initial jobless claims which rose unexpectedly by 25,000 last week to 471,000 and a similar number this week will throw serious doubt over the idea that the employment picture in the US is showing a sustainable improvement. Another strong economic indicator due this week is personal spending with the data for April due out on Friday. In the US we end Friday with the University of Michigan consumer confidence data for May with the level expected to remain close to the previous reported level of 73.3 although a decline cannot be ruled out in view of recent events.

Tomorrow in the UK we get the second estimate for Q1 UK GDP. The first estimate was 0.2% and most commentators are looking for a slight upward revision to 0.4%. Confidence data for Europe will be much in focus over the coming weeks for any sign of a significant deterioration. Tomorrow GFK publish their latest index reading. On Thursday German CPI data for May will be published with the annualised rate expected to show a modest increase to 1.2% from the previous reported level of 1.0%. Inflation is currently not a threat in Europe and in fact we have quite the opposite situation with deflationary pressures building.

A degree of stability returned to world stock markets this afternoon after european markets all opened heavily down. The recovery looks to be more down to the oversold position of the market from a technical perspective rather than any sudden change in sentiment and we can expect further volatility next week. When a degree of calm is going to return is difficult to answer but some stability in the euro would be a good start and we have certainly seen that this afternoon.The German lower parliament has agreed today to its contribution (up to 148bn euros) to the 750bn euro package which has also helped sentiment a little.


Yesterday we had three economic data announcements for the US all of which were a little disappointing and place some uncertainty yet again over the strength of the US economic recovery, and the risk that growth during the second half is likely to slow considerably. First off we had the publication of the usual weekly initial jobless claims which are generally a good pointer to employment trends and where the non farm payroll data is headed. During recent weeks the trend has been improving which is why most commentators were surprised to see the data jump by 25,000 to 471,000 from the previous weekly level of 444,000. Another high figure next week and there will be real doubt as to whether the trend in employment is sustainable. The second disappointment yesterday was the publication of the lead indicators for April (a composite index of ten indicators that should lead economic activity) which fell by 0.1%, the first decline in over a year. The consensus was looking for a further improvement of +0.2%. Whilst this does not mean a sudden reversal in growth, it does suggest that growth is likely to tail off as the year progresses. An interesting statistic quoted by a market commentator today is that after the last recession ended in November 2001 the lead indicator did not show a decline for 4 years.

The last data announcement yesterday was the Philadelphia Fed Manufacturing survey for May which was broadly in line with expectations at 21.4. The headline data did however mask a softer picture with the new orders element of the index up by 6.1 in May considerably slower than the April reading of 13.9. Further evidence of a possible weakening employment picture was in the employment element of this index which fell to a 6 month low of 3.2 from 7.3.

With so much attention focused on Europe the German lfo confidence index published today showed little in the way of impact from recent developments. It fell from 101.6 in April to 101.5 for May.

The German move to ban naked short selling on equities, government bonds and CDS has only exacerbated the fear factor and equities remain under significant pressure with all major world markets selling off heavily yesterday. Given the fact that the problems the euro zone faces are very much long terms makes it all the more difficult to identify the catalyst that will arrest the ongoing decline in markets. If European markets continue to sell off it will inevitably start to impact on investor sentiment and it is at that point when investors start to redeem their fund holdings and more medium terms trades that we could see markets capitulate. We are not there yet and it very much depends on whether European markets start to stabilise over the coming days.


Spanish Q1 GDP was announced yesterday and as expected it only just managed a positive reading at 0.1%. Given the outlook for Spain and the austerity measures required to address their budget deficit it is difficult to see it staying out of recession for very long. This is a theme we are likely to see across several European countries over the coming months, there will be a very fine line between growth and recession for a long time to come.

UK retail sales data this morning for April was a little better than expected with a 0.3% gain against the consensus expectation of 0.2%. In Europe this afternoon we have consumer confidence data and in the US the state of the manufacturing sector in the Philadelphia Federal Reserve District will be under scrutiny with the publication of the May data. It will be interesting to see if this index mirrors the equivalent data for New York published earlier in the week which actually fell against expectations from 31.86 to 19.1. This could indicate the start of a slowdown in the US manufacturing sector.

Today we have closed out another long position in GlaxoSmithkline. The shares rallied against the market yesterday providing us with a close out opportunity this morning with the strong market opening. Again we will be looking to see how US trading develops this afternoon before entering our next trade. Markets are so fragile at present and with sentiment changing very rapidly it is increasingly important to get entry levels as correct as possible to provide intra-day trading opportunities rather than holding trades for more than one day.

The UK Consumer Price Index (CPI) for April produced a headline grabbing number of 3.7% which was above expectations of the index remaining static at 3.4% with food and energy the main drivers of this increase. The more important core index rose slightly to 3.1% from 3.0%. The MPC is still firmly of the view that the recent rise is down to temporary factors such as delayed increases from the VAT rise and also a weak pound increasing import prices and finally higher oil prices. With so much spare capacity in the economy it is difficult to envisage the CPI increasing much further but with a possible VAT rise due in the forthcoming budget there may be additional upward pressure before we start to see a meaningful drop. The first rate rise in the UK still looks unlikely until 2011 at the earliest.


In the US yesterday housing starts data for April was published and this was at the top end of expectations with a number of 672,000 on an annualised basis compared to consensus expectations of 650,000. The spurt in construction activity is primarily down to a spike in housing demand with the expiry of the special tax credits for homebuyers in April. The real test comes in the months ahead with the housing market likely to soften significantly without the stimulus measures that have kept it stable at best.

Also in the US yesterday the Producer Price Index data for April was published and this actually fell over the month by 0.1%. Not that significant but it does demonstrate that deflationary pressures are in the system. The year on year rate fell to 5.4% from 6.1%.

The market has been spooked today by news that the German regulator has banner short selling on certain bond trades and equities. With confidence already low this has not helped sentiment or the euro.

In the US today the Consumer Price Index for April is due to be published. In the UK the minutes from the latest MPC meeting will be published and we also get the FOMC meeting minutes. Given the problems in Europe all eyes are likely to be on what Jean Claude Trichet, the European Central Bank’s president has to say about the economic situation and the value of the euro this afternoon.

The fear factor is back with global worries over what impact the necessary austerity measures on European growth will have. Concerns over sovereign debt default are not going away and worries over what impact that could have on the banks has caused inter-bank lending rates go up which has brought back all of the old credit crisis headlines. At this stage with a bail-out package in place and with the peripheral countries that are in trouble now taking measures to cut their deficits, it is too early to be assuming that defaults are on the way. The risk remains but as always market concerns can become elevated to levels that create extreme volatility as we experienced once again on Friday. This volatility is unlikely to go away in the very short term.


Salvation may be on the way later in the week when the first estimates for the European Purchasing Manager Index (PMI) data for May is published on Friday. Any sign that the recent concerns are impacting on sentiment may well give the bears further ammunition but conversely to this, if we get data that suggests there are no early signs that the European recovery is being de-railed, this may well be what is needed to establish a degree of calm. The PMI Manufacturing data according to the consensus will be looking for a very modest decline to 57.4 from the last reading of 57.6 whilst the equivalent number for services is expected to give a reading of 55.6, which would be the same as the last number for April. A slightly larger decline in both numbers would not be unexpected but a significant fall would certainly be taken badly by the market. We will also get the same data broken down for France and Germany on the same day.

Other major economic data to look out for this week will be the UK CPI estimate for April due for publication tomorrow. March data for the core rate was 3.0% annualised with the consensus expecting a modest decline to an annualised rate of 2.8% for last month. The same data will also be published for the euro zone tomorrow with their core rate expected to remain close to the annualised 1.0% reported for March. Interest rate policy in the UK and euro zone is unlikely to change until early next year.

With Germany still considered to be the powerhouse behind European economic recovery and with recent developments the May ZEW economic sentiment survey due for publication tomorrow will make interesting reading. The April reading stood at 53.0 but with recent worries a decline in this number is inevitable, but to what extent is difficult to say.

On Wednesday attention will focus on the US with publication of their CPI data for April. Inflation after stripping out the impact of food and energy prices remains relatively subdued in the US with the rate expected to remain close to the March level of 1.1% on an annualised basis. Also on Wednesday we see the publication of the minutes from the latest FOMC meeting.

Thursday brings the publication of the US Philadelphia Fed manufacturing survey for May, the usual US weekly initial jobless claims data and April retail sales for the UK. Friday will be all about the euro zone PMI data.

Concerns over a euro area break up are once again dominating the headlines and the ongoing debt crisis is seen as a potentially significant drag on what is already a fragile economic recovery. These concerns are likely to linger and we will not know the impact on the economic recovery for some time to come. Possible disintegration of the euro area remains a possibility but certainly not an immediate threat given the bail-out package announced earlier this week. The austerity packages being announced by the problem countries will inevitably hamper economic growth but most forecasters are still anticipating growth for the euro zone to still exceed 1% this year with a move to over 2% for 2011.


In the US today we have had retail sales data for April which was stronger than expected at 0.4% compared to consensus expectations of a 0.2% gain. This follows on from an upwardly revised 2.1% gain in March. US Industrial Production for April was also announced today which was slightly ahead of forecasts at 0.8% compared to consensus expectations of 0.6%. Keep a look out for the University of Michigan consumer sentiment data for May due out at 2:55 with the consensus expecting a slight improvement to 73.6 from the final April level of 72.2.

We closed out a long position in GlaxoSmithkline yesterday which we had entered at the start of the trading day. The shares had underperformed the previous day when the market was strong and with a strong start to trading yesterday morning an opportunity arose to pick the shares up before they played catch up as the day wore on. With the FTSE100 down almost 2% on the day we will await to see how markets open on Monday before entering our next trade.

A quiet day in terms of economic announcements and political wrangling. In the absence of this markets have drifted higher with some good company reports from the likes of Sainsbury and BT today helping momentum.


In the US today we have had the usual weekly jobless claims number which was broadly as expected at 444,000, a modest decline of 4,000 on the previous week. Whilst the Non Farm Payrolls for last month showed an improving trend in the jobs market, we are unlikely to see major gains if the weekly numbers are anything to go by and if you strip out the impact of recruitment for the US census count the numbers are still relatively low at this stage of the economic recovery.

An interesting article in the Wall Street Journal yesterday made mention of the fact that 12% of mortgage defaults in the US are now strategic in the sense that home owners are defaulting out of “anger, fear or despair despite” being in a position to pay. The savings from this are actually being spent which does not bode well for a sustainable US recovery and leaves the US property market in a very precarious position with further price falls likely.

The main US data of the week is due for publication tomorrow with retail sales for April expected to show an improvement according to the consensus of +0.2%. We also get industrial production data for April with the consensus expecting a gain of around +0.5% after a 0.1% gain March. The University of Michigan Consumer sentiment index always has the power to move the market and tomorrow the first estimate for May is due and is expected to show an improvement to around 74.0 from the April number of 72.2.

A number of stocks have been brought back by the shakeout over the last week or so and some have yet to really participate in the rally over the last couple of days providing opportunities for long positions. This is an area where we are currently focusing our trading attention.

With investor confidence very fragile especially with recent developments in Europe we can expect to see wild swings in sentiment over the coming weeks with markets likely to remain very volatile.


Following the completion of negotiations the UK now has a new government in place although given the serious nature of the immediate problems the Conservative/Lib Dem coalition face they are unlikely to enjoy the traditional honeymoon period that a new incoming government would normally experience.

UK data this morning relating to unemployment underlines the problems the UK faces with unemployment rising by 53,000 to a 16 year high of 2.51 million whilst the unemployment rate remained at 8%.

The deficit issues will come to the fore in a few weeks time when the new Chancellor, George Osborne, outlines the first concrete details of how the deficit will be addressed. Speculation over bank levies and other taxation issues will undoubtedly give the market plenty to fret about over the coming weeks.

The question of what happens next following the euro zone bail out is a difficult one to answer. The reality of what impact concerns over sovereign debt default and the ability of this package to prevent a collapse in confidence will only come apparent as various economic indicators come out over the coming weeks. The collapse of Lehman had a massive impact on confidence resulting in world recession as firms cut employment and consumption/investment was restrained. If worries in Europe persist that sovereign debt risk and the resulting impact from major expenditure cuts will impact on economic activity, we may well see a similar reaction. This could easily raise the spectre of a double dip recession which is the worst case scenario for world stock markets. Exactly what the outcome will be remains an unknown and for this reason it seems realistic to assume that market confidence will remain extremely fragile until there is concrete evidence that the European recovery has not been derailed.

There was some good news for Europe this morning with the preliminary estimate for Q1 GDP coming in at 0.2% which was broadly in line with the consensus. It is encouraging to see some growth after a flat Q4, but it remains to be seen with recent developments if this trend will continue. March industrial production data for the euro zone reported today was as expected at +1.3%.

We traded yesterday in Reed Elsevier given that a degree of calm seemed to be returning during the afternoon session and having closed that position this morning we are waiting for the market to show some direction before entering our next trade.

With the political negotiations ongoing in the UK and scepticism that the euro zone bail out is simply treating the symptoms but not the disease has left European markets on the backfoot once again. For a change European markets have today become a little divorced from the US with the Dow down by around 0.3% at the time of writing whilst major European markets have been down by the best part of 2%. The UK is the major underperformer due to the added pressure of political uncertainty.


The main UK economic news for today was the publication of industrial production data for March which came in at 2.0% significantly ahead of consensus expectations of a gain of around 0.3%. Manufacturing output managed a 2.3% gain well ahead of the consensus which was looking for a 0.3% gain. This data certainly suggests that the UK recovery is ongoing and we may well see an upward revision to the preliminary estimate for Q1 GDP OF +0.2%.

Expectations are increasing that a Conservative/Lib Dem coalition government will be announced this evening. With world markets looking for the UK deficit t be addressed quickly, this news, if it happens, may well get the UK market off to a positive start tomorrow.

The much anticipated Euro Zone rescue package has been announced and it does seem fairly comprehensive which has provided a much needed relief rally this morning across world stock markets. The situation with Greece has been ongoing but the onset early last week of a real threat of contagion has provided the catalyst for the announcement of a €750bn aid package. This in itself will easily cover the funding requirements of Spain, Portugal and Ireland with €110bn of aid for Greece already agreed. The stabilisation fund will be comprised of €60bn from the EU Commission (countries can draw on this fund rather than borrow from the market), €440bn in loan guarantees (designed to allow sovereign states in trouble to borrow in the market at acceptable rates) and finally a top up of up to €250bn from the IMF. In addition to the above the ECB will now be buying government securities and private debt on the secondary market (this announcement was expected last Thursday after the ECB met).


This is a very major announcement and it does remove sovereign debt default risk and contagion risk in the Euro Zone. It will mean far stricter controls on budget deficits going forward and with immediate cuts required to start bringing deficits into line and to meet the terms of financial assistance we can expect to see some downgrades to Euro Zone growth forecasts for 2010. Undoubtedly this is not something the market is focusing on today and there is considerable relief that the Euro Zone is now unlikely to endure a double dip during 2010 which would have been a serious risk without this aid package.

The UK market today is up with the rest of the world but we still face a second hurdle namely the shape of the next government which remains unknown. UK plc also faces its own deficit hurdle which is likely to start taking the headlines once a new government is in place and we face an emergency budget in a few weeks time.

The Bank of England met today and kept the base rate at 0.5% which was not unexpected and is likely to remain the case for most if not all of 2010.

There is no major economic news scheduled for today in the US and in fact it is a relatively quiet week in the US for economic data with the major news due on Friday when we get retail sales data for April with the consensus expecting a figure of around +0.2%.

We have a fairly busy week for economic data in the UK and Europe with the major announcement being the preliminary estimate for Euro Zone Q1 GDP, due for publication on Wednesday. After the final estimate for Q4 2009 was downgraded to zero from 0.1% the data for Q1 should make interesting reading. On the same day the Bank of England Quarterly inflation report is due for publication and we also get UK unemployment data for March.

Once the dust has settled today all eyes will move to ongoing negotiations over the shape of the next UK government. It is difficult to say if the market is going to continue to build on the gains made today with so much uncertainty over the political landscape. We are monitoring developments and have several stocks that now look interesting and depending upon how the Dow moves this afternoon we may well look to enter our next trade very shortly.

All eyes this afternoon are focused on the UK election result and attention has been drawn away from the all important US Non Farm Payroll data due at 1:30pm. With the formation of a new UK government likely to drag on over the weekend, the employment data in the US is likely to set the tone for trading this afternoon. Brokers are expecting a positive number of between 145,000 and 250,000 with the consensus standing at around 200,000. The unemployment rate is expected to remain static at 9.7%.


We should not forget the huge intraday decline in the Dow last night of just under 1,000 points. Whilst we appear to have a degree of calm this morning with the UK just in positive territory at the time of writing (primarily due to a strong performance from mining and oil stocks) and the Dow futures pointing to a positive start, confidence is extremely fragile, and developments over the weekend in Europe in relation to sovereign debt issues and the formation of a new UK coalition government will set the tone for trading next week.

Most UK economic news today is being overshadowed by the election result but what we have had so far are house prices for April from the Halifax which showed a decline of 0.1%. We have also had UK Producer Price Index data for April which increased by 0.6% against expectation of a 1% rise. Inflation pressures for inputs within the manufacturing sector remain relatively subdued although the equivalent index for output was actually a little higher than expected for April at 1.4%. Given the amount of slack in the UK economy it is difficult to see inflation gaining much more traction over the coming months.

In Germany, March Industrial Production data has been published this morning which was better than expectations with an improvement during March of 4% compared to consensus expectations of around 1.5%. Apart from the obvious problems that Europe currently faces it is still on course to achieve growth this year albeit sub trend.

We mentioned last night in our special Dow report that some sector valuations are moving to attractive levels and we will be looking for signs of market stability over the coming days before entering into our next trade.

In the US tonight the Dow fell by almost 1000 points before recovering to end the session down 347 points. The primary reason for what can only be described as panic selling was concern over the situation in Greece and the real risks of a similar situation in other European countries, and the contagion risks that this brings with it. Fear has again moved to financial stocks which have already been under significant pressure this week, with fears over the extent of their exposure to the problem countries and the potential impact any debt restructuring or default could have on their balance sheets.


The current correction will need a catalyst to arrest the decline and because the sovereign debt problem cannot be resolved over night this is a story that is likely to create considerable volatility over the coming days. We really need to see additional stability measures being undertaken in Europe and whilst IMF intervention and the austerity measures that must be taken by governments will help, many expected the ECB to announce after its interest rate meeting today that it would purchase government bonds to alleviate pressure on the governments facing funding issues. However this did not happen and the market itself may well dictate the need for an announcement of new measures to prevent the kind of loss of confidence which the Dow indicated tonight.

We believe that from the perspective of equity markets the current shakeout will bring valuations back to more attractive levels and we have already seen some sectors falling back to levels not seen since mid 2009. Our last trade was closed out early on Monday because we felt that the risks of a continued sell off were high in the UK especially with the uncertainty that today’s election brings. This action has enabled us to preserve most of our gains for the year so far and we will be looking to trade again once we have some clarity on the election result and it is clear that the ongoing equity market correction is nearing an end.

Equity market futures are indicating that the FTSE100 will open around 140 points down tomorrow morning although this may well change depending upon how the Dow future moves overnight.

Market sentiment remains very fragile indeed. The European Central Bank is meeting today to discuss the ongoing crisis and how to restore confidence in the euro. Combined with a UK election where the result hangs in the balance, and key US employment data due out tomorrow, there is scope for further significant market volatility before the end of trading on Friday.


What will break the current very negative sentiment is difficult to say. A clear UK election result will certainly help although that is looking doubtful. The Non Farm Payroll data in the US scheduled for release tomorrow will also play a big part in helping to settle investor nerves if consensus expectations (+200,000) are met or indeed exceeded. Disappointment may well leave this correction with further to go.

Contagion risk in Europe is very much in focus and the ECB meeting today may well result in policy measures to help allay fears at the very least, and at the time of writing the ECB has just announced that the base rate will remain at 1%. Contagion risk becomes a reality if there is any possibility of restructuring of Greek debt and this would almost certainly be the catalyst for a much deeper market correction. An announcement from the Euro Zone participants stating that Greek debt will not be forcefully restructured would help to at least allay fears on this issue.

The US ISM Non Manufacturing Index for April came in a little below expectation yesterday at 55.4 against the consensus which was looking for a modest improvement to 56.5 from the March level of 55.4. It is still running at a 3 year high which suggests the US recovery is continuing and is relatively broadly based. The employment element of this index is an area of concern given that it fell to 49.5 from 49.8 in March. This is not necessarily an indication of deterioration in the recent employment trends in the US, but it does demonstrate that we are unlikely to see an upside surprise to the employment data tomorrow.