May Flowers & Stocks Still Blooming

On this last trading day of May, one has to wonder if stocks are here to stay. The old adage, “Sell in May and Go Away” has not held up this year, despite doubtable economic data and the Fed-fear frenzy that defined last week. So then one has to wonder just how long will May flowers bloom.

Market ETF	May 1 – May 30	May 31 to 1:20 PM
SPDR S&P 500 (NYSE: SPY)	+3.9%	-0.07%
SPDR Dow Jones (NYSE: DIA)	+3.7%	+0.01%
PowerShares (Nasdaq: QQQ)	+4.5%	+0.18%

May Flowers

Economic Gardening

The Personal Income & Outlays Report was published this morning for the month of April. Personal outlays (consumer spending) declined by 0.2%, matching poorly against economists’ expectations for no change. In March, consumer spending edged up 0.1%. This month’s decline probably has a lot to do with the 0.3% drop in the PCE Price Index. However, when excluding food and energy price change, the Core PCE Price Index was unchanged in April. This means that spending may not have declined outside of price impact, but we must also note that the Easter holiday tends to skew this period.

Economists expected the Core PCE Price Index to increase 0.1% like it did in March, but inflation is nowhere to be found given economic realities globally. The Core PCE Price Index is of high interest, given its status as the Federal Reserve’s favored inflation gauge. My read on consumer spending and prices is that deflation is resulting from weak economic demand globally. The same report offers the latest information on personal income, which was unchanged, versus the 0.3% increase in March.

The Chicago Purchasing Managers Index was reported this morning for the month of May. This measure of Midwestern manufacturing improved greatly this month, with the Business Barometer Index rising to a mark of 58.7, from 49.0 in April. The result far exceeded economists’ expectations for a slight improvement to 50.0. This data offers an interesting contrast to what has generally been poor data for manufacturing nationally recently.

The Reuters / University of Michigan Consumer Sentiment Index improved again in this last report for May. Consumer Sentiment gained to an index level of 84.5, up 8.1 points from April. We can find reason enough for it in rising stock market prices and ongoing real estate recovery, but the broader economy has lagged, which has tended to lead to disappointed high consumer expectations for the forward six months. I would venture that this measure would be different, and very well could be soon, if stocks backed off like many expect on the economic retrenching I am seeing. Economists had expected this measure to just hold steady from its most recent mid-May reading of 83.7. It currently stands at a recovery high mark.

Cleveland Federal Reserve Bank President Sandra Pianalto spoke on financial stability at a joint Fed conference in Washington.

International Varieties

EUROPE	11:50 AM ET	ASIA/PACIFIC	CLOSE
EURO STOXX 50	-1.1%	NIKKEI 225	+1.4%
German DAX	-0.6%	Hang Seng	-0.4%
CAC 40	-1.2%	S&P/ASX 200	-0.1%
FTSE 100	-1.1%	Korean KOSPI	+0.1%
Greek ASE	+2.0%	BSE India SENSEX	-2.2%

Commodities (12:17 PM ET)

WTI Crude	-0.9%
Brent Crude	-1.1%
RBOB Gasoline	-1.0%
NYMEX Natural Gas	+0.4%
Gold Spot	-1.3%
Silver Spot	-2.0%
COMEX Copper	-0.3%
CBOT Corn	+0.6%
CBOT Wheat	+0.1%
CBOT Soybeans	+1.4%
ICE Sugar	+0.5%
ICE Cocoa	+0.9%
ICE Orange Juice Conc.	-1.4%
CME Live Cattle	+0.5%

Specific Stocks

The Sanford C. Bernstein Strategic Decisions Conference offers presentations by Merck (NYSE: MRK), Medtronic (NYSE: MDT), E. I. du Pont de Nemours (NYSE: DD) and McCormick (NYSE: MCK). Catch the annual shareholders meeting of Lowe’s (NYSE: LOW). The corporate wire has the earnings of Genesco (NYSE: GCO), Graham (NYSE: GHM), On Track Innovations (Nasdaq: OTIV) and more.

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Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.