TODAY’S MARKET – A Bad Economic Report a Day Should Keep the Fed Away but Not When Inflation Lurks

They say an apple a day keeps the doctor away. Likewise, a bad economic report a day keeps the Fed away. At least that’s what investors are hoping will be the outcome of moderately soft economic reports like the Durable Goods Orders data reported Wednesday. However, today’s drift seems to be a continuation of concern spurred by the scent of inflation we picked up yesterday. Find all your economic report and EPS report coverage below, and our analysis of markets at our Wall Street blog.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Today’s Stock Market

Stocks are modestly lower today as investors seek direction. The economic data is confusing, as the Durable Goods Orders showed softness. However, moderately poor data is good for as long as it helps hold off the Fed; that’s how the market will see it. Mortgage activity picked up, offering more hope for housing. Greece is still in play, with a submission of its plans expected on Monday. After a five hour meeting between Chancellor Merkel and Prime Minister Tsipras, hope exists that some resolution might evolve that keeps Greece in the euro-zone. Global stability is in play.

Finally, I think what is really weighing on the market is the continued concern about yesterday’s hint of inflation seen in the Core CPI uptick. You’ll want to explore my discussion about that here. There’s a lot in play, and little reason to move anywhere today as a result. We could be stymied or even see downside direction until strategists come forward to argue against the inflation case. I expect that will happen eventually, as inflation is still moderate.

Security	03-25-15
SPDR S&P 500 (NYSE: SPY)	-1.0%
SPDR Dow Jones (NYSE: DIA)	-1.1%
PowerShares QQQ (Nasdaq: QQQ)	-1.7%
SPDR Gold Shares (NYSE: GLD)	+0.3%
iPath S&P Crude Oil (NYSE: OIL)	+1.3%
PIMCO Total Return (Nasdaq: BOND)	-0.0%
PowerShares US $ Bear (NYSE: UDN)	-0.1%

Stocks are lower on inflation concern, while the dollar is also lower on the same catalyst. The dollar decline is pushing up oil despite a strong crude inventory build reported today. It is having the same effect on gold.

Economic Reports

ECONOMIC REPORT SCHEDULE
Economic Data Point	Prior	Expect	Actual
WEDNESDAY
Durable Goods Orders	+2.0%*	0.7%	-1.4%
-Ex-Transportation	-0.7%*	0.3%	-0.4%
Mortgage Activity	-3.9%		+9.5%
EIA Petroleum Status
-Crude Oil Inventory	9.6 MB		8.2 MB
-Gasoline Inventory	-4.5 MB
Evans Speaks

The economic report schedule was relatively light this morning but still carried quite a punch. Durable Goods Orders is a widely followed data point, but investors must understand that high-ticket prices for planes, trains and automobiles promote volatility in the headline data change month-to-month. For this reason, we look to the ex-transportation data. This month, ex-transportation, durable goods orders declined 0.4% against Wall Street expectations for a 0.3% increase. Also the prior month’s data was revised lower, so the report offers bad news about the economy. However, remember that bad news, as long as it is not too bad, serves stocks today because it helps keep the Fed away.

Mortgage Applications spiked for the reported period, up 9.5% against the prior week’s 3.9% decline. I’m looking for a pickup in housing, as I’ve discussed in recent articles. As the banks meet Fed critical standards and gain financial flexibility to return capital to shareholders, they also find more capital for lending. Look for lending standards to loosen and for the housing recovery to benefit.

Crude oil inventory saw yet another large build of supply, with 8.2 million barrels being added to inventory that is already well ahead of the seasonal average for the last 80 years. We’re at record levels in fact. I have a 2 part report in queue about the oil glut and how I believe the media has sensationalized a perceived risk and helped oil price decline. You’ll want to stay tuned to our blog for more on this.

EPS Reports

We are at the very tail end of the Q4 reporting period and about to enter the Q1 EPS season. As a result, the list of companies reporting earnings now is short. Still, I’ll be watching Five Below (Nasdaq: FIVE) today. It experienced holiday season softness and fell sharply into this report; the report itself should confirm that, but I’m a value seeker.

PVH (NYSE: PVH) is a housing company reporting today that you will want to keep an eye on for a bead on housing. Red Hat (NYSE: RHT) will garner market interest as well.

EPS REPORTS
Company	Ticker
WEDNESDAY
Affimed	Nasdaq: AFMD
Apollo Education	Nasdaq: APOL
China Mobile Games & Ent.	Nasdaq: CMGE
Dermira	Nasdaq: DERM
Destination XL Group	Nasdaq: DXLG
Five Below	Nasdaq: FIVE
Francesca’s Holdings	Nasdaq: FRAN
Iao Kun Group	Nasdaq: IKGH
Kingstone Companies	Nasdaq: KINS
Leidos Holdings	Nasdaq: LDOS
Lindsay	NYSE: LNN
LiqTech Int’l	Nasdaq: LIQT
Monogram Residential Trust	Nasdaq: MORE
On Track Innovations	Nasdaq: OTIV
Orient Paper	NYSE: ONP
Pacific Sunwear	Nasdaq: PSUN
Paychex	Nasdaq: PAYX
Progress Software	Nasdaq: PRGS
PVH Corp.	NYSE: PVH
Red Hat	NYSE: RHT
REX American Resources	NYSE: REX
USD Partners	Nasdaq: USDP
Vascular Biogenics	Nasdaq: VBLT
Verint Systems	Nasdaq: VRNT
Worthington Industries	NYSE: WOR
Yingli Green Energy	NYSE: YGE

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