Data Sings Its Song And Everyone Sings Along

Even if they sound slightly off key when they sing…

Jobless claims for the week ending April 16th totaled 247,000. That is well below the expected 264,000 experts had forecast. The weeklies have been at lows not seen since the early 1970s. Today’s number, which reflected a drop of 6,000 claims, has not been seen since 1973, when the country had only about 2/3rds the number of people it has today.

However, just up Interstate 95 in Philly, the Philadelphia Fed's Business Outlook index came in at -1.6, far below the +9 to 10 level that was expected. The minus sign in front of the 1.6 means contraction of course. Most of that contraction comes in the manufacturing sector. The last reading – in February – came in at +12.4, so there was a big surprise.

Yet leading indicators for March rose 0.2 percent, double the expected 0.1 percent increase. If that were spun out to a yearly growth rate it would mean that the economy would be growing at about 2.5%.

European stocks reacted strangely to news from the European Central Bank’s decision to keep rates as they are. Low rates in Europe are apparently cause for pessimism. The DAX was up very modestly while the FTSE in London and the Paris CAC were down modestly.

The ECB meets monthly so the rock-bottom interest rates will stay in place for thirty days until the central bank reconnoiters. The central bank held its deposit rate at negative 0.4% and its main refinancing rate at 0%. The decision to hold rates generally expected.

"Based on our regular economic and monetary analyses, we decided to keep the key ECB interest rates unchanged," ECB President Mario Draghi said in prepared remarks. "We continue to expect them to remain at present or lower levels for an extended period of time, and well past the horizon of our net asset purchases."

This varied news, at home and abroad, strengthened the U.S. dollar a bit, especially in its function as a commodity currency.

Oil was down not quite 2.25% in afternoon trading, about half of it based on dollar strength. The rest of the drop revolves around continuing worries about a crude glut.

Prices were heading lower when market intelligence firm Genscape reported a build of more than 840K barrels in U.S. crude in the four days to April 19 at the Cushing, Oklahoma delivery point. The data further weighed on sentiment.

This was added to fears that this month's 14% rally could coax U.S. shale crude producers to raise output.

Certainly lower oil did not help U.S. stocks but when you look deeper, you see there are a number of different factors tugging prices lower. The tech sector is weak. "Alphabet" (old Google) fell 6% on its earnings miss rumor, which came to be a reality after hours. Microsoft fell 5% for the same reason and Apple is seeing slipping sales. On a different note, Starbucks also missed its earnings forecast and fell 5%.

Additionally, U.S. exports are flat. And, while employment is robust, overall economic growth is somewhat anemic. We did say that once we get past earnings reports, then we would see a different and better equities picture.

Gold found legs of its own in regular trading and was not affected by the dollar trend. It’s a very good sign for gold traders that gold has uncoupled from crude and, unless there is a calamity, it has also uncoupled from equities.

We can also say that for the most part gold is not really serving as a haven play but a stand-alone investment people believe they can count on.

Wishing you as always, good trading,