Recession Fears Receding - Analyst Blog
10 Octubre 2011 - 4:11AM
Zacks
With the economic calendar on the thin side on Monday, stocks will
likely reflect the positive momentum from last week's favorable run
of economic data. The Europeans also appear to be making the right
noises, with German and French leaders committing over the weekend
to announce a bank recapitalization plan before the end of
October.
Relative to last week's busy economic schedule, we have few reports
on the docket this week. Friday's Retail Sales report and
Wednesday's Fed Minutes are the important ones. I would be looking
for some momentum in the Retail Sales report given the recent
positive showing on the chain-store sales front. In the Fed
Minutes, discussions surrounding the launch of Operation Twist will
be interesting and may provide clues for further easing
measures.
But irrespective of further monetary actions, the tone of recent
economic readings has been positive, easing fears of a double-dip
recession. These include Friday's jobs report, the positive
construction data, the better-than-expected chain-store and light
vehicle sales reports, and the two ISM readings.
On the labor market front, not only did Friday's September non-farm
payroll reading come ahead of expectations, but the prior two
months' numbers were revised upwards, indicating that the situation
may not have been as grim as initially feared. When looked at from
the perspective of the need for bringing down the nation's huge
numbers of unemployed, the Friday report was neither helpful nor
encouraging. The report's value comes from its ability to help us
assess the odds of a fresh recession for the U.S. economy.
Viewed from that perspective, the Friday jobs report -- as well as
the other recent economic readings -- was very positive. In an
absolute sense, all recent economic readings have been soft and
weak. But relative to fears of a recession, they are pointing
towards a non-recessionary outlook. Bottom line: the U.S. economy
remains weak, but it does not appear to be double dipping.
Some early evidence of this non-recessionary tone of recent
economic reports has started showing up in estimates for third
quarter GDP growth rates. On Friday, Macroeconomic Advisors raised
their estimate for third quarter GDP growth from 2% to 2.5%, citing
the positive economic reports, particularly the construction data,
retail sales and payrolls data. I would expect this trend in
positive estimate revisions to gain pace in the coming
days.
In corporate news,
Superior Energy Services (SPN)
is acquiring
Complete Production Services (CPX) in
a cash-and-stock deal valued at $2.7 billion. We also have word
from
AT&T (T) indicating very strong demand
for
Apple's (AAPL) new iPhone 4S. And we get the
unofficial kick-off to the third quarter reporting season on
Tuesday as
Alcoa (AA) releases results after the
market's close.
ALCOA INC (AA): Free Stock Analysis Report
APPLE INC (AAPL): Free Stock Analysis Report
COMPLETE PRODUC (CPX): Free Stock Analysis Report
SUPERIOR ENERGY (SPN): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
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