Thursday, October 28, 2010

More Upticks in Economic Data vs. Expectations

Today was the first week since the end of August that both the initial claims and continuing claims for unemployment were lower than consensus expectations.

While one week of noisy data should not substantially embolden the bulls, there has been a noticeable uptick in positive reports since the beginning of September – one that just so happens to coincide with the upturn in stocks.

I last updated the chart below at the beginning of the month and since that time, the pattern of positive surprises has continued. Note that housing and construction continue to provide the most consistent positive surprises, while the consumer appears to have a turned a corner at the end of August, giving a boost to stocks.

If the data are painting any sort of discernable picture, from my perspective the canvas looks like a story of slow but steady improvement – and more slow than steady at this stage.

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