Next week is pretty light on economic data. The two important pieces of data that I will be watching are
- Non-manufacturing ISM data on Tuesday at 10:00 AM ET
- Weekly Jobless claims on Thursday at 08:30 AM ET
There is a lot of central bank activity next week. Many of the fed governors will be speaking and there is Bank of England(BOE) and European Central Bank(ECB) announcement on Thursday morning. The key thing to observe will be if there is a change in tone towards starting to reduce monetary stimulus. Especially with a solid jobs report on Friday there is some increased chance of this.
I think the economic data will probably come in line next week, so major market movers will be oil and a possibly more hawkish stance from some fed governors.
Looking out over the next 6 months, the most positive aspect of the current economic environment is that jobs growth is picking up. It has already reached a solid 200K/month and is headed towards 250K/month of the next few months. This a very positive sign. Corporate earnings are really good and after having extracted a lot of productivity out of workers companies will probably have to hire more this year and should bode well for job growth.
On the negative side, you have oil which is up and acts like a tax on consumers and adds to inflation pressures. QE2 will most likely end and that will remove some support for asset prices and could cause market volatility in May and June. In the current post 2008 environment, market weakness can be pretty damaging on consumer psychology.