Most of the economic data released today has been positive. Here is my view on the important data released in the last 24 hrs
- Core CPI is still pretty tame. The s&p 500 future popped on this data. This is telling me that the market has started to get a little worried about inflation as typically the CPI generally never causes much moves after it is released.
- Empire state Manufacturing survey was pretty strong. This is a survey of manufacturing in the New York region. The theme of a strong rebound in manufacturing continues.
- In the same theme of strong manufacturing, industrial production also came in strong. Capacity utilization is also creeping up slowly and now stands at 77.4%. Once capacity utilization reaches 80+%, companies will need to start investing in new capacity. That maybe bad for inflation but it will definitely be good for jobs.
- Disappointment from Google. Google released earnings and they were slightly disappointing. The stocks is down sharply. The problem facing the company is that it is still relying on its search business and it is unable to demonstrate any new sources of strong revenue growth. Its margins are also decreasing as its hiring a lot of people. It added 2K more people in the first quarter. Google is starting to look more like Cisco and Microsoft – a value trap. The valuations look good but these kind of stocks can remain low for a very long time. A value stock is less risky but it offers very little upside also. It is amazing to me how Google in such a short period of time is starting to face issues similar to Microsoft. It is no longer the hottest place to work, it is loosing talent to Facebook, Twitter and other startups. I have myself experienced that the quality of the search results are declining. Just shows that in technology you can never rest easy.