I am back after a 2 month hiatus. I was in India for a 4 week vacation and just busy with starting my business. I am hoping to update the blog on a much more regular basis going forward.
Today we had two economic releases which were across the board good.
- The jobs report came in a about 100K better than expected and most of the internal components of the data like average work week(increased by 0.1hrs), average hourly earnings(increased by 0.2%) were all good. The job growth was also pretty broad based across all sectors
- The other big surprise of the day was the Non-Manufacturing ISM survey which came in quite good at 56.8 vs expectation of 53.3. The most encouraging were the internal components, both new orders and employment had strong jumps from previous months.
The stock market as expected is reacting very positively to this data. Looking at most data points it does appear the US economy is starting to accelerate. In fact the US seems to be doing one of the best among developed nations. We also have some improvements in the European credit markets. The improvement has mainly been driven by the strong actions taken by the ECB in December where they announced a 3 year loan program for European banks. They have also approved their permanent bailout fund the ESM whose size will be 500 billion Euros.
The main red flags now we have are coming form Asia. There are good indications that the Chinese real estate market has slowed down dramatically. Indian growth has also slowed and that was my observation when I was visiting there. The European problem is far from resolved also, it is a slow work in progress.