It is starting to feel like the release of any good economic data is being cheered on by an army of PR people nowadays.
People are quick to point to the improving unemployment rate and the rise in housing data.
But the reality is, economic data is still mixed and does not paint a rosy picture.
Below are two data points that I think we should all be closely watching:
The Deterioration In US Profits:
Albert Edwards, global strategist at Societe Generale, has warned that investors are ignoring a “savage deterioration in US profits”.
In his latest research piece he states:
The downturn in US profits is accelerating and it is not just an energy or US dollar phenomenon – a broad swathe of US economic data has disappointed in February.
The investor “herd” seems to be more focused on what the Fed will do next instead of underlying economic data.
Perhaps they are hoping that the decline in macroeconomic data will keep the Fed at bay a little longer.
Bloomberg US Macro Surprise Index:
In the past, when the Bloomberg Macro Surprise Index has significantly declined it has been met with a more aggressive Fed.
Will this time be different, or is a surprise QE right around the corner?
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Feature image: Craig Sunter/ Flickr