Chicken or the Egg
What comes first, demand or capital expansion? I think we see the answer day after day. The Home Depot numbers today show slow demand, and yet the CNBC commentators are talking about their expectations of increased capital investment this year. All this in the face of what corporations are really doing, buying back stock.
This is a new world and Target is reporting tomorrow.
Obviously I don’t think this is going to be a 4 % GDP quarter as many economists expect, we might be lucky to beat 2 %.
The market is like watching paint dry. This is day 52 of the top formation. The S&P closed at 1878 on March 7 and the average since that date is 1868. In the meantime we have days when the market closes above 1877, like yesterday, what is that about? Probably purely the Yellen happy talk factor.