Houghton and Atkeson

What's Ahead for the Markets

by Houghton and Atkeson   05/29/09

What the Markets Are Saying

The market appears to be cautiously optimistic. It is giving the economic recovery thesis the benefit of the doubt while keeping a watchful eye on the ease with which the credit market absorbs Treasury debt issuance.

We have gone sideways in May rather than down. When the news flow turns slightly positive, the market seems to respond. When the news flow is negative, it holds at key support levels.

Looking into early June, the reality of the GM bankruptcy will have been absorbed and the consequences of the Treasury auctions better understood. We suspect the market will begin to refocus back on upcoming earnings reports for evidence the economy is gaining momentum.

Today's Trading Landscape

Earnings Before Market Open: Golar LNG, Quality Systems, Royal Bank of Canada, Tiffany & Company.

On the economic front, we will see Q1 Personal Consumption (the consensus is 2.0%), Q1 GDP Price Index (the consensus is 2.9%), Q1 Core PCE (the consensus is 1.5%), Q1 GDP (the consensus is negative 5.5%), May Chicago Purchasing Managers Index, or PMI (the consensus is 42.0), the May NAPM Milwaukee and the May University of Michigan Confidence report (the consensus is 68.0).

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