Let's start with the good news. First, there's an overall expectation that this week's FOMC will sound more dovish. Second, the latest Housing Market Index (HMI) of 52 for June was the highest it has been since 2006! Third, the first two pieces of good news have pushed the S&P 500 up nearly 1%.
The not-so-good news is the Empire State Manufacturing survey, as although it came in much higher than expected, seven of its nine sub-indexes declined and were either at 0.00 or in negative territory. The overall index came in at 7.84, a huge improvement from last month's -1.43, and certainly above the expectations of no change. We find it very difficult to explain such an encouraging figure when new orders, shipments, unfilled orders, inventories, number of employees, and average workweek, all declined significantly. Number of employees sub-index dropped from 5.68 to 0.00, and all other sub-indexes stated earlier declined further into negative territory. By the way, the 6-month forward looking index, along with what we consider as important sub-indexes, was also lower.
We would like to say "don't let the smooth taste fool ya", but then again the equity market is already up 1% this morning. Regarding the names that we follow, AVID is up 0.5%, BCOR up 1.8% and nearing its 52-week high, FB remains near where we think it should be valued at, but is up 2%, and IACI is approaching $50, up 1%+.