The Meaning of life, the Universe and Economic Data

There are two macro areas to be concerned with during the second half of 2010: what will happen to the real world and the economic recovery and what will happen to financial markets-
which, whilst affecting the wealth of many of us, isn't really the same thing at all. The economic recovery will be affected by, at it's root- how much we make and how much we sell. Even things like sovereign debt are really just a result of how the above equation works itself out..the more we make and sell, the healthier our economies are and, therefore, the less our governments need to borrow to pay for things (if they can get social and economic policy even vaguely right- possibly the World's biggest IF at the moment). This means we watch manufacturing data, sales data, housing, autos etc. The latest manufacturing figures in the USA were bad and the housing data yesterday was terrible. Sales numbers in europe have generally held up well, but need close scrutiny in
months to come. For financial markets we are back to good old fear and greed. Confidence is actually the only thing that affects financial markets- even supply and demand are basically
just a measure of that confidence. That means we in financial markets watch surveys, consumer confidence etc just as closely (if not more so) than the real world data (or if we don't, we should do). Again.. the latest confidence numbers from the US were bad, unexpectedly plunging from around 63 to 53. However, this number is still a positive indicator, being over 50, so the jury is still out on this front. US equities recovered most of their morning losses yesterday, Asia is mixed and CDS indices barely moved- ITRX is actually tighter this morning and we may yet get a calm and positive ending to the week. This is not a time for panic (yet), merely extreme caution. All may yet be well- but markets are still (I believe) in a state where they can turn sharply negative, but only cautiously positive, over the next few weeks. Anyone investing or trading the markets right now needs to make sure he knows and understands what he is looking for and what all the data means (and not just what the press says it means- which changes every day!). Once he has worked that out- I hope he calls me and explains it all... then I can write about it! Happy Friday- non farm payroll numbers in the US the only key data today. Have a good weekend- come on Andy!!