It's March Madness in Philly. Thanks to the biggest jump in New Orders since Oct 2005, Philly Fed surged to 15-month highs (jumping from -2.8 to +12.4) crushiung expectations of -1.5. Number of employees improved mopdestly but remains in contraction but "hope" soared to 5 month highs led by exuberant expectations for capex and average workweek. Do you believe in miracles?
In a note that may have been quite prescient, BofA's HY strategist Michael Contopoulos released a note last night titled "Fed acknowledges global growth concerns… again", in which he said that "we have to admit; today’s dovish comments by Yellen took us by surprise" and adds that "although the market’s initial reaction was positive, we think the longer run impact of a very dovish message is bad for risk assets. In fact, we’re a bit amazed by the initial response from high yield today."
Moments ago Caterpillar, the company which as we promptly report every month, has never seen a "greater depression"...
... "surprised" markets with yet another reality check when it announced early this morning that it is slashing its Q1 revenue and EPS guidance, as follows:
We’ve long said the Norges Bank would ease in March in the face of falling crude prices and the continuation of the negative rates regime at the ECB, the Riksbank, and the NationalBank.
Indeed by the time of today’s announcement, the market was pricing in a ~75% chance that Oystein Olsen would cut rates by 25 bps. And he didn’t disappoint, slashing the depo rate to 0.50%. Incidentally, we’d hate to be the 1 economist out of 20 surveyed by Bloomberg that managed to miss this one.