In order to focus on the big picture trend, this time around I have elected not to break out the data into five groups (manufacturing/general, housing/construction, employment, consumer and prices/inflation) as I have done in the past. Instead, the chart below shows just the aggregate data relative to expectations plotted against the SPX on a weekly basis, going back to the beginning of 2010.
To some extent the chart shows stock prices and data surprises have been highly correlated over the course of the past 1 ½ years, with a very minor lag time, if any. Not surprisingly, the recent data trend has been down sharply. It remains to be seen whether this is a temporary hiccup as the full extent of the Japan disruption is revealed or whether the global economy now has some large structural headwinds. Certainly the recent decoupling of data and stocks is unusual – and may come to a head tomorrow morning.
Readers who are interested in more information on the details of the economic data included in this graphic and the methodology used are encouraged to check out the links below.
- Continued Lackluster Data vs. Expectations
- Economic Data Frozen Until Next Thursday
- More Upticks in Economic Data vs. Expectations
- Economic Data Trends Improving
- Chart of the Week: Updated Economic Data Trends
- Economic Data Trends in Advance of Nonfarm Payrolls
- Trends in Economic Data Relative to Expectations