Keep Watching The Tea Leaves

Durable Goods orders increased last month for the first time in awhile. The markets will like any good news even if last month the numbers were revised down. However a failed government bond auction in England points to the fragility of the crisis being navigated. Stocks were off yesterday after the big rise on Monday. This is not a big surprise but perhaps the rally on the heels of the toxic asset plan was more than the fundamentals warranted. As we have been saying, keep looking for the positive signs but the economy is still getting weaker. Corporate earnings are bleak and expectations aren't getting better. The market may move higher until the end of March but we expect stocks to again trade lower until they can properly discount the expectations of future corporate earnings and the bottoming of the economy.