Last week's manufacturing ISM was a big disappointment, making a mockery of Wall Street expectations, and of course its biggest permabull , Joe Lavorgna who came 10 standard deviations above the final number. Will this weakness continue today? If yes, it is merely a loophole for the Chairman to use at the next FOMC meeting and further goose the market. If not, it likely means that Friday's NFP number will see a record 'adjustment' fudge factor with payrolls soaring well above the consensus, on a last ditch effort to get the economy to sustain a virtuous cycle. Unfortunately when one takes away the $2 trillion punchbowl injected over the past 6 months into the global economy, this is impossible.
Goldman summarizes what to expect today:
10:00: ISM non-manufacturing index (February): Moderation. We forecast a moderation in the US services PMI, consistent with declines in a few of its global counterparts. In January, the services PMI was at a level historically consistent with around 3.5% GDP growth, which is significantly faster than our view of underlying growth momentum at the moment. The employment component of the report surged in January (to 57.4 from 49.8) and will be of particular interest in today's release. Another strong reading would be consistent with healthy payroll employment growth for February (reported Friday). We will also be watching the report's "prices paid" measure, which has inched higher in several of the other monthly business surveys.
GS: 55.3; Consensus: 56.2; Last 56.8. MAP: 3
10:00: Factory orders (January): Decline on durables. The already-released durable goods report suggests that total factory orders likely declined in January—we forecast a drop of 2.1% month-over-month. Revisions to durable goods shipments or news on inventories could affect our tracking estimate of Q1 GDP growth, which currently stands at 1.9% (annualized).
GS: -2.1%; Consensus: -0.9%; Last +1.1%.
13:20: Dallas Fed President Richard Fisher on the economy in Dallas. Q&A expected. Mr. Fisher will also be speaking on the economy at a dinner event in Houston (19:30 NY time).