Not like a market test was needed, but in a time when bad news is great for stocks, we fully expected today's Non-Mfg ISM [5]consensus beat to be great-er for the several hot potato passing algos still trading. Sure enough, the February non-manufacturing ISM just printed at 56.0, higher than the 55.0 expected, up from the 55.2 in February and the 8th beat of expectations in a row.
That the service sector output rose despite consensus it wouldn't due to tax hikes, and higher gas prices, indicates just how "valid" and accurate it truly is, but with every data point now geared to only one goal - to get everyone to play musical chairs while the music plays, does any data actually even matter? After all, an improving economy would mean a tapering QE, but Bernanke has now made it clear no matter what the actual real or fake state of the economy is, he will never stop the liquid(ity) morphine. Perhaps that is why the employment index actually dipped in February from 57.5 to 57.2 - supposedly this makes it "realistic."
The index components:
[6]
It is not that very surprising that there was not one negative comment among the respondents.
- "Our business is beginning to turn up slightly." (Health Care & Social Assistance)
- "Business seems to be improving; RFQ volume and orders also up." (Management of Companies & Support Services)
- "Continuing to see slight uptrend in activity, primarily related to 1st quarter initiatives started." (Finance & Insurance)
- "Construction market showing some positive signs." (Real Estate, Rental & Leasing)
- "The economy continues to slowly pick up, perhaps at an even faster pace than had been previously projected. New housing permits and business licenses are at a multiyear high, although still lower than pre-recession." (Public Administration)
- "February bouncing back to forecast levels, which was 11 percent over 2012." (Wholesale Trade)
- "Business is picking up; more projects to bid and things are improving." (Construction)
And so on. Now all we need a miss in this Friday's NFP data to make sure the bunchbowl is not taken away for a long, long time, and the Schrodinger economy - that which is getting both better and worse at the same time - continues .