When I wrote the update two weeks ago I said that we might be nearing the point of maximum optimism. Apparently, there is another gear for optimism in this market as stocks have just continued to slowly but surely reach for the sky. Which is fine I suppose since we own the devils (although not much in the way of the US variety) but I can’t help but wonder what happens when the spell breaks. Goldilocks may be in the house now but on Wall Street she is often chased away by a certain Mr. Murphy and his eponymous law. While nothing seems to dent the enthusiasm for stocks today for more than a few hours, there will inevitably come a time when no amount of positive news will be sufficient to convince today’s bulls to stay that way. 

The last two weeks of slow motion melt up were brought to you by quite possibly the most boring two weeks of economic data for this entire cycle. With hurricanes affecting some releases – or not – and tax reform still a vague form on the horizon, no one much cared either way how the data looked. As it turned out it didn’t have much to say no matter how much one tried to torture some meaning from it. You could have taken one of those weeks off to play golf in Hilton Head and not missed a thing. I know that for a fact. (Although, like so many others these days, I didn’t really take time off completely. I checked markets and economic releases, did conference calls and read all Jeff’s posts. I took 4 hours out of every day to play 18 holes but otherwise it was pretty much business as usual. There is no such thing as a true vacation anymore and that is probably more than just a little sad.)

Most of the sentiment based data was better than expected, as one might expect with the stock market making new highs daily. Don’t tell me that company managers aren’t affected by the markets and Fed rhetoric. The Fed surveys (Philly and Empire State) were both much better than expected with employment particularly strong. The employment component of the Philly survey hit an all time high (best in 48 years???). Curiously, that didn’t show up in the JOLTS report which showed a slight fall in job openings. The U of Michigan consumer sentiment survey was also better than expected with expectations up 7 points. Home builders were upbeat with the housing market index at 68. Starts and permits were both down though so one wonders where their enthusiasm originates. Multi-family permits were down a considerable 24% year over year but single family permits were up 9.3% so builders are obviously focused on the latter figure.