When the Chicago Purchasing Managers' index comes in well below 50 and the pending home sales cool, it doesn't make you feel all that concerned about what the Fed is going to do in March.
Except all the Fed seems to care about is one number: the employment number. That's been the story all along, so when I read these stories about data points that are incredibly weak, I think, "Oops, those are bad for the manufacturers or for the homebuilders, but not bad enough that they even hit the radar screen for the Fed."
It's too bad because, as Warren Buffett makes clear in his annual report, the idea that we could be satisfied with 2% GDP growth is something that just seems wrong and not historical, yet if your calculus is hiring, then the Fed is, indeed, ignoring that stat, too.
But the stocks aren't. It is hard to mount a rally where you think earnings might come down for the homebuilders and the industrials at the same time that the Fed might be hiking, especially in a political environment that Jeff Immelt, in his excellent GE (GE) report, says the political environment is the worst he has ever seen it. (GE is part of TheStreet's Dividend Stock Advisor portfolio.)
In other words, with a government unable to get anything done, with a Fed that thinks it is done being easy, and with manufacturing and homebuilding being weak, it's tough to get excited about the market, even if Buffett says long-term things are as good as ever.
I would feel better if either the data were stronger or the Fed said wait and see. Now we are just dancing past what could conceivably be the graveyard of the market if the employment number is so strong that the Fed feels compelled to act despite the fact that so many companies are simply not doing nearly as well as before, especially the heavily indebted oils.
Just a quandary that can be resolved positively or negatively by Friday, and traders should recognize how much is on the line this week, whether you are a bull or a bear.