Corner of Wall & Main

We're halfway through the trading week and, for some, the picture continues to be as clear as mud. Let's try to shine a light on what we've heard from the economic data and company earnings we've received over the last few days. To me, the biggest data ahead of Friday's nonfarm employment report was the initial gross-domestic-product reading for first-quarter 2014 this morning. We all knew it was going to be a bad report given the harsh winter and its impact on the economy, but the reported figure of 0.1% was far worse than the consensus view of 1%. In context, GDP in the December quarter clocked in at 2.6% while the reading on the year-ago March quarter was 1.1%. Ignore the rearview 1Q 2014 GDP reading. Despite being the advanced reading on GDP, we are already one month into the current quarter and that simply tells us what we already know: No matter how you slice it, the economy came to a standstill in the quarter, particularly in January and February. We saw some improvement in March and more in April in manufacturing, single-family housing starts and other data. Even this morning's April Chicago purchasing managers' index was far stronger than March. Add to that the earnings beats and raises from Parker-Hannifin (PH), Cummins (CMI) and others, and we have further confirmation of the improving manufacturing picture. Improving manufacturing means the highways and rails. The continued rebound in manufacturing means more products moving along U.S. highways and rails, and that bodes well for truck manufacturers like Paccar (PCAR), Navistar (NAV) and Volvo (VOLVY), as well as railcar vendors Trinity Industries (TRN) and American Railcar (ARII). Confirmation to watch for will be from the rails and shippers, and Ryder Systems (R) recently raised its current quarter and 2014 earnings guidance. Commentary from Cummins points to a stronger truck market than previously thought, with management now forecasting a North American Class 8 truck build of 244,000 units vs. 236,000 in the December quarter. Union Pacific (UNP) reported favorable volume growth year over year and confirmed it is seeing gradual economic improvement. Are some social media stocks finding a floor? Social-media stocks continued to get hit this week, and Twitter's (TWTR) earnings served up fresh pressure on the group this morning. Even so, stocks like Facebook (FB) and even Amazon (AMZN), which have been punished over the last several trading sessions, appear to be finding their footing. Tomorrow, social business networking and referral site LinkedIn (LNKD) reports its March-quarter results. For those watching or wondering, the current consensus expectation for the quarter is earnings of $0.34 per share on revenue of $466.6 million. We at the Thematic Growth Portfolio have used the pullbacks to get long FB and AMZN shares, but we are patient investors with a time horizon of 12 to 18 months. Income and wages are key for the consumer and for discretionary spending. The two big pieces of data between now and the end of the trading week are Personal Income & Spending and the April NFP report. Given the big moves in a number of food and other inputs -- beef, pork, bacon, sugar, cocoa, chocolate and others like gasoline -- wages and disposable income will be a keen focus of mine in both reports. If the trend of little to no wage growth continues, the outlook for restaurant stocks -- Cheesecake Factory (CAKE), Red Robin (RRGB) and others -- is going to get even rockier.

Corner of Wall & Main

Let's shine a light on recent economic data and company earnings

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