AP Fat Lady

Q1 is over.

First the scoreboard:

Dow: 13,212.0, +66.2, +0.5%
S&P 500: 1,408.4, +5.1, +0.3%
NASDAQ: 3,091.5, -3.7, -0.1%

And now the top stories:

  • There wasn’t a lot of action in the overnight markets to close the quarter.  One concerning signal, however, was the Japanese industrial production data.  The world’s third largest economy said factory production unexpectedly fell 1.2 per cent.  Analysts were looking for a gain.  This has some economists worried about the strength of the Japanese economy, which shrank 2.3 per cent in the fourth quarter.
  • On the bright side, more economists seem to be getting increasingly optimistic about China, which has been slowing.  Leaders in the world’s second largest economy are targeting a 7.5 per cent year-over-year growth rate, which most would consider to be a soft landing.  However, Ting Lu, Bank of America’s top China economist, sees the country growing at 8.6 per cent.  Lu argues that much of the disappointing recent data was the worst we would see for the year.  Another firm that is bullish on China is Morgan Stanley.  Helen Qiao, Morgan’s top China economist, recently lifted her GDP target to 9.0 per cent from 8.4 per cent.
  • It’s worth noting that Japan’s stock market smoked China’s stock market.
  • European markets rallied to close the quarter.  This morning, European leaders announced they would raise the firewall of bailout funding to around $934 billion.  Some had pushed for as much as $1.2 trillion.
  • Today’s U.S., economic data came out mixed.  Personal incomes climbed by just 0.2 per cent, which fell short of economists’ expectation for 0.4 per cent.  However, personal spending jumped 0.8 per cent, outpacing economists’ expectation for just 0.6 per cent.  With those dynamics, it should be no surprise that the personal savings rate dropped.
  • Chicago’s PMI number fell to 62.2 in March, missing expectations for 63.0. According to their report, employment expansion slowed.
  • The Reuters / University of Michigan consumer sentiment index jumped to 76.2 in March, beating expectations for just 74.5.  This was welcome news given elevated gas prices.
  • So, what’s next for the U.S.?  Well, Morgan Stanley’s Adam Parker is bearish.  In a recent note to clients, he compares the 2012 market to the 2006 market, which were both years when the S&P 500 breached 1,400.  He notes that we currently have better corporate profitability.  However, the economic picture is much weaker.  Morgan Stanley’s year-end target continues to be 1,167.
  • However, Goldman’s Jim O’Neill is a bit more optimistic on the U.S.  He believes it may be the most important growth driver in the world.
  • Don’t Miss: The 10 Ominous Signs That Will Portend Another Spring Stock Market Sell-Off >

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