Last week was indeed the whirlwind week we warned of. And, even the mediocre news was interpreted as bullish. The market soared accordingly.

Income and spending were both up, by 0.2% and 0.4%, respectively. And, consumer confidence came in higher as well as much better than expected (to 53.5). Factory orders were up a tad as well, by 0.1%.

On the housing front, the improvement was solid. The Case-Shiller index showed a 4.23% increase in home prices, and pending home sales popped by 5.2%.

Initial claims fell a tad (-6K) to 472K, as did continuing claims, to 4456K. Private nonfarm payrolls grew by a better-than-expected 67K. Hourly earnings also topped expectations with a 0.3% increase. The unemployment rate inched higher from 9.5% to 9.6%, though in some regards that’s a healthy sign of an increase in job-getting optimism.

Economic Calendar

The coming week will be much less eventful. August’s consumer credit levels will be unveiled on Wednesday (-$5.5B expected). New and ongoing claims will be released on Thursday; look for little change. Wholesale inventories should show a 0.5% increase on Friday.

Overall, as investors start to get comfortable with the fact that the incredible yoy growth was a thing of the past - and that the current yoy numbers aren’t “slam dunk” comparisons - expectations have been worn down to something more reasonable. And, now that it’s becoming clear that the slow-down doesn’t equate to a contraction, the bulls have a fighting chance again.

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