Last week the equities markets drifted higher to set a new all-time high. The caveat for investors is that signs of underlying weakness remain in the market and could be setting the indices up for a fall. Although the bulk of S&P 500 companies beat their consensus estimates the market was expecting much better, which is not a good thing for equity prices. In addition to earnings prospects dimming, the weather also indicates a decline in economic activity. Although the bulk of the information is in the positive territory, none suggests an acceleration in economic activity.
This week is going to be different. Although the earnings cycle is fast coming to an end, the economic calendar is full. A few reports worth to pay attention to include retail sales, the Producer Price Index, Industrial Production, Business Inventories, and Housing starts. The surprises may be the Industrial Production and Business inventories. Demand generated by the pandemic and a rebounding economy has inventories shrinking and output increasing.