Today’s Durable Goods Orders report wasn’t a disaster, but it wasn’t good either.  

Manufacturing has been a strong pillar throughout the recovery; it’s showing signs of pervasive stagnation, Total Durable Goods and Core Capital Goods are now down 1.8% and 1.3% respectively over the past 5 months. 

 Europe’s ongoing crisis may finally be hitting U.S. shores.  

I mostly focus more on medium to long-term market trends, but I’m giving myself a pat on the back for nailing this relief rally. :-)   See here.  

S&P 500 levels I’m looking at = 1,340, then 1,365.

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Tomorrow’s Eurozone summit and accompanying news of “No Eurobonds” from Germany should be the first test of its staying power.  Then on Thursday, we have the big Durable Goods Orders report.  See here for a preview

The report of the week will be Durable Goods Orders.  Most investors know the housing market is recovering, and it’s home buying season.  So we should get some good reports on that front.

But Durable Goods Orders have been weak the first 3 months of the year; a 4th month would begin raising red flags that manufacturing is set to slow the 2nd half of the year.  We need to see a good report for confirmation of the recovery story.   

Manufacturing continues to support the economic recovery.

I must admit, I’m impressed with its resilience, especially considering that Durable Good Orders (a leading indicator of industrial production) has struggled mightily in the first 3 months of the year.  Furthermore, Ceridian Pulse of Commerce has also been rolling over since 2011.  

Impressive indeed.  I’m sure this will lead to upward revisions in GDP from analysts.

Most of Europe is in recession or about to enter one.  Meanwhile, the U.S. economic recovery continues.  

This is inline with recent jobless claims data.  

On the subject of manufacturing’s good news yesterday, I forgot to mention that Durable Goods have been weak recently.  Therefore, continued strength in the ISM may prove difficult to come by.  

Europe continues to be a thorn on the bull’s sides.  However, with a VIX of roughly 17, I don’t think investors are too worried with what’s going on over there.  Many believe that the U.S. will decouple from the global economy. I don’t think it will be able to.  

Most PMIs showed continued, but slower, expansion.  However, the national ISM showed an acceleration in activity.  Go figure.  Nonetheless, the data must be respected.  

Overall this was a solid report and is the nexus of today’s bullish market activity.  The Dow has hit a new bull market high.  PragCap had an interesting take on today’s data.  

I still remain of the view that decoupling will ultimately not take place.  While today it seems that it’s occurring, remember that the housing market peaked a year before stock markets in 2006-2007.  Turns out the economy didn’t decouple from housing.  

But aside from that, today’s data is great solace for the bulls and keeps the decoupling story very much intact.   

Here’s the bearish spin on the Empire Manufacturing data.  I must admit, the virility of the data seems suspect when important sub-indices such as New Orders, Backlogs, Inventories, Prices Received, and Employment all showed declines.  

While the headline disappointed, it wasn’t due to sluggishness in manufacturing.  In line with this morning’s Empire manufacturing report, the sector continues to grow and confound the naysayers.  

At what point will slowing global growth translate to sluggishness at home?  What if it doesn’t?  I admit, I’m surprised that we haven’t seen softening economic numbers, given the state of the global economy.