The First Quarter Gets Some Window Dressing: Dave's Daily

Economic data Friday was mixed and depending on your vision or bias was spun to suit. Personal Income & Spending was a dangerously mixed bag with income down and spending up: (Personal Income .2% vs .4% expected & prior .3%. Spending .8% vs .6% expected & .4% prior. Core PCE was .1% vs .2% prior). With spending up a good portion of this goes to food and energy excluded in the "core" PCE. Since the "core" stuff is what the Bernank et al focus on it will justify ongoing ZIRP and perhaps more QE. It's all contrived and absurd frankly.

Later the Chicago PMI (62.2 vs 63 expected & prior 64) also disappointed with a miss but bulls didn't mind.

Consumer Sentiment (76.2 vs 75 expected & prior 74.3) rose and beat estimates but also has a larger stock market component than does Consumer Confidence data released previously.

Bulls chose to embrace the spending side of data and Consumer Sentiment ignoring everything else.

Apple's (AAPL) share price declined on news that Google (GOOG) would be stepping up efforts to compete with Apple products like iPads and smart phones. Also much in the news was widely disseminated story that without the company's earnings first quarter EPS for the S&P 500 would be flat versus up 1.50%. So despite the heavy weighting of shares (15-20%) in many indexes, not mention hedge fund and institutional portfolios, the stock were sold Friday. This is sector rotation of a different kind. It may only have little to do with recent stories of company sweat shops in China.

Sectors and linked stocks leading markets higher included retail (LIZ & XRT), consumer discretionary (F & XLY), insurance (TRV & KIE), healthcare (HCA & XLV) and REITs (SPG & IYR) to name a few.

Gold (GLD) prices rebounded as the dollar (UUP) weakened. Grain (JJG & DBA) prices exploded higher on a large and unexpected drop in inventories. It's also the planting season and despite good weather and large planting estimates we now enter the more uncertain period of the year when future weather and other factors (disease, drought, rot and currency issues) come into play. Base metals gained slightly while crude oil and energy gained slightly. Bonds (IEF, TLT and LQD) saw more serious selling.

Volume was once again light even on this window dressing day. Breadth per the WSJ was mixed.