KEY DATA: Leading Indicators: +0.6%/Jobless Claims: 336,000 (up 13,000)
IN A NUTSHELL: "The economy seems to be picking up some steam as the labor market continues to improve."
WHAT IT MEANS: I know it is getting boring but with the Fed casting its long shadow over the economy and the markets, any economic data that could affect the timing of tapering becomes important. The doubters, such as myself, point to continued sluggish U.S. and world growth coupled with low inflation and ask, "what's the hurry?" Others say that inflation is rising and the threats to the economy of continued quantitative easing grow each day. In that context, we got a couple of numbers today that could help the inflation-paranoids' drive to start the tapering in September. The Conference Board's Leading Economic Index jumped in July, adding on to a small gain in June and a moderate increase in May. It appears that this measure is signaling better growth ahead. Of course given the lackluster pace of the past year, that would not be saying much. The weekly jobless claims did rise, but that was hardly a surprise. These data are incredibly volatile and the previous week's sharp drop was likely to be unwound. More importantly, the four-week moving average, which smooth's out some of the ups and downs, was the lowest since November 2007, when the economy was still expanding. The level is consistent with solid - better than 200,000 - job growth and a decline in the unemployment rate, which is what we could see in the August employment report.