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Apparently It's Not All Greek - WSS Research Team

After a shaky open, the market has managed to make a steady intraday reversal, resulting in both the NASDAQ and the S&P 500 touching new intraday highs. Last night, Greece requested a six-month loan extension from the European Union so it would have more time to secure a longer-term bailout, but Germany has refused. As a result of the dragging negotiations, the value of the euro is continuing to slide relative to all major global currencies.

Crude inventory levels are not helping the price of oil today, nor is it giving a boost to many oil refiners that reported earnings this week. For the week ended February 13, the Energy Information Administration (NYSEMKT:EIA) reported that 7.7 million barrels were added to crude inventories this week, compared to a build of 4.9 million barrels in the prior week.

Though not quite apparent on the surface, the economic data released this morning showed a few bright spots for February's performance. Firstly, the initial jobless claims for the week ended February 14th showed some improvement over last week's pop. Initial jobless claims fell a sizable 21,000 to a slightly lower-than-expected 283,000, which near reverses the 25,000 spike in the prior week. Most importantly, the February 14th week is the sample week for the monthly employment report and showed improvement over the sample week in January. Continuing claims, which are reported with a 1-week lag, increased by 58,000 in the February 7th week to 2.425 million, but fortunately that brought the 4-week average down 10,000 to a 2.398 million level that was last matched in early December. The unemployment rate for insured workers remains at the recovery low of 1.8%. We note that there are no special factors in this week's report, and this fact should lift expectations for another solid employment report for February.

Slow growth in manufacturing was apparent in the Empire State's report earlier this week, and it's also evident in the February report from the Philadelphia Federal Reserve. The Philly Fed general conditions index held little changed at 5.2 versus January's 6.3. Like the Empire State report, Philly noted a substantial slowdown in optimism for the 6-month outlook falling to 29.7, which is still an impressive-looking reading but nowhere near as high as December's reading of 50.9. New orders were still positive at 5.4 but down from January's 8.5 and have been in decline for the last three months. Employment is back in positive territory at 3.9 versus the -2.0 reading in January. Price indications are flat overall with inputs showing only marginal monthly growth and finished goods showing a very slight contraction for a second consecutive month. Inventory levels are a bit suspect, rising to a whopping 15.2 from -0.07 in January. This could mean a near-term negative for shipping and logistics companies as retailers are not looking to replenish their stock anytime soon. The sudden drop in outlook is still the most ominous component of this report, likely hinting at the fact that manufacturers aren't confident about what their order books will show for the first half of the year. All in all, the Philly Fed report points to steady, non-accelerating growth at a fairly modest pace for the month.

Last but not least, the Conference Board's Index of Leading Economic Indicators for the month of January decelerated but was not surprising. The index slowed to +0.2% for January versus a slightly downward revised +0.4% (from +0.5%) in December. Reflective of the Fed's near zero rate policy, the yield spread was once again the biggest positive for the index. Consumer expectations were the second largest positive in the month, although this may reverse in the next report given the drop in the consumer sentiment index reported last week. Credit indications were also very positive in this report. In the negative column, were stock prices and ISM new orders but both of these could easily bounce back in next month's report. Though the headline of +0.2% doesn't look all that strong, steady rates of sustainable modest growth are actually a positive for business planning. Two other readings in this report underscore the steady rate of growth with the coincident index at +0.2% for a 2nd straight month and the lagging index at +0.3% for the third month in a row.