Sure, things look rosy for Goldman Sachs (GS.N), but the firm hardly represents the broad U.S. economic situation, as investors are looking over a mélange of lousy data, with dribs and drabs of mildly encouraging information in the mix. Goldman Sachs headquarters building in New York. REUTERS/Lucas Jackson
Tuesday's retail sales figures weren't all that great - the strength comes from auto sales and rising gasoline prices (and rising gas prices aren't exactly great for consumers) - and Wednesday's data on capacity utilization and energy inventories are likely to confirm the ongoing slack in the economy.
So what to make of the statements from CSX Corp. (CSX.N) chief executive Michael Ward, who told Reuters the worst of the recession has been seen? Data on capacity utilization doesn't suggest a pick-up in demand, and the giant inventories of distillate products in various parts of the country also suggest the economy is sputtering, not chugging.
Weekly data on energy product inventories will be released Wednesday. Notably, distillate stocks - that's diesel fuel, jet fuel and heating oil - were at 158 million barrels as of the July 3 week, or about 55 million barrels above normal. Of particular interest is the inventory of low-sulfur diesel located on the western U.S. coast. Refining production has been in decline here over the past year, but inventories have not been drawn down to any great degree.
In a strong economy, stocks would likely fall - but they're not, despite declining refinery output, because of slack consumer demand for imports that come into Pacific ports. "If we're not seeing a material drawdown in supply, I would think that's indicative of weakness in overall demand in the market," says Stephen Schork, who writes the Schork Report, an energy market newsletter. "We're simply not manufacturing this stuff right now."