Today's Stock Market Rally -- A Harbinger of More to Come?

The stock market's bullish reaction to today's strong US economic data fits with the views expressed in my blog over the past few weeks:

1.  Stocks would rally at least up to the ECB Meeting on March 10.

2.  Stocks may very well take a March Fed Rate Hike in stride if the macroeconomic background is in line with the above-trend FOMC Central Tendency Projection for GDP Growth.

It is far from clear, however, that US economic growth will exceed the 1.7% (annualized) estimated trend.  For example, the Atanta Fed's GDP Now Model's projection for Q116 Real GDP Growth is down to 1.9% (q/q, saar).

And, while Initial Unemployment Claims appear to have peaked in January, Continuing Claims are still trending up.  So, while layoffs may have abated, hiring has turned more cautious.   Both should move down to send a clear signal that economic growth is above trend.

Nevertheless, I'm getting cautiously more optimistic that the stock market rally will persist beyond the March 15-16 FOMC meeting, as /1/ key data ahead of the meeting should remain strong and /2/ there were hints from two Fed officials (a hawk and a dove) that forward guidance coming out of the meeting may ease up even, as is the risk, the funds rate is hiked -- see prior blog postings.

If the stock market gets through the March FOMC Meeting with little damage, I can see it rallying at least into May -- ahead of the "Brexit" referendum.