The immortal words of Gomer Pyle rang out in financial headline after headline this week, "Surprise, Surprise, Surprise!"
First the banking sector became awash in surprisingly good news. Four of the US top banks smashed all earnings estimates and posted collective net profits of $13.6B for the second quarter.
Bank of America (BAC) posted a profit of $3.2B
Goldman Sachs (GS): $3.4B
JP Morgan Chase (JPM): $2.7B
The technology sector followed with Intel's surprise. It posted its best quarter over quarter sales increase since 1988. Further, the chip leader formally asserted that this current quarter ending in Sept, will be significantly stronger than any analysts had even dreamed of. IBM also added its vote of Q3 confidence later in the week.
And there was more surprisingly good news in the jobs data Thursday. The number of initial claims in the week ending July 11 fell 47,000 to 522,000 - the lowest level since early January. The data for continuing claims also fell by 642,000 -- the largest drop on record! This huge downward surprise even pulled the four-week moving average of these continuing unemployment claims down by 110,250.
And then on Friday, the housing market chimed in with surprises of its own. Contractors started building single-family homes at the fastest rate in 4-1/2 years. "The bond market was completely caught off guard by the increase in housing starts," said Jane Caron, chief economic strategist at Dwight Asset Management in Burlington VT.
And stocks surprised most strategists as well. Just last week many had forecast stocks to continue their recent declines (or at least continue to move sideways). Q2 earnings jitters dominated the news. But as markets closed on Friday, many traders were left scratching their heads as the Dow rocketed to its best weekly gain since March, closing within easy striking distance of the 9000 mark.
But perhaps the mother of all surprises this week came from the bear of all bears, Doctor Doom, Nouriel Roubini. Just last week the ultra depressing economic prognosticator wrote an article "Brown Manure, Not Green Shoots." But this week in a significant flip, flop, Roubini actually stated, "the worst of the worst is behind us." (He later of course whined that his words were taken out of context.)
Gomer Pyle frequently exasperated his immediate supervisor Sergeant Carter with the Private's Pollyanna-style demeanor. With positive economic surprises everywhere, it is no surprise that Roubini feels a bit frustrated as well.
When all you read is gloom, turn here for a much different perspective.