Lousy Economic Numbers, but Stocks Hold Up

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The China and European Purchasing Managers Index (PMI) numbers were all below expectations. China's flash PMI (unofficial) came in at 48.7, showing contraction for the seventh straight month.

The euro zone composite PMI, which combines services and manufacturing indexes in the euro zone, fell to 45.9, the lowest reading since June 2009.

So why are we up? Well, German gross domestic product was up 0.5 percent in the first quarter.


1) On the surface, the European Union meeting was a complete dud: No concrete actions, just keep talking until the next meeting in June. Surprisingly, there was little movement on expanding infrastructure projects.

If you want to emphasize the positive, the EU is inching toward a consensus on Eurobonds, even with Germany's objections. There is widespread support for bank deposit guarantees.

And the Irish Prime Minister Enda Kenny said there was strong support for using the euro zone's bailout fund to directly recapitalize banks, rather than giving money to sovereign funds first.

None of this has translated into anything concrete, however. The leaders will only move on another crisis. The Greek elections, as well as bank funding issues, will present themselves as "crisis opportunities" before the next EU summit meeting June 28-29.

2) Tiffany & Co. drops 7.6 percent pre-market — set to open just off a 52-week low — after the high-end jewelry retailer missed earnings expectations and lowered 2012 guidance due to slowing global demand. Management said the second quarter was off to a slow start. Tiffany reported first-quarter earnings per share of 64 cents, lower than the Street’s view of 69 cents a share. Worldwide sales increased 8 percent, while same-store sales rose 4 percent. CEO Michael Kowalski noted the Americas, which provide slightly less than half of global sales, underperformed. This continued a soft trend that began last quarter, he added. Tiffany shaved its 2012 forecast by 25 cents on both ends to between $3.70 and $3.80, below analysts’ $3.97 expectation.

The problem with Tiffany is you can't just blame Europe. Europe is only about one-tenth of its revenues. Half of it is from the U.S., less than 20 percent from China, with most of the remainder from the rest of Asia-Pacific.

The flagship store in New York saw same-store sales decline 4 percent.

Besides the economy, the other problem is price inflation: Diamond prices have been rising dramatically in the past few years. Walk in and try to buy a $10,000 diamond ring, you'd be surprised how little you can buy.

Signet Jewelers is also guiding down.

3) The Indian rupee hit a record low Thursday. This is one of the main reasons we have seen gold (which is dollar-denominated) weaken, as well. The Indians are one of the biggest buyers of gold in the world. The Indian economy is faltering due to the slower global economy, but also due to rather poor central government leadership and a high trade deficit (they are a big importer of oil).

—By CNBC’s Bob Pisani

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