KEY DATA: Orders: +3.4%; Excluding Aircraft: +0.6%; Capital Spending: -0.8%/ Pending Sales: +5.1%/ Claims: -10,000

IN A NUTSHELL: “Another day of data, another day of pretty solid data.”

WHAT IT MEANS: The next Fed meeting is in a little less than three weeks and the economic releases will be even more closely scrutinized the closer we get. Today’s reports generally paint a picture of accelerating growth. Durable goods orders surged in April, as demand for civilian aircraft picked up sharply. Military orders eased back after skyrocketing in March. Even excluding aircraft, demand for big-ticket items was solid, with every sector other than machinery posting gains. That said, businesses remain quite cautious on the investment front. Orders for nondefense, non-aircraft capital goods fell for the third consecutive month and fifth time in six months. Consumer may be spending and their confidence rising, but CEOs are down in the dumps – or they would just rather buy back their stock than investment for the long-term. Whatever. Backlogs continue to build, so we should see an increase in production soon.

As for the housing market, The National Association of Realtors reported that pending home sales were up sharply in April to the highest level in a decade. This is a forward-looking index that is pointing to better home sales in the next few months. Strong increases were posted in the West and South, a more modest rise in the Northeast and a modest drop in Midwest.

After having spiked a few weeks ago, unemployment claims have moved back down to more normal, that is low, levels. Any question that the labor market was softening should be put to bed, at least until June 3^rd, when the May jobs report is released.

MARKETS AND FED POLICY IMPLICATIONS: To hike or not to hike, that is the question the FOMC members face. If they are really data driven, the data don’t demand they make a move in June, at least not yet. The numbers are coming in solidly and the Atlanta Fed’s GDP Now forecast is pushing 3%. So for now, it is fair to say that the data support a hike. But the labor market is key and until we get the May employment gains, unemployment rate and wage increases, “support” is the best we can say. The wild card is the May retail sales report, which is released the morning of the first day of the meeting, June 14. It was up big-time in April and any rise would be considered good. A decent one would point to a consumer who is back spending heartily. For now, let’s just assume the Fed could move in June but July may be a better bet, but only by a little. I suspect this uncertainty will temper the actions of investors for the next couple of weeks, especially since none of the economists I know have a good feel for the May jobs report.