This morning’s batch of economic data was largely inconclusive. However, this does not mean that there wasn't a message provided. From where we sit, we will say that the overall message from the reports seen in the last few weeks is one of an economy whose rate of decline has slowed. And as we’ve mentioned several times recently, this is a very important first important step in the recovery process.

As most investors are aware, the stock market is a discounting mechanism for future expectations. This is the basis of the old saw “buy when the government announces the country has entered a recession.” While applying this strategy would have caused buyers to be a bit premature this time around, the idea is that stocks will begin to discount an improvement in the economy between six and nine months before the economy actually improves. And since the average recession only lasts about nine months, well you get the idea…

Today’s data helps strengthen the argument that the rate of decline is indeed slowing. The CPI report also reminded us that there is nothing to worry about at the present time on the inflation front as March’s reading fell by -0.1%.

In addition, it was a positive that the Empire Manufacturing Index (an index designed to indicate the strength of the manufacturing sector in the New York region) came in with a reading of -14.65. While this number is negative, the reading is well above expectations for -35 and also significantly above last month’s reading of -38.2.

On the other side of the coin, Industrial Production for March fell by -1.5%, which was below the consensus expectation of -0.9 and last month’s readings were revised a tenth lower.

To sum up, we got a good inflation number, a better than expected number from manufacturing in the New York area, and a soft number for the country’s industrial production. All in all, this is pretty much what we’d expect to be seeing right about now.

In short, we should be looking for what Erin Burnett on CNBC calls “crocuses” to begin poking up through the snow in the economic picture. And so far at least, this is exactly what we’re seeing. This is why our current battle cry is “buy the dips – if you can get ‘em.”

However, before you label us permabulls, please note that we continue to be “market environmentalists” – meaning that we will adapt to the whatever market environment presents itself. And for now, that means we need to be leaning bullish.

Does this mean that stocks won’t experience a substantial pullback in the coming days, weeks, months? Of course not! We fully expect stocks to retest the lows at some point this year as all moves in the market tend to be overdone in both directions. And for the record, when we see some sort of a retest occurring, you can count on us to be pounding the table to “load the boat.”

S&P 500

S&P 500