It has quickly become the second most important economic report of the month, the ISM Manufacturing. Today's results came at a very pivotal moment as a disappointment, coupled with overall apathy and the ADP report, could have been devastating. Instead, investors are flocking to the usual suspects, bidding up Priceline (PCLN), Apple (AAPL), and Chipotle (CMG). The good news is there is some bottom fishing, while action in value names is also encouraging. Of course, all of this might not mean much if there is a major letdown on Friday. But, at this point, how much further can we be letdown? Consensus calls for a loss of 100,000 jobs in August, if it's 120,000 the message is the same.

The economic game plan is not working. In fact, it was never designed to work, and that is creating a dilemma at the White House. They don't want to change course, but yelling fire in a crowded theater isn't going to get the masses fleeing to the arms of big government and socialism. The nation has been there, done that, and it's like jumping out of the frying pan and into the fire. Keynesian economics doesn't work. Taking money from job producers to reward people that aren't working, or may not want to work, is a real recipe for tearing down a couple hundred years of progress.

Speaking of undermining progress, the airways are filled with experts saying they wouldn't chase this rally. Of course they wouldn't; they make money by scaring the hell out of individual investors and buying on weakness. For them, the last thing they want to see is the stock market move higher because it empowers the masses. That makes it tough on the individual investors; everyone seems to be out to mitigate their power. It has worked so well. So many people have their heads in the sand hoping to avoid getting kicked. It's all connected, and is currently designed to float a cloud of dismay.

Even today the market is up mostly because manufacturing looks better, and that's a hopeful sign the U.S. can hitch its wagon to the rest of the world. There is nothing wrong with competing around the world; in fact it is critical to our future development. But, we need to expect, and get more out of, our own $14.0 trillion economy. Once, just once, a whole-hearted address to the nation to say how much faith there is in the average American, followed by compromises in policies like allowing for the extension of the Bush tax cuts for every taxpayer, and the markets would take off and not look back.

Today's reprieve from the repressive stock market will not be the revolutionary shot heard round the nation, but a few sessions like this could spark more confidence.

Manning up on Manufacturing Data

Manufacturing came in at a reading of 56.3 against consensus of 53.0. In addition to besting the estimate, the employment component reading of 60.4 is the best since December 1984.

Little Guesswork Needed
By: Brian Sozzi, Equity Research Analyst

The market held valid concerns about Guess' (GES) fundamentals prior to the issuance of 2Q10 results. Not only has the company's sales and margin outperformance relative to consensus forecasts slowed, but back on the 1Q10 earnings call in May it was obvious management was tempering the potential outcomes for FY10. Toss in retail sector trends that have lacked bravado (slowing sales, slowing mall traffic, increased discounting, elevated inventories) and it's but little wonder that Guess shares have been on the chopping block since late April. Now trading on a forward year P/E multiple of 9.9x, the lowest dating back to the January 2009 ended quarter, and near the bottom end of our specialty retail sector average (stock also yields 2%), Guess shares are a sexy investment for a long-term minded investor.

Granted, the 2Q10 operating results from Guess did not exactly soothe the uneasiness of the bulls. Perhaps, the 2Q10 results fueled the engine of the bear camp. North American retail comps at +3.5%, though outpacing most peers for the quarter, slowed noticeably from 1Q10, with the segment's gross margin facing an attack by industry forces. A slowdown in the consumer uptake of premium denim played a role as well; denim is 30% of Guess' business. We believe, however, that Guess will post less disappointing results in North American retail as the year progresses as consumers adopt products outside of denim (different fabrics and fits) and desire to complete the look. For Guess, non-denim offerings are priced comparable to denim and have a similar margin structure, so increase conversion won't necessarily equate to an unfavorable sales mix that deconstructs gross margin.

Please visit www.wstreet.com to read remainder of the piece, which includes a full review of the company's investor conference yesterday.