The market is acting great on mostly mixed economic data. I'm not completely surprised a pattern has set in on jobs report week that sees Mondays come on strong and then the middle of the week pullback on anxiety and so-so economic data. The good news for the market is that expectations are lower for most of the data due out this week. Plus, big misses could be chalked up to the weather, so in effect market bulls can claim victory no matter what the numbers are...and imagine the data that comes in ahead of consensus.

The hottest niche of the economy, manufacturing, expanded for the seventh consecutive month. The headline ISM number missed consensus (57.5) but at 56.5 was still above the magical 50.0 expansion marker. There were negatives, including exports declining to a reading of 56.5 from 58.5, new orders slipping to 59.5 from 65.9, and production off 11.8% to 58.4. These reversals add to the double-dip recession argument. The bright spot was employment which climbed to 56.1 from 53.3. I think that the strong dollar hurt the export reading but I like that commodities are coming on, with some respondents saying metals are enjoying their best quarter in a few years.

The numbers are basing, looking for a spark.

Construction spending was down although a little better than expected. Consensus was for a decrease of 0.8% but the actual number was 0.6% decline. Residential construction actually edged higher to $269.2 billion from $266.2 billion (annually) but non-residential slipped to its lowest level since April 2007, as hotel spending dropped 9.8% month over month.

Retail Dual: Costco vs. BJ's Wholesale
By: Brian Sozzi, Research Analyst

Costco Wholesale Corp. (COST) announces its 2Q10 earnings on March 3 and in view of heightened market expectations going in, this report and subsequent forward-looking commentary by management must impress. We have reason to believe that Costco will not let the market down posting earnings ahead of consensus estimates ($0.72).

BJ's Wholesale Club Inc. (BJ) also announces its 4Q09 earnings results on March 3. In spite of an acceleration in comparable store sales as 4Q09 trekked along, it's probable that the overall report from BJ's will be on the lackluster side.

Please visit www.wstreet.com to read pieces on each company.

A Look Ahead: February Auto Sales
David Silver, Research Analyst, Wall Street Strategies

We are slated to receive February's auto sales tomorrow, and it will definitely be a month of two extremes. On one hand, we have Ford (F) and General Motors which are expected to post strong monthly sales. We have modeled for sales at Ford to be up approximately 27%, with sales from GM to be up approximately 22%. These figures should be taken with a grain of salt, as during February of 2009 GM and Chrysler were teetering on the edge of bankruptcy and auto sales continued to tank as Armageddon feelings were all around the auto market. On the other hand, we have Toyota (TM) and Chrysler. Toyota's past six weeks have been mired by recall after recall, apologies, and what amounted to a public tar and feathering. Due to the sales and production halt of many of the company's most popular vehicles, sales are expected to decline dramatically. We have modeled for sales to drop below the 100,000 mark for only the second time since 1999, and to fall approximately 10% from last month's figure (98,796). Chrysler is expected to report another decline, our forecast is for Chrysler monthly sales to fall more than 10% compared to February of 2009; however, we do expect to see a significant sequential improvement. We have ratcheted our expectations down for the month as the winter storms rocked the nation. The Midwest, Northeast, and even the south were hit with storm after storm, which definitely pressured sales.

Ford and General Motors are going to be two of the biggest winners from this Toyota debacle, but Honda, Hyundai, Nissan, and to a lesser extent Chrysler will also benefit. This jump is only temporary as eventually Toyota will rebound. Toyota has spent much of the past 50 years growing its market share, and while there have been reports about a massive decline in Toyota's market share, we are not that convinced. We have spoken to a few Toyota dealerships from around the country, and most are saying the same thing; customers still love their Toyotas, and maybe even more now as many dealerships are staying open 24-7 to fix all these vehicles. There is no doubt that the news will push some of the fence sitters over to another automaker, but Toyota's customers are extremely loyal. Additionally, once all these recalls are in the past (i.e. a few months from now), it is shaping up to be one of the best times to purchase a Toyota. Quality is again at the company's forefront, so you know the models that are produced over the next few months are going to have a quality stamp of approval; couple that with the expected incentives, and Toyotas could be the best bang for the buck.

Refer to our website, www.wstreet.com, for the remainder of the article.

Final Note

I appreciate all the takeover news today but would like to see U.S. companies making these acquisitions because they were preparing for growth in the economy.