One thing that seems to be missing is the timetable for Greek default. It would be good to know exactly when the Euro-banks have to book the losses.

Caterpillar (NYSE:CAT) was expected to earn $1.54 a share after it warned that the quarter would be weaker back in August. But this morning, Caterpillar posted $1.71 a share and raised its guidance for the rest of the year.

Stocks just ended their worst quarter since the financial crisis. The Nasdaq and S&P 500 each lost more than 12%.

In 2008, we knew that the mortgage-backed securities depleted the cash reserves at banks to the point that they were insolvent. In January of 2010, it was the uncertainty of Greek sovereign debt along with other European countries that caused a very sharp pull back for stock prices.

But it's more difficult to find a culprit for the declines we've seen lately.

Yes, there have been weakening economic data, to the point that GDP growth may be below the 2% line. That's close enough to negative growth that some are throwing around the "r" word: recession.

Earnings season continued at a torrid pace, with large cap stocks beating on revenues and/or earnings per share. The EU finalized a bailout plan, and reports seem encouraging that Congress will reach a budget deal soon.

We've had to suffer through a perfect storm of bad news since May. Now, we seem to be getting a perfect storm of good news. Even the most recent housing construction data was better than expected.

Unemployment, however, continues to lag. And as we've discussed at length, there's no reason to expect hiring to improve significantly, especially with spending cuts coming at the federal level.

There is a budding divergence between economic data and corporate forecasts. We’ve seen a stark deterioration of economic data across the board. Manufacturing surveys have weakened, auto sales were down in May and then, of course, we got the icing on the cake with the pitiful employment numbers last week.

 

Economists and strategists have been falling all over each other as they lower their 2011 GDP estimates. (Of course, Daily Profit readers had a heads up, as we noted the change in the Fed’s outlook after the last FOMC meeting.)

Oil price initially dropped this morning, but quickly rebounded. The dollar is also enjoying some upside today. It will be interesting to see if oil, and stocks, can maintain their positive bias.

As I discussed on Friday, we’ve gotten some economic data that is less than robust. Q1 GDP growth was just 1.8%. And the Fed has lowered its full year growth forecasts.

Investors have done an impressive job of shaking off a litany of negative storylines and jumping back on the bullish trend to higher stock prices. But let's not lose sight of the fact that S&P 500 bounced right where it should have, at 1,250. Today, it is challenging the next resistance/support level, at 1301.

 

The Apple Complex of tech stocks, which I referred to as a measure of investor sentiment, is also rallying. As TradeMaster Daily Stock Alerts' Jason Cimpl told his members this morning:

 

Yesterday's swift turnaround is a constant reminder that buyers still dominate the long term trend. The bulls have been stopped by 1301 resistance this week, but if they take it back, I'm looking for 1335 and then it's off to fresh highs. Today could be a gap and crap scenario, but the bulls have proven their ability to fend off negative ambiance and move the indices higher.

In a recent survey by the National Association of Business Economics, 70% of economists said they believe the U.S. economy will grow by more than 2%. Just three months ago, only 61% of surveyed economists had such bullish expectations.   

 

And it gets better. 24% of surveyed economists believe 3% growth is coming, up from just 14% January.   

 

The details of the survey also show that employment is improving in the hardest-hit sectors: real estate, finance and manufacturing. And salaries are also on the rise.