Thoughts

I view the price of energy to be crucial in here.

Should the price of oil continues its descent, the autos, airlines and retailers could provide something of a near-term floor for the broader market.

Signs of Slower Domestic Economic Growth

My guess is that first-quarter GDP will barely grow by 2% -- down appreciably from 3.1% in last year's fourth quarter.

The higher-than-expected trade deficit of $45.8 billion (consensus was $44 billion) confirms my view that first-quarter 2011 GDP will be weaker than most economists expect.

Most notably, especially within the context of a weak U.S. dollar, exports are down 1.4% month over month and will serve to reduce first-quarter GDP by as much as 0.6%.

My guess is that first-quarter GDP will barely grow by 2% -- down appreciably from 3.1% in last year's fourth quarter.

The trade deficit, when combined with March's higher headline import prices (up 2.7% month over month), raises the specter of stagflation.

That said, wages are going nowhere, and with the drop in oil prices over the last three days, the second quarter could see an acceleration in growth -- but it's too early to tell right now.

The yen is advancing -- causing an unwind of the carry trade and selling of leveraged equity and commodity positions.

It'll be interesting to see if (or when) the G7 cabal intervenes to stabilize the capital and currency markets.

The National Federation of Independent Business Optimism Index declined to 91.9 -- well below the prior month (94.5) and well below consensus of 95.

It's the first drop in this index in three months, with most of the decline in economic expectations and in expected sales growth.

Two positive features of the release were in capital spending plans and in hiring expectations, so if energy prices continue to drop and the jobs market continues to improve, we might see a better overall reading next month.