The stock and bond markets remain weak on Thursday. After a weak report on weekly jobless claims, now we have a report on leading economic indicators and data from the Federal Reserve Bank of Philadelphia. The (not so leading) leading indicators were lower than expected, but the regional Federal Reserve manufacturing data showed a much higher-than-expected gain.

The Conference Board released its leading indicators reading with only a 0.1% gain for the month of May. April’s figure was revised to +0.8% from +0.6% initially reported. Bloomberg had a leading economic indicators consensus estimate of a 0.2% gain.

We always make this warning about looking too much at the leading indicators: many of this index’s readings already are known going into the release, and many aspects of the data are not as “leading” as the name might indicate.

The Federal Reserve Bank of Philadelphia reported that the so-called Philly Fed surged higher in June to 12.5 from -5.2 in May. Bloomberg was calling for a reading of -1.0 for June. The biggest jump came from prices paid, rising to 22.5 from 6.9; prices received also rose to 14.6 from -3.3. New orders also surged to 16.6 from -7.9, and shipments rose to 4.1 from -8.5. Employment improved but was still negative at -5.4, versus -8.7 the prior month.

We have shown how the markets are more concerned about getting steamrolled by a Bernanke exit and hard landing more than they are about anything like a soft landing and a gradual stimulus exit. This is the Market Flush taking place, and it either has to play out or become better understood before the markets start to react normally.

After the 10:00 a.m. release, the S&P 500 is still down 21 points and the DJIA is down 197.

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