NEW YORK ( TheStreet) -- Economic data across the world continues to show weakness. Purchasing Managers Index readings in both Europe and China raised concerns over the future health of global economies, but central banks have been on guard.The European Central Bank cut rates recently, and President Mario Draghi vowed to keep a close watch on the data. European PMI's have been below 50 for a number of months now, indicating that contraction is taking place. China has seen a similar slowdown in economic data. The services sector as well as factory data released readings that were below expectations, and further weakness could hamper global demand. One of the lone bright spots is the nonfarm payrolls data out of the U.S. Although the number wasn't spectacular, it did beat expectations. The volatile nature of economic data has recently shown the ability to beat expectations one month and miss by a large margin the next. With a schizophrenic market, it is prudent to remain cautious. Although U.S. equities remain the most attractive asset class, downside risks remain.
Earnings season has taken way in Japan, and many analysts have deemed it disappointing. Of the companies that reported, only 54% beat expectations. That is compared to a rate of 68.5% in the U.S. "Abenomics," is the term coined for Japan's aggressive monetary and fiscal policy, made popular by Shinzō Abe, the current Prime Minister of Japan. The policy diminished the value of the yen by 24% and incited a 62% rise in the Nikkei index. Although the yen reached a psychological resistance against the dollar, proving unable to push past the 100 dollar/yen mark, the long term trend remains bearish yen.
The last pair is of iShares Dow Jones Transportation Average Index Fund ( IYT) over SPDR Dow Jones Industrial Average ( DIA) . This indicator has been used by analysts for a long time to determine the strength of rallies. The story goes that if the transport index outperforms industrials, then companies are shipping out product, which should show up in the earnings. Although factory output has been unimpressive, this pair looks to have found a near term bottom. A rise in the indicator should give further strength to the equity rally we are immersed in. At the time of publication the author held no positions in any of the stocks mentioned. Follow @AndrewSachais This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.