Moments ago the Non-manufacturing ISM came out, and in keeping with the theme of Baffle with BS, started last night when the China HSBC services PMI dropped even as the Manufacturing PMI from last week signaled the start of a "new recovery" or something (just don't look at the Baltic Dry, and definitely don't look at the endless barrage of reverse repos proving the PBOC will not engage in wholesale easing), it printed the first miss and decline in three month, coming at 54.2 on expectations of a 54.5 print and down from 55.1 previously. What is troubling is that while otherwise an economic miss such as this one would have been sufficient to ramp the bizarro marke, today it has merely sent ES to fresh intraday lows. Perhaps the reason is that unlike last week's Manufacturing ISM, whose headline was good but internals were not, this time it is the other way around with New Orders down but Employment rising from 51.1 to 54.9, the highest since March. Does this meant the Fed will prematurely end QEternity? Of course not, but the market appears to be shooting first, as usual, and asking questions later.
And from the respondents:
- "Business with markets and customers we serve remains strong." (Management of Companies & Support Services)
- "Business is steady, with good fourth quarter expected." (Information)
- "The sluggish pace of economic recovery coupled with rapid increases in gas prices on the West Coast continue to drag down customer traffic and discretionary spending. Levels remain well below last year." (Arts, Entertainment & Recreation)
- "Ongoing concerns about healthcare reform; reluctance to expand or hire." (Health Care & Social Assistance)
- "Outlook is positive yet still guarded. Clients have some pent-up demand that they are acting on with short-term contracts." (Professional, Scientific & Technical Services)
- "More companies seeking relief from fuel increases." (Public Administration)
Finally, for those seeking deflation, look elsewhere:
Commodities Up in Price
Beef; Chemical Products; Chicken; Computer Products; Copper Products; Corrugated Products; Dairy (2); #1 Diesel Fuel (3); #2 Diesel Fuel* (3); Food Products (2); Fuel (4); Fuel Surcharges; Gasoline* (10); Gasoline Related (2); Medical Supplies*; Oils; Packaging Supplies; Pallets; Paper; Pharmaceuticals; Pharmacy Products; Plastic/Poly Bags (3); Pork; Produce; and Urea.
Commodities Down in Price
#2 Diesel Fuel*; Gasoline*; Lumber; Medical Supplies*; and Soybean Meal.