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Non Manufacturing ISM Is Latest Economic Miss: Drops To 52.7 From 53.3, Below Consensus Of 53.3
Joining the Manufacturing ISM in the disappointment column is the just released Non-Manufacturing ISM which printed at 52.7 below consensus of 53.5, down from 53.3 previously. This is the lowest reading since January 2010. The employment index dropped from 54.1 to 52.5, the New Orders index missed contractionary territory barely at 51.7 down from 53.6, and lastly, the Prices Paid was down from 60.9 to 56.6, potentially opening up the way for QE3, even more that is. Elsewhere, June factory orders dropped by 0.8% in line with expectations, down from 0.6%, meaning no dramatic revisions to the already abysmal Q2 GDP, and Durable Goods was revised from -2.1% to -1.9%. Altogether another ugly economic data set, with the bounce in stocks most likely dictated by even higher QE3 expectations.
The always entertaining respondents:
- "Sales and customer traffic recovered slightly, pulling even with last year after trending lower for several months. Discretionary spending per customer has continued to decline in all areas of the operation." (Arts, Entertainment & Recreation)
- "Sales volumes are steady. Input costs are increasing." (Agriculture, Forestry, Fishing & Hunting)
- "Business outlook remains steady, but concerns about the second half of the year remain." (Professional, Scientific & Technical Services)
- "Municipal government has not bounced back at a similar pace to the private sector." (Public Administration)
- "New home construction is still very slow. Repair and remodel is the only bright spot." (Wholesale Trade)
- "Commodities cooling off and dropping a bit." (Retail Trade)
INDUSTRY PERFORMANCE (Based on the NMI)
- The 13 non-manufacturing industries reporting growth in July based on the NMI composite index -- listed in order -- are: Transportation & Warehousing; Mining; Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Accommodation & Food Services; Agriculture, Forestry, Fishing & Hunting; Retail Trade; Public Administration; Educational Services; Information; Finance & Insurance; Other Services; and Wholesale Trade.
- The five industries reporting contraction in July are: Professional, Scientific & Technical Services; Management of Companies & Support Services; Health Care & Social Assistance; Utilities; and Construction
And some price observations. Oddly enough not all that many commodity price drops. Actually almost none.
COMMODITIES REPORTED UP / DOWN IN PRICE, and IN SHORT SUPPLY
- Commodities Up in Price
Airfares (8); Asphalt Products; Beef; Can Liners (4); Cardboard; Cheese (2); Construction Labor; Copy Paper (2); Cotton Products (11); Dairy; #2 Diesel Fuel (13); Fuel (19); Gasoline(c) (10); Janitorial Maintenance Supplies; Lumber; Maintenance Contracts; Office and Computer Supplies; Packaging; Paper (9); Paper Products; Petroleum Products (7); Plastic Bags; Plastic Products (5); and Roofing Shingles.
- Commodities Down in Price
Chicken; Computers and Computer Supplies; Diesel Fuel; Gasoline(c) (2); and Natural Gas.
- Commodities in Short Supply
Trucks is the only commodity reported in short supply.
Some immediate responses from Wall Street:
TOM PORCELLI, U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK "I think as advertised by the ISM manufacturing board, the service component also slowed. I think this report will likely be received as not as bad as feared. But like manufacturing, the trend is undeniable. We have been slowing now since the beginning of the year. This will not quell the chatter in the market that we may be moving toward a recession. "I don't think anyone should doubt the creativity of the Fed but I don't know what they have left in their bag of tricks. I don't think another QE is the remedy. We've had two rounds and here we are still looking at a slowdown. "There has just been one bad number after another and it's beginning to weigh on sentiment in the markets." RUDY NARVAS, SENIOR ECONOMIST, SOCIETE GENERALE, NEW YORK: "It is slightly weaker than expected, most of the key gauges were down. It looks like this confirms that we are in a bit of a soft patch here, although not as soft as the manufacturing data, and if you look at what the respondents are saying it doesn't seem to be as tied to concerns about the debt ceiling, which the manufacturing survey seems to be pointing to. "It is not pointing to recession, but we still have to see how the data turns out -- the data is a little bit all over the place these days and the risk is things are not looking as bright as they were in June or prior to that." MARK LEHMANN, PRESIDENT OF JMP SECURITIES IN SAN FRANCISCO: "The ISM number shows continued malaise in the economy. It continues to demonstrate that the recent outlook has dissipated. Every indicator we've had has confirmed that. The ADP report was a nice kicker, but not enough to overcome some of the things we've seen recently. There are more clouds than there were a few months ago, and the euphoria over the debt ceiling deal has disappeared, leaving us with weak growth prospects."
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disappointment, bitchez
Feels like the algos have been reset to sell not buy.
They have. The slight lift in the Roach Motel [SPY] this morning was mercilessly mugged by selling of individual equities. The sellers of the underlying did not wait for the RSI on that Roach to rise much at all...meaning sellers are anxious.
There were and are some small scale short covering purchases within the context of this mornings action, with intent to sell and intent to buy messages flitting back and forth with unusual rapidity. It has been much more common for the market to pick a direction and run with it...helmet on...clapping for itself.
All in all, my guess is a lower market...which means 1240 on the S&P should be challenged. Heavy sell interest there, if sustained, will be lethal.
Robust.
Eat iPads
Geithner wasted no time, and debt deal not even cooled off yet.
http://finance.yahoo.com/news/Govt-will-borrow-72B-in-debt-apf-390783999...
$72 Billion down the tubes in one day
Last time we had 9 down days in a row, Vinne Barbarino, was a hetro, who didn't pretend that cat on his head was his hair.
Yes boys and girls fuck welcoming the Summer of Recovery and lets Welcome Back Mr. Kotter.
#1976
Up your nose with a rubber hose. O-ay
Vinny's faggish? Who knew?
If $2 Trillion won't do it, $8 Trillion will
That would be the Krugman response
Someone in another chat room said that the SP& and DJI had to move back to their 200 sma's. I just told him of course it did. I guess he didn't know how to zoom out his charts to see just how long they can stay away from that line.
I don't get it the market is violently swinging green and red yet the VIX is down today!
You're assuming the VIX actually isn't broken. How well can it work in a market with mostly bots and daytraders and few actual investors? Nobody really needs to hedge
http://vixandmore.blogspot.com/2008/04/ten-things-everyone-should-know-a...
Q: How is the VIX calculated?
A: The CBOE utilizes a wide variety of strike prices for SPX puts and calls to calculate the VIX. In order to arrive at a 30 day implied volatility value, the calculation blends options expiring on two different dates, with the result being an interpolated implied volatility number. For the record, the CBOE does not use the Black-Scholes option pricing model. Details of the VIX calculations are available from the CBOE in their VIX white paper.
I am a dillitant concerning economics, so I have trouble following some of the white paper jargon. could you recommend a better indicator for future volatility?
Dice, entrails, tea leaves, or astrology.
On July 14th, Bill Gross said QE3 could not happen.
Yesterday, Bill Gross said QE3 was likely.
Today, Barton Biggs said we will have QE3 with a twist, whereby The Bernank would shift from buying UST, to buying mortgages and the like.
I say QE3 isn't going to happen. I say that Jackson Hole is going to disappoint the QE addicts.
I say that QE has been discredited, and I point to David Stockman's public flogging of The Bernank as the date of the official death knell of QE.
What will tell the tale?
Watch what equity markets do in the run up to Jackson Hole.
The Bernank says the powder sucks this year.
Fed will announce that anyone interested should just come to DC and take whatever they think they need. That'll do it.
No need for QE when Italian and Spanish markets are dead, where else can they go but USTs?
Where are the clowns?
Bring in the clowns.
Quick send in the clowns. Don't bother they're here
They own the circus now.
For the grand finale they will pile into Bernak's QE3 VW beetle.
Here they are Senate Banking Subcommittee!
http://www.youtube.com/watch?v=rr6dlPCFaPA
Don't worry. Barton Biggs said to buy stocks aggressivley as The Fed is going to start buying houses. I should have added him to my list yesterday!
Bloomberg Scarlet FOO
"ADP better than expected" (but no mention of ISM)
New Index: ISM Non-Working
A surging index gauging non-participation, negative productivity, and non-compensated cerebral processes (aka American dreaming). Bullish bets being taken. Booya!
Be prepared! Be prepared!
http://www.youtube.com/watch?v=S7RyiwHVZdQ&feature=related
SnP decisively broken::
http://markettechnicals-jonak.blogspot.com/
at this rate QE3 may have to sail earlier than expected.... meaning the lifeboats will be forgotten... ;-)
transitory soft patch...i swear
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