Overnight another batch of poor economic news as flash Purchasing Manager indexes continued to show significant weakness. While there is nothing "new" here we are certainly not seeing any form of imminent turnaround in the data. In fact Chinese data was the worse in nine months. But I guess that means it will force the hand for more easing and that is all that seems to matter to the market in its current state. Futures were actually UP modestly on the Chinese data last night until Mr. Bullard from the Fed came on CNBC this morning and tried to downplay yesterday's FOMC minutes. Europe also showed nothing but flatline.
But all in all, it is a very light trading environment and other than the volatility caused yesterday afternoon the market has done little since the August 3rd spike but churn with a slight upward bias. The S&P is up about 12 points from August 7th as we continue to see a very narrow range most days. It remains a strange environment where a lot of bad economic data doesn't matter to the market.
- China's factory activity in August shrank at its fastest pace in nine months as new export orders slumped and inventories rose, a signal that a persistent slowdown in economic growth has extended deeper into the third quarter. The HSBC Flash China manufacturing purchasing managers index (PMI) fell to 47.8 in August, its lowest level since November, from 49.5 in July.
- “Details of the flash report showed sharp deterioration in all the sub-indices except for employment and delivery times, but employment index didn’t improve either from the lowest level (47.7) since April 2009. Production index fell below the boom-bust line again to 47.9, and total new orders index was down to 46.6 from 48.7 in the previous month. Worse still, export orders dropped to only 44.7 in August a level only seen during the Lehman crisis.”
- Private-sector business activity in the 17-nation euro zone contracted for a seventh consecutive month in August but at a marginally slower pace than in July, the Markit preliminary composite purchasing managers' index for the region indicated on Thursday. The index rose to 46.6 from a reading of 46.5 in July. Economists had forecast an unchanged reading. A figure of less than 50 indicates a contraction in activity.
- The services PMI reading fell to 47.5 from 47.9 in July, while the manufacturing PMI rose to 45.3 from 44.0. The contraction continued across the euro zone, with national indexes for the core countries of Germany and France both signaling shrinking output.
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