Is it just me or is there a pattern happening with the market? One day, the bulls make good on their bid and then, the next morning, the bears take that bid away. The next day, the bears drive down the bid and the following morning, the bulls pick it right back up. Oh sure, it doesn’t happen like this every day, but it sure seems like it is happening like this every day …
Okay, everyone, run for the hills. China’s PMI fell through the floor. Run, run fast, China’s PMI crashed, it went bust all over the place.
- Growth in China’s manufacturing sector unexpectedly slowed in April. The official purchasing managers’ index (PMI) fell to 50.6 in April from an 11-month high in March of 50.9. Analysts had expected the April PMI to be 51.0.
OMG! The Chinese PMI dropped three-tenths of a point in April from an 11-month high in March and it missed expectations by four-tenths of a point! This radical drop surely warrants this headline – China Factory PMI Raises Doubts About Economy’s Strength.
Now, add the above headline data to the spate of news about the weakness in the US economy, perceived weak earnings, and you have, voila, predictions about the Fed and what they will do with a “weak” economy and “sagging” inflation.” Mix all this data and news together and you have a market that opens in the red.
- Wall Street edged lower at the open on Wednesday, weighed by weak results from Merck as investors waited to hear from the Federal Reserve on the state of the economy.
By way of contrast to the Chinese PMI numbers above, take a look at the numbers below. The differentials in the consumer confidence numbers and the Chrysler sales numbers make any emphatic take on the difference in the Chinese PMI number seem silly.
- Confidence among U.S. consumers climbed more than forecast in April to a five-month high as Americans’ outlook for the economy and their incomes improved. The Conference Board’s index rose to 68.1. Bloomberg forecast an increase to 61.
- Strong demand for the Ram pickup truck helped drive Chrysler’s sales up 11 percent last month as the company posted its best April in six years. The increase is another sign that Americans continue to buy cars and trucks despite high unemployment and mixed economic signals.
Apparently, the US consumer is not getting it that the US economy is weak. They are still buying cars, trucks, houses and other stuff, and to boot, they are feeling better about consuming in April. As well, someone had better tell corporations that the state of the US economy does not warrant such profits. Okay, I have a question. Can anyone give me a reason the market will not keep going up, bumpy as the ride is?
Finally, with all of the hullabaloo about the US debt, the coming Armageddon regarding the same, how is it that the deficit is dropping and now so is the total debt? Could it be that the US will survive its massive debt, just as it has done countless times before? I’ll bet the market thinks it can …
- The federal government said Monday it would pay down a small portion of the national debt this quarter for the first time in six years. The Treasury Department said that it expects to retire a net $35 billion in bonds, notes and bills from April to the end of June. That compares with its estimate from earlier this year that it would rack up an additional $103 billion in marketable debt in the second quarter.
Trade in the day; Invest in your life …
