Other than the first confirmed case of US Ebola, the other bad news overnight was that European PMI readings were not only bad, but with the core of the European economy, Germany now in manufacturing contraction, printing at 49.9 down from 50.3 and consensus of the same has entered the fray. It's one thing for peripheral countries or the PIIGS to print badly, but when the engine of European manufacturing misses and comes in at contraction things are quite bad and the European Triple-Dip recession is looking very real.
In addition to the miss in Germany, France also continues to be in contraction printing at 48.8 (anything below 50 is contraction.
Also, while New Orders fell for the Euro-Area which also missed, input and output prices fell, also known as deflation which is an ongoing problem for Europe.
In addition to EU misses, the UK missed, printing at 51.6, down from 52.5 and consensus of 52.7.
Oddly you'd think, commentators are surprised futures aren't sky-high on the bad news as bad news is good news when it comes to Central Bank liquidity pumping measures.
However, I'd note that in order for the market to have a favorable reaction as I have suspected we might see now that today is the end of Q3 Window dressing and the start of Q4, WE NEED TO PUT IN A STRONGER DIVERGENCE AND BASE WHICH REQUIRES PRICE TO COME DOWN TOWARD THE LOWER END OF THIS WEEKS RANGE.
Incidentally, that;s exactly what's happening right now.
So we'll see if in fact we do get the positive signals today for a post Window Dressing (small/mid-cap sell off) bounce.
5 years ago
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