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Wednesday, September 2, 2009

Morning Market Report

The last couple days are a good example of why I believe that getting bogged down in every economic number gets people nowhere. Yesterday, the ISM index finally passed 50 which means that manufacturing is expanding. Automobile sales were up and construction spending was good. Then, this morning ADP released its August numbers for private jobs and they were worse than expected. ADP survey revealed that the private sector lost 298,000, more than the 250,000 that was expected, but less than the 367000 from July.

That's why I generally only look at the BLS jobs report, GDP, and inflation. There's just too many other economic numbers to make sense of it all. Of course, the market doesn't have my "wisdom". As such, the markets have given back this morning following the worse than expected ADP numbers. The month started very sour. Indices gave back more than two percent. That immediately gave rise to some market followers fears that September will be a bad month for equities. There is a sort of conventional wisdom that under normal conditions September is a bad month for markets, especially when months prior are good. Of course, no one can define "normal", and I doubt anyone would call the current climate normal.

All indices are down pre market but the losses, thus far, are not that severe. All indices are down less than half a percent currently. Treasury bonds are gaining just slightly. The ten year is now at 3.45% which is down about 1.5 basis points. That gains back some of the roughly 5 basis points it rose yesterday however. The yield spread between the 2 and ten year is now up to 2.55%. That of course measures the likelihood of future inflation and that's just below the all time high of 2.75% in June of this year.

Meanwhile, with little fanfare, oil continues its steep drop. It's now at $67.17 a barrel, and that's down about $8 a barrel from highs over the last few weeks. Markets all around the world were nearly unanimously down. Only the broad Chinese index was up and that's the only index that was up. The Hang Seng in China was down 1.76%, the NIKKEI in Japan was down 2.37%, and the Straits Time Index in Singapore was down 1.02%. The broad Chinese index was up 1.16%. Keep in mind this broad index was down nearly 7% a couple days back. In Europe, the FTSE in London was down .74%, the DAX in Germany was down .62%, and the Spanish Index was down 2.54%.

In currencies, the U.S. Dollar was up by .19% against the Euro, down by .31% against the British Pound, and down by .46% against the Japanese Yen.

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