Friday, January 2, 2009

Manufacturing ISM - Don't Get Fooled Again!

So, when the market goes up on bad news, that’s good, right? Tell ya what, those who do not see what’s happening clearly will be fooled – AGAIN – into believing that the economy has bottomed and that equities are going higher. Is that what we believe, that bad news is good news? Do we believe that wealth can come from a printing press and not from the manufacturing of tangible goods?

If you are buying this rally for anything longer than the very short term, then all I can say is, “sold to you.”
U.S. Economy: Manufacturing Shrinks as Orders Hit 60-Year Low

By Shobhana Chandra

Jan. 2 (Bloomberg) -- The decline in U.S. manufacturing deepened in December as demand for such products as cars, appliances and furniture reached the lowest level since at least 1948, signaling further cutbacks in factory jobs and production this year.

The Institute for Supply Management’s factory index fell to 32.4, below economists’ forecasts and the lowest level since 1980, from 36.2 the prior month. Readings less than 50 signal contraction. The group’s new-orders measure reached the lowest level on record and prices slid the most since 1949.

“Every component suggests that the weakness is going to carry over into 2009,” Mark Vitner, a senior economist at Wachovia Corp. in Charlotte, North Carolina, said in a Bloomberg Television interview. “There’s just not a whole lot of new business coming in,” and companies will have a “painful adjustment” as consumers shun spending.

Today’s figures underscore that, with private demand collapsing, manufacturers’ best hope for new business this year may be President-elect Barack Obama’s plans for an unprecedented stimulus package. Obama has pledged an investment program in roads, schools and the U.S. energy network akin to the 1950s- era interstate highway construction boom.

Stocks advanced on the first day of trading in 2009, following the biggest annual drop for the Standard & Poor’s 500 Index in 71 years, on expectations government stimulus efforts will curtail the recession. The S&P index rose 1.4 percent to 916.16 at 11:08 a.m. in New York. Benchmark 10-year Treasury yields rose to 2.25 percent from 2.22 percent late Dec. 31.

If you happen to be one of those who believe that bad news is actually good news, guess what? The Who were kind enough to do a performance just for you!

Don’t Get Fooled Again: