So, today gave me the giggles!!!
Wall Street kicked off September on a sharply negative note as China growth worries slammed global markets yet again.
The Dow Jones Industrial Average dropped 467 points, or 2.83%. The S&P 500 shed 58 points, or 2.94%, while the Nasdaq Composite declined 138 points, or 2.92%.
All ten S&P 500 sectors were in negative territory, with energy the most, dropping 3.14% in recent action, followed by financials, which declined about 3.53%.
It was déjà vu all over again for global financial markets as manufacturing data ruled the day.
In the U.S., a gauge on factory activity from the Institute for Supply Management saw a bigger-than-expected drop in August to 51.1 from 52.7 in July. Wall Street anticipated a shallower drop to 52.6. The reading, though still in expansion territory, was the lowest since May 2013.
The global picture wasn’t much better, and is what helped drive the selloff in world markets.
Overnight, data from China showed the nation’s manufacturing sector slipped to a three-year low and back into contraction territory for the first time in six months, though mostly in-line with expectations, while the services sector also showed weakness.
The data suggest a major theme of either moderate gains or declines across the board, according toIHS U.S. Economist Michael Montogmery’s Tuesday research note.
“Almost all of the world manufacturing powerhouses are nestled between 47 and 53 with the eurozone the best example of strength and China the poster child for manufacturing struggling,” he wrote. “U.S. manufacturing is somewhere in the upper third or that range, but no longer the locomotive as it digests bad foreign trade prospects and holding too much inventory in the system.
He added that the rest of this year is likely to be filled with rough waters and the likelihood that U.S. factory activity will revive itself before 2016 are “slim.” ……
So, a month ago I wrote this ….
AP Economy Writers Get Something Right!!!! But, Still Insist On Babbling Inanity!!! More Bad News In US Economy!
Well, at least this article got something correct. US Inventories rise again!!!! …….
Last February I wrote this ….
… So, check what’s happening at the wholesale level. The inventories have gained for 17 strait months ….
I’ve written numerous posts referencing and regarding the rising inventories in the US. Anytime you see “inventories have gained for 17 strait months”, run! Now, mind you, this is a “rule of thumb”, there are conditions in which this can be a positive thing. But, it’s almost always not good news. Fast forward 5 more months and we see our inventories still increasing!
It doesn’t matter how good our widgets are, or how efficiently we can produce our widgets if we’ve no one to sell them to!!!! Who are we going to sell them to? China? LMAO!!!! No, probably not! Europe? Uhmm, China can’t sell their widgets to Europe! That’s why their economy is slowing down! ….. China’s not Europe’s. Europe’s economy isn’t slowing down, it’s in a full stop mode! (I’m referencing the Eurozone)
Now, mind you, the stock markets will jump back up and lose a bit and jump back up for a while. But, none of that will correct the fact that there’s a bunch of companies holding too much inventory. You know what corrects that? One of two things. Either people suddenly start buying their inventory, or, they’re going to stop producing so much. When you stop producing, that means people stop working.
Now, China has learn this, and that’s what’s biting them in the arse, today. At this point, I would ask readers to extrapolate from there. I would go into detail, but, I can’t possibly in one blog post, because there are several layers and points of consideration from here. But, would happily engage in, and absorb, other people’s thoughts.