and no, I am not talking about the baseball playoffs but rather the triple whammy that completely obliterated both the US equity markets and the US Dollar this morning.
The New York Fed released its business conditions index and it was scary; spooky scary. The index fell to - hold onto your hat - from 27.54 in September to 6.17 in October. Most analysts had been expecting a decline but a more modest one to near 20. This index is a reading of manufacturing activity. If the reading comes in above zero, it indicates expansion but come on already, a plunge of that magnitude is hardly reassuring if one is trying to find a healthy economy!
That was strike one...
Strike two - falling retail sales. They dropped 0.3% in September. Retail sales have been rising since January - albeit not at a breakneck speed but this is the first drop since then. Again, analysts had been expecting a fall but only a meager 0.1%.
Strike three - a fall in the PPI or producer price index. It fell 0.1% in September. That was the first fall in a year!
STocks plunged and so did the Dollar but what is breathtaking is the action in the long bond. The thing SOARED and was up over 4 points in early action. It has subsequently settled down to being up a mere 2 points ( note - this is sarcasm). Yields on the Ten Year just now fell BELOW 2% hitting a low, thus far, of 1.868%.
Can anyone say DEFLATION!
If that were not enough bad news for one day, yet another hospital worker has sadly contracted the Ebola virus. People are getting scared as they know full well that Mr. Happy Face, the current propaganda in chief from the CDC, has been lying to them about the mode of transmission.
Let's see - we have a deadly disease in Africa that is threatening to become a world-wide epidemic, a group of grotesquely barbaric terrorists on the rampage through Mesopotamia and an economy that is looking more and more like it is running out of juice to sustain it - and NO, I am not talking about the bubonic plague, the Ottoman empire Turks and the mess in Europe during the Middle Ages but rather the 21th century. The more things change, the more they become the same.
"That which has been is that which will be so that there is nothing new under the sun, " echoed the wisest man of a former age, one named Solomon in the book of Ecclesiastes.
I will try to get some charts up a bit later. The long bond chart is breathtaking.
By the way, the sinking Dollar is having a profound impact on gold as it moved strongly higher. However, there are two schools of thought out there right now impacting the yellow metal. The first is gold is a safe haven. The second is that it is liquid and can be sold to cover losses in equities ( margin related) and could very well sink along with the crude oil and rest of the commodity complex.
IT looks as if the former is winning at the moment.
Soybeans are still being squeezed by whomever it is that has decided to go after the shorts. The excuse this time around is the falling Dollar will make US beans more competitive on the global export markets. I am very concerned however about almost all of the commodities because if indeed this market selloff is the start of something more serious on the economic front, it is hardly going to be conducive to higher grain and bean prices.
Even cattle, that stalwart of the commodity sector is succumbing. That has me sitting up and taking serious notice. Can beans be far behind? We'll see.
Traders - be so very careful in these markets right now. They can run you over in mere seconds.
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