The newswire emanating from overseas was dire enough this morning to send global markets into a tailspin. Purchasing managers reports for China and Europe worked against us. As a result, the SPDR S&P 500 (SPY) hardly had a chance today, and was down 0.8% at the close. The SPDR Dow Jones Industrials (DIA) and the PowerShares QQQ (QQQ) had a tough time of it today too given the troubles of Dell (DELL) and Hewlett-Packard (HPQ). DELL was off 3.8% at the close, while HPQ was down 8.1%, each suffering from Apple-itis (AAPL) I suppose, as they share consumer dollars with tablet makers now. Plus, PC buyers are waiting on Microsoft's (MSFT) next operating software package, Windows 8. Oh and of course there's the global slug of an economy to deal with, seemingly falling apart from Spain to Shanghai.
As the World Turns
S&P 500: -0.8%
EURO STOXX 50: -1.0%
S&P/ASX 200: +0.2%
FTSE 100: Unchanged
Nikkei 225: +0.5%
German DAX: -1.0%
Hang Seng: +1.2%
Russell 2000: -0.7%
CAC 40: -0.8%
Shanghai Shenzhen CSI 300: +0.3%
Watching events on a daily basis is like being caught in some soap opera nightmare. I feel I'm chained to my chair and being forced to watch the drama play out in slow motion day after day. The story never changes and the plot is so clear I wish to lash out, but I'm chained here, forced to watch the second class actors play out a haphazardly written plot.
The global economy is definitely heading in the wrong direction, and even the China story is unraveling before us my friends. Asian shares were mostly higher today though, as investors reacted to the U.S. Federal Reserve FOMC meeting minutes released Wednesday afternoon. The report was perceived as supportive of a September action by the Fed. Asian shares are buying into the myth that central bank magic can save the global economy, when in fact, all credit and capital leverage evils can be traced to the move from the gold standard decades ago and more recently to Alan Greenspan's low rate policies, in my humble opinion. Gold was higher today, by the way, and the SPDR Gold Shares (GLD) gained 0.8%.
In contrast to the direction of Asian shares, the tangible news out of the continent was not good. A survey of purchasing managers published by HSBC (HBC) showed deterioration in the nation's great manufacturing sector. The preliminary index reading for August marked decline to a point of 47.8, down from 49.3 in July. Need I point out that a reading short of 50 marks economic contraction for the sector? Yet, the stocks rise on central bank hopes. This can't last.
In Europe, Greece is word today, as the German chancellor prepares to meet with the Greek prime minister Friday. The word is that Greece will request more time and more money from the German head of the Medusa we call the European Union (EU). Much of the week's trading has been around rumor and reality about this subject. Today, the German finance minister said more time and more money will not solve Greece's problems, and so European shares bleed red. The Vanguard MSCI Europe ETF (VGK) managed to resurface yesterday after diving early, but faced a tough trial again today, down 0.8%. Likewise for the iShares MSCI Germany Index (EWG) which was down 1.1%.
On top of rhetoric, the data proved poor Thursday too. Markit's PMI for the euro zone showed the region's private sector business contracted for a seventh consecutive month. The index rose a bit to 46.6, from 46.5 in July, but at that level below 50 it continues to reflect important economic contraction for the euro zone. Even Germany contracted, and at a faster pace too, as its index fell to 47.0 in August, from 47.5 in July.
As the world turns, these days of our lives are better lived in a general hospital I suppose.