Market Overview

Wall of Worries Wednesday – Will the Fed and ECB Push US Over?

 

.SPX WEEKLYAs foretold, we flatlined into the end of the month – now what?

Today is May Day, where we celebrate the Workers of the World (as long as they don't unite, of course) and that means most Global markets are closed or slow but the bad economic data keeps pouring in.

Slovena's credit is lowered to junk by Moody's, China's PMI came in at 50.6, which is expanding slightly (50 neutral) but lower than 50.7 forecast and lower and 50.9 in March and, if you were paying attention to my chart lesson on Monday, you are thinking of how these readings affect the curve of the 50 dma that WILL be drawn in the future and how this WILL make the chart look – that's how you use TA to predict, rather than just react.

More importantly on China, new orders fell from 52.3 in March to 51.7 in April and, even worse, new export orders fell to 48.6 (CONTRACTION) from 50.9.  The Shanghai Composite is already down 11% for the year and we are ignoring this the same way we ignored it in 2008 – as our markets flew and China declined.  Our situation is a little healthier this time as we're not being led higher by energy, commodity and builder stocks – all things that ultimately suck money out of the pockets of consumers – so not the same situation for a total collapse but – correction? – maybe.

As noted by Bloomberg re. China: "Growth risks include weakness in export demand, property-market overheating, a surge in so-called shadow banking and the damping of consumption by President Xi Jinping's campaign to rein in official spending."

Don't forget, China is doing this on purpose to curb their out-of-control 8.5% growth/inflation and, as is very normal in Government tinkering, they are overshooting the mark ahead of making corrections (we assume they will).  By the way, China now surveys 3,000 manufacturers in their survey vs. 820 previously, so the data is now more accurate as well and, of course, I think it's bullish just to know they care enough to try!

Back to the bad news though (oops, this is getting to be the morning post!), Australia's Manufacturing DIED, dropping 7.7 points to 36.7 from an already crap 44.4.  This is their worst reading since 2004:

“The


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