Home Sales Down, Manufacturing Down

Well, it looks like it's going to be another one of those days for financial markets, the Dow probably notching its remarkable 8th day of 200+ point swings during just the first 14 trading days of August, that is, unless Fed Chief Ben Bernanke bellies up to a microphone somewhere to commit treason by announcing the launch of a $1.5 trillion QE3 binge.

The July decline of 3.5 percent for existing home sales reported by the National Association of Realtors added to the growing economic gloom as the months of supply metric rose to 9.4 months, almost double what is considered “typical”, that is, if anyone can remember what “typical” is for the U.S. housing market.

Probably more important than the dreary home sales figures were even more dismal numbers on manufacturing in the mid-Atlantic region that saw its sharpest decline since 1998, the Philly Fed manufacturing index sinking from +3.2 in July to -30.7 in August, a gauge where positive and negative numbers indicate expansion and contraction, respectively.

The new orders index plunged from +0.1 to -26.8, unfilled orders fell from -16.3 to -20.9, and employment dropped from +8.9 to -5.2, all signs that the growth slowdown in manufacturing is headed toward outright contraction, a development that could be confirmed in two weeks when the much broader ISM Manufacturing Index is released.