follow up to NY State report
from a market newsletter
. While the miscues of large hedge funds are probably playing a role, the truth is that the stock market, especially the Blue Chips, is telling us that the economy is very fragile at this point and could slip to a greater degree than anyone is expecting. This notion is echoed or seconded with the results from the May Empire State manufacturing report that came out this morning. Shocking the pundits, the report showed contraction for the first time since April 2003, coming in at a decline of 11.1% from an increase of 2.0% in April. The news is a bit unnerving in the since that certain components bode ill for near-term developments for manufacturing within the region. Inventories grew to an annual rate of $80.2 billion, the highest level since the first quarter of 2000.
Lest anyone forget, the first quarter of 2000 was the peak for the market and the beginning of a realization that inventories were overblown (and that's putting it mildly); simply put it was the first and biggest wakeup call for the current generation of investors. The good news, if indeed one believes there is always a silver lining, is that stocks are already reflecting a slower economy, though they will continue to hit air pockets and speed bumps along the way.
Technically, this week has the potential to be significant as the Dow Jones is on the cusp of breaking vital support and must find a way to put the brakes on and turn it around. There is tremendous value abounded, but the –negative- moment is dictating results and direction.
Pennies not a zero sum game as much as some zero game.
