Sunday, September 05, 2010

What is the data really telling us?

Just to recap - The market posted a couple of huge rally days last week on the heels of the ISM manufacturing report that came in slightly better than expectations and the jobs report that was also slightly ahead of expectations.

1) The ISM report seems to fly in the face of every regional report I've seen posted. Somehow, job markets are weakening in almost every major metro market but the manufacturing jobs component surged in July and was the primary driver behind the ISM surprise. When you peel back the layers of the report there were negative trends in every leading indicator like new orders, but details are for schmucks in this market. Rally on!

2) The best characterization of the jobs report was that it was stronger than expected but still not strong. I still find the birth/death numbers laughable (adding over 100k jobs to the BLS black box formula) but the number of part-time workers should really concern everyone. This jobs report was slightly better than expected so -- rally on! What was really surprising was the negative ISM service report out on Friday (reported 51.5 vs 53.2 expectation - the second lowest reading of the year) didn't get more coverage. Services are what drive the US economy not manufacturing. However, a weird statistical blip in the manufacturing number goosed the markets 300 pts, while a negative report in the much more important services sector didn't even register on Friday.

The combined ISM reports are at their lowest levels since Jan 2010.

The tone of the press and market coverage had turned so negative it was due for an "unexpected" pop. We'll see if it carries over post Labor Day.

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I don't have much to add here but there are two unsustainable trends.... Nearly 1 out of 2 Americans took a prescription drug at least once a month. Note that this is from a 2008 study and I'd guess the numbers have continued to increase over the past couple of years.

1) The continued trend of drugging our kids is going to put us further and further behind the rest of the world despite promises to "Race to the Top!".

2) We can't afford to sustain an aging population that is surviving on a daily drug cocktail of 5+ prescriptions.

"One of every five children ages 11 or younger took at least one medication each month in 2008, led by asthma and allergy treatments, according to the survey released today by the U.S. Centers for Disease Control and Prevention. Among those ages 60 or older, 37 percent used five or more prescriptions per month."

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On a happier note, I can't remember if I've posted pictures of this pool before.... Over 1,000 meters long in Chile with 155 ft deep end! Now that's a pool!

Cheers!

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