As you know, I've been saying that the U.S. is in a recession for months now.
If you think there's not big problems in America...look no further than the Empire State (New York) and Philly Fed (Philadelphia) indexes.
The Philly Fed index came out today at -24 vs. -10 expected and -20.9 previously. So the manufacturing in America has taken a huge hit.
Although this survey is limited to manufacturers in Philadelphia
only, traders pay close attention because the Philadelphia Federal
Reserve releases it weeks before other major reports on manufacturing
(e.g., Industrial Production, ISM Manufacturing Index).
Last week the Empire State index came in at -11.7 vs. +6.5 expected. So the numbers are getting slammed and staying consistent.
Keep in mind that the previous ISM manufacturing numbers came in under the bust level which means that the manufacturing sector is in a recession.
With housing and manufacturing being in a recession and stock prices dropping....what more proof do we need?
So stocks took a hit today on the Philly surprise as did the U.S. dollar.
The EUR/USD got pushed upward once again. Gold went through the roof hitting $950 an ounce again upon the news. Oil dropped over $2 a barrel since the market was "reminded" that we're in a recession.
Look for more of this to continue. Employment will worsen, the unemployment rate will continue to go upward in America....this means that consumers will tighten their wallets even further...and so there goes any hope of Retail Sales now doesn't it?
Once the EUR/USD takes another run at the 1.50 level, we should see selling set in again since the Euro Zone economy is slowing down. Trichet finally admitted that this morning..while I told you guys this about a month ago or so.
Governments are always slow to admit slow downs. Therefore the media gets it in a delayed fashion as well. So things like this give you an edge in your trading because you "see the bigger picture" before they do.
Sean Hyman
Editor/Trader
www.money-trader.com
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