Inventory Problems

A very good write up on the inventory buildup problems which I have I not been following. Manufacturing numbers came out today and at the surface they appeared good but if you dig into the numbers it seemed to go all to inventory. This is very concerning.

http://pbp.typepad.com/economy/2008/07/ism-is-up-but-it-isnt-good-news.html

The Chicago survey of Purchasing Managers (PMI) jumped from 49.6 to 50.2, meaning the manufacturing sector went from recession territory to positive. And keep in mind the survey was expected to fall to 49. That sure sounds like good news, and many in the media (USA Today) (NY Times) will tell you it's good news.

But unfortunately it isn't.

The guts of the index tell a very different story. Orders were down from a month ago and are still in negative territory. This is now the 7th month in a row that orders have contracted.

The market was all over the place today. The savior of the market appeared to be an unlikely source, General Motors with June sales horrendous but better than expected. This started the big reversal in the markets across the board. We also bounced hard off of 1270 in the S&P. I really think if it was not for Iran and European stocks getting killed the market would have been up over 200 points today. From bottom to top the market did post a 150 plus rally. The really interesting thing was what I referenced in the past couple of days. People buying beaten up stuff like banks and selling great performers like energy. It is so stupid that because the calendar says July 1st instead of June 30th they are willing to buy. Shows one of the many problems of Wall St. Anyway the rally today seemed to be a farce but there could be consolidation or move up around here for awhile. There was very heavy volume today compared to what I have been seeing for weeks. Interestingly Thursday will be the most important day with the ECB making a decision on interest rates and the June jobs number comes out. Considering how many vacations are planned it will be interesting to see the volume and violence of the markets based on those very sizable news items.