Stocks jumped to large gains in morning trade on mixed news. The ISM Manufacturing Index gained .8 to 56.3 in August bucking expectations despite a decline in New Orders to 53.1. Construction spending slipped 1% in July, a 3rd consecutive decline, all categories fell except non-residential which gained .8%.
Announced Job Cuts hit a 10-year low of 34,768 in August as per the Challenger Report, breaking a recent string of increases. That said the ADP Private Payrolls Report slipped 10,000 last month, a significant miss from expectations for a gain of 40,000 as the labor market continues to show stress. The official employment report will be released Friday and expectations are for a loss of 120,000 additional positions.
Despite a fall in the 30-year contract rate to 4.4% the MBA Association activity index only gained 2.7 points to 893.8, Purchase Apps increased 1.8 points to 173.6 while refi activity added 2.8 points to 5,085.3. Despite record low interest rates mortgage activity remains moribund as does real estate sales, which really tells you everything you need to know about the future of the sector.
A lot of talk is making the rounds regarding Quantitative Easing 2.0 or another big Federal Stimulus Package. I guess this is the reason for today’s huge market jump but honestly who knows. The sad reality is that the first package did little in the way of promoting real organic economic growth despite goosing the GDP figures, primarily because most of it was horribly misdirected. Various programs to encourage people to assume more debt by purchasing cars and houses when they were already choking on too much debt, as these effects fade the economy shows increasing signs of slipping back into reverse.
Despite the official forecasts of positive 3rd quarter GDP growth, increasingly it is looking like it will in fact be a negative number because incomes are essentially flat, personal spending is anemic, housing starts and sales have both plunged by about 30% while construction spending is week and business capex falters.
Hi and welcome to The Profit Motive, I’m your host Caleb Lawrence. Once upon a time in America the media acted as the watchdog of the corporations and the state. In the modern era it’s all about ratings and profits, opinion has been substituted for news and frequently is presented as fact. 
