I’m sticking to my belief that last Thursday’s news from the Fed culminated the central bank rally that started in earnest in late July, when ECB Pres Draghi took out his verbal guns, rather than being the impetus for another leg higher. Sell on the central bank news I continue to say for now as the reality of slowing economic and earnings growth that was swept under the rug for a few months pops back out again over the next month as we get more of a feel for Q3 earnings that will very likely show the 1st negative y/o/y earnings rate in 3 years. On the heels of the FDX earnings news, NSC last night attributed part of its earnings miss to “volume declines in certain markets.” Today, the initial Sept HSBC mfr’g PMI in China remained below 50 for an 11th straight month at 47.8 vs 47.6 in Aug, sending the Shanghai index lower by 2% to the lowest since Mar ’09 again. The euro zone Sept mfr’g and services composite index fell to 45.9 from 46.3 to the lowest since June ’09 as while Germany showed some improvement, it was more than offset by declines in France.
Spain was able to sell 4.8b euros worth of 3s and 10s, above their targeted amount of 4.5b euros but the emphasis was on the lower cost 3s which made up 82% of the sales as Spain takes advantage of the dramatic drop in their short term yields. Rollover risk is a risk for another day for them while the getting is good.
In the US, sentiment wise, individual investors are less bullish than the II measured newsletter writers as AAII said Bulls were 37.5 v 36.5 and Bears were 33.8 v 33.0
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