Mission accomplished. I know these ISM numbers seem grim to you, and they are. These numbers were truly dire, the worst since 2008.
The Institute for Supply Management’s non-manufacturing index slumped to 51.4, the lowest since February 2010, from 55.5 in July, the Tempe, Arizona-based group’s report showed Tuesday.
While a reading above 50 indicates the industries that make up almost 90 percent of the economy are expanding, the figure is lower than the most pessimistic projection in a Bloomberg survey.
Measures of orders and business activity skidded by the most since 2008, when the U.S. was in a recession, and an employment index moved closer to stagnation. Following the group’s factory survey, which showed manufacturing unexpectedly contracted, and separate figures indicating hiring cooled in August, the services slowdown raises questions about the economy’s strength ahead of the Federal Reserve’s meeting later this month.
Seven of 18 industries in the survey showed a contraction in August, including retail; arts and entertainment; transportation and warehousing; and mining. That compares with three industries in the July survey.
The business activity index, which parallels the ISM’s factory production gauge, dropped to 51.8 from the prior month’s 59.3. It was the lowest level since January 2010 and the steepest slide since November 2008.
The new orders measure fell to 51.4 from 60.3, marking the lowest level since December 2013 and largest decrease since January 2008. A gauge of order backlogs fell to 49.5 from 51.
The employment gauge decreased to 50.7 from 51.4, the second straight drop.
As a result of these penny dreadfuls, markets have priced out any chance of a September hike. This, of course, was always the plan. Just when it looked as if the Fed was really gonna pull the trigger, BAM!, a fucking sundry of negative headlines cuts their dicks off.
At the moment, markets are throwing a fit and is off a little bit. But barring another China scare, due to capital flight, bad news will likely be viewed as good news for QE easy Fed loving bulls.
Yields are plunging through the floorboards. Gold and silver are ripping higher. Utilities and REITs, or anything with a yield, are measurably outperforming. Markets should love this news, as it permits the faux reality where Central Banks rig markets and set prices thrive in perpetuity.
If you recall, thanks to Exodus, I went all in on gold a fortnight ago, fully expecting this horseshit to materialize.
The dollar is getting hammered v the euro, off by 0.9%.
Naturally, the yen is soaring during a time of duress, higher by 1.15% v the dollar.
Gold +1.5%.
US 2yr plunges 5bps to 0.74%
Also, the ark floats.
My REIT performing well today: a state room on the ark and a pied a terre in a mine.
Viva Le Fly !!