I agree, below is the Reuters story on NAPM.
<<I think that a 6.5% Fed funds rate is absurd given the dramatic slowdown in manufacturing. What is the point in holding it any longer? >>
I don't see much upside in holding rates at these levels. In fact, I don't see any upside in it. The bubble has been broken. A few more days like this one, and even the high priced wonders like VRTS, BRCD, BRCM, EMC and NTAP will be at reasonable levels. I do think, though, that the selling this morning has as much to do with taxes as anything else, and that there may well be a nice snap back either later this afternoon, or tomorrow sometime, as the selling gets exhausted.
The selling will get exhausted, won't it?<g>
Another reason for cutting soon and avoiding a recession would be to try to deflate the argument for a Bush tax cut before it gets any momentum. Surely Uncle Alan doesn't want to see us return to Reagan style deficits again, as this cut which spends money which has already been spent will almost surely do. Especially if we spend still more money on a Rumsfeld defense shield, one of the most absurd ideas I have heard recently. Bill Safire justified it last week by suggesting that there is a dire threat of missle attack from North Korea or Iraq. What kind of cigars has he been smoking lately? He obviously inhales, whatever it is.
Manufacturing Lowest in Almost 10 Years
NEW YORK (Reuters) - U.S. manufacturing activity fell for the fifth
straight month in December, reaching its lowest level in almost a decade, a
new report by the National Association of Purchasing Management
(NAPM) showed on Tuesday.
NAPM's closely watched index of manufacturing activity dipped to 43.7 last
month from 47.7 in November. The latest reading was the lowest since
April 1991 when the index was at 42.9. It was also well below the 47.0 forecast on average by economists polled by
Reuters.
The report showed a deepening of the downturn in the factory sector, which accounts for about a fifth of U.S. economic
activity and jobs. Manufacturing has been hardest hit by a dramatic slowdown in growth in the second half of 2000.
But some analysts say this is a two-speed economy, with manufacturing in a contraction but the services sector, which
accounts for 80 percent of the economy, still growing at a fairly healthy pace.
NAPM's new orders index, often used as an indicator of future activity, also fell sharply to 42.0 in December from 48.4
in November. Prices paid, an inflation gauge, rose to 61.0 from 56.6. New export orders remained below the key level
of 50 for the third straight month, showing a decline in activity. |
