Hard to know, I've shorted AIG, and may just buy XLF Oct 30 puts, if I can get a decent execution. Think there is more "synthetic economics" at work on who pays for a mega-event. The prevailing attitude is that it's always "the other guy". We will see about that.
Some "small" details about yesterday's weak Chicago report:
Stocks promptly plunged lower after the release of the latest economic data, but they have since begun to rebound back into positive territory. Topping the news, the Chicago area saw growth in the manufacturing sector slow over the past month. The Chicago Purchasing Managers' Index (PMI) dropped to 57.3 percent in August from July's reading of 64.7 percent. Analysts were anticipating a more modest decline to 60.8 percent. On the bright side, the reading remained above the critical 50 mark, which indicates expansion within the sector.
Delving deeper into the report, the prices paid index soared to a 16-year high at 86.6 percent from July's reading of 77.6 percent. The employment index edged higher to 51.1 percent from 45.6 percent. On the downside, the new orders index plunged from 68.7 percent to 58.0 percent.
This report is often seen as a preview to the Institute of Supply Management (ISM) report, which is due out tomorrow. According to Barron's, economists are currently forecasting a drop to 60.0 from July's report of 62.0.
Adding to the woes on the Street, consumer confidence sharply declined in August, according to the Conference Board. The index dropped to 98.2 from July's revised reading of 105.7. Not only was this the largest drop since February, but August's report marked the lowest reading since May. Analysts were looking for a slight decline to 103.6. What's more, July's reading was lowered from its initial reading of 106.1.
The present-situation index backtracked to 100.7 from July's reading of 106.6. Furthermore, the expectations index tumbled from last month's report of 105.3 to its current reading of 96.6. The sharp decline in confidence is being attributed to the slow down in job growth of the past two months.
Speaking of jobs, investors should keep an eye out for August nonfarm payrolls and the unemployment rate, which are due out Friday morning. |
