Courtesy of John Nyaradi.
Economic reports start week with indications of global economic slowdown while all eyes look to Brussels
At home, the November ISM Services sector declined to a reading of 52 from last month’s 52.9 as the services sector (NYSEARCA:IYC) and this level is the lowest print in nearly two years, since January, 2010, as service sector employers continue a cautious profile.
Factory Orders for October declined -0.4% from last month’s +0.3%, indicating a potential trouble spot for the manufacturing and industrial sector (NYSEARCA:XLI) which has been a perennial bright spot in the economic recovery to date.
Overseas, Europe (NYSEARCA:EFA) continues heading towards recession as the Euro Zone PMI clocked in at 47, its third monthly decline in a row as the economy slows and the PMI stays below the 50 level that separates economic growth from contraction.
Italy appears to be the weakest economy, followed by Spain,(NYSEARCA:EWP) and it appears that even economic powerhouse Germany is slowing which makes the job of reforming the Euro Zone all the more difficult. Across the Channel, Britain (NYSEARCA:EWU) reported a rise in its October PMI to 52.1% from a previous 51.3%.
However, the really important news came from Chancellor Merkel and French President Sarkozy as they agreed on a plan for a new European Union treaty leading up to their “last chance” summit later this week. Markets around the world responded with substantial gains and Italian bond yields dropped below 6%, now well below the 7% level regarded as unsustainable. For today, it’s all about avoiding global disaster in Europe and market players are betting that the week will end with good news from Brussels.
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