us employment, page-7

re: us employment data whoooosh Managed to have a look at some of the economic data from the US.

The recent GDP figure was a real downer at 1.6% and in particular when the street was looking at for around 2% to support the goldilocks theory of a soft landing. Some economists know say that the 1.6% was an aberation and that the figure was more like 0.9%. See Bloomberg http://www.bloomberg.com/apps/news?pid=20601087&sid=aF5My4Z6jHiY&refer=home

If the figure was 0.9% then there is no economist who can support the Goldilocks theory. It becomes Cinderella at around five minutes before midnight.

Other recent data are the two ISM reports. The manufacturing one came in with an index reading at around 51.2 showing that manufacturing grew at the lowest rate for a number of years. The non manufacturing ISM the other night looked ok but of note was the headline in the press release ..."Business activity in the non-manufacturing sector increased at a slower rate in September 2006".

For me the inventory readings that have been released clearly indicate that stock is not moving, nor being replenished and it firmly supports a slowdown. Check Walmart and Caterpillar for examples.

Leading indictors of SOXX and DJ transports are also somewhat of a worry. The other sector not showing too much strength is the BKX (Banking).

I think that there is some delusion in believing the US is going to grow from here. There is also a belief that China will support the Australian market because of its reliance on commodities. This is mistaken. China is not a consumer economy it is heavily reliant on exports and in particular to the US. If those exports cease because of shrinking demand then China will start to fell the pinch and that means Aus will catch a cold.

I still believe that the US will have a zero growth reading in the first quarter 2007, and perhaps in the last quarter 2006. I am also of the opinion that the markets will move down in February becasue the fourth quarter GDP reading that will come out in late January 2007.