Today's Key Market News - Market's Sleepy Return

(Stocks in article: NYSE: DB, NYSE: HBC, NYSE: HD, NYSE: OMG, NYSE: PCS, NASDAQ: LEAP, NASDAQ: PSPT, NYSE: MRK, NYSE: WFR, NYSE: FAF)

As market participants sleepily drift back into their offices after the long holiday weekend, even as the BBQ ribs they enjoyed still sooth their stomachs, the restless market greets them with a slap to the face. Key economic data already hit the wires this morning. The ISM Manufacturing Index measured 52.9 in August, slightly below expectations and down from July's 53.8. The measure reflects expansion when it sits above 50.0, but we view change and direction much more important than level.

What this data reflects is perhaps a shift in trend. Recall, over recent months, we've time and again expressed our opinion that manufacturing will lag all other data in indicating recession, since it will be sustained by international demand. However, we've also indicated that in the end, it is the American consumer who butters the bread of American manufacturers; and for this reason, the American consumer could also dent the global economy. We feel certain global equity markets will feel the impact of decreased spending in the States, and we remain concerned that significant decline in well-appreciated emerging markets could have similar impact overseas to the effects of the 1929 crash in America. However, we also feel it will take nothing less than a surprisingly messy war with Iran to do so. Problem is, we still see that as probable.

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