EmailS&P futures are down slightly as the euphoria over QE3 subsides.
In fact, there is a risk that the stock market has received most of the boost it will get from European and US central banks. Now, the focus almost has to turn to the upcoming earnings reports, which will be lousy. There is also the poor global economic data with which to contend.
News is light this morning so the headlines are about the US intending to file a World Trade Organization complaint against China for alleged illegal subsidies for auto parts. Global trade is weakening in a worrisome manner. Political tension on trade will hopefully remain limited.
The US manufacturing outlook is weakening along with the disturbing global trends. This morning, the September New York Empire manufacturing index was reported at -10.4, down from -5.9 in August. A negative number reflects a decline in manufacturing activity in the New York region.
Last week, overall US industrial production was reported to have fallen 1.2% for August. The trend into September is apparently not good.
The Fed has implied that one goal of QE3 is to lift asset prices, including stocks. That (artificial) boost will get increasingly difficult if current earnings and economic trends continue. The Fed has stated that poor US employment trends are a major reason QE3 was launched. A preemptive effort to address a potential wave of difficult credit, earnings, and economic news might have been even more important.
Founder and Chairman, Briefing.com
