Global Manufacturing Collapses To Worst Levels Since Mid-2009, Markets “Shrug It Off”
by Tyler Durden
News from last night out of China, coupled with early morning news from Europe confirmed what many speculated: namely that global manufacturing is now in a toxic spiral and absent another stimulus kick from various monetary and fiscal authorities there is no catalyst on the horizon to put the global economy into second gear. As Reuters observes, factories in Asia and Europe all but stagnated in July, according to business surveys that showed the weakest rates of growth since major industrial powers were struggling through the 2009 recession. While stock markets rose on signs of a last minute solution that would avoid a U.S. debt default, manufacturing purchasing managers indexes (PMIs) provided the latest evidence of a slowing global economy. The euro zone manufacturing PMI, which gauges the activities of thousands of businesses, fell to 50.4 in July from 52.0 in June — its worst showing since September 2009 and barely above the 50 mark dividing growth and contraction. Perhaps more worryingly, China’s official government PMI dropped to 50.7 from 50.9 in June, its weakest in more than two years, while the HSBC PMI fell below the 50 mark for the first time in a year — to 49.3 in July from 51.6. Following Friday’s horrendous GDP and Chicago PMI readings these are hardly a surprise. Needless to say, the reverse decoupling thesis will be tested once again today after the July ISM is released with consensus looking for a 54.9 print, and Zero Hedge looking for number just a tad above 50. But none of this matters. As Bloomberg’s James Halloway points out, “Markets are for now shrugging off Friday’s poor U.S. GDP report, softening PMI prints in China and Germany, contractionary PMI readings for Ireland, Spain, U.K.” One couldn’t have put the idiocy of the market any better. Oh, and did we mention there is actually still no deal on the debt ceiling. It is merely priced in. As was Tarp 1 before the vote, leading to the biggest then historical collapse in the Dow once the market realized it had gotten ahead of itself. Deja vu coming up?