ISM INDEX

ISM Index-December was 47.7 vs est of 50.5 consensus.. And 52.0 by Briefing.com.

The ISM Index has been down for 6 months in a row.. from June high of 56. Below 50 is Contractionary. New Orders were down Hard at 45.7.. Lowest since October 2001. Export Orders fell to 52.5 from 58.5... This is a first sign of what we looked for.. with the Euro at record highs.. and thus Europe slowing. Prices paid fell to 48.0.. from 67.5.. suggests more weakness. Prices paid... from another source reads 68 .. up from 67.5... That suggests less weakness than the Briefing.com numbers. New Orders index fell to 45.7% from 52.6%.. lowest since Oct 2001. Slower demand .. more of a problem than excess Inventories. Remember.. in Q3.. the GDP growth was boosted a lot by Inventory growth... so that is a concern now. The Prices paid will put pressures on Profits.. since manufacturers generally have not much pricing power.

Overall.. the ISM Index report today was such a shock to markets.. since it came just after the string of low LEI numbers.. and the ECRI WLI at lowest growth rate in over 5 years. Also.. the Initial Claims have been inching higher.. though not yet saying Recession as yet. The talk is of more layoffs coming in Financials. Corporations have held off laying off workers.. because of strong balance sheets .. and they don't want to let go qualified workers.. unless they see significant slowing. Qualified workers are still in short supply. The strong balance sheets are probably the difference. In Y2000 they first tried holding onto workers.. but then started laying off big time... once the slowdown became evident. Balance sheets were not in such good condition then. And the ones who held on too long suffered Losses.

Initial Claims will be reported tomorrow. We will get more evidence; probably not much change over the Holidays. ADP will also give estimates of New Jobs tomorrow. Last month they estimated way too high. That's for last week.. so workers may take a few days to file Claims.