Whilst all the focus is on the plight of the Eurozone the domestic financial mess the USA is locked in continues to escape rigorous scrutiny. California is bust, Jefferson county can’t afford its sewers and now we learn that Wayne County Detroit’s morgue can’t afford to bury, or cremate their dead. Having sacked three out of the eight previous pathologists the morgue is struggling to keep up with the levels of autopsies. In an inventive twist and in order to shave off costs of circa $1.5ml over three years, the morgue has partnered up with the local university of Michigan to allow medical students to dissect and experiment with certain bodies, presumably those whose relatives cannot afford a burial will get ‘preferential’ treatment. Given the pressure parents are under to afford the crippling student debts we can only hope and pray that the medical students don’t unzip the body bag to discover Mom and Pop staring right back at them..
Whilst contagion will once again re-appear as the latest buzz phrase for the mainstream media to latch onto, the ignorance of the damage caused by the insatiable USA banking ‘machine’ will continue to be unquestioned. As the Eurozone financial policy makers reminded Tim Geithner’s entourage last week during the meeting in Poland, the USA is in no position to lecture or point out the merits of the mechanism by which it (supposedly) came out of recession.
The contagion between Euroland’s issues, the USA and the global economy will no doubt continue to be twisted in a simple finger pointing exercise towards Europe, that simplistic and childish diagnosis could be equally dumped at America’s door. Gordon Brown, the former UK prime minister, quickly rubbed out the “blame” word from his narrative back in 2008-2009, politically it was deemed to be very insensitive at a time when the problem had been identified but now a solution was needed. However, he was right then and he’d be equally right now in his prognosis..
In overnight/early morning trade the Asian and Pacific region markets were battered. The ‘contagion’ of the downbeat and unimaginative FOMC announcements impacted heavily. The Hang Seng closed down 4.85%, the CSI closed down 3.08% and the Nikkei closed down 2.08%. The ASX 200 closed down 2.63%. The ASX has collapsed by 14.28% year on year. Brent crude is currently down $220 a barrel and gold is down $14 an ounce.
Currently the UK FTSE is down 3.28% and flirting with the psychological 5,000 barrier. The loss year on year is currently 7.73%. in Europe the STOXX is currently down 3.81%, the CAC is down 3.82% and the DAX is down 3.46% having lost circa 15% of its value year on year.
Not withstanding the debt crisis, data has been published revealing that Euroland’s services and manufacturing output contracted for the first time in more than two years in September, the region’s worsening debt crisis adding to concerns that the economy is sliding into a recession. An index compiled from a survey of purchasing managers in both industries fell below 50, which suggests contraction, for the first time since July 2009, London-based Markit Economics said in an initial estimate today. The index declined to 49.2 this month from 50.7 in August. Economists had forecast a drop to 49.8, according to the median of 17 estimates in a Bloomberg survey.
The SPX equity index future is currently 1.5% down, the DOW is below 11000. The storm clouds appear to be gathering for the New York session/s. There are data releases to be published on or during the New York session that could be highly significant.
Naturally the USA jobs claims data will be highly significant, A Bloomberg survey forecasts Initial Jobless Claims of 420K, compared with the previous figure released which was 428K. A similar survey predicts 3722K for continuing claims, compared with the previous figure of 3726K.
13:30 US – Initial and Continuing Jobless Claims
15:00 Eurozone – Consumer Confidence Sept
15.00 US – Leading Indicators Aug
15:00 US – House Price Index July