The main idea is that orders are declining relative to inventories. Business, in this situation, is forced to cut production.
The outcome is a decline in the ISM index. The implication is that the economy is likely to slow down in the coming months.
And this is bad news for earnings.
Will then the Fed implement QE2? It would be great news for stocks. Let's hope so. Everybody needs to make some money to feel better.
George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked best market timer in the 12 and 6 months ending 8/20/10 by Timer Digest
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