August's recap on the S&P 500

Mostly, I'd say it was a month full of bad expectations, with a remark on the consumer side and a developing political crisis in Washington. We saw most of the forward-looking data showing some signs of contraction in the economy. But on the other hand, hard data showed the U.S. economy still has some fight in it.

Nevertheless, job creation is null. Jobless claims can't seem to break the 400k level, and continuing claims show an even worse scenario since they keep going up. That in mind, and with manufacturing data reaching the very thin line between growth and contraction, I think the month ahead will have high volatility with a downward trend.

Please go to link below to see the graph in full size:
August on the S&P 500

Also, and most important, for now I'd be looking very carefully to data coming from Europe. France is defenitely not doing ok. As you can see in the graph, its industrial production keeps going down and manufacturing isn't going anywhere but down as well (actually, in contraction territory). Greece, Italy and Spain are the other ones to keep an eye on. Greece's data just confirms (at least for me) the eventual and inevitable default of its soverign debt: Industrial production -13%, unemployment 16.6%, GDP -6.9%, Retail Sales -8.3%... All worse than expected.

Italy... well, 8% unemployment, retail sales -0.2%, and manufacturing in contraction levels at 47. This is no news now, since we all know the ECB had to get in and buy Italian and Spaniard bonds to keep them solvent.

In Asia, China still showed growing inflation despite all efforts to contain it (6.5%) so my guess is we'll see more rate and capital requirement increases. And also, here's something extra on China: On Wednesday, the HSBC manufacturing index got to 49.9 points....

So my point here is, U.S.A. is fine (for the moment) but the real threat of a double-dip, this time comes from the outside, and that's Europe.