Market Analysis

Bonds opened better today and stocks lower in early morning trading on continued concerns about Greece. Markets then adjusted with the release of the September Institute of Supply Management Manufacturing Index which came in higher than expected. Bonds moderated and stocks moved towards breakeven.

The fact that the problem continues to be of such huge significance is very interesting given how small Greece is in the overall world picture. In 2008, prior to being hit by the financial crisis, Greece’s gross domestic product (GDP) was $355 billion. For that same year, the U.S. government's Bureau of Economic Analysis reported the GDP of the Dallas, Fort Worth and Arlington MSA at $379 billion. Five other US metro areas in addition to DFW, had bigger GDPs than Greece in 2008. In ascending order, from 5^th to 1^st are Washington, D.C., Houston, Chicago, Los Angeles and New York. New York City's economy in 2008 was about three and a half times the size of Greece's in 2008. It is true that large European banks, particularly in France, have exposure in the event of a Greek default, and that a Greek default could trigger investor panic for other European countries with debt problems. However, given how small Greece is, what is highlighted is a leadership vacuum in Europe and insight as to the culture shift that has yet to occur in terms of the general population’s dependence on government subsidies. What is also highlighted is how different the rest of the world is from the US, who has been so generous since WWII in helping other countries. The fact that Europeans have not yet dealt with this problem, is a telling sign about Europe’s evolution. When times are good they are clearly willing to band together. When times are not so good they are not so sure. Clearly the issue is complicated by the fact that other European countries do not want to subsidize an unsustainable Greek quality of life . However, at a time when we in the US are so hard on ourselves, it is worthwhile to step back to see how much we have done for the rest of the world and how much we do for each other when times are really bad compared to what is currently being done in Europe and the manner in which it is being done, where aid is dangled on a string of shame.

Below is a recap of this week’s economic calendar

Monday, October 3, 2011

• September Institute of Supply Management (ISM) Manufacturing Index – came in at 51.6, up from 50.6 in Sept and estimates for a 50.5 figure.

Tuesday, October 4, 2011

• August Factory Orders – expected down .1% vs up 2.4% for July

Wednesday, October 5, 2011

• September ADP Employment Change – expected 45,000 Private Sector jobs added vs 91,000 in August.
• September ISM Services Sector Index – expected 52.8 vs 53.3 in August

Thursday, October 6, 2011

• Initial Jobless Claims Week Ended 10/1 – expected 402,000 vs 391,000 the prior week

Friday, October 7, 2011

• September Non Farm Payroll Report – expected 60,000 jobs added compared to 0 in August. The Private Sector is expected to have added 83,000 jobs vs 17,000 in August. The Public Sector is expected to have shed 23,000 jobs vs shedding 17,000 in August.
• September Unemployment Rate – expected to remain flat at 9.1%