Send In The Excuse Makers

July 30, 2007

With the stock market taking one heck of a hit last week, you can count on hearing lots of rhetoric on how well things really are. In fact it has already begun; however, you can’t have a lot of that over the weekend because news gets lost. As an example, U.S. Treasury Secretary Henry Paulson said the meltdown in the subprime mortgage market reflects a reassessment of risk that doesn’t pose a threat to the economy. “I don’t think it poses any threat to the overall economy,” Paulson, a former chief executive officer of Goldman Sachs Group Inc., said in an interview today in Washington. “Risk is being repriced. As we get a broad reassessment of risk, we are getting volatility.” <--more-->

Richard Russell believes that the subprime lending fiasco will bleeed over into everything else as he said, “And the song they’re all singing is that “the subprime mess won’t rub off on the rest of the economy.” Great, hope they’re all correct — but I’m much more interested in the market’s appraisal than that of the “chief executives.”

Rob Sellar, head of North American equities in the Philadelphia office of Aberdeen Asset Management, called this week’s rout in U.S. stocks a “necessary sell-off.”

There are no major economic releases expected Monday, but Tuesday will be busy with new data on personal income, employment costs, the National Association of Purchasing Management-Chicago index, construction spending and consumer spending all on tap.

Wednesday has a report from the Institute for Supply Management on the manufacturing side of the economy, as well as data on pending home sales and reports by manufacturers on car and truck sales in July.

The ISM has a report on the services sector on Friday

So, in spite of what the movers and shakers may think, the “facts” will drive the market a lot next week.

Written by Ernie · Filed Under Daily Commentary