The Chicago Purchasing Managers Index dropped unexpectedly when it was predicted to rise. This is an early indicator of manufacturing reports that will come out shortly and don’t expect them to be good. As I said a few weeks ago, the reports last month indicating growth were being misread and the down turn is likely to worsen.
China is restricting industrial expansion because of over capacity. No longer able to dump excess production into US market and thus assuring growth by destroying US manufactures that are still holding on. China continues to threaten to cut off imports of chicken from the US in response to Obama cracking down on their dumping tires in the US market. Of the $700 million in chicken that they import, half is chicken feet. Worth only 2 cents a pound in the US, they bring 40 cents in China as a delicacy. If exports from the US are blocked, look for more toe nails in the hot dogs.
CIT the eighth largest bank is again teetering on the edge of Bankruptcy and has the potential to cause a cascade of business failures since it primarily lends to small and medium businesses and these depend on bank lines of credit to operate.
Ken Lewis, chairman of BOA surprised his board by resigning. Is he expecting an indictment or just jumping ship while he can still can cash his golden parachute check? With the IMF saying that US banks have only revealed half of their toxic assets, another round of banking crisis’s bringing the economy to the edge is inevitable.
You can eat the rich with a nice broth made from surplus chicken feet.