NEW YORK (CNNMoney) – “More bad news about China's factories: The decline in the country's crucial manufacturing sector got worse last month.  A closely-followed report by bank HSBC, released Monday, said export orders for China's factories slid at the sharpest rate since March 2009…on Saturday, the Chinese government's official manufacturing index fell to 49.2 from 50.1 in July. Any reading below 50 indicates that factory activity is shrinking rather than growing.”
http://money.cnn.com/2012/09/01/news/economy/china-pmi/index.html?iid=HP_LN

HUSSMAN ON THE DEBT

The Hussman Weekley Comment was not published this week, however, John Hussman included his thoughts in the Annual Report to his shareholders and I’ve printed an excerpt below:

"Economies can retreat from excessive debt burdens in three ways. One is “austerity,” where spending is restricted in the attempt to reduce deficits and keep burdens from growing as fast as the economy grows. The difficulty with austerity is that it is often self-defeating because economic growth slows and tax revenues often decline enough to offset the reduced spending. A second approach is “monetization,” the central bank creates currency and bank reserves in order to purchase and effectively retire government debt. This approach may be expedient in the short-term, but can lead to severe inflationary effects in the longer-term. A final approach is “debt restructuring,” where bad debts are written down or swapped for a direct ownership claim on some other asset (known as “debt-equity swaps”). This approach can detach the economy from the burden of prior debts, but it is most contentious politically because it requires lenders to take losses or accept changes in the structure of their claims.”

“In the next several years, it seems inescapable that the U.S. and Europe will require a combination of all three approaches. In my view, the likelihood of addressing global debt problems without significant economic and political turbulence is quite low. "  From…
http://www.hussmanfunds.com/

LOST MANUFACTURING JOBS NOT COMING BACK (excerpts from a blog by Charles Hugh Smith)

“Both Mitt Romney and Barack Obama will give us happy talk about maintaining entitlement benefits (e.g., Medicare and Medicaid) that cannot possibly be sustained. They will talk about energy self-sufficiency. They will talk about creating jobs. They will tell us that we can somehow ‘grow’ our way out of our economic distress. But neither candidate will admit that technology now destroys more jobs than it creates, because to do so would be to commit political suicide. The fact is that none of the happy talk will ever come true. Instead, the Federal Government, with the tacit approval of both major political parties, continues to run trillion-dollar-plus deficits year after year in a futile attempt to spend our way out of our economic problems and to sustain an economic model that cannot be sustained

Those who believe that bringing manufacturing back to the US will also bring back jobs are trying to fight a war that has already been fought and lost. Why? The answer is technology...A fully automated robotic manufacturing facility might require only 100 workers, while a traditional assembly line facility might utilize 3,000 workers...The simple fact is that most of the lost manufacturing jobs are never coming back.”
http://charleshughsmith.blogspot.com/2012/09/labor-day-2012-future-of-work.html

My comment: He’s right.  I wrote once before that I took a tour of the Ford assembly plant about 10-yrs ago.  I was amazed at how few workers were there.  All of the welding was done by robot.  They turned out a truck every minute

 

MARKET RECAP

Monday the S&P 500 finished DOWN about 2-pts to 1405 (rounded).  VIX rose 3% to 17.98.   

NTSM

The NTSM analysis remained HOLD Monday.

Looking at market internals, both the breadth (%-stocks advancing) and “new-high vs. new lows” look like they might be signaling a downturn.  These are not in the NTSM analysis, at least not yet.  Market internals tend to give early signals so I will wait to see if this turn is confirmed by the NTSM analysis.

The NTSM system is beating the S&P 500 by ½% for 2012.  Not much, but 89% of all hedge funds are underperforming the S&P 500 this year (per CNBC) so it could be worse. (NTSM was up 78% from 2006-2011 while the S&P 500 was essentially flat.)

MY INVESTED POSITION

Based on the BUY signal, 6 July, I moved back into the market on 9 July (after the weekend) at S&P 500 1352. 
 
I now have a 50% stock allocation overall.  For my age, that is what most advisors recommend as a fully invested position, however, I am normally much more aggressive.  I have less invested in stocks now because there’s a lot of risk