Poor Manufacturing Numbers - Good for the Market?

A slew of manufacturing numbers from around the globe were released in the last few hours. And the overwhelming theme was deceleration (except China).

China HSBC Flash PMI for the month of July was 49.5, a boost from the 48.2 reading a month earlier and the best level since February. This can be viewed in two ways. One it shows that the easing measures taken by China have helped improve the number. The other way to view it is that the number remains below 50 and shows demand and employment is still too low for the likes of the government. Even though the latter is negative, it does open the door for more easing, which should lead to improvement in the number and a higher stock market.

The Eurozone Flash PMI fell to 44.1 in July from 45.1 in June, hitting a new 37 month low. The silver lining is that the Services PMI is at a 4 month high of 47.6. The number should be of no surprise given the situation in the Eurozone.

The July Flash PMI in the US fell to 51.8 from 52.9 in June. Output and New Orders also fell from the prior month. The lone bright spot was Employment, which recorded an increase to 52.9 from 52.8 in June.

Considering all the numbers from around the world are not where they should be, it does open the door for more coordinated quantitative easing and stimulus packages. It has been working in China and the EU is more than likely going to be forced to do more, and the US now has the ability to implement QE3. The combination will result in a stock market rally the investors do not want to miss out on.