While the October national ISM index looked weaker than expected at 50.8 (the consensus was 52) the composition was good as new orders rose from 49.6 to 52.4 (that's the best level in seven months).
Lower inventories moved the index to below consensus and the new orders/inventories gap rose dramatically.
International markets are now in full panic mode.
A muddle-through economic scenario has increased in likelihood (despite the Greek hitch yesterday, today, tomorrow, etc., etc.), and, given the level of interest rates (low for as long as the eyes can see), the likelihood of healthy corporate profits in 2012 and conservative investor expectations, I would be a dip-buyer at this point.
A call for a new referendum in Greece will likely hang over the market for weeks.
Yesterday afternoon's government call for a Greek referendum on the country's aid package has had a delayed impact on the markets, but it is hurting overseas markets and U.S. futures this morning.
Stated simply, the full positive effect of last week's initiatives in Europe has been wiped out by the call for a new Greek referendum yesterday afternoon. Since the referendum won't be held until the first week of December at the earliest, this uncertainty will weigh on the markets for the next several weeks.
One would assume that the referendum will pass; if it doesn't, new elections will be called (as well as a new referendum) in early 2012. Not passing the referendum will materially increase the economic risks in Europe, likely leading to Greece being kicked out of the eurozone, causing a run on Greek banks as well as other countries' weak financial institutions and placing further strain on the bond markets of Italy and Spain.