Economic news was not surprising last week - more of the same only worse

ISM manufacturing index comes in below 50 which means that the idea that exports will drive the manufacturing sector is not doing enough to offset the internal slowdown.

Construction spending is down and vehicle sales are anemic. Factory orders are negative and the ISM non-manufacturing numbers are also below 50. Initial jobless claims are slightly lower and the continuing claims are slightly higher. The Challenger job cuts were down 14 percent over the last year and the ADP employment change was down over 20,000. We ended the week with non-farm payrolls down over 60,000 and manufacturing payrolls off by over 50,000.

Mortgage delinquencies are now pushing closer to 6%. The housing market is still on a downturn.

The real story is the credit crunch. Dow Jones lost 350 points on the back of hedge fund and mortgage fund failures. The systematic delevering by financial institutions who extend credit is the number one issue driving the financial markets. Or, as mentioned by the blog Calculated Risk, "Who is this guy Margin who keeps calling me?”