Market Update – The SP500 has been down now for 9 of the last 10 sessions “buyers are no where to be seen” $SPY

• Market Update – equities extended their decline this week, w/the sp500 dropping ~5% (on back of last week’s ~3.6% decline), although late on Thurs and into Fri, it appeared like the worst of the selling pressure had been exhausted. 
• The SP500 has been down now for 9 of the last 10 sessions (and 4 of those 9 days have been declines of more than 1%, inc. the 3.1% drubbing experienced on Tues June 29).  The big underlying catalyst behind the weakness has been a theme present in the marketplace for a couple weeks now but gaining more adherents every day – a concern that economic growth is quickly slowing and potentially heading for a “double dip”. 
• US investors have endured a slew of economic readings coming in below consensus really since the May jobs report back on June 4 (when the private sector adds of just 41K badly missed St expectations of +180K; that 41K has subsequently been revised lower to +33K). 
• Since that early June release, numbers gauging a wide range of activities have come in under the St view (inc. a bunch this week, like the June BLS report, US ISM, auto sales, factory orders, etc).  Housing has experienced a substantial drop-off in activity ever since the Apr tax credit expired. 
• The China PMIs have dropped under St estimates for two consecutive months (inc. the June PMIs out this week). 
• The JPMorgan Global Manufacturing PMI is revealing signs that the “global IP boom is waning” and JPMorgan’s M Feroli cut his US GDP growth forecasts this week. 
• The ECRI weekly leading index fell further this week (the latest reading was out Fri according to Reuters; you can see the index on Bloomberg under “ECRWWLI”).  While collectively these readings still reflect an economic expansion, investors are nervous about the steep loss of momentum (Paul Krugman’s “The Third Depression” article received a lot of attention this week.  Just as the world appears to have hit an economic speed bump, global fiscal and monetary policy is emphasizing contraction. 
• On the former issue, the G20 leaders statement out over the weekend highlighted somewhat that was first articulated back at the G20 finance ministers gathering of a couple weeks ago – governments (esp. ones in Europe) are focused on trimming budget deficits lest they be attacked by the same vigilantes that have hurt Greece and others so much.  While the US continues to urge fiscal bodies to not withdraw support too quickly, their pleas are falling on deaf ears (and the US itself is having trouble keeping the fiscal spigots open as evidenced by the repeated failure of the Senate to pass unemployment benefit extensions, although this looks like it will happen once Congress returns from recess on Jul 12). 
• On the Central Bank front, the expiration of the ECB’s 12-month tender this week amounted to an effective withdrawal of liquidity (one of the reasons why the euro was so strong) while its covered bond purchase program wrapped up w/o an extension.  The ECB has been slowing its pace of sovereign bond purchases and permitting peripheral spreads to drift wider (and the purchases it has been doing are being “sterilized”).  In London, there appears to be a rift emerging at the BOE, w/some calling for a more hawkish policy and M King increasingly isolated in his dovish view (something talked about in a DJ article Fri).  A couple Fed officials this week have commented that the current environment doesn’t warrant the resumption of asset purchases.  Meanwhile, lurking in the background of all this is the prospect of higher tax rates in the US once the Bush tax cuts expire in ’11.