For those expecting an early economic recovery the numbers had to be disappointing. Non-farm productivity fell 1.2 percent, down from the expected 0.7 percent. Unit labor costs were revised up to 6.3 from 5.2, the largest increase in eleven years. Factory orders dropped 3 percent versus the 2.5 percent expected and the NAPM non-manufacturing came in at 46.6, slightly lower than the anticipated 47.7. The economy is still showing signs of weakness via slowing growth and, when we throw in an increased possibility of inflation down the road, we could very well be headed for a bout of Stagflation.
Small specs are the general trading public with commercials being financial institutions.
Commercials are historically on the correct side of future trend changes while small specs are not. Extreme divergence between each signals a possible market turn in favor of the commercial trader's direction. Small Specs cut back dramatically on the DJIA net short positions while adding to their net-longs on the tech index. Commercials are end users of gold and are hedging current inventory purchased at lower prices. Commercials have been building extreme net-long position in this industrial metal, a bullish sign for economic health.