Manufacturers Ain't Feeling It!

In case you're wondering what happened to this morning's strong rally; at 6:45 am (pdt), exactly when stocks began selling off, Markit's U.S. Manufacturing Purchasing Managers Flash (advanced [i.e., 85% complete]) Index for August was released.

It came in below 50 (albeit barely at 49.9 [a 10-yr low]), which denotes contraction -- and is the lowest reading in 10 years:  

click any insert below to enlarge...



Per or reporting of late, we've been seeing this (general weakness) developing in our macro index.

Stocks bottomed at around 8am and have been battling their way back ever since; no doubt on the prospects that data like this morning's will make for an easier Federal Reserve. Tomorrow's speech by Chairman Powell could be short-term huge for markets.

Interesting, however, while stocks have battled back to near-even (from yesterday's close), the VIX (tracks implied volatility on S&P 500 Index options) has stayed elevated. Suggesting that options traders are (at the moment) bracing for Powell disappointing the market come tomorrow.

S&P 500:


VIX