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Pisani: Second Round of Easing a Failure?

S&P futures have came very close to breaking through the 200-day moving average of roughly 1284 (on the cash contract) in the overnight session. Given that we saw a dip two days ago when the S&P 500 crossed the 50-day moving average of 1310, it's not unreasonable to assume that crossing 1284 would also cause additional selling.

Can we conclude the second round of quantitative easingdid not work? It may have solved the deflation problem, but it did nothing to help improve the jobs outlook or the economic outlook, it appears. Traders were particularly shocked about the revision in first quarter to 0.04 percent from 1.9 percent...remember, the first quarter was before the Japan quake.

Financials (banks and insurance companies) and materials are among the weakest groups pre-open.

I have noted that many traders are much more focused on a weaker economic outlook than on the debt ceiling. The S&P 500 is down 3.3 percent for the week at the close on Thursday, while Treasurys have barely budged, an indication that fundamentals are indeed at the core of the problem.

As evidence, look at the 4.3 percent decline in the Dow Transports, a leading indicator of U.S. activity. Susquehanna transportation analyst Matthew Troy, in a note to clients Friday morning, said "signals of slowing continue to flash bright orange in our universe." He is observing deceleration across the board: intermodal, ocean, and air.

One of the world's biggest shippers is also cautious. Switzerland-based Kuehne und Nagel's stock dropped 7 percent after it reported results on July 18 and gave very cautious commentary on the second half of the year; the stock is now down 20 percent since hitting highs in May (its shares don't trade in the U.S.). Kuehne und Nagel are the number one sea freight shipper in the world, and are in the top three in global airfreight.

Troy quoted the chief executive, Reinhard Lange: "On the outlook for 2011, we all realized that during the last couple of months the global market, the global trades were softening, and therefore also the market outlooks have been reduced."

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