Posts Tagged ‘ISM manufacturing’

STOCKS RALLY AFTER STRONG ISM REPORT

STOCKS RALLY AFTER STRONG ISM REPORT

Courtesy of The Pragmatic Capitalist 

Signs of weakness in the global economy were not apparent in this morning’s ISM report.  Equities were set to tumble 1% this morning after weaker than expected data in China and continued concerns in Europe, but turned around on the ISM’s release.  Econoday detailed the strength of the report:

“Robust month-to-month growth for new orders and employment highlight another very strong ISM manufacturing report. New orders held steady at 65.7, a reading well over breakeven 50 and the third in a row over 60. Employment index was last above 60 back in May in 2004. May’s reading came in at 59.8 for a 1.3 point gain to indicate significant acceleration in hiring.

Other readings include strength for production, backlogs, export orders and continued delays for deliveries. Input prices continue to show significant pressure. The activity in production appears to be drawing inventories which points to a rising necessity for inventory restocking and a future boost for production and employment.

This report is very positive and should help bolster the optimists who say the U.S. economy is on the mend.”

showimage.asp  STOCKS RALLY AFTER STRONG ISM REPORT

Robert Ore, chairman of the ISM Manufacturing Business Survey Committee is quite confident in the strength of the recovery:

“The manufacturing sector grew for the 10th consecutive month during May. The rate of growth as indicated by the PMI is driven by continued strength in new orders and production. Employment continues to grow as manufacturers have added to payrolls for six consecutive months. The recovery continues to broaden as 16 of 18 industries report growth. There are a number of reports, particularly in the tech sector, of shortages of components; this is the result of excessive inventory de-stocking during the downturn.” 

Econoday:  Definition

The ISM manufacturing composite index is a diffusion index calculated from five of the eleven sub-components of a monthly survey of purchasing managers at roughly 300 manufacturing firms from 21 industries in all 50 states. The survey queries purchasing managers about the general direction of production, new orders, order backlogs, their own inventories, customer inventories, employment, supplier deliveries, exports, imports, and prices. The five components of the composite index are new orders, production, employment, supplier deliveries, and inventories (their own, not customer inventories). The five components are equally weighted. The questions are qualitative rather than quantitative; that is, they ask about the general


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THOUGHTS ON THIS MORNING’S DATA

THOUGHTS ON THIS MORNING’S DATA

looking at dataCourtesy of The Pragmatic Capitalist

Mixed bag of data this morning depending on how you want to interpret things.   Retail sales were mixed with discounters performing well and high end retailers performing poorly.  The U.S. consumer continues to keep spending under wraps and is very price conscious when they do buy goods and other items.  This morning’s retail sales data was another sign that the cash for clunkers is going to detract from sales for months to come.  This is by far the most worrisome component of anyone’s v-shaped recovery thesis.  The U.S. consumer is simply not coming back as fast as many would like.

Jobless claims continued to trend sideways at 570K. Continuing claims shot higher to 6.23MM.  This is continuing bad news for U.S. consumers.  570K claims and 6.23MM continuing are truly remarkable figures for an economy that is supposedly on the mend.  This doesn’t bode well for a consumer recovery.  Perhaps most alarming is the sideways movement.  This likely means we’ll see little to no change in overall job losses tomorrow while the market expects a 10% decline in job losses.  Don’t be shocked if we see a figure very close to last month’s 247K….

 THOUGHTS ON THIS MORNINGS DATA

ISM manufacturing was essentially in-line at 48.4. Econoday reports:

But there are definitely signs of improvement that point to a plus 50 reading for the composite index perhaps as soon as next month. Prices jumped 22 points to 63.1, a gain, especially given flat fuel prices, pointing to rising demand for inputs. Business activity, akin to a production index, showed an actual month-to-month increase in August, up more than 5 points to 51.3. This index on the manufacturing side rose above 50 in June, by the way matching that month’s cyclical pivot higher in total U.S. manufacturing sales.

The composite index attempts to anticipate GDP and these results may temper related estimates which have been climbing to as much as 4 percent for next year. But the coincident indicators in this report — the prices index and business activity index — point to ongoing expansion. Yet the headline was weaker than expected, pushing stocks and commodities lower.

All in all, it’s a fairly worrisome set of data for anyone who believes the consumer is going to rebound to their old habits and save the economy.  Thus far, there are little to…
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WHAT’S ON TAP?

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WHAT’S ON TAP?

Courtesy of The Pragmatic Capitalist

Another huge week for the markets coming up.  Another 18% of the S&P 500 will report earnings, but the shift will move from major market leaders to second tier companies.  Very few of the reports will be major market movers like we’ve seen in recent weeks.  I expect the impact of earnings to diminish substantially in the coming two weeks.  This is one less log on the rally fire.   The economics news will be front and center including the grand daddy of ‘em all, the NFP report on Friday.

  • Monday: July ISM manufacturing survey, July construction spending, July auto sales
  • Tuesday: June personal income and spending, June pending home sales
  • Wednesday: July ISM services index, June factory orders, July ADP employment survey, weekly crude inventories
  • Thursday: weekly initial jobless claims
  • Friday: July unemployment and change in nonfarm payrolls, June consumer credit

I’ve turned neutral on the market here.  The risk reward appears most unfavorable.  Although I am not directly shorting the equity markets I do have a number of pseudo shorts via the currency and derivatives markets.  My equity exposure has been cut to 0% at this point.  I feel very comfortable with my Thursday sell near S&P 995 after the disturbing late day action on Thursday and Friday.  They say the smart money transacts after 3PM  and the smart money was selling both days.  We’ll see if it materializes into real selling in the coming weeks.  I am having trouble finding a new catalyst for the rally.  Positive earnings and an all out economic recovery are largely being priced into stocks here.  Sentiment is wildly positive in the near-term.  All of this makes me less than excited about buying into the market at these levels.

 

 


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Phil's Favorites

Is This As Good As It Gets For the Stock Market?

 

Is This As Good As It Gets For the Stock Market?

Courtesy of 

Josh and I spoke recently  about the slow grind higher, the lack of volatility, and all the recent stock market records. The very first response in the comment section was, “market overdue for a pullback.”

This seems to be the prevailing narrative and I gotta be honest, I agree. I’m just as surprised as anyone that the market keeps grinding higher.

Here are a few data points, by way of the S&am...



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Zero Hedge

Neel Kashkari Appeals To "QE Conspiracists": Show Me How The Fed Is Moving Stock Prices... So Here It Is

Courtesy of ZeroHedge View original post here.

Things are starting to get surprisingly heated at the Fed, now that not only Wall Street strategists, and traders but also Fed presidents are starting to tell the truth about how the Fed's "NOT QE", which sorry but we will call it by its real name QE 4, is pus...



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The Technical Traders

Energy Continues Basing Setup - Breakout Expected Near January 24th

Courtesy of Technical Traders

After watching Crude Oil fall from the $65
ppb level to the $58 ppb level (-10.7%) over the past few weeks, we still
believe the energy sector is setting up for another great trade for skilled
investors/traders.

We are all keenly aware that Winter is still
here and that heating oil demands may continue to push certain energy prices
higher.  Yet Winter is also a time when
people don’t travel as much and, overall, energy prices tend to weaken
throughout Winter.

Over the past 37 years, the historical monthly breakdown for Crude Oil is as follows:

December: Generally l...



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Insider Scoop

10 Biggest Price Target Changes For Friday

Courtesy of Benzinga

  • Citigroup lifted Caterpillar Inc. (NYSE: CAT) price target from $145 to $170. Caterpillar closed at $147.87 on Thursday.
  • UBS cut Twitter Inc (NYSE: TWTR) price target from $37 to $35. Twitter shares closed at $34.19 on Thursday.
  • Morgan Stanley boosted the price target for Yum! Brands, Inc. (NYSE: YUM) from $113 to $118. Yum! Brands closed at $102.16 on Thursday.
  • Jefferies lifted the price target on Ventas, Inc. (NYSE: ...


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Kimble Charting Solutions

Tesla About To Run Out Of Energy Here? Short-Term Peak Possible?

Courtesy of Chris Kimble

Tesla (TSLA) has been screaming higher of late, as very impressive gains have taken place.

Is Tesla about to run out of energy/take a break/experience some selling pressure? A unique price setup is in play, that bulls might want want to be aware of.

This chart applies Fibonacci to the 2016 lows and 2017 highs at each (1). The impressive rally of late has it testing its 161% extension level, based upon those price points.

At the same time, it is hitting its 161% extension level, it finds itself at the top of a 7-year rising channel, with momentum hitting the highest ...



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Chart School

Gold Gann Angle Update

Courtesy of Read the Ticker

The new year of 2020 has gold is poised to break out higher. Why is gold going higher? Maybe the FED's economists can explain .... or not.

Maybe these could be on the list:

- FED repo hundreds of billions a day.
- ECB made up tools to keep the European banks solvent.
- A sugar high stock market with Apple Inc and Microsoft looking like Bitcoin 2017.
- The US bond market is NOT confirming a strong stock market.
- Corporate profits have flat lined for 3 years while stocks soared each year.
- Knowing an US election year needs stimulus, and a lower US dollar is a first choice.
- China deal, will have a currency element to make it easier to do business. Lower US dollar.



Gold Gann Angle ...

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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Digital Currencies

Cryptos Have Surged Since Soleimani Death, Bitcoin Tops $8,000

Courtesy of ZeroHedge View original post here.

Bitcoin is up over 15% since the assassination of Iran General Soleimani...

Source: Bloomberg

...topping $8,000 for the first time since before Thanksgiving...

Source: Bloomberg

Testing its key 100-day moving-average for the first time since October...

...



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Members' Corner

Tobin Smith: Foxocracy, the 2020 Election, and the Stock Market

 

For decades, Fox News has been spreading false information and hooking its audience into an angry, xenophobic and paranoid worldview. It's no mystery that Fox was instrumental in the 2016 election -- but how did it do it? How did it gain so much influence? Tobin Smith, CEO of Transformity Research, Inc. and former Fox News contributor and talk show host, explores this phenomenon and discusses Fox News’ emotionally predatory and partisan propaganda media strategies and tactics in his new book, ...



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Biotech

Why telling people with diabetes to use Walmart insulin can be dangerous advice

Reminder: We are available to chat with Members, comments are found below each post.

 

Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/Shutterstock.com

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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