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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The PhilStockWorld.com Weekly Webinar - 10-21-2020

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Major Topics:

00:00:09 - Checking on the Market
00:02:06 - Petroleum Status Report
00:03:05 - Currencies
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COVID-19 causes some patients' immune systems to attack their own bodies, which may contribute to severe illness

 

COVID-19 causes some patients' immune systems to attack their own bodies, which may contribute to severe illness

In autoimmune diseases, circulating antibodies destroy an individual’s own tissues. JUAN GAERTNER/SCIENCE PHOTO LIBRARY/Getty Images

Courtesy of Matthew Woodruff, Emory University

Across the world, immunologists who retooled their labs to join the fight against SARS-CoV-2 are furiously trying to explain why some people get so sick while others recover unscathed. The pace is dizzying, but some clear tr...



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Arquitos Capital Management 3Q20 Commentary: MMAC Is Undervalued

By Jacob Wolinsky. Originally published at ValueWalk.

Arquitos Capital Management commentary for the third quarter ended September 2020, discussing how their historical holdings MMA Capital (MMAC), Westaim (WED.V), and Enterprise Diversified (SYTE) are historically undervalued.

Q3 2020 hedge fund letters, conferences and more

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Stimulus Stalemate Sparks Slump In Stocks, Bonds, Oil, & The Dollar

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Day after day the algos excited pumped and dumped stocks on the back of 'hope' and 'nope' headlines about the next round of COVID-19 relief from Washington. By the end of the week, stocks were down, bond (prices) were down, oil was down, the dollar was down, and economic data was down...

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Courtesy of Steven Mulroy, University of Memphis

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Kimble Charting Solutions

Doc Copper/Gold Indicator Breaking Out Again?

Courtesy of Chris Kimble

The Doc Copper/Gold ratio broke above a 2-year falling channel back in 2016 at (1). Following this breakout, it rallied for the next year. During that year, Copper related assets did very well!

The ratio peaked in the summer of 2018 and created a series of lower highs over the past two years.

The strength of late has the ratio attempting to break above dual resistance at (2).

If the ratio continues to push higher and succeeds in breaking out, Copper, Basic Materials (XLB), and ...



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Dow Gann Angle Update

Courtesy of Read the Ticker

Time to see what happens to the Dow post US elections.

The Dow Gann Angle Target 3 (from 2007 top) is on the table, and what a ride that will be. The FED went BRRRRR is all the fundamental news you need to know. Gann angles are very good tool to see how the masses are pushing price.


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The last two US elections saw Bitcoin and the DOW rally well for 6 months, due to stimulus. The most bearish 2020 US Election case for the markets is a Biden win with the Senate and Congress controlled by the Democrats, somehow this blog feels that is very unlikely. So what could go wrong!


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Bitcoin: the UK and US are clamping down on crypto trading - here's why it's not yet a big deal

 

Bitcoin: the UK and US are clamping down on crypto trading – here's why it's not yet a big deal

Where there’s a bit there’s a writ. Novikov Aleksey

Courtesy of Gavin Brown, University of Liverpool

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COVID-19 Forces More Than Half of Asset Management Firms to Accelerate Adoption of Digital Marketing Technology

By Jacob Wolinsky. Originally published at ValueWalk.

There is no doubt that the use of technology to support client engagement initiatives brings both opportunities and threats but this has been brought into sharp focus this year with the COVID-19 pandemic.

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Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

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Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

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Economic Data Scheduled For Friday

Courtesy of Benzinga

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Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

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