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3 Sep 2019

ISM NUMBERS

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Post by MoneyRadio Staff

—-This morning, the ISM Manufacturing index for August came in at 49.1%. Estimates were for 51.3%. It is important to note that the  line between expansion and contraction is 50.0%. This reading ends a 35 month expansion and is the lowest since January of 2016.—-
—-Our thoughts:—–
—–We have believed we were in slowdown mode. Our expectation was for the mid 1s for GDP. We may have been too generous. We say this for several important reasons.—–
——The New Orders Index plunged to 47.2% from 50.8%.—–
——The New Export Orders Index decreased to 43.3% from 48.1%. This is the lowest reading since April of 2009. (trade worries?)—–
——Notice the word ‘NEW!” New is what drives future growth. The Employment Index also fell to 47.4% from 51.7%.—–
——Could these numbers be fleeting? Of course they can be fleeting. By itself, it is just one number but when we see the engine of Europe,  Germany contracting, Asia slowing with Japan hardly budging, moronic trade wars not only continuing but escalating, massive debt and massive deficits, these numbers must give pause.—–
—–Markets have sold off a bit off of the news. Just don’t blink! Markets had already been fragile. (Read our morning report again!) The good news is the recent support of the past 4 weeks still holds. It will need to. We already knew the fed was going to lower rates at the next meeting. This may push them to a bigger number. After all, the 10 year is now at 1.447% as we write this. And we repeat, we believe they do not want to but if the lows of the market do get taken out, we expect a rate cut before the meeting. Will lower rates again get markets on the move again? It’s been working decently for 10 years. Next time? —–

—-The Institute of Supply Management (ISMManufacturing Purchasing Managers Index (PMI) Report on Business is based on data compiled from monthly replies to questions asked of purchasing and supply executives in over 400 industrial companies.—–