You Know What They Say: ‘When It Rains Apple Guidance Cuts, It Pours Egregious ISM Prints’

Score one for The Duke University CFO survey or, actually, for BofAML’s interpretation of that survey and the bank’s efforts to extrapolate PMIs from the results.

On Monday, BofAML warned that that confidence data from the Q4 installment of the Duke study predicted the US PMI would dive to 50.3 by February from 59.3 in November.

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‘Planet Earth To Policymakers’: One Bank Sends An Urgent Message

Well by God, Thursday’s data has us well on the way.

ISM printed 54.1 for December, missing consensus by a country mile (the lowest estimate among five-dozen economists was 55.0) and diving the most MoM since October 2008. This is an ugly-looking visual:

(Bloomberg)

“Juuust a bit outside.”

New orders fell to 51.2 from 62.1, which sounds (and looks) pretty egregious from where we’re sitting.

(Bloomberg)

Clearly, this serves to “validate” the slowdown narrative and indeed appears to suggest that the negative feedback loop between markets and the real economy went into hyper-drive recently.

The timing is obviously awful, coming as it does on the heels of Apple’s guidance cut which itself underscored concerns about global growth and served as further confirmation (as if any was needed) that the Chinese economy is decelerating rapidly.

Stocks are back in free fall, as whatever goodwill was engendered by Thursday morning’s ADP data is now ancient history.

(Bloomberg) 

Yields fell, the dollar dropped and crude slumped, in a predictable knee-jerk under the circumstances.

(Bloomberg)

This is just another one of those days when everything that can go wrong is now going wrong. It would be difficult to conjure a more foreboding set of circumstances if you tried. Traders and investors, already shell-shocked, are staring at i) an Apple guidance cut blamed on China’s economy and the trade war, ii) a flash event catalyzed by an outlandish surge in the yen, and iii) an absolutely horrible ISM manufacturing print.

All that’s missing is a Trump tweet about Jerome Powell.

And yes, that’s a pseudo-prediction.