It’s a good news type of day for data in the US.
An hour and a half after the January jobs report blew through estimates on the headline while betraying cooler-than-expected MoM wage growth (so, “Goldilocks”, if you’re into tired, old market memes), ISM manufacturing also printed well ahead of consensus at 56.6 versus an estimate of 54.
(Bloomberg)
Make no mistake: This is relief for markets.
Recall that December’s 54.1 print was seen as a particularly heinous economic crime given that it represented the largest MoM drop since October 2008. It was revised up to 54.3.
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Meanwhile, new orders jumped to 58.2, the largest increase since 2014.
(Bloomberg)
On the downside, new export orders fell to the lowest since 2016, in a sign that trade tensions are biting – or something.
(Bloomberg)
In any event, you can absolutely expect everyone to take this as evidence that the US economy isn’t falling off a cliff after all – especially in light of the jobs report.
When you throw in the Fed’s dovish relent, it looks like the only remaining obstacles to a sustained rebound in risk assets are Donald Trump’s “greatest” tariffs and that same Donald Trump’s “tremendous” border barrier battle.
On the latter, he’s gone out of his way this week to pound the table on the idea that he can and will shut down the government again in two weeks.
And when we say “pound the table”, we mean that literally…
a bit of poetic license on the ‘pounding’, no?
so the economy is good….so the fed CAN do a rate raise….or continue the covert financial conditions tightening via the balance sheet runoff. if no changes in rate of runoff….didnt we read somewhere that each 100billion is like a quarter point in the fed funds rate?
we are back in a ‘is good news good or bad, and what IS good news in 2019? a stronger economy and higher rates or vice versa?
too bad housing and autos continue to fall off a cliff, and china….and that the LEI (less jobless claims/sp500 factors) is rolling over.
beware of folks who insist on wanting to know not only what the propensity of a mkt downturn are, but also insist you couple that with the Why?–that item that will coincide with mkt decline. Retail has no memory of those series of 3% down days in december…..is that the hallmark of a bull market?
Right, the economy is kickimg so much ass that it needs a higher Fed put lest it crash and burn.
The wealth effect is a real bitch…