Color Accompanying US PMIs Now Downright Silly
Services activity is robust in the US, the flash read on IHS Markit's gauge for May suggested.
The index notched a new record at 70.1, up sharply from April and well ahead of the 64.3 the market expected. No economist predicted a print above 66.
The manufacturing gauge hit 61.5, also a record and likewise ahead of expectations. The composite index posted an all-time high as well.
At the risk of oversimplifying, records abound. Composite new orders: Record. Composite input prices: Record. Se
This is irrelevant to stock prices, as are earnings for that matter. (Not just in the USA – check out the price action on the Sensex in the face of the Covid epidemic.)
All we need to know is where measured and implied volatility are going.
“By the end of 2021, we may all look back at these surveys and chuckle at the extent to which we were duped into mistaking fleeting supply chain problems and temporary demand surges for the beginnings of real, enduring trends.”
H, I trust you have this sentence bookmarked for future reference. My only thought is that you may be a bit premature with end of 21 instead of 1st or 2nd quarter 22 projection, but I would defer to your judgement if given the timeline choice…
What’s the problem with the supply chain. Of course it’s the pandemic, but are we to believe that across the board global manufacturing whiffed on restarting operations as the vaccines became available. My second question, is where does a long term increase in demand come from that will fuel inflation. How does a globe go from a huge covid induced slam to demand and GDP, bypass a return to where we were in December 2019 and leapfrog to today’s anticipated out of control inflationary spiral. I thought we always had to pass GO. Apparently if you say anything enough times people will come to believe it.
Very well put, JDDD.