The first of this week’s key US macro updates suggested factory activity across the world’s largest economy remained in contraction last month.
That’s, um, hardly surprising. I’m running out of creative ways to say this, so I’ll just be blunt: We’re not “bringing back American manufacturing.” That’s a pipe dream.
On that happy note, the ISM headline for October printed 48.7 in Monday’s update. That was below estimates. Consensus was looking for 49.5.
As the figure shows, this marks the eighth straight contraction-territory print and the 33rd in 36. Again: It ain’t comin’ back. Like that cat who never liked you and was praying you’d leave the window open one day. Just forget about Cleo. She’s gone.
There were no real surprises in the subindexes. New orders ticked up, but at 49.4, it’s still in contraction. The production gauge fell back below 50, and although the employment metric improved slightly, 46 on that index is abysmal.
The word “tariff” came up 13 times in the release. Not a single one of those mentions was positive. Two anecdotes stuck out. Someone in Computer & Electronic Products noted that, “even with the tariffs, the cost to import in many cases is still more attractive than sourcing within the US.” Someone in Machinery said, “The products we import are not readily manufactured in the US, so attempts to re-shore have been unsuccessful.”
Do you need me to translate those two anecdotes for you? God I hope not. But just in case: What Donald Trump’s trying to do simply isn’t possible. Forget about the merits. They don’t matter because it’s not feasible. This is too far gone. We’re damn near 40 years into the hyper-globalization era. There’s no turning back this clock, nor any other clock.
The one silver lining in Monday’s ISM report was the prices paid gauge. It slipped below 60 for the first time since January suggesting, at least, that input cost pressures are incrementally less pervasive even as they remain vexingly ubiquitous.
“Consensus was looking for 49.5.”
I’ve often wondered how the forecasts of ISM readings or U/P Claims are conjured up. The old straight ruler method or?
Yeah, and not to be abrasive about it, but imagine someone like me — where that means someone who writes things like that “Eternity” Monthly — sitting here looking at something as mind-bogglingly trivial as a PMI and as hopelessly asinine as a median projection for a metric which purports to summarize a set of survey anecdotes. The juxtaposition between the daily stream of content here and the Monthlies is becoming amusingly vast.
Yep. And concisely expressed.
It’s a burden partly of your own making.
Yeah, it is. It’s just that frankly, I ran up against the limits of what there is to know about “macro-markets” about two years ago. With apologies to everybody for whom this stuff’s still interesting, it’s an inherently limited field of inquiry. There just isn’t that much there. Certainly not compared to, say, cosmology and philosophy or even something like sociology. Don’t worry: I’ll continue to document every macro-market twist and turn as long as I draw breath, but I implore everyone: Broaden your horizons. Because when it comes to expanding your mind, this (macro-market “stuff”) ain’t it.
Because I make the majority of my retirement income from the markets, I value your insight as well as many of the regular commentors here that might help me keep from getting too off base in my personal market decisions, but that stuff has gotten to be pretty much the same old, same old. I do appreciate your other writing and that is what I look forward to these days especially because I tend to be a pessimist that is rarely disappointed in life but also sometimes pleasantly surprised by the way things turn out.
Thank you. Like most of your diligent readers I appreciate your reporting on those oh-so-important macro nuggets. At the risk of insulting you, I’ll say that they are much better than AI!!
“but I implore everyone: Broaden your horizons. Because when it comes to expanding your mind, this (macro-market “stuff”) ain’t it.”
Where’s the damn clapping emoji when I need it?
The bulk of the tariffs are basically a government revenue source, to shift tax burden to consumer and companies, from . . . you can guess. As such, they will be difficult to reverse. A minority of the tariffs are a simplistic and clumsy attempt at industrial policy, which is mostly failing since businesses need predictability to make long-term decisions.
Weren’t the majority of the tariffs negotiated by Trump himself? Are the negotiations a matter of public record? Is there a possibility that one of the results of all these deals was a quid pro quo that personally benefited the Trump family? If so, then it really shouldn’t matter to Trump if the tariffs are reversed or not, or how hard that process would be.
Maybe when he sees this he will double the tariffs, still too low !