1/2 Empty or 1/2 Full?
How do you look at our world, your world?
Did you happen to notice what occurred right in the middle of the most recent noise and turmoil? For example, the uncertainty caused by The Federal Reserve’s Jerome Powell comments, “the economy faces potentially significant long-term damage from higher unemployment and a wave of small business failures.” And, the fear caused by the misinformation regarding the COVID 2nd Wave, to the turmoil caused by rioting and destruction on big city streets: Did you happen to notice that Nasdaq Composite reached an all-time high?
A friend of mine many years ago reminded me that once it is in print, or once you’ve watched it on the telly, it’s in the past. Equity markets, investors, that is, look forward. That is why Equity markets are “Leading Indicators,” portenders of the future. To what future are equity markets hinting?
The Institute For Supply Management (ISM) provides accurate and reliable, my opinion, manufacturing (PMI), and non-manufacturing (NMI) monthly economic activity. The decline is over, it appears, based on the most recent reports. For example, “The May PMI® registered 43.1 percent… This figure indicates expansion in the overall economy after April’s contraction, ….” May’s NMI, although showing much better percentage point gains, failed to register the threshold for economic expansion, but it is less than 3% points from doing so, up 3.6% in just one month.
Here are some selected comments from the folks in the trenches:
- “Despite the COVID-19 issues, we are seeing an increase in quoting activity. This has not turned into orders yet, but it is a positive sign.” (Computer & Electronic Products)
- “Increased COVID-19 sales in the food business has really stressed our production capabilities.” (Food, Beverage & Tobacco Products)
- “Fuel sales demand are beginning to rebound in May as stay-at-home orders are lifted across the country.” (Petroleum & Coal Products)
- “Business activity remains strong for consumable applications and very weak in durable segments.” (Plastics & Rubber Products)
- “We have been fortunate that most of our customer base is considered to be a part of the critical workforce, so we have been running at around 80 percent of our normal production volume.” (Primary Metals)
- “Getting out from under several suppliers being closed worldwide. Also, looking at what really needs to be in China.” (Machinery)
½ Full, I’d say – We, Americans, adapt, innovate, and serve.
Carlos Dominguez – CERTIFIED FINANCIAL PLANNER™, Portfolio Manager, RJFS
Photo by Gary Butterfiled (my cropping)
Sources are being provided for information purposes only. Raymond James is not affiliated with and does not, authorize, or sponsor any of the listed sources. Raymond James is not responsible for the content of any source or the collection or use of information regarding any source’s users and/or members. Past performance may not be indicative of future results. The S&P 500 is an unmanaged index of 500 widely held stocks that is considered representative of the U.S. stock Market. Inclusion of these indexes is for illustrative purposes only. The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system. Leading Economic Indicators are selected economic statistics that have proven valuable as a group in estimating the direction and magnitude of economic change. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary. Any opinions are those of Carlos Dominguez and not necessarily those of Raymond James. This material is being provided for information purposes only and is not a complete description, nor recommendation. The information has been obtained from sources considered reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no assurance that any investment strategy will be successful. Investing involves risk and investors may incur a profit or a loss.