The Making Industry Moves Slower
Factory workers in the US have their feet up! Yesterday, the ISM manufacturing index clocked one of its lowest ever readings. Investors view these economic indicators as catalysts for future market events, so what could this be a catalyst for?
For two months in a row, manufacturing activity has gone backward. If the same happened to gross domestic product (GDP) in quarterly terms, we’d officially be in a recession! So, given the seriousness of the matter, the US President wasted no time in issuing a response. He called Fed Chair Jay Powell “pathetic” on Twitter, but this one probably goes both ways…
Since day one of the Sino-US trade war, purchasing managers up and down America haven’t had solid demand to rely on. More expensive products after tariffs mean there’s a risk in purchasing big from a manufacturer. What if the goods don’t sell? Nothing is costlier than a dormant heap of unsaleable inventory, so look out for upcoming inventory data nationwide. You’d expect the number to fall as manufacturers aren’t feeding businesses with as many goods, and you’d also expect the Chinese to celebrate. Bonds are rising, and stocks are falling, which confirms an American bruise in a trade war that still hangs in the balance.
Time to sell everything and go into hibernation? Let’s ask the experts. “There is no end in sight to this slowdown. The recession risk is real.” Those are the words of the chief economist at Deutsche Bank. Perhaps Chris Rupkey, another chief financial economist, wants to offer us some more positive feedback? “Purchasing managers are telling us to run. Run for your life. Get out while you can. The outlook is darkening, and the thunder is growing louder by the day!”
We’ll take that as a “no.”
