{"id":1441623,"date":"2023-12-01T12:45:00","date_gmt":"2023-12-01T17:45:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1441623"},"modified":"2023-12-01T12:45:00","modified_gmt":"2023-12-01T17:45:00","slug":"stocks-face-a-nasty-pothole-from-a-miss-in-todays-ism","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/stocks-face-a-nasty-pothole-from-a-miss-in-todays-ism\/1441623\/","title":{"rendered":"Stocks Face A Nasty Pothole From A Miss In Today’s ISM"},"content":{"rendered":"

Stocks Face A Nasty Pothole From A Miss In Today’s ISM<\/span><\/p>\n

\n

Authored by Simon White, Bloomberg macro strategist,<\/em><\/p>\n

A significant miss in the November manufacturing ISM, released later today, leaves stocks open to downside, as overboughtness and less favorable liquidity conditions meet hard-landing fears.<\/strong><\/p>\n

The US manufacturing ISM is one of the most consequential pieces of macro-economic data for markets.<\/p>\n

It is the single largest explanatory factor for the performance of global stock markets, it is leading, and it is minimally revised.<\/strong> Last month it surprised to the downside, coming in at 46.7 versus 49 expected.<\/p>\n

It\u2019s a volatile number, and last month\u2019s print could just be noise.<\/p>\n

Moreover, short-term leading indicators for the ISM, such as the new orders-to-inventory ratio (see chart below), point to a continued rise in the headline index. <\/strong>Also the manufacturing PMI is more stable, and came in for November at 49.4.<\/p>\n

<\/a><\/p>\n

Nonetheless, ISM could surprise negatively again. Stocks would be exposed to more downside this time, <\/strong>as it would happen when they are significantly more overbought – after one of the best November performances on record – and when liquidity conditions are becoming less favorable.<\/p>\n

As discussed\u00a0fully\u00a0earlier this week, liquidity has been buoyant over the last month, principally due to the ~$200 billion rise in central bank reserves. Money market funds (MMFs) de facto funding the fiscal deficit via the purchase of T-bills, and the government withdrawing funds from the Treasury\u2019s account at the Federal Reserve, combined to boost high-powered liquidity, driving a rally in stocks and bonds.<\/strong><\/p>\n

<\/a><\/p>\n

But that impulse from reserves has started to fade.<\/strong><\/p>\n

The one-month change of the one-month change of Fed reserves is now falling (blue line in chart below), which translates as the absence of a tailwind for stocks.<\/p>\n

Thus far, the stock market has been greeting data with a soft-landing lens. <\/strong><\/p>\n

The expectation is the Fed will be able to cut rates a little as inflation softens – a typically Panglossian outlook for stocks – which have rallied as bond yields have fallen.<\/p>\n

But a big drop in the ISM would (with some credence) amplify hard-landing fears.<\/strong> Stocks in this case would be likely to sell off as falling bond yields start to reflect a Fed cutting rates to try to stem a recession, which stocks are very much\u00a0not discounting.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nFri, 12\/01\/2023 – 07:45<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/stocks-face-nasty-pothole-miss-todays-ism<\/a>\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Stocks Face A Nasty Pothole From A Miss In Today’s ISM Authored by Simon White, Bloomberg macro strategist, A significant miss in the November manufacturing…<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1441623","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1441623","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1441623"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1441623\/revisions"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1441623"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1441623"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1441623"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}