The market is off to the races this morning as bad news has turned into good news for the market.
Today saw the release of the Markit PMI Flash report for August. This is a preliminary report of the Purchasing Managers Index (PMI). It is considered a soft-data report in that it is based on interviews and surveys. The report is broken down into three sections; manufacturing, services, & a composite. All three came in below consensus expectations. Manufacturing posted a 61.2, services a 55.2, and a composite score of 55.4. As a reminder, anything above 50 is considering expansionary. While anything below 50 indicates a contraction.
Chief Business Economist, Chris Williamson, commented on the report stating
“Prices charged for goods and services grew at an increased rate as demand once again ran ahead of supply, most notably in the manufacturing sector.
Prices look set to continue to rise sharply due to the persistent upward pressure on costs arising from shortages of materials and labor, though if demand continues to cool due to rising case number this should alleviate some of the inflationary pressures.”
Mr. Williamson makes it sound like the perpetual inflation thesis is still intact. This has certainly lit a fire under silver, oil, and gold (SOG) this morning. This report also pushed the general market up. The thinking goes, if we have this bad of data coming out the Fed won’t taper, therefore the market should be bought. Needless to say, it has pushed me out of my market short into a market neutral position. After a break, I’m looking to start a new position in oil or oil producers. I believe we’ll see the peak of the delta variant soon.
Important and Possibly Market Moving Data Releases this Week
Tuesday, August 24th
H.6 Money Stock
Wednesday, August 25th
Manufacturer’s Shipments, Inventories, and Orders Survey
Thursday, August 26th
Initial and Continuing Jobless claims
GDP
Jackson Hole Symposium
Friday, August 27th
Personal Income & Spending
Personal Consumption Expenditures
U of Michigan Inflation Expectations & Consumer Sentiment Final report
Fed Chair Powell Speaks