In our analyses, we regularly examine current movements, identify possible influencing factors and assess the general market situation. However, these are not recommendations, but merely opinions and food for thought.Perhaps it is not ideal to discuss hard economic figures the day before Thanksgiving. But US investors will also be confronted with a flood of figures next week after a hopefully long weekend. Of course, all eyes are on the US labor market data on Friday, December 8, 2024. The day before, the US trade deficit will already be published.The ISM figures, which are published earlier in the week, are often underestimated or even overlooked. However, they have a very high impact on stock markets and inflation.ISM what? Of course, it is difficult to pick out the truly relevant ones from the hundreds of economic indicators that are published on an ongoing basis. But the ISM figures are one of them. writes: The Purchasing Managers Index (PMI), also known as the ‘ISM Manufacturing Index’ or ‘ISM Purchasing Managers’ Index’, is the most important and reliable early indicator of economic activity in the USA. It is published by the Institute for Supply Management (ISM), a US non-profit organization based in Tempe, Arizona. A value of 50 is considered neutral, a value of over 50 points as an increasing and a value of under 50 points as a decreasing industrial production.The ISM Manufacturing PMI Index will be published as early as Monday, December 2, 2024. It is not only a very important input for the stock markets, as can be seen from the historical correlation of various assets.When the economy is growing, cyclical stocks are to be preferred over defensive stocks. The fact that the market follows this rule is particularly evident in the European equity market. The only question at the moment is whether, despite the disappointing performance of the ISM, the cyclicals have been able to outperform over the last two years (ratio rose). Perhaps the interest rate cut fantasies behind this are creating false hopes?The same picture emerges from the S&P500 Index over the past year. Although the development of the ISM does not inspire optimism, US equities were able to advance. In spring 2020, the stock market also took a different path, which was then corrected quite abruptly…Of course, some might now argue that the ISM Manufacturing Index could be giving a false picture of the US economy. However, in contrast to the stock market, the Copper/Gold ratio (boom/bust ratio) confirms the development. Copper is in higher demand during economically positive times, and vice versa.Economic specialists also follow the development of the ‘Philly Fed Order Intake’ very closely because this economic indicator is a relatively reliable precursor to the ISM figures. And the following chart shows quite clearly: This economic index has recently been very positive… So will the ISM figures on Monday be a positive surprise?On Wednesday, the ISM Non-Manufacturing (Services) Index will be released. And it has the property of providing a very good indication of the development of inflation…In addition, we have recently had a very strong US Dollar – making imports cheaper. However, the cycle of 5.31 years indicates that this phase could soon come to an end…A weaker US Dollar increases the cost of imports. The tariffs that the President-elect wants to introduce do so even more. And that is why the cycle for inflation could see a continuation that indicates an imminent low…And compared to the inflationary phase of 50 years ago, it is fair to repeat: history never repeats itself, but it does rhyme…That’s it for today!More By This Author:Will The Mysterious 17 Year Cycle Continue? Trading Gold Is Unlike Trading Anything Else Buy When The Cannons Thunder And Sell When The Angels Sing
The ISM Economic Figures And The Power Behind Them
