Below is a chart and brief excerpt from today’s Market Situation Report written by Tier 1 Alpha. If you’re interested in learning more about the Hedgeye-Tier 1 Alpha partnership, there’s more information here.
The past 24 hours have been a macro charcuterie platter left in the sun an hour too long — a collection of cured meats, JOLTS, a sovereign downgrade, and chewy ISM data. We will not dig into the JOLTS data today; the highlights were job openings down in June to 9.58M vs. 9.6 expected, with significant revisions for May to 9.62M from 9.8M. Notably, the quits rate was down to 2.4%, most significantly in the retail, healthcare and construction sectors. People cannot switch jobs as readily, which is something to watch in the coming months.
The July ISM Manufacturing index exhibited a slight increase, reaching 46.4, up from 46.0 in June, but fell short of the expected 46.9. That means a reading below 50 for nine consecutive months, the longest streak in 14 years. Sub-indices showed mixed results, with the Prices Paid and New Orders slightly up but below expectations, while the Employment index fell to 44.4 from 48.1 in June. The Inventories index rose to 46.1, and the Backlog of Orders increased to 42.8. However, the New Export Orders dropped to 46.2. The readings highlight a prolonged contraction in the US manufacturing sector, though at a marginally slower pace.
We did promise a smorgasbord! The Atlanta Fed has upped its Q3 GDP expectations from 3.5% to 3.9%. This is optimistic, even given the massive increase in government spending post-debt ceiling resolution. For an enlightening deep dive into the current state of Money Supply and Velocity of money, we'd urge you to delve into Dr. Lacy Hunt's latest research. He brings to light some serious rates of change slowdowns in real ODLs, a trend we haven't witnessed in over half a century. Please follow this link for that insightful read. It is highly recommended!