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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. |
Last week, there was a significant discussion about real GDP and GDI. We'll delve deeper into this as the week progresses. In theory, GDP and GDI should be identical since every dollar spent on a product or service becomes income for households, businesses, or the government. However, this is only sometimes reflected, with incomes often declining faster than GDP. We find regional manufacturing data insightful in explaining this. Even though survey participation has diminished, making the data slightly less trustworthy, regional surveys have traditionally provided early indications of national PMI data, subsequently influencing revenues per share in the SP500.
Our bonus chart today offers a glimpse into the upcoming Friday release of the Empire manufacturing data. Only six positive readings have emerged from the index in the past eighteen months. For August, the headline number was -19, with new orders at -19.9. While these figures will be updated on Friday, our primary focus will be on the forward projections from respondents for the next six months. Last month, they anticipated a 19.9 in general business conditions, nearly 40 points above the present, and new orders at 28.1, almost 50 points above the current value. Crucially, from a flow perspective, business owners foresee a substantial rise in employment in the coming months. This suggests an already tight labor market may tighten further. What if they're wrong, rapid employment cost cutting?
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Learn more about the Market Situation Report written by Tier 1 Alpha. |
