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A Bird's Eye View Blog

Fireside Charts: Sectors’ All-Time Highs, Inverted Yield Curve as LEI, Sharp Downtrend in U.S. Manufacturing PMI

By:BCM Investment Team | Date:Mar25, 2019 | Category: Equity, Economics, Market Highlights, Fireside Charts

Thursday’s release of the FOMC statement drove markets higher, but that was short-lived. With five of eleven sectors ending the week in the red, the stock market sold off Friday after a yield curve inversion and the release of grim global economic data. U.S. Manufacturing data had remained strong versus its European counterparts, but we are now seeing a sharp downtrend in U.S. PMI. Is all of this pointing to a larger downturn or a temporary pause in momentum? The market-based probability of the Fed cutting rates this year shot above 60%. Are investors being too Dovish? Stay tuned as the news of Mueller’s report plays out and more U.S. economic data is released this week.

 

1. Was last December the beginning, the end, or the beginning of the end?

  3.25 chart 1

Source: Thechartstore.com, as of 3/25/19

 

 

2. So far only two sectors have reached new highs...and they are interest rate sensitive and historically defensive sectors.

 

 

Source: Thechartstore.com, as of 3/25/19

 

 

3. The yield curve inversion "worsened" last week and now has given an "official" recession warning...

 

 

Source: Thechartstore.com, as of 3/25/19

 

 

 

4. It looks like the FED is taking advantage of the recent strength in Treasuries to accelerate QE reversal before they slow and then end it...

 

 

Source: Thechartstore.com, as of 3/25/19

 

  

5. Are investors being too Dovish or is a slowdown real?

 

 3.25 chart 6

Source: Bloomberg, as of 3/24/19

  

  

6. A great look at the total U.S. bond market.

 

Source: WSJ Daily Shot, as of 3/25/19

  

 

7. While U.S. manufacturing is still growing (> than 50), the trend looks like the rest of the world...

 

 3.25 chart 8

Source: WSJ Daily Shot, as of 3/22/19

 

 

8. What happened on Friday to the equity markets?  As we've been warning, a global manufacturing recession is building steam...

 

 3.25 chart 5 final

Source: IHS Markit, FSO, as of 3/25/19

 

    

9. When you know as a society that we have too much stuff...

 

Source: Census Bureau, as of 3/20/19

 

 

 

Global economic weakening is bleeding through the market data. Despite the end-of-week sell off on Friday, we’ve been wondering how the markets can be ripping up while the global economy slows. Take a deeper look into the disconnect by reading our latest piece: The Stock Markets are Ripping Up. The Economy is Slowing. What Could Ultimately Be Wrong?

 

The Stocks Markets Are Ripping Up. The Economy is Slowing.  What Could Ultimately Be Wrong? 

 

 

 

 

Disclosure: The charts and info-graphics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are a recommendation to take any action. Individual securities mentioned may be held in client accounts.