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A Bird's Eye View Blog

Fireside Charts: Tariffs Benefit from De-escalation of NAFTA,  U.S. Manufacturing at 9-Year Low, Presidential Elects During Recessions

By:BCM Investment Team | Date:May24, 2019 | Category: Equity, Economics, Market Highlights, Fireside Charts

We begin today's blog by sharing the industries that will benefit from the de-escalation of North American trade tensions. The U.S. manufacturing PMI (purchasing managers index) was 50.6 in May, the lowest level since September 2009. Japanese manufacturing PMI dipped below 50 again, which tends to indicate contraction. On this Memorial Day weekend, we thank those who have made the ultimate sacrifice for our nation in their service. Have a safe and happy Memorial Day! 

 

1. Remember the hullabaloo about a new North American Free Trade Agreement? The U.S. finally agreed to remove the 15% and 25% tariffs on aluminum and steel for Canada and Mexico and the retaliatory tariffs are also being removed. Here are the "winners" of this trade war ending:

 

 Source: International Trade Centre, as of 5/23/19

 

 

2. While Q1 earnings estimates were overdone to the downside (they still decreased by 75%), the analyst consensus is that the next three quarters are predicted to be lower...

 Source: Refinitiv, as of 5/22/19

 

 

3. Will U.S. manufacturing go into recession (below 50) next month?



Source: Goldman Sachs, as of 5/21/19

 

   

4. The U.S. consumer accounts for ~70% of GDP, but the manufacturing sector is taking a beating and may well pull down our GDP.

 

 

 Source: WSJ Daily Shot, as of 5/21/19

 

 

5. Japanese manufacturing dipped back into contraction (less than 50). 

 

 

 

 Source: WSJ Daily Shot, as of 5/22/19

 

 

  

6. U.S. Presidential elects around recessions.

 

 

 

Source: Mehlman Castagnetti Rosen & Thomas, as of 5/24/19

   

 

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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.