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A Bird's Eye View Blog

Fireside Charts: Global Manufacturing Numbers Continue to Disappoint, Trump Tweet Throws Fuel on the Fire, and the Jobs Report

By:BCM Investment Team | Date:Aug02, 2019 | Category: Equity, Economics, Market Highlights, Fireside Charts

The global manufacturing slowdown continues, and U.S. manufacturing in particular has entered its sharpest downturn since the 2009 financial crisis. However, today's jobs report shows a solid labor market and wage growth surpassing expectations. The markets, usually quick to react to keystone economic reports, had a measured response though—likely due to uncertainty around the recent rate cut and renewed trade fears. While we thought the trade war would remain in limbo until September, President Trump took to Twitter to announce a new round of 10% tariffs on Chinese imports and quickly threw the markets into a tailspin. Coming only one day after Fed Chairman Jerome Powell cited trade tensions as a major factor in the decision to cut rates, could this be Trump's way of chasing more aggressive future cuts? Regardless, the tweet sparked the largest one-day decline on the 10-year U.S. Treasury yield in over a year. 



1. The Midwest has joined all but Philadelphia in manufacturing contraction...


 Source: Natixis, as of 8/1/19



2. The latest local survey to turn negative (shrinking manufacturing activity)


Source: WSJ Daily Shot, as of 8/2/19



3. Canada joined Australia in fighting back to minimal growth mode...


Source: WSJ Daily Shot, as of 8/2/19



4. One economist's opinion on the manufacturing slowdown...


Source: IHS Markit, as of 8/2/19



5. ...and small businesses, the historical driver of employment, are shedding jobs...


Source: WSJ Daily Shot, as of 8/1/19



6. More tariffs, including the retaliation, will not help this trend!


Source: Capital Economics, as of 8/2/19



7. This is not a drill...


Source: WSJ Daily Shot, as of 8/2/19



8. Very little is being said about the Fed terminating QE reversal two months early. So after purchasing ~$3.7 trillion in bonds, the Fed has sold/let mature ~$750 billion, a ~3 trillion increase that appears permanent...


Source: WSJ Daily Shot, as of 8/1/19



9. However noble the cause, a trade war hurts everyone...and now the U.S. consumer will really feel the heat...


Source: Twitter, Desjardins, as of 8/2/19



10. Sharp moves in the bond market often occur quickly...


Source: WSJ Daily Shot, as of 8/2/19



11. Is this the first response to the new tariffs? A cheaper Yuan allows China to export goods at lower prices, which will hurt all countries who trade with China...


Source: WSJ Daily Shot, as of 8/2/19



12. Will China now buy it's soybeans and other crops from other nations?


Source: WSJ Daily Shot, as of 8/2/19




From the U.S. resuming trade meetings with China to Q2 earnings reports and economic analysis—a lot happened this July. Click below to receive the BCM monthly newsletter delivered straight to your inbox, and see the leading financial stories we've been following. 



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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.