Monthly Update

State of the Economy + Trends

TL/DR is that monthly models are continuing to show economic strength (albeit it looks like we are seeing very fast weakening of economic conditions). We are seeing increasing inflation at the beginning of the supply chain again (future inflation issues are coming). There is plenty of time to side-step the actual inflation when it comes, it’s nothing to worry about now. We are seeing the Nasdaq index come down on top of monthly support levels - whether or not those levels hold is anyone’s guess, but I lean towards them holding personally. We are getting ready to get ready to sell is the best way to put it.

ISM PMI

Purchasing manager’s index for ISM came out and is weakening substantially from the prior month. It was a pretty bad “miss.” The trend is still up overall and technically in a bullish configuration (tan line is > blue line on the bottom clip). You can see the last time it turned really bearish was at the beginning of the last bear market in 2021. Before that it was bearish when the “Trade War” was started by the Trump admin - that was a terrible time to trade, and the economy was in bad shape too despite what the Trump acolytes would have you believe. We made no progress in stocks for years. But I will say this about the current configuration - the data is weakening substantially, and we could get a sell signal next month easily. This is one of the key pieces of data I use to determine the direction of the economy. I will get significantly more defensive in my trading (trading more bonds, gold and possibly oil and commodities depending on how they act when interest rates fall) when this model goes into “sell” mode.

Purchasing Managers Index Monthly Model

CPI and PPI (Inflation Numbers)