I’ve hinted many times over the years that the most robust leading indicator is the ISM (Institute for Supply Management) manufacturing index.  Last Friday, the report was – not surprisingly – dismal.  May is likely to be even worse.

ISM PMI 2020-05-06

We’re also seeing the first (data) signs of the huge impact coronavirus is having on discretionary spending, and it’s not pretty.  Yesterday the ISM published the non-manufacturing (or services) index.  It’s the definitive end of 10 years of growth.

ISM non-manufacturing graph May 2020

Despite the optimism still embedded in the stock market, Warren Buffett’s reluctance to throw money  at it could prove to be brilliant.  The prospect of a V-shaped recovery seems pretty remote – these leading indicators point to one ugly summer in economic terms and more data will simply mean more disappointment.

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About the Author

Malvin Spooner is a veteran money manager, former CEO of award-winning investment fund management boutique he founded. He authored A Maverick Investor's Guidebook which blends his experience touring across the heartland in the United States with valuable investing tips and stories. He has been quoted and published for many years in business journals, newspapers and has been featured on many television programs over his career. An avid motorcycle enthusiast, and known across Canada as a part-time musician performing rock ‘n’ roll for charity, Mal is known for his candour and non-traditional (‘maverick’) thinking when discussing financial markets. His previous book published by Insomniac Press — Resources Rock: How to Invest in the Next Global Boom in Natural Resources which he authored with Pamela Clark — predicted the resources boom back in early 2004.

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