ACTV - PMI Ruling Sentiment

2024-04-05 03:15:00 ET

Summary

• The PMI from the Institute of Supply Management seems to rule the roost of investor psychology.
• The media and investors hold the PMI in high regard, along with the LEI from The Conference Board.
• Net/net, individual investors are much better at buying the sentiment dips when the economic trends are rising.

The PMI from the Institute of Supply Management seems to rule the roost of investor psychology. The media and investors hold the PMI in high regard, along with the LEI (Leading Economic Index) from The Conference Board. The PMI from 1977 and the LEI from 2000 reveal that each has called for recessions that did not occur like the present. The PMI has a prominent role in the LEI, as do other sentiment indicators. Both, by my observations, have a history of calling for recession when the S&P 500, itself a market psychology measure, shifts to track the hard-count economic data despite the pessimism. For those who track the instances of miscalls, the PMI has forecasted 27 of the last 9 recessions. When you call "the sky is falling" that many times, and it does not occur, one would think there is something amiss with what it was that triggered the pessimism. Nevertheless, both the PMI and the LEI remain in high regard and a media favorite....

For further details see: