FTDS - Sentiment And Data Not Matching

2024-05-14 03:40:00 ET

Summary

• Three sentiment indicators reflected additional pessimism from the week prior after the PMI came in at 49.1, a PMI recession signal below 50.
• Investors should use any short-term dips in sentiment as an opportunity to add capital to accounts.
• Over the longer term, equity markets are driven by economics, not sentiment.

Three sentiment indicators reflected additional pessimism from the week prior after the PMI came in at 49.1, a PMI recession signal below 50. I suspect this caused portfolio managers to add downside hedges as seen in the S&P 500 Net Non-Commercial Futures, the WTI and a more pessimistic position on the Yield Curve. None of this has been supported by the hard data indicators, i.e., employment, Real Personal Income, Real Retail Sales, New Orders for Durable Goods or Construction Spending....

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