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Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Sunday, September 08, 2013

Purchasing Managers Surveys -- Unconfirmed Bright Spot

US purchasing manager survey data for new orders and general activity have picked up
strongly over the past two months. That news should qualify as a significant  plus for
the US economy. However, the data does not square well with weekly forward looking
indicators and weekly coincident indicator activity which suggest a slow pace of growth
going forward. The discrepancy here represents a very unusual development. I have
teased the weekly data at great length and I can reduce the discrepancy only somewhat.
Because I have respect for all the data series involved, and further, because each of the
series can be volatile in the short run, I am not going to blanket judge the play out ahead.
New industrial production data will be available next week from the Fed, and it should
show a good increase for Aug. if the PMI surveys have it right.

One additional matter though, and that is the continuing grim news about employment and
the real wage. Couple that with a progressive loss of internal cash flow growth momentum
from business and you have a picture where the PMI survey data, if on the mark, could
provide genuine re-invigoration to a sluggish economy. 

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