"The worldwide manufacturing sector took a further step towards recovery in June. The JPMorgan Global Manufacturing PMI — which acts a barometer of the overall health of the sector — posted 46.9, its highest reading since last August. Output expanded slightly following a year-long period of contraction." (Source)The June ISM Manufacturing Index number increased 2% to 44.8%. The 17 month trend trend in economic activity is still contracting at a SLOWER pace. Look at the downtrend. History shows dramatic rebounds after ISM hits less than 40%. The chart does not show ISM during the 1930s. The # needs to break above downtrend.
ISM Manufacturing: PMI CompositeIndex (St. Louis Fed)
Summary of JP Morgan's Thomas Lee on Bloomberg:
- Manufacturing is a huge generator of corporate earnings, 30% profits/9% employment
- 2002 playbook was consumer credit expansion, 2009 recovery = global industrial cycle
- Sees V-shaped industrial recovery pulling us out of recession
- Will be different recovery, smoke stack industries will beat expectations
- If ISM recovery plays out, will be upside revisions to transports, steels, auto parts, tankers
- Lee Doesn't like GOLD, output gap and slack in terms of unemployment not inflationary
