QUOTE OF THE WEEK
“See the world as a big wardrobe. Everybody has his own costume. There is only one that fits you perfectly. – George Harris
TECH CORNER
Sorry I have not published the weekly Your Money, Our Thoughts for a couple of weeks. I have been fighting a bout of a COVID infection. I am better now.
One of the indicators to pay attention to is the ISM Manufacturing Index. A reading of 50 is neutral, numbers above 50 indicates expansion and readings below 50 indicate contraction of the U.S. economy. A reading below 47 is a serious danger sign.
The reading for May came in at 48.7 lagging the consensus expectation of 49.7.
The major measures of activity were mostly lower in May. The new orders index declined from 49.1 to 45.4 and the production index fell from 51.3 to 50.2. Activity in the U.S. manufacturing sector has now contracted for eighteen out of the last nineteen months.
I understand that we have been predicting a recession for over a year now. Factors such as increased government spending and an excess of liquidity in the money supply have forestalled the recession to this point.
What we like to look at is the trend in economic activity. Some trends we are still seeing include declining revenue in the corporate sector, declining liquidity, and a slow but steady decline in the employment sector. We will be getting the new employment report this week which will tell us a lot more.
I can’t tell you when the recession will arrive, but the trend is slow but steady in that direction.
We are still positioning the portfolios in a safety-first position. At this point in time, we don’t want to be investing against the trends.
