We start this week with early equity market strength on better Global Manufacturing data overnight.  According to Markit, Chinese and German Purchasing Managers Indices (PMI) were better than initially expected.  Remember, this has been one of our four key reasons to remain optimistic heading toward our 2020 S&P 500 (SPX) target of 3350.  While everyone was looking for a recession this summer on weaker global activity, we have been highlighting how it has become “less bad” over the past six months, which has led to be a turn higher when coming from such low levels.  This better than expected global data has led to a “risk-on” feel this morning with SPX futures higher, Treasury prices lower (yields higher), and weak Gold.


This is going to be a heavy week for news on economic activity, Trade War rhetoric, Impeachment proceedings, and Fed speculation.  Today’s key economic data is the ISM Manufacturing report that is expected to remain weak, but similar to China and Germany highlighted above – it should be “less weak.”


We will update you as the data emerges, but still don’t want to add exposure with our tactical indicators at such high levels.  It is amazing listening to everyone be so bullish on the Financial TV this morning based on the realization the economy is unlikely to collapse.  We agree, but worry too many have moved to one side of the boat temporarily, which could make it just a tad unstable.  To be clear, there is a big difference between being patient when looking to add further exposure vs. being negative.  With our positive core fundamental thesis still in place, we simply believe a more significant and sustainable leg higher toward our 2020 target should be launched with our indicators spring loaded (closer to oversold) rather than extended as they now are.

Past performance is not a guarantee of future results. Index returns are unmanaged and do not reflect the deduction of any fees or expensesAll data points are sourced from Bloomberg as of 12/02/19 unless noted otherwise.


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