Just to summarise quickly what the ‘Purchasing Manager Index’ is, it’s a monthly data release by the ISM. PMI data is based on 5 survey areas: new orders, inventory levels, production, supplier delivery & employment. PMI data ranges from 0-100. A PMI reading ABOVE 50 represents expansion in the economy. Whereas, a reading BELOW 50 represents contraction. Below...
They do not scream "SELL" just yet, but these indicators offer strong caution of further market correction. Please take some time to study the charts so you understand the story they tell. I am not an economist; I am a trader who has been learning more about bonds and macro indicators. (I have ignored the pandemic drop because it was extraneous to normal...
Let's keep it simple. Increase in raw material & production cost-> Decrease in aggregate supply (Suppliers drop out as profit deteriorates)-> Decrease in total production->. If demand remains the same (most likely going to be the case unless there is another stimulus check coming in), then remaining producers/suppliers who now have more pricing power can and...