Stock Market Nerd Macro – April 06, 2024
Output Data:
- The Manufacturing Purchasing Managers Index (PMI) for March was 51.9. This compares to 52.5 expected and 52.2 last month.
- The Institute for Supply Management (ISM) Manufacturing PMI for March was 50.3. This compares to 48.5 expected and 47.8 last month.
- The S&P Global Composite PMI for March was 52.1 as expected. This compares to 52.5 last month.
- The Services PMI was 51.7 as expected. This compares to 52.3 last month.
- The ISM Non-Manufacturing PMI for March was 51.4. This compares to 52.8 expected and 52.6 last month.
Consumption & Employment Data:
- The ISM Non-Manufacturing Employment Index for March was 48.5. This compares to 49 expected and 48 last month.
- The ADP Nonfarm Employment Change for March was 184,000. This handsomely beat 148,000 estimates and compares to 155,000 last month.
- Initial Jobless Claims were 221,000 vs. 213,000 expected. This compares to 212,000 last month.
- JOLTs Job Openings for February were 8.756 million, which roughly met expectations.
- Nonfarm Payroll for March came in at 303,000 vs. 212,000 expected. This compares to 270,000 last month.
- The Labor Force Participation Rate for March was 62.7%. This compares to 62.6% expected and 62.5% last month.
- Private Nonfarm Payroll for March was 232,000. This compares to 160,000 expected and 207,000 last month.
- Unemployment was 3.8% vs. 3.9% expected. This fell from 3.9% last month.
Inflation Data:
- The ISM Manufacturing Price Index for March was 55.8. This compares to 53.3 expected and 52.5 last month.
- Average Hourly Earnings rose 0.3% M/M for March as expected. This compares to 0.2% growth last month.
I continue to see a first rate cut coming in June or September, and I continue to not care all that much if that happens. With my multi-year horizon, the first cut being delayed by a few months is exactly the kind of market volatility I want to take advantage of. As long as we do not get resurgent inflation, cuts are likely coming in 2024. I don’t see inflation sharply re-accelerating as a realistic scenario. Pundits will react to every little data point, there will be fits and starts in terms of macro progress and disinflation will remain non-linear. But? The ingredients for realizing a soft landing or a mild recession (mild enough for structural growers to keep growing while discount rates and cost of capital fall) are still there.
Job gains are being masked by government and part-time hiring. The GDP sugar-high will fade away in the back half of the year as we lap the benefit of recovering supply chains. Housing disinflation remains crystal clear from any real-time indicator that you want to look at. The Fed’s lagging housing metrics in its inflation readings are the items propping up inflation well above its target. Those lagging indicators will eventually reflect today’s current data. Powell explicitly said just that in his latest presser. These are the ingredients needed for easier monetary policy; these are the ingredients that I still view as firmly in place.
