Ironically, the President’s fall guy (wrongly-accused in my view, btw) for last year’s market correction, Fed Chair Jerome Powell, may end up being his savior (albeit temporarily) based on how things are presently trending.

Bottom line, economic conditions (reflected particularly in the industrial sector) are waning, and as long as tariffs are the “tool” of choice in trade negotiations, that’ll be the trend; as they are unequivocally the problem. 


Frankly, without a tariff-rolling-back trade deal with China, and a dispensing with all threats to incite the same with our other trading partners, I’m quite certain that the expansion (the global expansion) we presently enjoy will see its demise in the not too distant future. Along the way to the next recession, however, I’m equally certain that we’ll see, among potentially other stimulus measures, the Fed cut its benchmark interest rate; a practice that often leads to strong stock market rallies (hence, Powell potentially becomes hero). Whether or not such stimulus will ultimately stem waning conditions will depend of course on if/when a no-tariff deal is struck, and on whether or not it occurs before the tide has turned toward recession.


If you happen to doubt my less-than-rosy assessment of conditions, I totally get it; you’re being told that this is like the greatest economy in the history of all economies. And, true, much of the consumer-related data still looks very good. However, again, much of the business-related data not so much. And, as I don’t need to tell you, if business conditions continue to deteriorate, it’s simply a matter of time before the consumer begins to feel it.


Here are the up-to-date charts for 20 “business” data points in our proprietary macro index, along with their current impact on the overall score:  Red shaded areas denote recessions… click each insert to enlarge…


Note: At the beginning of 2018, prior to the first round of tariffs, the impacts (on our index) of the below were +1s nearly across the board.


Institute for Supply Management (ISM) Manufacturing Survey: Impact: 0



ISM Services Survey: Impact: 0



Small Business Optimism (NFIB Survey): Impact: 0



Small Business Hiring Plans: Impact: +1



Small Business Capex (Expansion) Plans: Impact: 0



Industrial Production: Impact: -1



Durable Goods Orders: Impact: -1   Ex-Transportation: Impact: 0



Overall Capex: Impact: 0



Corporate Financing Gap (Capacity for Capex): Impact: +1



Commercial and Industrial Loans: Impact: -1



Commercial Paper Issuance: Impact: 0  Rates: Impact: 0



Truck Tonnage: Impact: +1



Rail Traffic: Impact: -1



CASS Freight Shipping: Impact: 0   Expenditures: Impact: 0



Chemical Activity Index: Impact: +1



Caterpillar Global Sales: Impact: 0



Global Purchasing Managers Index (PMI): Impact: 0