Digging for Clues

Beyond the traditional bear market technical profile — that would see the first selloff retraced by at least 50% (like now) — for the current rally in stocks to make fundamental sense the macro setup has to have either stopped deteriorating, or is deteriorating at a measurably slower pace. And of course an economic rebound would have to be in the not-too-distant offing.

Of course we don’t know for certain at this juncture; as things such as economic rebounds aren’t always easily foreseen (although we do have a process)… So we dig around and look for clues.


Here are two items that today’s digging uncovered:


Institute for Supply Management’s report on COVID-19 effects:
Respondents reporting:

47% have reduced revenue targets 

36% have reduced capex 

54% will delay hiring this Q

33% will reduce hours; 24% will reduce headcountDemand for health care/social assistance +50%Lead times for inputs +200% in Asia, Europe & US



New York Fed’s Weekly Economic Index:

Not finding anything that would make me remotely bullish — i.e., that suggests a slowing of macro deterioration — just yet, but I’ll keep digging…

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