Most investors did not expect interest rate cuts starting from July. However, the market purchases the possibility of initiating the interest rate cuts as of September, which is the next FOMC meeting.
Though the chair of the FED mentioned that it is possible to start that process, the market has some deeper concerns about the economic health of the global markets.
The negative data from the fiscal reports already affected many stock prices. Besides, the lack of narrative hinders the market from going up as it used to happen. Now, the new paradigm is revealing itself and the veteran investors know what's on the horizon: Recession.
Today we have seen the ISM Manufacturing PMI data for July.
If the PMI is below 50, the managers are not eager to purchase goods or invest more in the business they do because of the uncertainties that they do not want to face with. Though the expectation was around 49 points, the markets were shocked with 46.8 actual data from the U.S. economy!
I'm concerned about a couple of things in this chart but the most terrifying one might be the new orders.
Net 9% lower new orders clearly indicate that the slow down in the economy is worse than what many people assume. Actually, the data was pretty promising in June and the mutual expectation was to get better results in July.
When you read the ISM report, you will notice that the eleven manufacturing industries are shrinking but the prices are sticky and they do not show any sign of a drop.
Now we know that the FED is missing the train. If the recession hits, it may result in a crash in the market and it will make it harder for businesses to stay alive during the turmoil. Most probably, the zombie companies will be bankrupt and the central banks will start to inject liquid money once again after a short time.
The red days hurt badly but the cryptocurrencies are / will not be the best performing of the recessions. The real party that we expect starts when the quantitative easing is launched once again. Until that time, we may go up and down in a narrow horizontal channel.
What do you think about the ISM data and its effects on the market?
Share your thoughts below 👇
Hive On ✌️
Posted Using InLeo Alpha
