5 Things To Ponder: Rising Risk

There are things going on with the financial markets currently that seem just a bit “out of balance.” For example, asset prices are rising against a backdrop of global weakness, deflationary pressures and rising valuations. More importantly, there is a rising divergence between sentiment and hard data.
For example, on Thursday the Philadelphia Federal Reserve released their regional survey which showed that manufacturers are the most optimistic in the region in, well, ever. The surge in the “manufacturing” index from 20.7 to 40.8 comes against a backdrop of weaker industrial production during the last 3 months.
However, even more curious was that the surge in the manufacturing survey was offset by Markit’s US Purchasing Managers Index which saw a decline to 10-month lows of 54.7 and has, like industrial production, fallen three months in a row.

Importantly, here are the “key points” from Markit that confirms much of my analysis regarding the impact of a strong dollar/weak global economy combination on U. S. exports.

This post was published at StreetTalkLive on 20 November 2014.