We continue to see a very steady trend in the ongoing avalanche of negative data from the USA.
Friday saw the release of the S&P500 Global Composite PMI for the USA. Witnessing eye-watering further decline to just 44.6. This represents serious contraction territory.
We also saw the release of the S&P500 Manufacturing PMI on Friday, which fell deeper into contraction territory as well. It looks as though manufacturing is actually collapsing across the US now, with the PMI declining further to just 46.2. Both services and manufacturing are now falling sharply, but manufacturing appears the greater concern as it tends to be harder to turn around than services.
The Great Depression began with a collapse in manufacturing. Not the stock market, which only followed manufacturing south much later.
We have been warning since 2021, that the US economy was at risk of falling off a cliff that no one else was then seeing. This is what is happening. Serious economic collapse.
So far, most commentators are only calling it a ’slow-down”, but there is a clear movement toward ‘collapse’ as a more accurate description. This is very likely an economic trend that will dominate 2023.
The stock market remained under significant pressure with any hopes of an ongoing Santa rally now dwindling quickly. In this last week of trading before the holidays, there appears little on the immediate horizon to generate any significant buying.
Most of the pre-holiday buying interest has probably already been exhausted. Leaving the market highly vulnerable to the downside.
The outlook is for further stock market declines across the rest of 2022, and for much of 2023 as well.
Market insights and analysis from Clifford Bennett, Chief Economist at ACY Securities
