Wednesday, May 2, 2018

Quotes of the Day

We view the Institute for Supply Management's (ISM)'s monthly purchasing managers surveys as critical inputs to our macro index.
We've added highlights as follows to the April manufacturing report's featured respondents' comments below:

Green: Unambiguously Positive
Yellow: Clear signs of inflation brewing (not necessarily a huge negative at this juncture)
Red: Signs of inflation due to recently enacted steel and aluminum tariffs (unambiguously negative)
Red with large bold font: Business plans on hold due to tariff issues (unambiguously negative)

While the general optimism expressed by on-the-ground movers and shakers is consistent with our analysis of general conditions, we hope you're beginning to understand our concerns (some struggle with them) surrounding protectionism. That said, per yesterday's audio commentary (in your inbox), we maintain that the market/economic-induced political risk of a global trade war makes one highly unlikely. However, per the below, the mere threat of one creates distortions that we'd rather not see...


We are seeing strong sales in the U.S., Europe and Asia.” (Chemical Products)

Business is off the charts. This is causing many collateral issues: a tightening supply chain market and longer lead times. Subcontractors are trading capacity up, leading to a bidding war for the marginal capacity. Labor remains tight and getting tighter.” (Transportation Equipment)

“Shortages of trucks and drivers has impacted delivery times.” (Food, Beverage & Tobacco Products)

“The recent steel tariffs have made it difficult to source material, and we have had to eliminate two products due to availability and cost of raw material.” (Fabricated Metal Products)

Demand is up for products. Commodity pricing for steel and other materials increased due to the proposed tariffs. We are seeing commodity futures coming down. A lot of suppliers are asking for increases, and the team is battling those requests.” (Machinery)

"[The] 232 and 301 tariffs are very concerning. Business planning is at a standstill until they are resolved. Significant amount of manpower [on planning and the like] being expended on these issues.” (Miscellaneous Manufacturing)

Production orders at this time are still strong and being driven partially by construction factors and customers purchasing ahead to avoid potential price increases.” (Plastics & Rubber Products)

“The general outlook for 2018 remains positive and upbeat as we see continued signs of a growing economy and investment in housing and infrastructure.” (Nonmetallic Mineral Products)

“Business conditions have been good; order book is full and running around 98 percent capacity.” (Primary Metals)

Backorders remain strong. New order rate exceeds shipment rate.” (Computer & Electronic Products)

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