Data of the Day: ISM Survey Speaks To What Most Concerns Me At The Moment

In this morning's log entry I noted that data this week has been "net positive". Well, the exceedingly important ISM (Institute for Supply Management) Manufacturing Survey results were released this morning, and they lower that net (relative to expectations) number just a bit.

While 52.8 is still an expansionary (above 50) read, it's a far cry from the 55 consensus expectation. 

Below are the report's featured responses. I'll highlight the areas that speak (scream!) to the concern I've been expressing herein over and over and over and over again. In fact I'll go so far as to say that the only thing that might have the Fed lowering rates later this year (as some would have them do now) would be if the December ISM report exhibits more of the same frustration (deterioration) on the part of U.S. purchasing managers. I.e., conditions simply can't ultimately hold up against a strong protectionist headwind:

WHAT RESPONDENTS ARE SAYING

"Business conditions remain largely unchanged. There is growing concern about supply chain product flow through the southern U.S. border. Price pressures remain, and inventories continue to grow in preparation for what is expected to be a growth year." (Electrical Equipment, Appliances & Components)

 "Mexico/U.S. border crossing delays are slowing supplier deliveries. Tariffs are resulting in increased prices on computer components, as well as manufacturers moving out of China to countries not impacted by the tariffs. Brexit expected to result in delays on moving product through the United Kingdom." (Computer & Electronic Products)

"January and February were strong months. March softened significantly, eroding some of the [previous months'] gains." (Chemical Products)

"[We are] closely watching the Mexico border situation as well as the tariff situation." (Transportation Equipment)

"Economy is holding steady, and so are prices. Supply availability is generally OK, yet risk remains in chemicals and some longer lead-time packaging." (Food, Beverage & Tobacco Products)

"Raw material prices continue to come down, along with logistics costs. Suppliers continue to struggle to get [qualified workers], and the learning curve is leading to quality issues. That is impacting their ability to deliver. Overall, business [is] strong. Monitoring the tariffs and Mexico border issues, which are a potential threat. The China trade agreement getting completed will help with stability with suppliers and costs management." (Machinery)

"Business is steady. We expect business to grow throughout the second quarter, then level in the third and fourth quarter." (Fabricated Metal Products)

"Commodity-price uncertainty — partially driven by concerns of an economic slowdown and trade/tariff policies — has led my company to reduce its capital spend in 2019. Our 2019 capital-spend levels will be similar to 2016 levels." (Petroleum & Coal Products)

"Business seems to keep humming along." (Plastics & Rubber Products)

"Order book remains strong; future outlook is beginning to soften a little." (Primary Metals)

"Orders continue to be strong, especially from the steel industry." (Nonmetallic Mineral Products)

I knew something was up when I saw this on my bond market (proxy) chart this morning:


And this on my stock market chart:



And this on my VIX (volatility index) chart: