Latest / Markets with Megan: A Quick Financial Markets Update / Breaking Down the ISM Manufacturing Report: Impact of Recession Speculations | Episode 087 | 1-03-2024

Transcript

Breaking Down the ISM Manufacturing Report: Impact of Recession Speculations | Episode 087 | 1-03-2024 · Markets with Megan: A Quick Financial Markets Update

• 0:02
  Megan Horneman: Hello, welcome back, and Happy New Year.
• 0:04
  Megan Horneman: This is Megan Horneman, the Chief Investment Officer for Verdence Capital Advisors.
• 0:08
  Megan Horneman: We're coming to you today.
• 0:09
  Megan Horneman: We're going to pick back up for this year with our Markets with Megan, talking about some of the economic data that we receive and some of the market actions that we've received from that.
• 0:18
  Megan Horneman: This morning, we're going to talk about the ISM Manufacturing Report.
• 0:22
  Megan Horneman: This usually kicks off every calendar month.
• 0:24
  Megan Horneman: This is a report on the overall manufacturing sector in the US, and this tends to be a leading indicator for recessions.
• 0:32
  Megan Horneman: However, this has been in contraction territory now for the 14th consecutive month, and we still do not have a recession in sight.
• 0:41
  Megan Horneman: What we're seeing in this report is, as I said, it's in contraction territory, which is a level below 50.
• 0:47
  Megan Horneman: When we look at all the different components in this index, all of them except for one are also contracting.
• 0:54
  Megan Horneman: Some of the biggest declines we saw this past month were in inventories, also in the prices paid component.
• 1:01
  Megan Horneman: This is a negative for the index but can have a positive impact on inflation because prices that the manufacturers are paying are coming down.
• 1:10
  Megan Horneman: We're hoping that translates in to passing on to the consumer.
• 1:14
  Megan Horneman: Some of the other areas that were weak were new orders.
• 1:18
  Megan Horneman: This is a leading indicator for the economy as well.
• 1:21
  Megan Horneman: And also, as I mentioned, the customer inventories.
• 1:25
  Megan Horneman: We did see a pick up in new export orders, which is good news, but still, each one of these component's production, backlog of orders, employment, and imports all of these are things that are in contraction territory in the manufacturing sector.
• 1:40
  Megan Horneman: This is the first big piece of information we'll week this to kick off 2024.
• 1:46
  Megan Horneman: Again, not a great report with manufacturing.
• 1:49
  Megan Horneman: We know it's been in contraction territory for quite some time.
• 1:52
  Megan Horneman: We'll be back for the rest of this week, especially on Friday, when we get that much- anticipated employment report.
• 1:58
  Megan Horneman: That should give us some more indication on what direction the Fed will be going