Latest / Markets with Megan: A Quick Financial Markets Update / ISM Report Flashing Warning Signs? | S2 E037 | 05-01-25

Transcript

ISM Report Flashing Warning Signs? | S2 E037 | 05-01-25 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: The manufacturing sector in the US is confirming what we've seen and what we believed would happen is that the economy is slowing, if not contracting.
• 0:07
  Megan Horneman: It is Thursday, may the 1st, and this is Markets with Megan.
• 0:10
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• 0:14
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• 0:16
  Megan Horneman: But let's dig into what we saw today.
• 0:18
  Megan Horneman: It's the first of the month and every first of the month we get the ISM Manufacturing Index of the month, and every first of the month we get the ISM Manufacturing Index and this gives us a very good read on where we are from a manufacturing standpoint in the US.
• 0:30
  Megan Horneman: What we saw is that this index contracted for the second month.
• 0:34
  Megan Horneman: Contraction means a level below 50.
• 0:37
  Megan Horneman: Anything above 50 means the economy is expanding.
• 0:40
  Megan Horneman: We've now seen that this index has fallen for the third consecutive month and it is the lowest level we've seen this year.
• 0:47
  Megan Horneman: So let's dig into some of the details.
• 0:49
  Megan Horneman: It was a little bit better than the expectation.
• 0:52
  Megan Horneman: It came in at 48.7 when the estimate was 47.9.
• 0:56
  Megan Horneman: It still doesn't erase the fact that the economy is contracting.
• 1:00
  Megan Horneman: From a manufacturing standpoint, the biggest declines here in this index were both in export orders and production.
• 1:06
  Megan Horneman: We saw both of them see the biggest drop that we've seen.
• 1:10
  Megan Horneman: They're now at the lowest level since May of 2020.
• 1:14
  Megan Horneman: And that's when we were really in the depths of the pandemic and, yes, in a recession.
• 1:18
  Megan Horneman: The other areas that we're focusing on is there's an inflation indicator in this and it's called prices paid.
• 1:26
  Megan Horneman: So what are manufacturers paying as far as their goods?
• 1:30
  Megan Horneman: And what we've seen is this has increased now.
• 1:34
  Megan Horneman: It was a little bit better than expectations, but it's at 69.8.
• 1:39
  Megan Horneman: It's increased now for five consecutive months and it's the highest level on this index that we've seen since June of 2022.
• 1:47
  Megan Horneman: So if you were to just look at this report on its own, it would show you that the manufacturing side of the economy is in this stagflation type of environment where you're seeing inflation rise but yet the activity actually decline.
• 2:02
  Megan Horneman: Now markets are higher today, regardless of this report.
• 2:05
  Megan Horneman: This is mainly because of the fact that we got some tech earnings, and this is the biggest week for earnings season that we've seen for first quarter earnings and tech earnings, both, whether you look at Meta or Microsoft a little bit better than expected.
• 2:19
  Megan Horneman: Also, we're getting any good news.
• 2:22
  Megan Horneman: Any tiny bit of good news is good news from the trade perspective.
• 2:25
  Megan Horneman: So we've got a little bit better news on the fact that maybe China and the US are here working together, so markets are higher today.
• 2:34
  Megan Horneman: Tomorrow we'll be back with the much-anticipated jobs report.
• 2:37
  Megan Horneman: This comes in the first week of every month and this is going to be highly scrutinized and most likely a market mover, not only from the fact that the labor market side of it is what the Fed's focusing on, but again the inflation side.
• 2:51
  Megan Horneman: So we'll look at average hourly earnings, but also what are we seeing of the impact not only from the Doge effects, but also the trade wars, and are we seeing an impact here on the labor market?
• 3:01
  Megan Horneman: That's all we have today.
• 3:03
  Megan Horneman: If you want a further history of our podcast, you can go to marketswithmeganfm.
• 3:25
  Megan Horneman: Thank you.