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The ISM Manufacturing and Non-Manufacturing Composite Indices are subcomponents in the Economic Cycle indicator in TJT’s proprietary InVEST Risk Model®.
The ISM Manufacturing Index declined to 54.2 in February from 56.6 and the ISM Non-Manufacturing Composite Index increased to 59.7 in February from 56.7. A reading above 50 denotes expansion.
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The rally in financial assets continued in the month of February with the S&P 500 index gaining 2.97 percent as the Federal Reserve backed off from their quantitative tightening policy (reducing the size of their balance sheet). However, while the gains since late December are welcome, the reality is that from February 28, 2018 to February 28, 2019 the S&P 500 index is up 2.6 percent, not much more than the yield on the one-year Treasury Bill.
The Conference Board’s Consumer Confidence Index is a subcomponent in the Sentiment indicator in TJT’s proprietary InVEST Risk Model®.
The Consumer Confidence Index fell to 120.2 in January from 126.6 in December and 136.4 in November. Sentiment was undoubtedly impacted by the record 35 day government shutdown (12/22/18 – 1/25/19) but to what degree is unknown. The next release is scheduled for Tuesday, February 26th.
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The U.S. stock market rallied in January as the S&P 500 index gained 7.8 percent following the 9.1 percent drubbing that took place in December. Concerns about the government shutdown, ongoing trade war with China, and a major policy mistake by the Federal Reserve weighed heavily on the markets late last year. Those concerns receded in January as the government shutdown ended, trade talks with China continued, and the Federal Reserve made a 180 degree reversal in policy.
The U.S. stock market came under intense selling pressure in December as fears of a major policy mistake by the Federal Reserve gripped markets. The U.S. stock market experienced one of the most volatile months in years as the S&P 500 index fell 9.1 percent in December as a slowing global economy, the effects of the ongoing trade war with China, and political uncertainty in the U.S. and Europe also weighed on markets. The decline occurred despite the S&P 500 having the largest single-day point gain in its history.
The Federal Funds rate is a subcomponent in the Interest rate indicator in TJT’s proprietary InVEST Risk Model®.
On Wednesday, December 19th the Federal Reserve raised the federal funds rate 0.25% to a range of 2.25% to 2.50%. It is the ninth increase since the Federal Reserve started raising interest rates in December 2015 and the fourth interest rate increase in 2018.
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Volatility spiked in the U.S. stock market in November with several 500-plus point moves in both directions in the Dow Jones Industrial Average. Concerns centered around a deceleration in global economic growth due to the ongoing trade war, a possible policy mistake by the Federal Reserve, the ramifications of a “divided Congress” following the mid-term elections, and a substantial decline in oil prices, among others.
Index of Industrial Production is a subcomponent in the Economic cycle indicator in TJT’s proprietary InVEST Risk Model®.
The industrial sector accounts for less than 20 percent of GDP. Yet, it creates much of the cyclical variability in the economy. Contact us to learn why this is important when managing your money.
Volatility returned with a vengeance in October as the market experienced the biggest monthly selloff since 2011 with the Dow Jones Industrial Average, S&P 500 Index, and NASDAQ Composite falling 5.7 percent, 6.7 percent, and 9.2 percent, respectively from their all-time closing highs. In just two days, October 10th – 11th, the Dow lost 1377 points, or 5.2 percent.
There was no shortage of reasons for the decline given various concerns including the upcoming mid-term elections, the ongoing trade war with China, concern about Federal Reserve interest rate policy, rising geopolitical tensions, and slowing global growth to name a few. Nonetheless, what is not in dispute is that the market direction changed dramatically following an interview by Fed Chairman Jerome Powell on October 3, 2018. Whether intentional or not, Mr. Powell’s comments seemed to convey a greater sense of urgency on the part of the Fed to raise interest rates more aggressively.