Strong Manufacturing & Strong Employment = ?

Strong economy!

Okay, now that we have that out of the way the futures reversed this morning on the jobs report that should have been no surprise to anyone. It’s as good as it gets out there. Just look at some of the data from Tuesday’s ISM report (PMI 61.3%).

As a side note see Charlie Bilello’s Do Stocks Perform Better When Manufacturing is Booming?

I’ve highlighted the key items showing an overheating situation that frankly should be stimulating the effects of all that balls out monetary and now fiscal reflation/inflation in the economy (yet still inflation expectations gauges go sideways at best).

Here’s what the respondents are saying, according to ISM.

It sounds like an economy greatly in need of cooling off from a cost perspective. There would be nothing like a global equity pullback that washes up on US shores to put global pressure on US supply chain costs. Some of that is indicated in comments above. But considering today’s strong Jobs report, we cannot discount a cost-push inflationary extravaganza either.

What has come first, the cart or the horse? Has the monetary & fiscal inflationary cart pushed the economic horse or is he pulling the cart to a new phase of overt inflationary effects and fears of same?

USD is up on the employment news. Stocks, commodities and gold are down on the news. Yields are up on the news.

You can click the graphic for the detailed BLS Employment report.

Here is the monthly change by industry.

And here is the change by industry over the last year. By this measure Manufacturing faded on the month but has been strong over the last year, much of which featured a weak US dollar.

Ah, there’s the key phrase… “US dollar”.

It’s got a running mate you know; it’s called the Gold/Silver ratio and together they are the 2 Horsemen.

Why on earth is silver not rampaging vs. gold if the chips are going to fall cyclical inflationary?

Look, this stuff is not easy. I’d suggest a week by week process in gauging what’s ahead. It could as simple as indicators (still) out of whack and a full on cost-push inflation is going to follow the economic data. It could be that the US continues on in its Goldlocks suit while the rest of the world bows down (again). Or global issues (some of which we’ve exported over the decades) could wash up on our shores.

But at this moment in time, all appears well with the Good Ship Lollypop, economically. All eyes on the stock market, however.

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