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Tuesday, June 12, 2012

Global PMIs

With so much of the profits in the big corporations coming from overseas now SPX is greatly affected by the global economy.  Here is a site with many PMI numbers from around the world.

The JPM global composite PMI is the one I look at the most.  This number is heavily weighted by the U.S., but seems to do a decent job of tracking what is going on in the world.  Here is the latest chart.

We can see that last year the numbers got lower then they did in 2010.  SPX mirrored that bigger drop by falling more in 2011 then it did in 2010.  As the PMI numbers dropped below 50 in 2008, SPX accelerated down.  If all three of these numbers do that again, I would expect another big drop in SPX.  Here is a little longer chart of the all-industry number along with global GDP growth.

This chart shows that global GDP growth the last 2 years has been well below the growth seen in the 2003-07 time period.  It is also getting down to a point where it has accelerated down in the past.  The next 3 months could be critical here to see if it can hold up or not.  Next is a look at the China PMI.

Clearly China's manufacturing has not rebounded yet from last year's slow down.  The recent interest rate cut was not surprising after looking at this chart.  This is having a drag on many commodity prices since China is a huge importer of many raw materials. 

There are many country PMI numbers on the above web site that may be useful in trading some of the many non U.S. ETFs available.  The global composite PMI usually comes out around the 5th or 6th of the month.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.