Forget the Schrodinger "baffle them with bullshit" economy - it is now officially the Idiotmaker economy. Following the massive Chicago PMI drop yesterday, there were those who expected reality to revert and today's mfg ISM to plunge. No such luck, in fact the Manufacturing Data just came out and destroyed every single convergence thesis, printing at 54.8 on expectations of 53.0, and up from the March print of 53.4. This was the best ISM beat in 7 months, following the worst PMI print in 2.5 years yesterday, also the biggest MOM jump since June 2011, and the biggest 2 month rise since April 2010. Go figure. The only one who predicted the correct outcome? Why Zero Hedge, courtesy of none other than Joe LaVorgna.
As per our tweet from one hour ago:
The full ISM breakdown:
From the report:
The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The PMI registered 54.8 percent, an increase of 1.4 percentage points from March's reading of 53.4 percent, indicating expansion in the manufacturing sector for the 33rd consecutive month. Sixteen of the 18 industries reflected overall growth in April, and the New Orders, Production and Employment Indexes all increased, indicating growth at faster rates than in March. The Prices Index for raw materials remained at 61 percent in April, the same rate as reported in March. Comments from the panel generally indicate stable to strong demand, with some concerns cited over increasing oil prices and European stability."
Of the 18 manufacturing industries, 16 are reporting growth in April, in the following order: Furniture & Related Products; Printing & Related Support Activities; Machinery; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Primary Metals; Paper Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Chemical Products; Fabricated Metal Products; Computer & Electronic Products; and Petroleum & Coal Products. The only industry reporting contraction in April is Wood Products.
Finally the ever informative respondents:
- "We expect our production levels to remain at the current level or increase over the next quarter." (Chemical Products)
- "In general, demand remains strong for products, and we [are
experiencing] more supply disruptions now than four to five months ago."
- "The economy was off to a good start through the first quarter, but
the European issues keep coming up as well as the recent disappointing
jobs report. It appears that some of the early gains may be temporary."
(Fabricated Metal Products)
- "Warm weather in Midwest appears to have helped soft drink sales." (Food, Beverage & Tobacco Products)
- "Positive increase in volume of sales and orders, and slight uptick
in inventories, indicate the overall outlook remains robust through
summer at least." (Miscellaneous Manufacturing)
- "Sales are slowing." (Computer & Electronic Products)
- "Business conditions on a national scale have a very positive
outlook for the commercial metals we provide. At this point, we have
outperformed each quarter's goal and anticipate a strong finish."
- "Strong demand [compared to] previous year." (Plastics & Rubber Products)
- "Business indicators suggest a stronger stability in overall
environment. Production and orders are stable." (Transportation
- "Business conditions continue to improve." (Furniture & Related Products)
In other words, everyone who was betting on QE yesterday will now have to unwind those trades.
Biggest beat in 7 months...
and biggest 2-month jump in 24 months...
and today's ISM print was a 4.5 sigma beat - entirely sustainable...
All makes perfect sense, right? And ES liquidity (the red line is today) disappeared into the print...