ISM Defies Consensus, Surges In Best Consensus Beat In Past 7 Months

Tyler Durden's picture

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."
    (Primary Metals)
  • "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...

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firstdivision's picture

Now the only question one has to ask is this one more reliable than China's? 

slaughterer's picture

Epic short squeeze above SPX 1406 happening right now.  

Village Smithy's picture

I definitely felt that. When will I ever learn.

lotsoffun's picture

bernake and company have their backs to the walls.  they are r.ts.  you can't fight the fed.  they have nothing to lose except your money.  YOUR money.  they play with it and bathe in it.  it took decades to accomplish the power that they have, but they figured it out.


ihedgemyhedges's picture

Backlog of orders went below 50.................that is a leading indicator and confirms Chicago and Dallas................

HyperLazy's picture

There you go folks, there is a fly in the soup after all.

Comay Mierda's picture

i hope your trading with stops, the PPT is taking advantage of this light volume day and ramping up the markets.  lets see if it holds tomorrow

Manthong's picture

Gold slam, bogus ISM, melt-up short squeeze..

just another day at the office.

TradingJoe's picture

Yep! That's how they do it, except..they are doing it to themselves!!!!!

crawl's picture

No doubting the short squeeze. It feels like the market is doing the ' heads I win, tails you lose' to the shorts.

If the data was less than expected, the market would still likely have rallied in hopes of QE.

SheepDog-One's picture

Let them lie to themselves, no one even cares anymore.

GeneMarchbanks's picture

EURUSD takes a tick down. That is about all.

slaughterer's picture

With ADP always systematically being upwardly calculated above reality and EZ PMIs consensus so low, it looks like first week of May will head-fake all bulls into thinking to "stay in May."

VonManstein's picture

silver hardly moved.. gold a little more.. lets see if it becomes tradition for PM market to defy the propagandists

edstar's picture

still holding pretty good. 

realise we are in an instant gratification high frequency world but the idea of gold being valued as a referendum on QE is BS


I laugh out loud when the MSM portrays silver as an only an industrial metal and then you get a fake ISM beat and silver then drops.  

TradingJoe's picture

Hah! "NO ONE" saw it coming! BUT ZH...Of Course! Hell we should ALL be filthy rich based on "Da Tyler's" genius! EH?!

homersimpson's picture

Then go start your own website and bitch to yourself with all of your 3 Chinese viewers. ZH posted the comment in advance of the announcement - so quit yer whinin'.

CrashisOptimistic's picture

Another step back for QE.

SheepDog-One's picture

Yes, almost as if theyre just using QE rumors as a carrot and stick, and never actually intend to do it. 


WonderDawg's picture

Bingo. You know shit is fucked up when market makers hang breathlessly on every twitch and quiver of Bernanke's lips.

Winston Churchill's picture

The Fed and the ECB are in a box.

They can only hint,not do.

Expect the BRICS to unveil their own alternate SWIFT system after the

"special'meeting coming this month.

May is going to be a fun month for all.

youngman's picture

The comments were good....I trust those more...mixed signals today..but I still think the EU problem will hurt in the future..

DeadFred's picture

Gold was getting a bit unruly, they had to do something about that.

CryingBear's picture

who is this guy joe?

Randall Cabot's picture




Managing Director
Chief US Economist
Deutsche Bank Securities, Inc.

Joseph A. LaVorgna is a managing director and serves as Chief US economist in charge of US macroeconomic research for Global Markets. He joined Deutsche Bank in 1997 from Lehman Brothers where he was a Vice President in the Fixed Income Division. Prior to joining Lehman, LaVorgna was an economist at UBS Securities and he started his professional career at the Federal Reserve Bank of New York in 1992, where he was an economist on the Monetary Analysis and Projections Staff. LaVorgna is a graduate of Vassar College and is a frequent commentator for CNBC as well as various other media outlets. LaVorgna and his colleagues were ranked #1 in Economics in the 2010 Institutional Investors’ All-Star Fixed Income Team

nobusiness's picture

expect QE market up, expect no QE market up.  Fuck it.  I give up.

CryingBear's picture

Well, you can still win if economic data is good and earnings are really bad.

Squid Vicious's picture

fade the Lasagna... brilliant!

hedgeless_horseman's picture



Sell the rip.


carbonmutant's picture

EURO/USD down to yesterday's lows and the DJI up 60 pts

What happened to the correlation....???

CryingBear's picture

fool, dollar will go up now on good news on US.

gjp's picture

Correlations only work if they point the market up.  If the indication is down, then decoupling.

There is only one correlation in Uncle Ben's world: if the sun rises in the east, the market rises too.

crawl's picture

Short annihilation underway. Melt up, up and away.
Hard to believe the data.

Kristian's picture

"In other words, everyone who was betting on QE yesterday will now have to unwind those trades."

Tell that the robots.

gatorengineer's picture

At least until a 90k jobs print on Friday.

_ConanTheLibertarian_'s picture

It's really time for some epic natural disaster to help the stock market in the right direction...

Bold Eagle's picture

Need to pump ES before dissapointing payroll report comes out

CryingBear's picture

Was this really that good of a number?

CrashisOptimistic's picture

It's a survey.

It's not a measure.

SheepDog-One's picture

Less than 1% number? Big deal. Just could call it 'static'.

But it shows 1 thing, theyre very stuck on more QE, it scares them.

ejmoosa's picture

Well, it did beat expectations.  And that's all that counts these days.

WonderDawg's picture

There ya go. Corporate earnings especially, doesn't matter if they suck, as long as they beat "expectations". What an easy way to game the suckers.

Chump's picture

Yep, I expect the shit to start hitting the fan almost every day, so in that sense every day is awesome!

DavidC's picture

No, they were OK, they weren't that good. Spending was only up 0.1% despite forecasts of 0.5%. Prices paid haven't moved despite forecasts of going down. Manufacturing better than expected, well, yes, but we've had a mild winter/spring so far.
USD Construction Spending
Actual 0.1% Forecast 0.5% Previous -1.4% ISM

Actual 54.8 Forecast 53.0 Previous 53.4

ISM Prices Paid
Actual 61.0 Forecast 59.0 Previous 61.0

To warrant a 160 point turnaround on the Dow? No. They can do it today because it's a holiday in Europe, low volume and ramp. It's just broken.