RANsquawk: US Morning Call - Chicago PMI Preview: 30/03/12

Comments

[JaylP6]

Stock market bottom April 2012 - http://stockmarketbottom.com

[TeresaE]

Eventually the investors that put credence in PMI will see the error of their ways.  Of course, it will be too late then.

If you look back at PMI readings throughout the oughts ('00 to '08) until the crash, they were in "positive" territory continuously.  Showing "growth" and employment.

Yet, in the real world, and the industry, we were losing hundreds of thousands of jobs and tens of thousands of long-established companies a year.  EVERY year.

How could this be, I continuously asked myself.  How can my customers and competitors be closing shop yet this stupid number continue to show growth?

Then, I remembered the days when I belonged to this organization and the simple truth smacked me in the head.

Purchasing managers - by and large - have NO clue as to the underlying strength of a company.  They are considered the spenders by Controllers and treated as outsiders.  They don't make a company money, they spend it.  And they are kept in the dark and fed bullspit about the future that "doesn't concern them."

And laid off, eliminated, and downsized purchasing managers don't fill out the monthly survey after their fax and company email are taken away.

This number only shows growth in the tiniest smidgeon of the US (Western world) economy(ies). This number will NEVER reflect the very real contractions still being felt in the industry.  Which all investors could figure out if they simply chose to do some research and they found that while this number remains well into positive territory now, the industry is STILL shedding companies and jobs.

Without accounting for overall shrinkage of the survey respondents, this "survey" carries next to no meaning on a broader economic scale.

Whatever, I'm sure the market will go up on the great "news."  Invest accordingly.