While Europe's confidence-inspired rally is floating all global boats in some magical unicorn-inspired way, the reality is that on the ground in the US, things have never looked worse. The NFIB Small Business Outlook for general business conditions had its own 'cliff' this month and plunged to -35% - its worst level on record - as the creators-of-jobs seem a little less than inspired. Aside from this unbelievably ugly bottom-up situation, top-down is starting to be worrisome also. In a rather shockingly accurate analog, this year's macro surprise positivity has tracked last year's almost perfectly (which means the macro data and analyst expectations have interacted in an almost identical manner for six months). The concerning aspect is that this marked the topping process in last year's macro data as expectations of continued recovery were dashed in a sea of reality (both coinciding with large 'surprise' beats of NFP). We suspect, given the NFIB data, that jobs will not be quite so plentiful (unadjusted for BLS purposes) the next time we get a glimpse.
NFIB Small Business Outlook for General Business Conditions 'crashed'...
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And the US Macro Surprise Index (which tracks both macro performance absolutely and relative to expectations) has tracked last year's rise almost tick-for-tick. This stunningly close analog suggests we have reached a peak in this macro cycle...
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Charts: Bloomberg