There is very important economic data out today that underscores the fact this economy was heating up like a rocket.It also points to greater potential imposition from efforts to quail the coronavirus than the virus itself in curbing economic growth.

Chicago PMI

• 49.0 from 42.9 and ahead of forecast 45.9 (note sixth month of contraction)
• Supplier delivery (measures if orders are being delivered slower or faster than last month) +7.9 points to 61.3 highest November 2018

The index rises when delivery times slow.

“Anecdotal evidence that the coronavirus is already leading to supply chain disruptions.”

• Production rose 8.3 points to 51.0 (eight-month high)
• Order backlog rose off a four-year low to 38.2
• Employment fell to 44.5 from 46.9 (lowest since July 2019)

There were two special questions, one about the phase-one trade deal and one about Boeing’s 737-Max production shutdown.

• 23.9% large impact from signing of Phase One trade deal
• 8.7% materially affected by Boeing

Bottom line: There is good news, but the top line rise is overstated because supply chain problems lifted the supplier-delivery-times index. More companies are still cutting than adding workers, while the orders backlog index is below 40. It appears the economy was re-accelerating in Q1, but Covid-19 was already affecting Chicago area businesses in February.

Chicago PMI

Consumer Sentiment

• 101.0 Up from 100.9
• Second best number since January 2004
• 58% see improving personal finance (all-time high read)

February Consumer Sentiment	Level	M/M	Y/Y
Current conditions	11.4.8	+0.3	+5.8
Expectations	92.1	+1.8	+9.1

Comments from Surveys of Consumers Chief Economist, Richard Curtin:

Consumer sentiment rose to 101.0 in February, nearly matching the expansion peak of 101.4 set in March 2018.

The coronavirus was mentioned by 8% of all consumers in February when describing the reasons for their economic expectations.

However, on Monday and Tuesday of this week, the last days of the February survey, 20% mentioned the coronavirus due to the steep drop in equity prices as well as the CDC warnings about the potential domestic threat of the virus.

While too few cases were conducted to attach any statistical significance to the findings, it is nonetheless true that the domestic spread of the virus could have a significant impact on consumer spending.

Importantly, the early indications suggested only a very modest impact as the Sentiment Index among consumers who mentioned the coronavirus was still quite high (just over 90.0).

If the virus spreads into U.S. communities, consumers are likely to limit their exposure to stores, theaters, restaurants, sporting events, air travel, and the like. There is likely to be some advance buying and increased online shopping, but much of the discretionary spending may not occur.

To be sure, there is no reason to anticipate that consumers will engage in such extreme measures at this time. It is a fine line that needs to be drawn to encourage people to take normal steps of preventive hygiene but not to engage in panic reactions. Panic is best avoided by a strong sense of confidence in the government’s responses that aim to control the potential spread of the virus and limit any resulting damage to the economic welfare of consumers. The most effective fiscal and monetary policies include proposed reactions to the virus that are transparent, well understood, and act to maintain confidence in government economic policies close to its nearly two-decade high.

Final Thoughts: I like the action in the market going into the weekend, even if machines take over into the close.  It is clear that oversold stocks want to bounce, and the moves would make for great trades.  I’m not hundred percent sure on longer term positioning, as of yet.

Comments

Great summary. Difficult to know ideal purchase time due to political overstatements and dishonesty! Dan Spengler on 2/28/2020 1:58:51 PM

Companies for the most part, are open for business and hiring all over this country. This is a cyclical event at most... it has come, and it will go. Frankly, I'd rather see pharma making their products outside China. God only knows what they could do to us if they wanted. Costs of pills are NOT going down, or note by much. Supply chains can be set up all around the world, (even in the US!) as we have been relying on China for too long. Barry M Gold on 2/28/2020 2:04:50 PM

The media, including Fox, eats this news up because you DO have to fill up the time. Scaring the troops instead of encouraging us. I have just heard Bloomberg say Trump isn't leading... I call BS. A cheap shot by a very poor leader. Bloomberg complains... says he can do better... but, not how. Barry M Gold on 2/28/2020 2:08:35 PM

I firmly believe that as Trump continues to negotiate with countries like India for new business the market will be forced to re grow going forward. The health scare news and anything the opposition can do to negatively effect the economy they will try. They and the deep state still have influence to exercise. By the way I don't think it's quail the coronavirus, but quell the coronavirus....Just saying.... Bradley Voigt on 2/28/2020 3:03:31 PM

Almost everyone I know that is aware of my participation in your program has called me in the last 2 days asking for advice. I have answered a specific question on something if it was already known, but my answer always strongly suggest that they get your book. :) Janice Jantz on 2/28/2020 3:11:05 PM

Thanks you so much Janice. unstoppableprosperity.com  Charles Payne on 2/28/2020 3:12:20 PM

Charles is right there is a great deal of behind the scenes working going on in the US economy. Boeing has been testing the 737 at different airports around the US plus in Canada. They are serious about getting that plane up and running again. As for the US political scene President Trump is doing a wonderful job in running the US. People don’t see how other leaders miss run the countries they are in change of. We need to understand educating the young is the job of the older population the professors in these Universities need to be put out of business for poisoning the minds of our youth. The youth of course want free everything not understanding the consequences of such foolish actions. As for Medician being manufactured in China we need to bring back what we can. But understanding there are elements of some medication that we don’t have naturally in the soils of North America that are native to China. Pamela Durham on 2/28/2020 3:11:13 PM

bottom line - the corona virus is a flue ..... CV will end just like the regular flue season ends ... can't panic over this harry miller on 2/28/2020 3:28:32 PM

Thank you, Charles. It is good to have your prospective, and see how it fits in your advice in "Unstoppable Prosperity." John Hudson on 3/2/2020 2:11:29 AM

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