The Consumer Might Be Teetering

Regional Fed Manufacturing Index Spikes

After correctly foreboding a weak August manufacturing report, the September Empire Fed manufacturing report portends a snapback in the sector. The index rose from 3.7 to 17 which beat the highest estimate of 15 and the consensus for 6.5. The new orders index was up 8.8 to 7.1 and the shipments index was up 7.4 to 14.1. To be clear, each index is the net between those experiencing higher new orders/shipments minus those with lower new orders/shipments. The 6 month forward looking index was also up as it rose 6 points to 40.3. Within this, new orders and shipments rose 1.9 and 8.2 points to 39.1 and 39.

As you can see from the chart below, the expected capex index was up 12.7 points to 18.7 which is near the middle of where it was last cycle. Tech spending was up 6.4 to 14.4.

Tech Speculation Is Still Here

The 10% correction in the Nasdaq may have been the quickest ever (3 days), but it didn’t get rid of the speculation among retail traders. It just encouraged more buyers because the mantra is to buy the dip.

As you can see from the chart below, the net call value traded as a percentage of the market cap for the QQQ hit 138% which is a 12 year high.

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