Fund Managers The Least Bullish On Value Stocks Since 2010

We got the first of the July regional Fed manufacturing reports on Monday with the Empire Fed reading. Keep in mind, we still hadn’t gotten the June industrial production report as of Monday. The July Empire Fed reading showed a solid improvement as the general business conditions index beat estimates for 0.8 by coming in at 4.3 as you can see from the chart below.

This was an improvement from -8.6 in July. The ISM-like weighting of this index improved from 48.4 to 49. As we know, the June ISM manufacturing PMI was 51.7, so it wasn’t as weak as the Empire Fed index.

The Empire Fed report might have improved because of the trade deal with Mexico and the renewed trade negotiations with China. We will get a better understanding of whether the manufacturing sector is actually improving and why it is doing so from the regional Fed indexes that include quotes. The internals of this report were solid even though the ISM-like PMI didn’t improve much. The new orders index was up 10.5 points to -1.5. Employees worked more, but there were less of them. The workweek index was up 6 points to 3.8 while the number of employees index cratered 6.1 points to -9.6 which is the worst reading since 2016. That’s interesting since the manufacturing sector added 17,000 jobs in June according to the BLS report.

The expectations index was solid as the 6 months forward general business conditions index increased 5.1 points to 30.8 and the new orders index was up 7.6 points to 35.4. It’s curious how the expectations for the number of employees only fell 1.4 points to 14.2 which isn’t even the lowest index of this year. In previous declines in the current index, the expectations index also fell. Finally, the capex and technology spending indexes were up 8.5 and 1.8 points to 19 and 14.6.

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