E Tuesday Talk: Slip Sliding Sideways

With the Middle East seemingly going to Hell in a proverbial handbasket the markets seem to be slip sliding, not away (as the Paul Simon song would have it) but, sideways as it were. Yesterday the S&P 500 closed down 11 points, at 4,163, the Dow closed down 54 points, at 34,328 and the Nasdaq Composite closed down 51 points, at 13,379. Currently futures for all 3 indices are trading in the green.

yellow and black no smoking sign

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Nevertheless, TalkMarkets contributor Jill Mislinski brings us the latest New York recovery stats in her article, Empire State Mfg Survey: Continued Growth In May She notes that though general business sentiment dropped from 26.3 in April to 24.3 in May, economic activity continues to expand a healthy rate. Mislinski includes this quote from the beginning of the report:

"Business activity continued to grow at a solid clip in New York State, according to firms responding to the May 2021 Empire State Manufacturing Survey. The headline general business conditions index was little changed at 24.3. New orders and shipments continued to expand strongly, and unfilled orders increased. Delivery times lengthened significantly, and inventories moved somewhat higher. Employment levels grew modestly, and the average workweek increased. Both input prices and selling prices rose at a record-setting pace. Looking ahead, firms remained optimistic that conditions would improve over the next six months, and expected significant increases in employment and prices. [full report]"

Mislinski includes several charts showing manufacturing activity in New York and nationwide, including the chart below which plots activity by five Fed regions and the average of all 5. As she notes, one can clearly see the timing differences in expansion and contraction by region, but the expansion from the 2020 COVID-19 recession is strong in all regions (despite the current m-t-m drop).

Contributor Alex Barrow takes us through his weekly set of charts to help readers understand what's going on in the markets and with the recovery in general. In a TM Editor's Choice article one of the questions he asks is, is it Time To Buy Weed Stocks?  But before tackling that questions he gives this take on on the current state of inflation.

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William K. 4 weeks ago Member's comment

I see things differently. All it takes to start and grow inflation is dumping in money. Wages do not need to rise for inflation to take off. Does anybody actually believe that dumping FIVE TRILLION DOLLARS into the economy will not launch a cycle of inflation that will cause a whole lot of damage ao a whole lot of people? And it will be serious damage that will threaten the stability of society. Things will change, and not one atom of that change will be for the better. When a whole lot of people suddenly become both homeless and hungry they may not listen so politely as they do while they are at home and fed.

David Marshall 3 weeks ago Contributor's comment

For a good take on Biden’s ambitions for the infrastructure program(s) check out NPR’s Special Edition of it’s UpFirst podcast with Presidential historian Doris Kearns which was put up over the weekend.

William K. 3 weeks ago Member's comment

My point was that the records show that in the past, every time money was dumped into the economy, inflation resulted. So why should this time be any different?? There does not seem to be any change in the mechanism of inflation, and so it seems that the results of the action will be the same, although the time delay might be different.

My other concern is about the effect of all that debt on the future. The bad thing about debts is that they must eventually be paid off. ( I keep saying this, I believe it is true.)