EDITOR NOTE: We started writing this post yesterday, when Goldman announced that the upcoming string of PMI/ISM numbers would be critical for determining the direction of the global economy.The first half of the post is the intro. In the second half, we’ve been putting all of the country-by-country numbers in as they’ve come out, a process that started Sunday, but which will continue until the ISM numbers come out in the US this morning.
Goldman’s Dominic Wilson is out with a new note offering guidance to investors on whether to finally jump off the stock market, and get more bearish.
Here’s the key threshold:
We think that risk assets are likely to move higher as long as US data remain consistent with GDP growth of somewhat more than 2%.
The next several hours may be decisive…
Given more mixed news in March, and the likelihood that weather-related boosts will fade in the month or two ahead, the stakes have been raised for the releases over the next 24 hours. At the risk of oversimplification, if the ISM and global PMIs bounce convincingly, we think the market is likely to be able to make fresh highs. If instead we see a second month of declines, we are likely to turn more cautious.
So basically, huge hours ahead, starting with the Chinese PMI today, and ending with US ISM numbers tomorrow morning.
UPDATE: The official Chinese PMI reading has bounced back nicely.
Update 8:00 PM ET: Japan’s Tankan survey has come in weaker than expected.
On the other hand, Korean PMI data has jumped nicely for March, from 50.7 to 52.0.
Update 10:05: The latest good report is from Taiwan, where the PMI jumped to 54.1
Update 3:20 AM:
We have two big European PMIs out already this morning, and they’re a split decision. Ireland’s was very strong, with new orders and foreign orders surging.
That chart is here:
Spanish PMI, on the other hand, was a disaster, with things getting worse at the fastest pace in 11 months.
Update 4:00 AM ET:
We’ve got a bunch of new European PMIs out, and the bottom line is that they’re weak.
France was particularly bad, with the number dropping from 50.0 to 46.7.
Germany has also dropped below the 50 mark.
Update 4:30 AM ET:
Check out our Chart Of The Day for the truth about Europe.
UPDATE 10:07: And the final report is in the books! The US ISM report expanded from 52.4 to 53.4, beating expectations of 53.0.