Trump Rally Shifts to Rocket Stage

Well for those that didn’t believe this was the Trump Rally, Wednesday points to an exclamation point on the main driver.  While there’s no doubt there’s excitement about potentially unleashing American greatness, much of this session is about the potential for unity, too. 

There is a bunch of economic data out today, including the ISM Purchasing Managers Index, the nationwide report card on the state of manufacturing.   At 57.7, the index has reached its highest point since August 2014.

Drilling Down

Most of the respondents had great comments on the key trends in their industry:

“Business [is] improving and lead times are extending by two or more weeks.” (Chemical Products)

“Very positive outlook for this quarter. Production goals have been adjusted multiple times and increased each time due to demand.” (Computer & Electronic Products)

“Product demand continues to be solid.” (Plastics & Rubber Products)

“Bookings are heavy early in the season. Expect robust first half of the year.” (Primary Metals)

“Demand still outstrips capacity. Competitors have announced heavy capital investments to increase capacity.” (Food, Beverage & Tobacco Products)

“Sales and business continue to be strong and increasing.” (Machinery)

“Business holding steady in Q1.” (Transportation Equipment)

“Medical device manufacturing is still strong.” (Miscellaneous Manufacturing)

“Even though oil and gas prices are on the upswing, we still face a tough 2017 and will continue to save on costs.” (Petroleum & Coal Products)

“Major focus on commodities and potential [for] further inflation.” (Electrical Equipment, Appliances & Components)

Every aspect of the report was impressive, save for one that remains ominous – employment.   This continues to lag, but it’s the last piece of the puzzle that is otherwise coming together nicely.

Incomes are picking up faster than expected, but gains have been so limited and inconsistent in recent years, consumers toggled back on their spending.   In a way, this should give many more confidence that consumers are going to need a wealth effect beyond a higher stock market before they spend too much money.