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MV Weather Report: Chicago PMI Freezes the Bulls


Rain or shine, we review the day's biggest stock stories.


The Chicago Purchasing Managers Index stole the show today and maybe even the bull's bite.

If you aren't familiar with the Chicago PMI it's an index of business conditions in the Chicago area. Today's number was extremely disappointing coming in at 46.1 compared to an analyst estimate of 52.0. During the month of August the index came in at 50.0.

Today on the Buzz and Banter Professor Lance Lewis gave his analysis of the Chicago PMI.

"Once again, take a whiff of the stagflation sandwich that is the September Chicago PMI. The headline index fell to 46.1 from 50 in the prior month, indicating that the Chicago manufacturing sector is once again in contraction after its brief breath of fresh air in August. Meanwhile, the prices paid indicator rose to 51.3 from 50.

"Let's see… economic stagnation + inflation thanks to the Fed's money printing… hmmm… what's that called?

"I don't know how many stagflationary data points like this we need to get before the market "gets it," but when they finally do, gold is going to explode."

Lance may have been on to something this morning. Commodities did get it as gold traded higher by 1.37% to $1008 and crude oil finished higher by 5.4% to $70.31, albeit crude's move was due to inventory numbers. Like Lance said, Gold stocks rallied. To name a few: Agnico Eagle Mines (AEM) +3.08%, Royal Gold (RGLD) +1.04% and Goldcorp (GG) +1.51%.

The market did not like the Chicago PMI, the index was up at the beginning of day, sold off on the release before rallying back to breakeven and selling off again. For the day, the S&P 500 closed lower by -0.35% to 1056 well off the day's low of 1046 and the day's high of 1063.

I think the original morning sell off was based on fears that tomorrow's ISM index will be less than the expected 54.0 consensus estimate, as the Chicago PMI and ISM typically mirror each other. That being said, today may have been a victory for the bulls as it should have been a lot worse, but once again investors seemed anxious to buy the dip.

Is the bull case really that strong or are the bears happy with every little drop they get?

We will find out more tomorrow when Personal Income, Personal Spending, Initial Claims, Continuing Claims, Construction Spending, ISM Index and Pending Homes Sales are released.

Did I mention that tomorrow is the start of the fourth quarter and earnings season is right around the corner?

That's all for tonight, have a great one!

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No positions in stocks mentioned.

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