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There is a divergence between consumer sentiment and manufacturing in the United States right now. The chart above shows that the recent peak of the manufacturing index occurred in August of 2018 (you remember those easy going times before the trade war had hardened us all). The latest valley in consumer sentiment occurred in January of 2019. Since then, these two indices have been traveling in opposite directions.

Why do we point this out? Well, often numbers get thrown in our face, and we are told that they have magical powers to tell us our future. We are sure that some talking heads will call attention to the manufacturing reports today and say that the sky is falling. But it is not, at least not yet. Any reading above 50 on the manufacturing index means that expansion is still taking place. While we would always like to see expansion expanding, that is not realistic. The index can even dip below 50 and into a contraction point and still rebound quite nicely.

We highlight this demure data divergence to warn our readers and ourselves that most recently reported numbers and predictions do not actually make the market go up or down in the long run. We always want to be careful of anybody citing numbers and speaking in certainties about the shape of things to come, especially when that shape can differ drastically depending on the timeframe we examine, as the longer-term graph of manufacturing vs. sentiment given below demonstrates.


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