Month: January 2019

As we noted yesterday, just ahead of the FOMC decision which consensus overwhelmingly expected would be “disappointing” as there was just “no way” the Fed could match the market’s dovishness (which it did, and then some), Nomura’s Charlie McElligott warned that “there is some VERY provocative, 11th hour talk through the ‘consultant/macro advisory’ circles that the Fed could state today that at a future meeting, they will lay out an actual timetable to end the balance-sheet runoff“, which would be seen by the market as a clear escalation of the thoughts trial-ballooned in the WSJ piece last week (to end QT “sooner-than-expected”)”, and the result would be wholesale panic buying response to this dovish reversal by the Fed which could send the S&P as high as 2,700-2,750.

Well, one day later, we are well on our way there, because as McElligott summarizes in his morning note, “here we are: The Fed (over the course of a month and half) goes laughably “all-in” on the slowdown story (because Equities prices now set policy I guess and not the other way around—but that’s none of my business), and markets respond with the old-school “QE trade” of old: Stocks, Bonds and Gold UP, US Dollar DOWN.”

As the Nomura strategist elaborates, not only did the Fed nuke the prior “…further gradual increases” guidance, but they actually said the next policy move is as likely “down” as it is “up”—all while “giving-in” to the market on an earlier-end to the balance-sheet run-off than previously expected.

Predictably, the Fed’s complete capitulation to the market has mutilated “tightening” expectations, and as McElligott notes STIRs no longer simply price-in a “pause,” but instead the outright end of Fed policy rate normalization, with nearly a full rate cut again being priced for 2020 as shown in the Eurodollar spreads below.

All of this gave a powerful boost to stocks overnight and this morning, when after an initial weakness, the S&P is now at session highs, and above to rise above 2,700 and fast approaching it prior all time highs in the mid-2,800 area, even though more than one analyst have lamented that by caving to the market’s whims, the Fed has “traded short-term market support for more volatility this year” as Barclays said, or as Rabobank forecast, “epic market volatility is assured.”

Validating such concerns, one of the notable side effects of the Fed’s announcement was a sharp steepening in the yield curve, which as we discussed over the weekend is troubling, as it is a curve steepening – not flattening – that immediately precedes every recession…

… and is also the reason why the most popular pre-recession trade according to BofA right now is a 2Y forward curve steepener.

Furthermore, as we discussed in our post why the Fed is now trapped, the last three recessions all took place with 3 months of the first rate cut after a hiking cycle, perhaps as it was the Fed’s official admission of economic weakness – by cutting rates – that triggered the economic contraction that was gathering pace as a result of higher rates and tighter financial conditions. “If that is indeed the case, then the next US recession will begin just a few months after the Fed cuts rates”, we concluded.

To be sure, McElligott also noted this curve move, warning that of the steepening of the yield curve at this juncture is 1) the precursor to the death of the cycle and 2) the signal that “we have tightened ourselves (through policy- and self-fulfilling anticipation-) into a slowdown / recession.”

Yet while the Fed’s capitulation, and eventual rate cut, may indeed be a precursor to a recession in 2020, and further market weakness, that would represent the long-term, ‘structural’, 12-month view. Meanwhile, the Nomura strategist notes that there are absolutely local “upside catalysts” for U.S. Equities.

This means that as traders contemplate how to trade in response to the Fed, there are two trades they need to consider: the structural, long-term one, and a more directional, tactical trade.

First, focusing on the structural one, McElligott lays out his “favorite 12 month trade” view post the Fed as follows: “The dovish bull-steepening capitulation (and impact on USD and U.S. Real Yields) then crystalizes the thesis for many of my previously-noted favorite 2019 trades:”

• The steepening is the longer-term catalyst for U.S. Equities “Value” factor market-neutral as funds rebalance portfolios into the “end of cycle / start of next cycle” trade (long “Value,“ short “Growth” as steeper curve “bleeds” the prior funding-advantage of now-EXPENSIVE Growth companies in a flattening curve environment, and further down-the-road as we approach easing, we see “Value Longs” work, which are economically-sensitive / very Cyclical which respond to easier FCI)—also worth again noting that the steepening too is a powerful headwind for “Momentum” factor as well
• The curve steepening is the core then to my favorite risk-book hedge, 1Y expiry 5s30s curve cap options contingent with SPX lower (we have this flow, and doing it contingent with SPX cuts the price in half)
• The dovish capitulation is driving a massive move lower in U.S. Real Yields and U.S. Dollar, which means another impulse higher for Gold
• For the same “lower USD / lower real U.S. Real Yields” catalysts, we are SUPER bulled-up on market-neutral (+) EEM / (-) SPY expression on the EM / DM convergence trade
• A similar (but even “saucier”) thesis with additional “High Beta-” and “Value / Growth-” kickers is (+) FXI / (-) QQQ

However, before one puts on these various directional trades, as Charlie puts it “Let’s be real though” noting that for Powell to have so utterly “bent the knee” to the stock market in such abysmal fashion absolutely changes the calculus for investor psychology near-term—and as such, traders have to again expect fundamental/active folks get “pulled-in” over the next few weeks, with “don’t fight the Fed” being the mantra against still very historically low “Betas to Equities” and “Nets-/Grosses-“

Additionally, in addition to the FOMO factor from institutions most of whom have been strangely missing from the recent ramp higher in risk assets, coupled with the end of the buyback blackout window which slowly rolls off after the end of this week once the majority of S&P companies report earnings, McElligott notes that there is a potential additional “Bullish Equities” catalyst which he mentioned last week regarding Systematic Fund flows and the importance of the 1Y model window, to wit:

Within the Nomura QIS CTA model, the 1Y window across all of Equities estimates is an extraordinary 86% weighting (meaning the longest-term window has an outsized importance over 2s / 1m /3m / 6m combined)

And as we laid out last week, here is why that matters: the violent sell-off days from early February 2018 are now about to “drop out of sample”—at least temporarily — which is likely to then move the next “buy to cover” level for existing Equities “Short” positions moves MASSIVELY lower, mechanically covering the remaining short and going long. So, in light of the these days dropping-out and the Fed-induced “gap,” the Nomura strategist expects these “cover short” levels to drop to a point where the 1Y signals are almost certain to mechanically signal flip from current “SHORT” to outright “LONG.”

And as such, today Nomura sees its Nasdaq model likely pivoting from current “-71% Short” to an outright “+100% Max Long” signal by the close at current levels, as the 1Y model flips with powerful negative days coming “out” of the lookback, in conjunction with the overall Nasdaq return profile over the 1Y—all assumptions/current levels held constant, Nomura sees the 1Y Nasdaq model ‘flip to LONG’ and HOLDING as such over the following few weeks.

It’s not just the Nasdaq that is being supported by CTAs: should the S&P hold around the current level of around 2,700 it is likely that Tuesday we will also see a mechanical flip in SPX 1Y window from “short to long” as well:

Finally, from a ‘relative 1Y returns’ perspective (NDX +6.4% since last Jan vs SPX only +0.3%), it remains to be seen if an S&P “flip” (as opposed to Nasdaq definitely “going long” by the close) will in-fact be traded by the funds, especially due to the chop of the daily returns at the front of the 260d look-back period, McElligott cautions that it is just as likely to see the 1Y model pivot back “Short” with ensuing rallies (Feb 2nd SPX -2.3% Feb 5th -5.4% Feb 6th +3.3% Feb 7th -1.0% Feb 8th -2.8% Feb 9th +0.9% Feb 12th +1.4% etc as this volatility persists throughout the month + thereafter).

In other words, unlike the Nasdaq “100% long”, any imminent short-term flip “long” in the S&P signal as it currently stands looks to be a temporary “false signal,” as it will thereafter turn “sell” again due to the large snap-back days after the initial impulse lower from Feb 2nd / 5th.

 

via ZeroHedge News http://bit.ly/2S53BAY Tyler Durden

A free speech debate is brewing in France after lawmakers have backed a bill banning protesters from hiding their faces during demonstrations, according to Reuters. The legislation seeks to make it easier for facial recognition systems to identify rioters, and carries a penalty of up to a year in prison and a 15,000 euro fine. 

The “anti-casseurs” (anti-hooligan) bill which is expected to secure approval next week also grants French police greater powers to identify and detain potential troublemakers from demonstrations. 

Addressing the lower house National Assembly, Interior Minister Christophe Castaner urged members to “stop the brutes … (who listen) only to their hunger for chaos”.

Opponents of the “anti-casseurs” (anti-hooligan) bill accused the government of impinging on civil liberties, with the debate exposing divisions within Macron’s party, which has a comfortable majority in parliament.

The tactics used by police around the country have come under scrutiny, in particular the firing of “flash ball” riot guns, which have caused serious injuries, including at least one person blinded in one eye.

“We’re not restricting freedoms, we’re ensuring that freedoms can be guaranteed,” said a spokeswoman for French President Emmanuel Macron, Aurore Berger. 

“We’re not talking about any French citizen chosen at random, we’re talking about those who have hurt others, those who want to kill and destroy property,” Berger told BFM TV on Thursday following the overnight vote. 

The anti-mask bill has drawn criticism from the center-left of French politics, with some describing the measures as “authoritarian.” 

Charles de Courson, from the centrist UDI party, told parliament the law was extremely dangerous. He said: “It’s as if we’re back under the Vichy regime [the Nazi-collaborationist regime of the 1940s]. You’re presumed to be a résistant so we throw you in prison. Wake up! Wake up, colleagues! … The day you have a different government in power – a far-right government – and you’re in opposition, you’ll see that it’s pure madness to vote for this text.” –The Guardian

The Yellow Vests began protesting in November against a climate change-linked fuel tax, and rapidly evolved into an general anti-Macron movement that has spilled over into several other countries. While the protests have been largely peaceful, there have been incidents of vandalism, looting and violent clashes with police nearly every weekend.

In response to the violence, four key measures contained within the “anti-hooligan” bill have been approved by French lawmakers ahead of Tuesday’s vote on the overall package. 

In addition to the ban on wearing a mask or other face covering without justification, a specifically named person can now be prohibited from demonstrating.

Previously, judges could issue such an injunction as part of a case – but the power to ban a person from protesting will now also be granted to regional administrators.

Supporters of this ban say it will only target repeat violent offenders: they must represent a serious threat to public order and have carried out some violent act against people or property.

…

Another part of the law hopes to make troublemakers financially liable for any property damage they cause. –BBC

Of course, many of the protesters are donning gas masks to protect against tear gas fired by the police. We assume they’ll be prosecuted as well. 

via ZeroHedge News http://bit.ly/2GhnbTr Tyler Durden

Authored by Alexander Rubinstein via MintPressNews.com,

ICC Judge Flügge said he realized that the “diplomatic world” did not value the independent judiciary that was the ICC.

A senior judge at the United Nations’ International Court in The Hague has resigned in protest of “shocking” interference from the Trump administration into a preliminary war-crimes investigation into U.S. troops.

The judge, Christoph Flügge, who hails from Germany, slammed National Security Advisor John Bolton over his response last year to a preliminary investigation into American soldiers accused of torturing people in Afghanistan. That investigation ultimately found “a reasonable basis to believe that war crimes and crimes against humanity” were committed by U.S. forces, MintPress News reported.

“The United States will use any means necessary to protect our citizens and those of our allies from unjust prosecution by this illegitimate court,” Bolton said in September. He also called for sanctions against the International Criminal Court (ICC) and warned the body against pursuing any investigations into “Israel or other U.S. allies.”

Bolton even cited a Palestinian-led effort to bring Israel to the ICC over its human-rights abuses in Gaza and the West Bank as a reason for closing the Palestine Liberation Organization (PLO) office in Washington.

He went on to promise to ban ICC “judges and prosecutors from entering the United States,” adding:

We will sanction their funds in the U.S. financial system, and we will prosecute them in the U.S. criminal system. We will not cooperate with the ICC. We will provide no assistance to the ICC. We will not join the ICC. We will let the ICC die on its own. After all, for all intents and purposes, the ICC is already dead to us.”

“John Bolton, the national security adviser to the U.S. president, held a speech last September in which he wished death on the International Criminal Court,” Flügge said after leaving his post. Flugge continued on Bolton’s declaration:

If these judges ever interfere in the domestic concerns of the U.S. or investigate an American citizen, [Bolton] said the American government would do all it could to ensure that these judges would no longer be allowed to travel to the United States – and that they would perhaps even be criminally prosecuted.”

The American security adviser held his speech at a time when The Hague was planning preliminary investigations into American soldiers who had been accused of torturing people in Afghanistan. The American threats against international judges clearly show the new political climate. It is shocking. I had never heard such a threat.

It is consistent with the new American line: ‘We are No 1 and we stand above the law.’”

A supine UN, a dreadful precedent

The attacks from the White House were one of two reasons for Flügge’s resignation, as the judge was left aghast by the UN’s deferential response to Turkey after Turkey arrested Aydın Sefa Akay, another UN judge, over alleged links to Fethullah Gülen, a cleric living in exile in the U.S. whom Turkish President Recep Erdoğan claims is the mastermind behind the 2016 failed coup attempt in Turkey.

Akay was at the end of his tenure when the charge was leveled by Turkey. “We, the other judges, immediately protested. But his tenure was nevertheless not extended by the UN secretary general. And with that, he’s gone,” Flügge said.

The assaults by Turkey and the U.S. were both undertaken in the summertime. Afterwards, Flügge said he realized that the “diplomatic world” did not value the independent judiciary that was the ICC. The lack of a response by the UN to Turkey for its meddling in ICC matters set a dangerous precedent, according to the judge.

“Every incident in which judicial independence is breached is one too many,” Flügge said.

“Now there is this case, and everyone can invoke it in the future. Everyone can say: ‘But you let Turkey get its way.’ This is an original sin. It can’t be fixed.”

via ZeroHedge News http://bit.ly/2Rpc50t Tyler Durden

While much of Wall Street breathed a sigh of relief yesterday when the Fed Chair Powell fully threw in the towel to any last trace of hawkishness in the central bank’s monetary policy, boosting asset prices and crushing the dollar now that the Fed’s hiking cycle appears to be effectively over, and making “financial analysis” once again a simple exercise in binary liquidity flows – is the Fed tightening or is it not – there were a handful of scathing critiques to emerge in the hours that followed.

Earlier, we presented the most “aggressive” one, authored by Rabobank’s Michael Every, who wrote that “the Fed did what every cynic must have known in their heart of hearts that the Fed would do: totally capitulate… Considering that our house view is that we are likely to see a US recession in 2020, we can start the clock until rate cuts, not rate hikes, and towards more QE and a larger Fed balance sheet, not a smaller one.”

Besides merely opining on the tactical implications of the Fed’s capitulation, Every also laid out some brutal criticism of what the Fed’s announcement meant strategically, and it wasn’t good: “In short, our global institutions, like central banks, are in serious trouble even before we have to deal with a trade war, Hard Brexit, geopolitical risk, the May EU elections, or the next US recession, any of which could happen. Populism is rising, and the Establishment has no idea what to do. Epic market volatility is assured.”

His conclusion, one which we were almost surprised to see make it past Rabobank’s compliance department, needed no clarification:

Naturally, markets love it today though. More drugs, what’s not to like! Stocks up, bond yields down, and the USD down – for now. Because don’t think this means good things for the rest of the world. That Chinese stimulus had better arrive soon. What used to be capitalism is waiting patiently for what is still closer to communism than the used-to-be capitalists will admit.

Yet while Every was an outlier in his scathing takedown of the Fed, other sellside staregists were just as brutal, if somewhat more diplomatic. One among them was Barclays’ Michael Gapen, who said that “it is difficult to read the outcome of the January FOMC meeting as anything other than the Fed capitulating to recent market volatility.”

According to Gapen while the Fed does have time to be patient before proceeding on any further policy rate hikes, “the unwillingness to provide upward bias in its policy rate guidance seems at odds with the evolving outlook, which has not weakened, in our view, by nearly as much as Fed communication has changed in the span of a month.”

Following the January FOMC meeting, Barclays now expect only one 25bp rate hike this year in September and one additional 25bp rate hike in March 2020 implying a terminal target range of 2.75-3.0% for this tightening cycle. The bank also expects the balance sheet to normalize at around $3.5trn of securities holdings, which would imply excess reserves in the neighborhood of $1.0trn, a level Gapen expects to be reached in late Q1 20 or early Q2, with the key forecast risk being an earlier end to run-off should demand for reserve balances be larger than expected (and confirming that the US banking system is in far worse shape than comments about “fortress” balance sheets suggest).

But where Gapen was harshest was in his criticism of the Fed’s communication policy, which the Barclays strategist said was “in tatters” explaining as follows:

During the onset of the financial crisis and, for several years thereafter, the Fed augmented its traditional communications policy with an extended statement, forward guidance, the introduction of press conferences, participant projections that extend three years into the future (SEPs), and participants’ projections of the appropriate policy path (eg, the “dot plot”), among others. While we may have preferred this communication to come in a different format (eg, a consensus FOMC forecast versus individual participant projections), we never doubted the importance of the added information. We viewed the SEPs, in particular, as containing invaluable information. The first year of the SEP, in our view, represented an honest forecast of where FOMC participants saw the US economy heading and how policy was likely to evolve. The outer years of the SEP were not likely to prove accurate from a forecasting perspective, but they contained important information about the Fed’s framework. In other words, if monetary policy works with long and variable lags, the outer years of the SEP tell a lot about how the Fed thinks the US economy works and how policy is likely to evolve over time as data come in and Fed forecasts are updated. The SEPs are about intuiting the Fed’s framework and its reaction function.

One of Chairman Powell’s objectives since taking the helm of the Fed has been to de-emphasize forward guidance. This has been accomplished in several steps, including removing any language from the statement that says something about the Fed’s future intentions; the discounting of estimates of the neutral rate of interest, potential growth, and the natural rate of unemployment – the so-called “star variables”; and persistent recommendations that investors not look to participants forecasts for guidance about monetary policy. Reducing the extent of forward guidance and communication is one thing – we agree that the state of the cycle warrants that much – but eliminating forward guidance and communication altogether is something different.

Baclays’ concern is that the communications framework that played an essential role in the conduct of monetary policy “has been discarded, leaving us to wonder about the Chair’s policy framework and reaction function.”

Is it a world where the Phillips curve is perfectly flat and some combination of rising participation and low NAIRU mean that the Fed can let the economy run hot for longer than previously anticipated? Is it a world where incoming data and movements in financial markets have convinced the Fed that r* is lower than previously thought and monetary policy risks over-tightening? Or is it a world where things have not changed much about how the Fed sees the workings of the US economy, but external factors are providing headwinds that policy should offset temporarily? Without insight into the Fed’s framework, we have little to go by.

This leads to Gapen disclosing his main concern namely that the hyper-data dependence (with the data in question now seemingly on the market), “means a reactive Fed, potentially whipsawed by market movements and absent clear direction.”

We see recent Fed actions as providing some confirming these fears, from statements as recently as October that potential growth may be rising and the economy was a long way from neutral to today’s decision whereby the Fed feels that it cannot provide any guidance on further policy rate hikes only one month after staying that it judged that  “some further rate increases” will be consistent with sustaining the economic expansion.

Yet while many of the risks to the US outlook remain in place, Barclays repeats a frequent lament from other analysts, namely that there is little to suggest that the outlook has changed by as much as Fed communication says it has.

As a result, Barclays worries “that the Fed has traded near-term support for financial markets and the economy for another round of volatility later this year if it is forced to lift rates higher, which remains more likely than not, in our view.“

Or, as a far less politically correct Michael Every predicted, “Epic market volatility is assured.”

via ZeroHedge News http://bit.ly/2UtToKY Tyler Durden

President Trump is on another tweeting tear Thursday morning, alternating between comments about the ongoing US-China trade talks and his push to convince a bipartisan group of lawmakers to strike a border security deal that includes funding for his promised border wall.

After affirming earlier that a trade deal won’t be struck this week because there won’t be a “final deal” until Trump and President Xi can meet face to face (the WSJ reported that Trump will travel to China next month for the meeting), Trump followed up by insisting that a final deal will require China to open up its markets not only to US financial services firms, but to US “manufacturing, farmers and other US businesses and industries.”

Looking for China to open their Markets not only to Financial Services, which they are now doing, but also to our Manufacturing, Farmers and other U.S. businesses and industries. Without this a deal would be unacceptable!

— Donald J. Trump (@realDonaldTrump) January 31, 2019

He followed that up with a tweet affirming that the Pentagon will be sending more troops to the US border (something the Pentagon announced earlier this week).

More troops being sent to the Southern Border to stop the attempted Invasion of Illegals, through large Caravans, into our Country. We have stopped the previous Caravans, and we will stop these also. With a Wall it would be soooo much easier and less expensive. Being Built!

— Donald J. Trump (@realDonaldTrump) January 31, 2019

On Wednesday, Trump shared a quote from a Fox & Friends story about the three migrant caravans that are currently headed for the US border, an angle that Trump is seeking to play up as Democrats dig in their heels and Trump threatens to finally call the national emergency that would (in theory, at least) allow him to circumvent Congress and order the military to build the wall (which, as Trump has repeatedly claimed, has already been started). The tweets on trade come ahead of a reported meeting between Trump and Chinese Vice Premier Liu He at the White House on Thursday.

via ZeroHedge News http://bit.ly/2RWA7Fb Tyler Durden

After calamitous declines in December’s Existing- and Pending-Home Sales, and Case-Shiller’s report that home price gains are the weakest in four years,  New-home sales were (like the others) expected to rebound in November (delayed due to the shutdown)… and they did, massively.

Against expectations of a 4.8% rebound from October’s 8.9% plunge, November printed a surprising 16.9% MoM surge in new home sales...the biggest MoM rise since Jan 1992

But Year-over-year new home sales are still down…

New Home Sales SAAR rose to 657k (massively above the 570k expected)…

as the median price plunged to $302,400 – the lowest since Feb 2017…

That is the biggest MoM drop in Median home prices since May 2016…

So what happens next? Does November’s surge collapse like December’s did for pending and existing sales?

via ZeroHedge News http://bit.ly/2FXCCAR Tyler Durden

The fact that the bottom hasn’t fallen out of the US economy (as many free traders warned that it would) has largely vindicated President Trump’s decision to push ahead with his trade war over objections from Republicans, Democrats and business groups from Silicon Valley to Detroit, to the farm belt (and beyond). But while Republicans (and even some Democrats) have largely fallen in line behind the president – see Larry Kudlow’s embrace of Trump’s “fair trade” rhetoric – every once and a while, we’re reminded of just how viciously globalists in Washington and beyond fought the president when he announced his plans to unveil his first significant round of global tariffs – on imported aluminum and steel – nearly one year ago.

For anybody who had assumed that Trump’s battle against the free traders had resulted in a decided victory for the administration, the latest reminder  that this is decidedly not the case comes courtesy of a group of bipartisan lawmakers who are pushing a bill to revoke President Trump’s authority to levy tariffs under the auspices of “national security.”

According to Reuters, legislation known as the Bicameral Congressional Trade Authority Act was introduced by two bipartisan groups of lawmakers in both the Senate and the House of Representatives. The text of the bill accuses Trump of levying tariffs under “false pretenses” and, if passed, it would require him to seek Congressional approval in the future.

The bills would require Trump to have congressional approval before taking trade actions like tariffs and quotas under Section 232 of the Trade Expansion Act of 1962. The law currently allows the president to impose such tariffs without approval from Capitol Hill.

And as it happens, the push to curtail Trump’s tariff-levying authority, which comes barely one month before the US is supposed to enact its next round of tariff escalation against China (that is, unless a trade deal is struck), is being led by a Republican: Pennsylvania Senator Patrick Toomey, who led a similar push last year that never made it to a vote.

“The imposition of these taxes, under the false pretense of national security (Section 232), is weakening our economy, threatening American jobs, and eroding our credibility with other nations,” said Republican Senator Pat Toomey of Pennsylvania, co-sponsor of the Senate bill.

Toomey led a similar push last year that did not go to vote. It is unclear that Congress would consider taking up such legislation now. Still, the bills underscore mounting pressure from lawmakers to address concerns over tariffs, especially those on Canada and Mexico as lawmakers ready to vote on a new North American trade deal agreed late last year.

And Toomey isn’t the only Republican to push back against Trump’s trade wars: Senate Finance Committee Chairman Chuck Grassley  pressed the Trump administration this week to lift tariffs on steel and aluminum imports from Canada and Mexico before Congress begins considering a bill to implement USMCA (better known as Nafta 2.0).

Of course, the bill doesn’t have much of a chance of passing. If it did, it could very well throw a wrench in the works of the US-China trade talks. Because what incentive would China have to relent to the US’s demands if lawmakers were on the verge of legislating the end of the trade war?

via ZeroHedge News http://bit.ly/2WxIPZa Tyler Durden

Amidst all the hope – and promises from The Fed that everything will be awesome – Chicago Purchasing Managers strongly disagree as their latest business survey collapsed from a revised lower 63.8 to 56.7 in January…

That is below the lowest analyst estimate (range 58 – 63.8 from 24 economists surveyed) and the weakest print since Jan 2017…

Business barometer rose at a slower pace, signaling expansion

• Prices paid unchanged, signaling expansion

• New orders rose at a slower pace, signaling expansion

• Employment rose at a faster pace, signaling expansion

• Inventories rose at a slower pace, signaling expansion

• Supplier deliveries rose at a slower pace, signaling expansion

• Production rose at a slower pace, signaling expansion

• Order backlogs rose at a slower pace, signaling expansion

• Number of components rising vs last month: 1

via ZeroHedge News http://bit.ly/2WxCAo4 Tyler Durden