Lots of good news this morning. Let’s take a look:
- The ISM Manufacturing index surprised to the upside with a reading of 60.8. That was better than analysts expected. Norbert Nore, Chairman of ISM said:
“The manufacturing sector grew at a faster rate in January as the PMI registered 60.8 percent, which is its highest level since May 2004 when the index registered 61.4 percent. The continuing strong performance is highlighted as January is also the sixth consecutive month of month-over-month growth in the sector. New orders and production continue to be strong, and employment rose above 60 percent for the first time since May 2004. Global demand is driving commodity prices higher, particularly for energy, metals and chemicals.”
Overall, this was a very good report. New orders hit 67.8, employment hit 61.7, production hit 63.5. All in all, this is right in-line with the very strong regional reports we’ve been seeing.
In addition, the new orders to inventories ratio has surged in recent months after briefly dipping into negative territory at the end of last year. This is much more consistent with a strong economy.
- In earnings news economic bellwether UPS said they are preparing for their best year ever. The company projects 2011 EPS to jump 16-to-22%. Domestic revenues improved and the revenue recovery now appears as though it could be stronger in the USA than many believed (myself included) with domestic revenues posting 7% annual gains and international posting 9.3% gains. All in all, UPS appears to rhyme with the ISM report. This economy is stronger than most believe.
U.S. Domestic Package 4Q 2010 4Q 2009 Revenue $8.08 B $7.55 B
International Package 4Q 2010 4Q 2009 Revenue $3.05 B $2.79 B
- The most important data point of the last 24 hours might have been the China PMI, which came in at a healthy level. This all has the market recovering the losses from the Egypt scare.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
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