As a former manufacturing guy, I am well aware of how monetary policy and the state of the US dollar affects US manufacturers. But I have not been that guy for so long now that I tend not to look at it as closely anymore. But the current time seems appropriate for a review of the manufacturing sector.
I actually used to look down upon the ‘services’ economy as something almost artificial, given that the US had been exporting its manufacturing base (and thus, much of its productivity) for decades and replacing normal economic cycles with monetary chicanery (like the Fed’s ability to regulate the economy through interest rate manipulation) in order to keep the consumerist racket going.
The latest round of monetary manipulation (the post-2020 cycle was driven by the Fed’s latest inflationary operation) is being addressed by the bond market, which is forcing the Fed to raise interest rates. The anticipation of which is a primary driver of the US dollar, which has been diverging inflation for a year. USD is on a heater now much like it was in 2014 when NFTRH caught that bottom in real time amid the post-2011 Goldilocks phase (in the US, while deflationary pressure persisted globally).
USD has retraced 62% of its decline into the 2007 low and is now at a long-term resistance area. Will it ‘sell the news’ of a hawkish Fed just as it bought the news (in 2021, which we also nailed in real time) of terrible inflation permeating the macro? That is for another article, as this one is about the ISM. For the purposes of this article, suffice it to say that a strong USD impairs US manufacturing exports. Continue reading "ISM Hints At Forward Deceleration"