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Market over-reaction to weak US PMIs. We expect market to bounce hard... (best guess)

Equity markets sold off over the past two days. While the cumulative decline is a mere 1.2%, the sharpness of the reversal is notable and the abrupt change in character from much of November stand out.  Moreover, the selling intensified Monday with the downside reading of US ISM Manufacturing (48.1 vs 49.2 expected). In our view, we would be buyers of this pullback.  Our base case remains that 2020 economy > 2019 economy, setting the stage for a “revival of animal spirits” (investor perception) and thus, setting the stage for a move towards 3,185 before year-end.  POINT: MARKIT PMI SHOWS IMPROVEMENT, EVEN AS ISM MISSESThe November Markit US PMI (reported 12/2) showed an improvement to 52.6 from 51.3 and the best readings since April 2019.  This is in contrast to the US ISM showing flat 48.1 vs 48.3.  The differences between ISM and Markit reflect some difference in methodology (Markit weighs forward looking indicators, while ISM is a simple avg of 5 components) and Markit believes ISM tends to weight larger companies (, we believe the Markit divergence (improvement) vs ISM weakness mitigates the “miss” value of the I...

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