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Investors who look more deeply into what the market is saying will always do better. The consensus market mantra is that we are “late cycle” and that a recession is coming soon. Cue the bear market soundtrack.

As regular readers know, I don’t agree, and there’s data to back me up. Not every cyclical is telling us that we are “late cycle.” It will pay to heed that counsel. This upcoming week, global purchasing manager indexes for September will be released. It’s likely they won’t be so hot. The mantra will be repeated.

But here’s what you need to look at, and I’ve written about this in the past few months, even as that bear mantra has been repeated over and over. I don’t expect the US PMIs to bottom until the fall (October-ish) with a print ~46-48, as the 2018 downturn in oil, government shutdown, lingering damage from Fed over-tightening and global trade war work their way through the global economy.

Moreover, my favorite leading indicator for the US Institute of Supply Management’s Purchasing Manager’s Index is the 200-day change in long-term yield curve, which previously pointed to 2019 as seeing continuously weakening PMIs until the fall. See nearby chart.

Wait, you say, Tom, then how can you be optimistic?

Arguably, the global economy...

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