Betting On Bullish Hard Data, Not Bearish Soft Data

The “soft” economic data releases have been weak, while the “hard” data have been strong in recent months. The former includes surveys of consumers, small business owners, and purchasing managers. We've been betting on the resilience of the economy, as confirmed by the hard data. Stock investors seem to agree with our view.

The purchasing managers indexes for both manufacturing (M-PMI) and non-manufacturing (NM-PMI) remained weak through May. However, the M-PMI doesn't track the growth in real goods GDP as it did prior to the pandemic. The same can be said for NM-PMI and the growth in real services GDP. The growth of real GDP on a y/y basis remains solid (chart).