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Data Distortions One Way Or Another

Jeffrey Snider profile picture
Jeffrey Snider

Back in October, we noted the likely coming of two important distortions in global economic data. The first was here at home in the form of Mother Nature. The other was over in China where Communist officials were gathering as they always do in their five-year intervals. That meant, potentially:

In the US our economic data for a few months at least will be on shaky ground due to the lingering economic impacts of severe hurricanes. In China, the potential for irregularity is perhaps as great, though it has nothing to do with the weather. In a little over a week, Communist Party officials will gather for their 19th Party Congress.

The temptation may exist to deliver a somewhat better economic picture than has been the case. The government spent a whole lot in resources betting on if not straight economic growth by now than at least a plausible path to it. So far in 2017, China's economy, as the global economy, has not come close to living up to expectations.

The specific reason for writing all that was China's official manufacturing PMI. The National Bureau of Statistics had reported that day a rise to 52.4. Released just ahead of the 19th Party Congress, though a relatively low level for China it still represented a pleasant-sounding 5-year high.

And, predictably, it was taken that way particularly in the Western media that presumes this globally synchronized growth. Since that simply cannot occur without China's participation, if not emphasis, the hype was strong. That particular PMI number, however, was dubious to begin with.

Four months further on, the manufacturing PMI has dropped in February 2018 to nearly 50 again. From 51.3 in January the current estimate is just 50.3, registering both the largest decline in years as well as the lowest level going back

This article was written by

Jeffrey Snider profile picture
As Head of Global Investment Research for Alhambra Investment Partners, Jeff spearheads the investment research efforts while providing close contact to Alhambra’s client base. Jeff joined Atlantic Capital Management, Inc., in Buffalo, NY, as an intern while completing studies at Canisius College. After graduating in 1996 with a Bachelor’s degree in Finance, Jeff took over the operations of that firm while adding to the portfolio management and stock research process. In 2000, Jeff moved to West Palm Beach to join Tom Nolan with Atlantic Capital Management of Florida, Inc. During the early part of the 2000′s he began to develop the research capability that ACM is known for. As part of the portfolio management team, Jeff was an integral part in growing ACM and building the comprehensive research/management services, and then turning that investment research into outstanding investment performance. As part of that research effort, Jeff authored and published numerous in-depth investment reports that ran contrary to established opinion. In the nearly year and a half run-up to the panic in 2008, Jeff analyzed and reported on the deteriorating state of the economy and markets. In early 2009, while conventional wisdom focused on near-perpetual gloom, his next series of reports provided insight into the formative ending process of the economic contraction and a comprehensive review of factors that were leading to the market’s resurrection. In 2012, after the merger between ACM and Alhambra Investment Partners, Jeff came on board Alhambra as Head of Global Investment Research. Currently, Jeff is published nationally at RealClearMarkets, ZeroHedge, Minyanville and Yahoo!Finance. Jeff holds a FINRA Series 65 Investment Advisor License.

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