August 13, 2020
The last two weeks of initial jobless claims came in lower than expected, the July Jobs Report exceeded expectations, July manufacturing/services ISMs were well ahead of consensus and PPI/CPI readings were firmer this week. The near-term string of upside macro data is a clear tailwind for equities and deserves some extra attention given still elevated levels in the US Economic Surprise Index (ESI). Currently at +250.30, the US ESI is just barely off its July 16 record of +270.80 vs its prior record from December 2017 of +86.02. An Economic Surprise Index measures the difference between consensus expectations and actual results. Obviously, consensus expectations for US economic activity were way too low. At +206.50, the Eurozone ESI is also elevated and just off record smashing levels, while global manufacturing and even services PMI data is in expansion territory.