The second half of 2012 is upon us and I believe it will be an inverse repeat of the first half. By that I mean that the third quarter will likely bring more volatility with frustrating moves in equity markets netting very modest gains just as the second quarter took back the stellar gains of the first.
The fourth could be a game changer. I believe it will be positive for investors.
In the meantime, we will follow the forthcoming economic data closely. Last week, the ISM figures were concerning so I want to tell you more about them.
The Institute for Supply Management (ISM) said its service index dropped to a reading of 52.1% in June. The manufacturing index was even more disappointing.
What is this measurement?
“A legacy of the United States’ industrialized past is that we have a lot of manufacturing data. Each month the Census Bureau reports shipments, orders, and inventories of durable goods (goods designed to last at least three years). An important subsector of durable goods is capital goods, such as machine tools and computers.” ~Greg Ip
The capital goods stats can tell us about business investment and it seems to be saying that there is some hesitation or a pause in what has been a fairly decent growth period.
This is not a surprise in an election year. This is not a surprise when global economies are still dealing with major issues.
It’s not a reason to abandon your investment strategy.
I’ll keep you posted. Call with questions.
Until next week,
Susan R. Linkous