OK, these are just 2 of the Federal Reserve's 5 regional surveys. Yet the fit with the cycle (using GDP growth to measure it) is good, though not perfect. However, taken together with my US diffusion index, which has turned up, it suggests that the US economy is recovering. It's possible that the economy suffered a shock after the trade wars started, and now that supply lines have been partially rejigged, and confidence has recovered, it has picked up. Or it is undergoing just another of the those mini cycles we have had since 2010.
What this means, though, is that after the Fed's probable rate cut at the end of this month, there will be no further rate cuts. Which has implications for bonds (the bull run in Treasuries is over), for the US $ (likely to continue to strengthen), and for equities. Wall St is battling the head wind of falling company profits right now, but if the economy is rebounding, so will earnings. Meanwhile, it scarcely seems possible that the Fed will raise rates yet. So there will be a brief "sweet spot" where earnings are likely to increase while interest rates don't.
What about the rest of the world? It is because of global weakness that I think the Fed will cut at the end of July. If, though, the US economic growth heads back to 3%, domestic considerations will trump (as it were) foreign conditions, meaning that there will be no further cuts should that happen.
We still have to worry about Trump's erratic switches concerning trade wars and blood wars, of course. And I can't help you there.
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