The week ended September 11th showed a sharp decline in our index of weekly GDP versus the year before. As shown, our index can be quite volatile, but it does do a decent job tracking the general trajectory of GDP. Since peaking at an implied growth rate of +0.9% YoY on July 10th, our index has slid to -2% YoY, the lowest reading since mid-June.

Taking a look at another tracker of short-term economic growth, below we show Weekly Economic Index data updated by the New York Fed each week. After decelerating sequentially YoY for the week ended September 4th, the WEI reported sequential YoY growth slower once again in the week ended September 11th. We also show what each high frequency tracker implies about quarterly growth. As shown, our tracker has consistently implied a higher quarterly growth rate than the Weekly Economic Index, and official data for the last two quarters. That said, Q3 is tracking at least 20%, with upside to the high-20s as the US continues to rebound from COVID.  This post was originally published in our post-market macro report — The Closer — last night.  Click here to start a free trial to Bespoke Institutional and receive our nightly Closer for the next two weeks, featuring more commentary and data on macro markets.

Unlike its neighbor to the north, the Philadelphia Fed Manufacturing Report lost a bit of steam in September.  Economists were expecting the headline index of General Business conditions to remain unchanged at 17.5, but the actual level showed a modest decline to 15.0.  Nothing to get alarmed about, but still weaker than expected.  Even at current levels, though, it’s worth pointing out that September’s reading was still above the predominant levels we were seeing in the year leading up to the COVID outbreak.

Breadth in this month’s report was also positive.  Besides the index of General Business Conditions, the only other indices that declined on a m/m basis were Inventories and Average Workweek.  On the upside, the biggest gains were seen in Shipments and Prices Paid.  In the case of Shipments, its current level now ranks in the 98th percentile of all prior readings while Delivery Times are also elevated in the 96th percentile of all other periods.

This month’s surge in shipments also ranks as the highest level in over 16 years (July 2004), and that comes just six months after the lowest reading on record.

Finally, in the report’s special questions this month, respondents were asked how Q3 production will compare to Q2, and the responses were positive.  22.2% of those surveyed expect production to increase by more than 10% while just 11.1% expect business to contract by more than 10%. While these results bode well for Q3, the outlook for Q4 doesn’t look as great.  Only 6.7% of respondents expect Q4 production to increase significantly while 11.1% expect activity to decline by a ‘significant’ margin.  In a trend that doesn’t bode well for the current high levels of unemployment, of those expecting activity to increase, only 17% plan to accomplish this by hiring additional staff.  The rest plan to either increase productivity, the hours of current staff, or other measures.  Click here to start a free trial to Bespoke to unlock full access to all of our research and interactive tools.

With the S&P 500 rallying in the first two days of the week and early on Wednesday, bullish sentiment on the part of individual investors saw a sizable uptick over the last week.  According to the latest weekly survey from the American Association of Individual Investors (AAII), bullish sentiment increased from  23.71% last week to 32.02%.  That 8.31 percentage point increase was tied for the largest weekly increase since January 16th but only marks a three-week high in optimism.

With the big move into the bullish camp, there was an exodus of equal magnitude from the bears as negative sentiment fell from 48.45% down to 40.39%. The last time bearish sentiment dropped that much in a week was on February 13th just before the Q1 stock market peak.  Similar to bullish sentiment but in the opposite direction, though, bearish sentiment was actually lower four weeks ago.

Even after the shifts in sentiment this week, though, the bull-bear spread remains negative at 8.34 percentage points.

This week’s bull-bear spread now takes the current record streak of negative sentiment readings to 30 which is eight weeks longer than the prior record reading of 22 weeks back in late 1990. It’s been well-documented that the sample of this survey tends to skew bearish, but 30 weeks is a long streak!  Click here to start a free trial to Bespoke to unlock full access to all of our research and interactive tools.