The ISM Non-Manufacturing index rose to 57.1 in December. This chart shows the ISM Non-Manufacturing index overlaid with the S&P 500. It shows that the stock market does not lead the economy. The idea of the market as a discounting mechanism is a Wall Street shibboleth. In fact, there are instances where economic data turns ahead of stock prices. Both stock prices and economic activity are driven by a common cause– changes in liquidity. The Fed is at the controls.
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If you want to know what the economy and the market will do, just follow the Fed.
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