Lloyd

Philly Fed data for May dropped yesterday – and the Future New Orders index just made history. Literally. Expectations for new orders posted the largest monthly spike ever recorded – going all the way back to the index’s inception in May 1968. A staggering +4.3 standard deviation move.   For perspective: That’s an even bigger move up than the downside collapse during the depths of the 2008 Global Financial Crisis (-4.1 standard deviations).   Let that sink in...   As far as we're concerned, the macro big picture remains this:   Q1 growth was weak. The reason is straightforward – financial conditions tightened sharply in Q4. The dollar ripped, bond yields surged… a classic tightening phase.   This was driven by businesses panic-loading inventories ahead of Trump tariffs, and markets front-running the inflation narrative.   We’ve highlighted repeatedly:   This had all the hallmarks of Q4 2016 during Trump’s first term. Just like early 2017, that tightening spilled over into slower growth momentum in Q1.   But here’s the important part: Those Q1 headwinds have flipped into Q2 tailwinds.   Everything flows downstream from changes in financial conditions…   Purchasing managers’ expectations are shifting – and shifts in thinking eventually translate into action.   Sentiment shifts first. Action follows. It always does.   Bullish.