US manufacturing contracts and the NASDAQ rallies to all-time-high … why?

Good Morning,

We have another busy day today, meeting with CFOAM management who are in town and attending an investor lunch for a potential new PEAK opportunity…

So stay tuned….

Last night, US stocks rose (Dow +47 points) as the manufacturing sector slowed…

The Institute for Supply Management’s non-manufacturing index (ISM) slumped to 51.4, the lowest since February 2010, from 55.5 in July, the Tempe, Arizona-based group’s report showed Tuesday.

“The last two ISM reports have been shockingly weak, and I think the case for the Fed to hike this month becomes increasingly more difficult and unlikely,” said Mazen Issa, a senior foreign-exchange strategist at Toronto-Dominion Bank in New York. That’s being reflected in a falling U.S. dollar, he said.

What we are seeing is “bad news is good news”……….. and markets are rallying on weaker-than-expected macro data….

Why?

Because US interest rates are unlikely to rise in 2016…….

This is positive for commodities (i.e. Gold, Silver, Nickel, Copper, Lithium) are all denominated in USD, so when the USD falls, commodities “should” rally….

So today, the resource and material sectors should be well supported

The SPI is up 18 points this morning

Niv Dagan is an Executive Director of Melbourne based boutique funds management and corporate advisory firm, Peak Asset Management (www.peakassetmanagement.com.au). He is also a regular financial commentator on Sky Business