Everyday there is a wealth of information to be absorbed and most of us do not have the time to read and analyze everything or we rely on short cuts. In an recent article about the JP Morgan index, Scott Barlow helps explain why that index is important.

The monthly JP Morgan Global Manufacturing PMI Index is an excellent way to check for mispricing in industrial metal prices and domestic mining stocks. The data looks backyard or what has happened, however when metal prices diverge rom changes in global manufacturing activity it is often a sign that speculation excess in metals – bullish or bearish is creating investors opportunity. Another method to say that is global manufacturing creating a demand for metals? what are metal prices doing?

In Mr. Barlow, he compares the JP Morgan Global Manufacturing PMI Index to the S&P GSCI Industrial Metals Index and they are showing the same direction. The direction is negative and there has been a sell off in metal prices.

Andrew Garthwaite, a strategist with Credit Suisse uses the JP Index to compare the yield from 10 year Treasury. In 2017 it was at a high of 55, now it approaches 50, if the number is below 50 expect a worldwide decrease in manufacturing.

If the above continues, Mr. Garthwaite believes US Treasury yields will decrease.

The most widely agreed upon definition of a stock price is the discounted value of cash flow and dividends. Bond yields determine the discount rate, if it goes higher stocks go down, if it goes lower stocks should go up.

Similar to every theory, there are elements in the economy which can change the theory until the next month.

Linking to dividend paying stocks, no one knows which stock will go up or down, but you can look at history to determine which are better ones to own. Throughout history, if you own a profitable stock which pays a dividend, that has been a very good thing to own. Understand why your investments make a profit and as the value of the investment grows in your portfolio, you may start looking for the JP Morgan Index or another one.

There are more questions than answers, till the next time – to raising questions.