Pursuant to Rich’s point in this earlier item about the gains for stocks continuing long after the ISM Manufacturing Index peaked, that is indeed quite true – the S&P500 actually rose more than 40 percent from the time that the ISM reached its 2004 high until the 2007 peak for stocks, so, “portending doom” was clearly a poor choice of words for the title (though, in my own defense, it is followed by a question mark … so there).

Nonetheless, there is an uncanny correlation between the ISM Manufacturing Index and the year-over-year change in stock prices as demonstrated in the chart below.

Of course, none of this probably matters since the board members who matter on the Federal Reserve are convinced that they’ve got to keep stock prices elevated, and they’re getting better and better at it all the time. Unfortunately for them, they’re also getting better at making commodity prices go higher too, which seems to be causing trouble lately.