Manufacturing supply chain cuts are the cause of optimism in equities

A slowdown in the pace of stockmarket gains in May presaged concerns the equity market rally was abo...

A slowdown in the pace of stockmarket gains in May presaged concerns the equity market rally was about to peter out. However, the economic prospects look less uncertain than they did three months ago. While economically sensitive stocks do not present as compelling value as they did earlier this year, there seems to be plenty more upside to be gained. The principal cause of this optimism is the growing indication the supply chain in the manufacturing process has been denuded of inventory. Cuts in companies' working capital aimed at raising cash and reducing borrowings have left them short...