Was the Chicago PMI Leaked?

Conspiracy theorists are buzzing this morning regarding the release of the weaker than expected Chicago PMI. Economists were expecting a level of 52.0, but the actual level came in well below 50 (46.1). Even though the report was released to the general public at 9:45 ET, the S&P 500 began its nosedive minutes before the official release of the report. At first glance, most would agree that the report was leaked.



While everyone likes a scandal these days, a deeper look at an intraday chart of the S&P 500 and the firm that compiles the Chicago PMI (Kingsbury International) shows that there was most likely nothing nefarious taking place. The S&P 500 certainly did decline prior to the official release, but traders should be aware that anyone who wants early access to this report can do so provided they are willing to pay for it.

On the company's website, Kingsbury describes the Chicago PMI as, "a proven monthly ‘first look’ at business, government and NGO economic activity in the USA." They then go on to say that subscribers to Kingsbury's data will receive "access to this market-moving data 3 minutes before public release." In other words, Kingsbury will 'leak' the report to anyone who is willing to pay at least $200 per month.

With this information in mind, another look at an intraday chart of the S&P 500 shows that today's decline began at 9:42, which was (not coincidentally) three minutes before the official release of the Chicago PMI when Kingsbury alerts their subscribers to what the official release will be. While there appears to be nothing illegal taking place, it does provide another example of how the market is stacked against the individual investor.




Source:Bespoke Investment