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Thursday, July 21, 2011

Eh, The Real News Is PMI Today

China's mfrg PMI in June was near stall, but today's flash has it in outright contraction. An output index at 47.2 is kind of surprising. I had expected a temporary downshift in China due to the Japanese quake/tsunami tragedy. There is a very large volume of trade between Japan and China and Japanese problems were doomed to affect Chinese manufacturing, but as those problems cleared I was expecting a relative rebound to mask the overall declining trend. The supply disruptions can no longer explain Chinese data. It is possible that power rates and supply issues might, but after seeing Singapore data earlier I think we are simply looking at the inevitable result of oil and coal prices on the world economy.

European PMI is off also, but at least it is still mildly positive. By September, that may not be true; the depth of the fall is significant. The truly marked degradation in German PMI suggests a hard landing for the soft patch, with the composite down a staggering 4 points from June? Eh?

France is not a manufacturing giant. French mfrg PMI at 50.1 and output at 49.7 therefore doesn't have the same implications for Europe as a whole. French services PMI is slowing although still in the 54s.

I can hardly believe I wrote that hard landing for the soft patch, but all is madness. Perhaps my esteemed editors will be merciful; anyone's brain might snap when looking from a sub-50 Chinese PMI to oil prices. Somebody's crazy. Brent over 117 with European composite PMI at 50.8, down 2.5 from June? Really???????? What are they betting on, TARP II and Leadman Sachs getting 300 billion in secret, long-term, non-interest-bearing loans from Treasury to spend at ICE?

Ideally this would all be a hallucination, but so far I cannot get these numbers to change by shutting the windows and opening them again.

Let's turn to a slightly more pleasant subject - US initial claims. Headline is 418K this morning, with a four week MA of 421,250. This is better than it has been, but shouldn't be relied upon because we are in July; seasonal adjustments are related primarily to auto manufacturing schedules, and those are bound to be a little off because of the Japanese problems. The last week in July and the first week in August are the first real checkpoints.

On a much more cheerful note, the employment base has been recalculated. The employment base is figured from state unemployment account reports approximately quarterly. In December, it was 125,845,577. In January it was 125,560,066. That was this cycle's low (compare to the previous cycle's low at 126,084,041). In April it came in at 125,572,661. In July it was reported at 125,807,389.

This figure generally lags other employment figures in both contracting and expanding cycles. (After the early 80s double recessions, it first began increasing again in 1984) It is a very "real" number; but it has the distinct effect of popping up right before a downturn. I have always thought this is because better uptake of part-time jobs due to cash-strapped workers. Of all the primary employment numbers, it is the most unbiased in one respect - it is not a sampled figure! It does seem to support NFIB's theory that July should show slightly better employment stats. The peak in the last cycle was in Q4 2008 at 133,902,387. We are still off eight million jobs, and we appear to be heading down again. This number should peak in Q4 2011, unless a miracle happens.

Philly Fed billed as "neutral" - workweek drops from June, inventories increases, unfilled orders stick, number of employees mildly up, prices paid index drops a little, but prices received drops more, shipments steady. Future expectations much better, but those change quickly.

Ah, wonderful news indeed. But let's be honest: if the cultish Tea Partiers were shipped off to labor camps in Montana, the rest of us could get on with recognizing Obama's transcendent powers, and everything would be wonderful again.

On a personal note, let me tell you that Lyme disease really, really sucks.
TARP II and Leadman Sachs getting 300 billion in secret, long-term, non-interest-bearing loans from Treasury to spend at ICE?

Please don't give them any ideas.
Oh, Gordon, I'm so sorry!

Are you getting better? I know that can be a long treatment!
PS: I dropped in to leave a link to this article.

It's all about how consumers are using CCs to charge food and gas.

They do not mention that this means that banks need to tighten up CC monitoring and start chopping credit limits very fast!
Allan - I can assure that they are capable of thinking these things up quite without my help.
I meant, "assure YOU".

Additionally regarding the banking/finance picture, the mortgage insurers are being further pressed. Genworth goes to loss.
I think traders are betting on the twin forces of QE3 and Chinese capital flight. The rumor I keep hearing is that wealthy Chinese aren't reinvesting profits in China--they either buy import commodities or foreign properties. I made a brief, futile effort to verify this, but how can you trust Chinese announcements about internal investment?

At any rate, assuming China allows a large portion of its surplus accounts to run through its fingers via graft and sweetheart loans, that's an enormous pool of cash going largely into commodities.
On the other hand, might be great investments in payday loan companies! sorry to hear about the lyme disease, Gordon. If you don't have health, everything else pales.
Hmmm, that article on cc use doesn't mention commodity prices stabilizing. I bought four plastic sacks of groceries yesterday, primarily fresh fruit and vegetables. Cost me over $60. There is a produce stand that is cheaper, but I have to drive to get to it. It's very difficult to keep grocery spending down, even if you already primarily buy just the basics. And this is in summer, when that kind of stuff is cheaper. Just wait till you see what it's like come winter.
I used my Discover card to buy groceries instead of using cash last month. But that's because Discover gave me 5% back for grocery purchases in June instead of the usual 1%. My bill gets paid in full every month, I'm sure the store raises prices because of the transaction costs. Not quite an inflation spiral, but still.
MOM said, "Ideally this would all be a hallucination, but so far I cannot get these numbers to change by shutting the windows and opening them again."

Yes, the world seems upside down right now. The market is bipolar - end of the world one day, life's a bowl of cherries the next. The debt deal is done, no it's not! Silver's up big one day and in the dumpers the next. All this has little conviction - low volume and IBD shows more distribution.

I'm betting that the debt deal will be done, but it will consist of little or no spending cuts and new taxes. If so, the ratings agencies may still threaten to pull the trigger on the downgrades. If so - silver, gold, and Swiss francs will reign?

I pay almost all my bills by credit card and pay the bill through on line banking. It's just so much simpler and reduces the need to carry much cash. I pay the balance every month so it's not costing me any interest.

WV = rative. Will the U.S. credit rating dive?
Jimmy and all - but now revolving credit balances are rising month-to-month.

Plenty of people have been doing what you described, but they were paying down the balance every month. Now the broker households are charging and not paying it down!

The article is good because it explains how they know what is being charged. From the monthly totals (back to H.8 again, and also the Consumer Credit report) we know that an increasing number of people are letting those balances rise. CCs as a payment method are one thing. CCs as a financing method are quite another!!!
It just shows that cash isn't circulating through the economy. Borrowing for basic needs will get some
people in bigger trouble down the road. Payroll tax
receipts help understand the bigger picture.

Gordon> sorry about the Lyme disease. My whole family had it a number of years ago. Here in CT one of the local Dr's found a good method to beat it- A combination of an Anti Malaria Drug and an Anti Biotic used for HIV patients (Mepron?). Of course the insurance Co didn't cover it but knocked the sucker out of us pretty quick.
I recently read the Biography of John D. Rockefeller. Really good. One thing I noticed that of the several Banking Crises that took place during his life, they always seemed to take about 10 years to repair themselves.

Wish I read that book in 2009. Darn.
Thanks, folks. I really thought I'd already had a mild case, but there are variations, apparently. (long tale of selfmisdiagnosis) So when I saw the big honking rash last night, I realized it wasn't what I thought. The symptoms were very similar, with alternating drenching sweats and bone shaking fevers, and a lot of ache.

When I got to the clinic, and they had expressed their disapproval of me puddling sweat on their counter, they checked my BP. She gave the machine a funny look and checked it again: 77/55. Normal for me is about 137/95.

That sort of thing gets you a lot of attention quickly. They drew lots and lots of blood, and dumped a full unit of saline in tootsweet.

That got me back up to triple digits, and he let me leave after I promised to drink lots and lots and lots of water. Tomorrow I see the infectious disease specialist.

Polymerase chain reaction tests: 'tain't only tick-borne stuff they're testing.
Gordon - babesia is the tick-borne common infection that responds to Mepron. It is quite possible that you have several infections. Most doctors do not test for all the organisms that may be causing illness, so you just got some very good advice from CF.

They ultimately stopped the Lyme vax because too many people had silent infections and got sick from it. So if you had been infected before, it is possible that you could have a massive immune reaction just from Lyme, I think. It is more common in men.

However I do not want to scare you, but there is another group of tick-borne diseases that is more lethal.

The last and probably most rare group are the flaviruses.

Recently there was a US death from Powassan, and there have been multiple cases this year up north.

Unfortunately ricksettia and Powassan are difficult to test for in early infection, and then there is the real possibility of co-infections, so that you may have to be rotated between multiple meds.

Do not get male stubborn about this. Make sure you are being tested for all strains, and you may have to be tested multiple times. You are very ill, and if you don't have a good doctor you need to find one. Minnesota has a Powassan problem this year.

Just because they isolate one, it doesn't mean they have identified what is making you sickest. You will need to seek supportive treatment if you begin feeling ill or have a serious headache.

Please do not ignore this. I am praying for you and for any doctors presented with your case.

Are you currently on doxycycline? You should be. Please keep us up to date.

I am on Doxy. I just took the third one, 100mg twice a day. I'm on my way to the infectious disease clinic in a moment; the doctor who saw me yesterday would only release me if I agreed to today's appointment.

Thanks to everyone for the information. I'm trying not to let this keep me down, but the reality is sinking in, and now I have a better idea of what I may be facing. The multiplicity of symptoms is exhausting, and I'm getting about 3 hours of sleep a day right now.
Gordon - you are down. If you get one of these that infects the white blood cells, it's a long recuperation, long treatment and failing to recognize the need for rest will prevent recovery.

I'm sorry to tell you this, but your best chances for a full recovery require not working and getting as much rest as you can at this point.

Since you are going to the doctor I won't belabor you with all the details. Your chances of making a full recovery are going to be highly dependent on not being heroic about this.

I don't think there are any commercial tests for Powassan, but the Minnesota Dept of Health should do testing. Make sure a test for that is performed.

Prayed for you again this morning - I know it's frightening. Don't get perturbed if all the bloodwork comes back negative at first.

You absolutely must take that doxycycline with food! If your stomach gets upset there's a liquid form you can try, but keep eating. Lots of liquids.

Do not stop the doxycycline under any circumstances.
CF - re the 9-10 years.

Theoretically, the trillions thrown out there were to prevent that from happening.

So much for theory! Keynesian theory never has been tested in a real depression, and in practice, it has its downside.

In theory, if they keep throwing money it could be about 25 years. I hope we do not try to test that theory.
Gordon, let me repeat MOM's advice. don't get male stubborn! I thought my husband just had the same flu that we'd both had before. It turned out to be pneumonia and he was too far gone by the time I got him to see a doctor. It's much better for something to be a false alarm.
MOM; It's a weird world. Simply put, the low rates/excess liquidity is pushing up commodity prices, reducing disposable income. Since the low rate transmission mechanism is broken the consumer isn't getting the benefit. See ya'll in 2017.
But in no serious downturn would the low rate transmission work, CF. Not a credit-fueled one, and all the serious ones have had an element of credit-fueled implosion.

The thing is, we have an old-fashioned panic, and we have found a nice new modern way to make it worse.

Therefore, I am not too confident about 2017.

My word verification is "timmi", which I take to be a sincere statement of angst-filled agreement from the now-sentient Blogger WV computers. The cloud! Watch the cloud!!!
Thank you again for the prayers and advice. I'm feeling better. I haven't had a major fever or sweating episode since early Friday, so the Doxy is helping. I even did the dishes yesterday, and stayed on my feet the whole time.

The infectious disease specialist says there's no doubt I have Lyme; she said the presentation doesn't get more classic than mine. She's had it herself, which was interesting. The urgent care doc had already ordered the tests for everything but babesiosis, and she added that.

I brought up Powassan, and she said that it's possible, but since I'm not showing any symptoms, she wants to wait and watch, and she told my wife that if she notices personality changes or severe headaches/nausea/vision problems, then to call in right away. She said there's no treatment, so nothing can be done proactively.

I'm still dehydrated, but that's improving, and my appetite is slowly coming back. I slept eight hours last night, and that's the most since this began.
MoM- Ref your comment at 6:36 am
regarding theory and practice-

I once came across a quote that I think put it nicely:

"In theory, there is no difference between Theory and Practice.

In practice, there is."

Eewww! Speaking of all the infectious-disease stuff: my wv= cloccu. I just know there's E.Coli in there somewhere.
That is great, Gordon. I'm tremendously sorry you are sick, but I am pleased you are improving. And thank you so much for the update. I've been fretting.

The nice thing about doxy is that it knocks several of the others out as well.

Follow up! It's good that you have a doctor that has had it. It is apparently pretty widely spread.

SuperDoc told me once that effective treatment should be based purely on the clinical evidence, not on lab tests. He did get rather excited and bounce around about the folly of not testing for the complete spectrum, because as CF noted, a lot of times Lyme comes along with other infections, and then even if you are treating one the other drives you down, so you just don't get well like you should.

Don't forget to eat! Being able to sleep is probably the best indication.

It's amazing what antibiotics do for us.
A_Nonny - I like it. I really like it. I think I'll steal it.

The more I think about this, the more I blame the lack of up-front fiscal response. It's normally the debt write-off cycle that controls overlending, and in this case, the overlending was so severe that it just couldn't be treated symptomatically.

The more they try to treat the symptoms, the worse they make it.
Gordon; Watch out for the Sun w/The Doxy. And drink a lot of water.
You seem very knowledgeable, but there is a lot of unexplained jargon and allusions in these posts.
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