Thursday, September 01, 2011
Odd, Just Odd
After reading a bunch of opinion pieces from Wall Street types since I got power back, I have come to the conclusion that they are all stark, raving mad. I'm quite serious. That is not a joke. They know no financial history and they are determined not to learn.
Jeff reports that he is being redirected from the blog. He's running Firefox. I can't reproduce it, but if anyone else has noticed the problem please let me know.
ISM Manufacturing - the market took this as good news because it is above 50. I think they haven't looked at it. New orders at 49.6. Production at 48.6. Inventories at 52.3, having risen from 49.3 the previous month. This explains the drop in production, which was at 52.3 the previous month. New orders at 49.6 are up from the prior month's 49.2 but not much. It depends on final demand, doesn't it? Exports dropped to 50.5 from 54 the prior month.
Second oddity - Initial Claims: I'll tentatively take this week's headline number of 409K as the real level, although I think it's more like 404-405K. It's hard to know, though. According to DOL, the prior two weeks' of claims were distorted upward by the Verizon strike, with the biggest surge of claims from that in last week's report. However DOL revised last week's number up to 421K, which may mean that the real carrying wave is something close to 410K.
Looking at ADP employment, it does appear that US employment will do pretty poorly until holiday hiring kicks in at the end of this year. The reason is that big companies are not hiring (or aren't hiring much net). I never like to see this pattern; it generally indicates a bad six-month result. ADP comments that August's results imply that the unemployment rate will rise in months to come.
ISM Manufacturing PMI is now at levels often associated with the beginning of a recession:
This data at St. Louis Fed Fred is only through July, but the new numbers don't change the picture (well, only negatively). There was some chance they would:
If we follow the Japanese pattern, as soon as the production level falls below 52 for a few months, blam, we're in a contraction. Look at the earlier years when the US economy was much more biased toward manufacturing. Because housing is so hideously flat there's nothing much for a growth edge except exports and domestic manufacturing. This leaves the US economy's growth structure far more like that of the 80s than like that of the late nineties-mid aughts.
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