.comment-link {margin-left:.6em;}
Visit Freedom's Zone Donate To Project Valour

Wednesday, August 15, 2012

Empire State Survey goes negative

Well, this is not exactly optimistic:
The August Empire State Manufacturing Survey indicates that conditions for New York manufacturers deteriorated over the month. The general business conditions index slipped below zero for the first time since October 2011, falling thirteen points to -5.9. At -5.5, the new orders index was below zero for a second consecutive month, and the shipments index fell six points to 4.1. The prices paid index climbed nine points to 16.5, pointing to a pickup in the pace of increase in input prices, while the prices received index hovered just above zero for a third consecutive month.
Survey questions also noted negative revisions to future plans: 
In a series of supplementary questions, manufacturers were asked about modifications to 2012 hiring and capital spending—both year-to-date changes and revisions planned for the rest of the year. Substantially more firms (roughly twice as many) made downward than upward revisions in their plans for the second half of the year. As for actual spending year-to-date, modest downward adjustments were made, on balance. When asked about negative influences on 2012 hiring and capital spending plans, a majority of respondents cited increased uncertainty about business prospects.
Staples reports same store sales in North America down 2%. It's hard to know how much of this is shifting of sales to the big discounters like Walmart. Still, it is in no sense an economic positive:
Sales fell 5.5 percent to $5.50 billion in the second quarter ended on July 28, well below the analysts' average estimate of $5.72 billion. International sales dropped 18 percent to $1.1 billion, hurt by weakness in Europe, which is reeling from an economic crisis, and lackluster demand in Australia.
It's better than Office Depot, though. This is where the bad NFIB reports start to hurt the general economy.

Amid all the chatter over CPI (because everyone's waiting for the moneycopters), no one seems to be commenting on the fall in price increases for new cars and used cars. Here's the full html release. On the month, new car prices fell 0.3%. Used cars and trucks are still rising a bit at +0.3%. This takes the 12 month gain to 0.8% for new vehicles and 1.1% for used vehicles. On an SA basis, that's -0.1 and -0.5 respectively.

I'm thinking that the joy of subprime car loans is about to expire. The financing boom at auto dealers has been supported by good overall loan stats. Subprime auto loans have been supported by high resale values, which greatly cut the cost of those loans. I think that the used car market is equalizing now. This shouldn't be that much of an impact this year. I think.

Worst prediction ever:
Import cargo volume at the nation's major retail container ports is expected to increase 6.3% in August compared with the same month last year,


I put on my rose-colored glasses and read the report. I'm just not seeing what you are seeing.

Blah blah blah blah blah blah blah blah, but remained positive blah blah...

Emphasis added, lol. Sigh.
Industrial Production is up with a nice gain in capacity utilization. Manufacturing in the same report is up too. At the same time the Empire State survey actually contracted below zero.

These two reports are completely the opposite. One cannot believe anything, I guess. If I had to choose I would discard the surveys as they are not actual accounting numbers compiled.

So two of the four NBER indices, retail sales and industrial production, have improved in the most recent reporting month.
Squire - I think industrial production is real. This is walking down, not crashing down.

Remember, auto lines were running longer than normal in July - we saw that in the initial claims series for a couple of weeks. Total MV production was up 1.9% for the month.

It's the leading edge that concerns me!

On the other hand, utilities were up 1.3%. I find that hard to believe, given the heatwaves. It should have been up about 2.5%. That implies that the real economy is slacker than expected.

Defense/space rose 2.8% in July after a strike ended. I don't see any discrepancy in the numbers. It's clearing forward that concerns me!

Squire, one of the weird aspects of our situation are that good economic reports drive asset (commodity & equity) prices down. This just goes to show how much weight is being placed on central bank stimulus efforts.

It's a bizarre market.
Perversely, bad news makes the market rally. The only question for investors who might want to get into the stock market now is to what level is bad/good news priced into the market. I have never been able to know that answer.
Post a Comment

Links to this post:

Create a Link

<< Home

This page is powered by Blogger. Isn't yours?