The headlines say seasonally adjusted Industrial Production (IP) declined. This month the manufacturing portion of this index was unchanged month-over-month – but the other portions of industrial production declined. This is another weak report, and again under expectations. Headline seasonally adjusted Industrial Production (IP) decreased 0.3% month-over-month and up 1.9% year-over-year. Econintersect‘s analysis using the unadjusted data is that IP growthdecelerated 0.3% month-over-month, and is up 1.9% year-over-year. The unadjusted year-over-year rate of growth decelerated 0.7% from last month using a three month rolling...
The percentage of respondents to University of Michigan’s Consumer Sentiment Survey that “think they (or their spouse) will lose their job over the next 5 years” soared to its highest since March 2009. Either the BLS’ workers are lying, or the government’s data on jobs is ‘misleading’ According to UMich Curtin: CURTIN: TRADE GAP’S INFLUENCE ON JOBS BIGGEST SENTIMENT RISK And worse still: CURTIN: MAJORITY OF DECLINES THIS SIZE OCCURED IN RECESSIONS But do not worry: CURTIN SAYS DOESN’T EXPECT CONSUMER SPENDING TO RETRENCH Though he offered no actual reason for his expectation. Finally, we ...
This past week has been much the same as the last couple of months – boring. It has been more interesting trying to count carpet fibers in my office than watching the markets. However, there has been some excitement in domestic bond yields that have SURGED over the last couple of weeks. Well, as I discussed earlier this week, its a surge alright, you just need a magnifying glass to actually see it. “The chart below is a 40-year history of the 10-year Treasury interest rate. The dashed red lines denote the long-term downtrend in interest rates.” “The recent SURGE in interest rates is hardly noticeable when put into a l...
Industrial production came in at -0.3%, down for the fifth consecutive month below the Bloomberg Consensus Estimate. Industrial production is stalling, down 0.3 percent in April for a 5th straight monthly contraction. Factories are cutting back with capacity utilization down 4 tenths to 78.2 percent. And the manufacturing component, which has been flat to negative all year, is unchanged. All these readings are at or near the Econoday low-side forecasts. Among manufacturing subcomponents, consumer goods output fell 0.3 percent with business goods down 0.4 percent. Construction supplies rose only fractionally but at 0.1 percent the readin...
This Great Graphic comes from the Wall Street Journal. It shows the evolution of market expectations for the first Fed rate hike from the monthly survey it conducts. At the start of the year, many economists, like ourselves, thought that a June hike was the most likely scenario. However, the weakness of Q1, and especially the poor job growth in March, spurred a rethink. The latest survey was conducted after the April jobs report was released a week ago. It found that nearly three-quarters (73%) expect a rate hike in September. We also think that is the most likely scenario. Yellen said on more than one occasion that the Fed can hik...
Nothing to Lose There is a specter haunting America … and all the developed nations of the world. It is the specter of a debt revolution. We left off yesterday talking about how the economy of the last 30 years – and especially that of the last six years – has favored the old over the young. “Rise up, ye young’uns,” we as much as said, “you have nothing to lose but your parents’ debts.” We showed how the value of U.S. corporate equity, mainly held by older people, had multiplied by 28 times since 1981. That was no honest bull market in stocks; it was a market sent soaring by an explosion of credit. But what...
When I was in college there was a popular t-shirt that read: “Dear Aunt Em, Hate you, hate Kansas, taking the dog. Love, Dorothy.” The obvious reference to Wizard of Oz aside, it captured the sense of adventure people feel as they leave boring, ho-hum lives in rural or suburban areas to seek their fame and fortune. It makes sense that college kids were drawn to the sentiment, but I imagine it would resonate much more with the sort of young adults who, like Dorothy, grew up on a farm. Especially in emerging nations. This is the breeding ground of the manufacturing class of the world — the same kids who probably made said t-shirt. The a...
Theories abound in the stock market world. Marketwatch has one story based on bearish sentiment of individual investors saying the market will surely soar to new heights. Just below that story they have one based on the Dow Theory that warns of a possible impending crash. I don’t give too much credence to individual investor bullishness or bearishness these days because there are virtually no individual investors in the market. Institutions and their high frequency trading machines control the market. Computers are pre-programmed to buy or sell based on some logic or signal. This indicator may have been useful up until 2001, but the Federal...
This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions at 3.1 (3.09 to two decimals) shows an increase from last month’s -1.2, which signals a return to modest improvement in activity. The Investing.com forecast was for a reading of 5.0. The Empire State Manufacturing Index rates the relative level of general business conditions in New York state. A level above 0.0 indicates improving conditions, below indicates worsening conditions. The reading is compiled from a survey of about 200 manufacturers in New York state. Here is the opening paragraph from the report. The May 2...
The case for a second-quarter revival in the US economy took another blow in today’s April report on industrial production. Output slumped 0.3% last month, marking the fifth-straight decline for the monthly comparison, the Federal Reserve reports. The annual pace continues to slide as well, with the year-over-year change dipping to 1.9% for the 12 months through April—the first reading below the 2% line in nearly three years. There’s clearly a deceleration in macro conditions unfolding and it’s no longer reasonable to argue that it was contained in Q1. It remains to be seen if the deceleration persists, but for the moment it’s obv...