Posts Tagged ‘ISM’

Non-Manufacturing ISM Plunges Below Prediction of All 73 Economists, New Orders Collapse, Prices Firm; Did Rosenberg Capitulate at the Top?

Courtesy of Mish

The April 2011 Non-Manufacturing ISM plunged 4.5 points to 52.8 from 57.3 The drop was below expected range of all 73 economists in a Bloomberg ISM Survey.

The range of economists’ forecasts in the Bloomberg survey was 54.5 to 59 with the median forecast up a tick to 57.4.

Tellingly, new orders collapsed by 11.4 points from 64.1 to 52.7. Employment, one of the weaker measures and up only 8 consecutive months fell to 51.9. One more reasonably bad month and services employment will contract.

Please consider the April 2011 Non-Manufacturing ISM Report On Business®

Economic activity in the non-manufacturing sector grew in April for the 17th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®.

click on chart for sharper image

New Orders

The 12 industries reporting growth of new orders in April — listed in order — are: Management of Companies & Support Services; Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Mining; Real Estate, Rental & Leasing; Wholesale Trade; Information; Health Care & Social Assistance; Public Administration; Construction; Other Services; and Educational Services. The four industries reporting contraction of new orders in April are: Finance & Insurance; Retail Trade; Professional, Scientific & Technical Services; and Utilities.

Employment

Twelve industries reported increased employment, five industries reported decreased employment, and one industry reported unchanged employment compared to March.

The industries reporting an increase in employment in April — listed in order — are: Arts, Entertainment & Recreation; Mining; Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Other Services; Information; Construction; Accommodation & Food Services; Finance & Insurance; Public Administration; Wholesale Trade; and Transportation & Warehousing. The industries reporting a reduction in employment in April are: Real Estate, Rental & Leasing; Educational Services; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Utilities.

Prices

For the second consecutive month, all 18 non-manufacturing industries reported an increase in prices paid, in the following order: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Arts, Entertainment & Recreation; Construction; Wholesale Trade; Accommodation & Food Services; Finance & Insurance; Transportation & Warehousing; Real Estate, Rental & Leasing; Management of Companies & Support Services; Educational Services; Professional, Scientific & Technical Services; Retail Trade; Public Administration; Information; Health Care & Social Assistance; and Other Services.

ISM Prices Firm, What About Profits?

This was a…
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Jobs Decrease by 54,000, Rise by 60,000 Excluding Census; Unemployment Rises Slightly to 9.6%; A Look Beneath the Surface

Jobs Decrease by 54,000, Rise by 60,000 Excluding Census; Unemployment Rises Slightly to 9.6%; A Look Beneath the Surface

Courtesy of Mish 

This morning the BLS reported a decrease of 64,000 jobs. However, that reflects a decrease of 114,000 temporary census workers.

Excluding the census effect, government lost 7,000 jobs. Were the trend to continue, this would be a good thing because Firing Public Union Workers Creates Real Jobs.

Unfortunately, politicians and Keynesian clown economists will not see it that way. Indeed there is a $26 billion bill giving money to the states to keep bureaucrats employed. This is unfortunate because we need to shed government jobs.

Birth-Death Model

Hidden beneath the surface the BLS Black Box – Birth Death Model added 115,000 jobs, a number likely to be revised lower in coming years. Please note you cannot directly subtract the number from the total because of the way the BLS computes its overall number.

Participation Rate Effects

The civilian labor force participation rate (64.7 percent) and the employment-population ratio (58.5 percent) were essentially unchanged from last month’s report. However, these measures have declined by 0.5 percentage points and 0.3 points, respectively, since April.

The drop in participation rate this year is the only reason the unemployment rate is not over 10%. The drop in participation rates is not that surprising because some of the long-term unemployed stopped looking jobs, or opted for retirement.

Nonetheless, I still do not think the top in the unemployment rate is in and expect it may rise substantially later this year as the recovery heads into a coma and states are forced to cut back workers unless Congress does substantially more to support states.

Employment and Recessions

Calculated Risk has a great chart showing the effects of census hiring as well as the extremely weak hiring in this recovery.

click on chart for sharper image

The dotted lines tell the real story about how pathetic a jobs recovery this has been. Bear in mind it has taken $trillions in stimulus to produce this.

June, July Revisions

The change in total nonfarm payroll employment for June was revised from -221,000 to -175,000, and the change for July was revised from -131,000 to -54,000.

Those revisions look good but it is important to note where the revisions comes from. The loss of government jobs in June was revised from…
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Depression III, Double Dip Recession, Cooling or Slowing Economy?

Depression III, Double Dip Recession, Cooling or Slowing Economy?

Courtesy of Ron Rutherford

The Institute of Supply Management (ISM) has again graced us with another two reports on the Manufacturing and Non-Manufacturing ISM Report On Business®. In this and other posts on the ISM, we wish to delve deeper into the raw numbers and get a better degree of understanding of the underlying currents in the macro-economy.   Along the way let us also look at other voices and opinions of the macro-view.

Headline Numbers of ISM Report On Business®.

The PMI index {manufacturing index} was reported as 56.2% and NMI (non-manufacturing index/composite index) was reported as 53.8%.   Both numbers missed Market Watch’s Economic Calendar consensus numbers with ISM Manufacturing consensus at 59% and Non-Manufacturing at 55.3%.   Econoday reports ISM Mfg Index as 59 consensus and the range as 57.6 to 59.7 and ISM Non-Mfg Index as 55 consensus and the range as 53.5 to 56 which indicates that only non-manufacturing fell within the range of consensus.

Both reports are remarkably similar in that the composite chart is marked most prominently in “Slower” under the rate of change. The indexes and indicators are mostly growing but are growing at a slower pace.   Considering the number of months of trending growth especially in the manufacturing report, this slow-down could just be head winds slowing progress or just a small hill that will easily reverse and accelerate the growth in future months.   I am just not certain that the slow-down is worth wringing hands over, but could easily frighten the equity markets as they appear to have done prior to this past week.   Econoday notes the possible reaction from markets.

Today’s report is not good news for the stock market which may continue to discount economic slowing for the months ahead.   Today’s report will also increase talk that new rounds of government stimulus may be in order.

Not sure another stimulus is a prudent move at least at this time. I also want to quote from both reports on the recent cooling episode.

Peak growth may have already come and gone, a worry of the global markets and indicated by the ISM’s June report on non-manufacturing.

The acceleration in manufacturing cooled but only slightly in June, according to the Institute for Supply Management’s composite index which slowed to 56.2 from May’s


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INFLATION EXPECTATIONS COLLAPSE AMID SLOWING ECONOMIC GROWTH

INFLATION EXPECTATIONS COLLAPSE AMID SLOWING ECONOMIC GROWTH

Courtesy of Rom Badilla of Bondsquawk.com

Inflation expectations as indicated by the yield differential between 10-Year Treasuries and 10-Year Treasury Inflation Protected Securities (TIPS) continues to decline.  The decrease is attributed to a decline in inflation concerns fueled in part, by the drop in today’s release by the Institute for Supply Management manufacturing activity data.

The manufacturing sector growth is showing signs of slowing.  ISM reported its manufacturing index declined to a reading of 56.2 in June from a print of 59.7 in the prior month.  Today’s release disappointed economist expectations of 59.0.  While the June figure is still showing economic expansion since a reading above 50 indicates growth, today’s release is the 2nd consecutive drop after peaking in April at 60.4.  Equally important is the decline in the ISM Prices Paid component which is having a huge effect on inflation expectations.

Several weeks ago (posted here), we discussed that the Prices Paid component of the Philadelphia Fed Business Outlook Survey Index (released June 17) dropped significantly from a May reading of 35.5 to 10 signaling easing pricing pressures.  By charting the prices paid component to the breakeven rate, we can see a correlation between the two. The two exhibits a 0.79 correlation where a reading of 1.0 suggests a direct step for step relationship and -1.0 indicates an inverse relationship. A reading of zero suggests no relationship at all. A decline in the prices paid component reading suggests falling inflation expectations and even lower bond yields.  As posted on June 23rd, several days after the Philly Fed release, we concluded that given the level of the prices paid component, the breakeven rate could fall 20 to 30 basis points.  Furthermore, given that the 10-Year was trading at 3.10-3.15 percent at that time, a decline in inflation expectations could point to a “10-Year Treasury yield of sub-three percent, reaching or even surpassing recent lows”.

In similar fashion, today’s release of the ISM’s Prices Paid component confirms our concern of lower inflation readings and hence a lower breakeven rate.  The ISM Prices Paid component (which is highly correlated to the Philadelphia Fed Prices Paid component by 0.87 over the past 10 years) dropped to a reading of 57.0 from 77.5 in the prior month.  Today’s lower print further disappointed economists as surveys were at 70.0.

2010 07 01 ISM PP 300x214 INFLATION EXPECTATIONS COLLAPSE AMID SLOWING ECONOMIC GROWTH

ISM Prices Paid Index – Historical Chart (Monthly


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No green shoots here

Consumer Metrics Institute Personal Finance Index Continues to Deteriorate

Courtesy of Rick Davis at Consumer Metrics Institute

Below is an addendum to the update sent out on Tuesday, addressing new data reflecting changes in consumer behavior concerning their debt:

The Consumer Metrics Institute’s Personal Finance Index continued its decline for the sixth consecutive week, with it now showing a year-over-year decline in consumer confidence in excess of 40%.

This contrasted sharply with the situation as recently as the end of January 2010, when the same measure of confidence was showing a year-over-year gain in excess of 7%. The Consumer Metrics Institute’s Personal Finance Index is composed of a number of data series, some of which collect transactions that are precursors to the initiation of default and/or foreclosure activities. The levels of these negative activities are inverted before being included in the ‘Personal Finance Index’, so that a rapid rise in Consumer transactions with default and foreclosure counseling services, for example, will drive that particular index down. 

[http://www.consumerindexes.com/weekly_personal_finance.png]

The Personal Finance Index is not alone in reflecting continued weakness. In fact, our ‘Weighted Composite Index’ (which is by far our best daily aggregate measure of the consumer ‘demand’ side of the economy) has shown a relatively steady deterioration since peaking in August 2009, with the trailing month now recording contraction in excess of 2%.

[http://www.consumerindexes.com/monthly_weighted_composite.png]

The sliding ‘trailing quarter’ as reflected in our ‘Daily Growth Index’ has also reached a level consistent with a year-over-year contraction rate of about 2%, after initially dropping into net contraction on January 15th. When compared to previous contraction events in 2006 an 2008 this particular episode of contraction in consumer demand is following a unique profile: at it’s worst it is still milder than the mild 2006 event but it has gone on longer than even the 2008 event without forming a clear bottom.

[http://www.consumerindexes.com/commentary_2010_contraction_watch.png]

If the housing market is expected to recover soon, a significant increase in demand for residential real estate loans will need to be occurring in the near future. Although there has been a recent minor upturn in consumer interest in refinancing on a year-over-year basis, it may only be a sign that consumers are beginning to expect that the historically low mortgage rates are nearing an end.

[http://www.consumerindexes.com/weekly_refinance.png]

A more telling development would be for a similar upturn in consumer interest in new loans, which we…
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Zero Hedge

Italian Cases Soar Past 300 As EU Stubbornly Refuses To Close Borders; 10 Dead: Live Updates

Courtesy of ZeroHedge View original post here.

Summary:

  • WHO warns the rest of the world "is not ready for the virus to spread..."

  • CDC warns Americans "should prepare for possible community spread" of virus.

  • Italy cases spike to 322; deaths hit 10

  • HHS Sec. Azar warns US lacks stockpiles of masks

  • Italy Hotel in Lockdown ...



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Phil's Favorites

World economy flashes red over coronavirus - with strange echoes of 1880s Yellow Peril hysteria

 

World economy flashes red over coronavirus – with strange echoes of 1880s Yellow Peril hysteria

Courtesy of John Weeks, SOAS, University of London

As the novel coronavirus pandemic continues to unfold, travel restrictions are being imposed around the world. China is the main target, with various countries including Australia, Canada and the US placing different restrictions on people who have travelled through the country ...



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Biotech & Health

World economy flashes red over coronavirus - with strange echoes of 1880s Yellow Peril hysteria

 

World economy flashes red over coronavirus – with strange echoes of 1880s Yellow Peril hysteria

Courtesy of John Weeks, SOAS, University of London

As the novel coronavirus pandemic continues to unfold, travel restrictions are being imposed around the world. China is the main target, with various countries including Australia, Canada and the US placing different restrictions on people who have travelled through the country ...



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Kimble Charting Solutions

Dow Industrials Reversal Lower Could Be Double Whammy for Stock Bulls!

Courtesy of Chris Kimble

Dow Jones Industrial Average “monthly” Chart

The Dow Industrials have spent the past 70 years in a wide rising price channel marked by each (1). And the past 25 years have seen prices test and pull back from the upper end of that channel.

The current bull market cycle has seen stocks rise sharply off the 2009 lows toward the upper end of that channel once more.

In fact, the Dow has been hovering near the topside of that price channel for several months.

But just as the Dow is kissing the top of this channel, it might be creating back-to-back “monthly” bearish ...



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Insider Scoop

Benzinga's Top Upgrades, Downgrades For February 25, 2020

Courtesy of Benzinga

Upgrades
  • Sidoti & Co. changed the rating for FormFactor Inc (NASDAQ: FORM) from Neutral to Buy. For the fourth quarter, FormFactor had an EPS of $0.41, compared to year-ago quarter EPS of $0.31. The stock has a 52-week-high of $28.58 and a 52-week-low of $14.20. FormFactor's stock last closed at $23.16 per share.
Downgrades
  • Dougherty downgraded the stock for Palo Alto Networks Inc (NYSE: PANW) from Buy to Neutral. Palo Alto Networks earned $1.19 in the second quarter. The stock has a...


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The Technical Traders

Yield Curve Patterns - What To Expect In 2020

Courtesy of Technical Traders

Quite a bit of information can be gleaned from the US Treasury Yield Curve charts.  There are two very interesting components that we identified from the Yield Curve charts below.  First, the bottom in late 2018 was a very important price bottom in the US markets.  That low presented a very deep bottom in the Yield Curve 30Y-10Y chart.  We believe this bottom set up a very dynamic shift in the capital markets that present the current risk factor throughout must of the rest of the world.  Second, this same December 2018 price bottom set up a very unique consolidation pattern on the 10Y-3Y Yield Curve chart.  This pattern has been seen before, in late 1997-1998 and late 2005-2008.

...

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Chart School

Oil cycle leads the stock cycle

Courtesy of Read the Ticker

Sure correlation is not causation, but this chart should be known by you.

We all know the world economy was waiting for a pin to prick the 'everything bubble', but no one had any idea of what the pin would look like.

Hence this is why the story of the black swan is so relevant.






There is massive debt behind the record high stock markets, there so much debt the political will required to allow central banks to print trillions to cover losses will likely effect elections. The point is printing money to cover billions is unlikely to upset anyone, however printing trillions will. In 2007 it was billions, in 202X it ...

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Members' Corner

Threats to democracy: oligarchy, feudalism, dictatorship

 

Threats to democracy: oligarchy, feudalism, dictatorship

Courtesy of David Brin, Contrary Brin Blog 

Fascinating and important to consider, since it is probably one of the reasons why the world aristocracy is pulling its all-out putsch right now… “Trillions will be inherited over the coming decades, further widening the wealth gap,” reports the Los Angeles Times. The beneficiaries aren’t all that young themselves. From 1989 to 2016, U.S. households inherited more than $8.5 trillion. Over that time, the average age of recipients rose by a decade to 51. More ...



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Digital Currencies

Altcoin season 2.0: why bitcoin has been outgunned by crypto rivals since new year

 

Altcoin season 2.0: why bitcoin has been outgunned by crypto rivals since new year

‘We have you surrounded!’ Wit Olszewski

Courtesy of Gavin Brown, Manchester Metropolitan University and Richard Whittle, Manchester Metropolitan University

When bitcoin was trading at the dizzying heights of almost US$2...



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ValueWalk

What US companies are saying about coronavirus impact

By Aman Jain. Originally published at ValueWalk.

With the coronavirus outbreak coinciding with the U.S. earnings seasons, it is only normal to expect companies to talk about this deadly virus in their earnings conference calls. In fact, many major U.S. companies not only talked about coronavirus, but also warned about its potential impact on their financial numbers.

Q4 2019 hedge fund letters, conferences and more

Coronavirus impact: many US companies unclear

According to ...



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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Promotions

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Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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