Posts Tagged ‘Philly Fed’

Open Dissent at the Fed: Charles Plosser (Philly Fed) Opposes QE2; Thomas Hoenig (Kansas City) attends Tea Party

Open Dissent at the Fed: Charles Plosser (Philly Fed) Opposes QE2; Thomas Hoenig (Kansas City) attends Tea Party

Courtesy of Mish

An open battle exists at the Fed concerning Bernanke’s second round of Quantitative Easing (QE2).

Private Collection

Hoenig Attends Tea Party

Bloomberg reports Fed Dissenter Hoenig Wages Lonely Campaign Against Easy Credit

Thomas M. Hoenig, dressed in a gray suit, white shirt with French cuffs, and baby-blue tie, faces an edgy crowd of 150 people in a hotel meeting room in suburban Lenexa, Kan. A large “Kansas City Tea Party” banner covers a table at the door. Attendees wear anti-tax stickers on their lapels. This is not an after-dinner speech for which most central bankers would volunteer.

Hoenig smiles at his audience and begins: “This is a support-the-Fed rally, right?”

Dead silence. Then the room erupts in laughter. Disarmed, the Tea Partiers listen politely as Hoenig defends the Federal Reserve as an indispensible institution, even if at the moment, he says, it happens to be heading in the wrong direction.

And, by the way, if it were up to him (though it’s not, really) he would break up the biggest Wall Street banks.

This is Tom Hoenig’s moment, and it’s a strange one. In Washington, he is the burr in Fed Chairman Bernanke’s saddle: the rogue heartland banker who keeps dissenting alone — for the sixth straight time on Sept. 21 — to protest the Fed’s rock- bottom interest-rate policy. Hoenig warns that the Bernanke majority is setting the country up for an as-yet-unknown asset bubble: the next dot-com or subprime craze. He can’t tell yet where the boom-and-bust will materialize, but he can feel it coming, like a Missouri wheat farmer senses in his bones the storm that’s just over the horizon.

In abundant speeches and articles, Hoenig has condemned the political influence of the financial elite. “We’ve had a Treasury Secretary from Goldman Sachs under a Democratic President and a Treasury Secretary from Goldman Sachs under a Republican President. The outcomes were not good,” Hoenig says while being driven to a luncheon talk at an affordable housing conference in Topeka, Kan.

Hoenig harbors powerful misgivings over not dissenting more often and more forcefully during the Greenspan years. “He regrets going along with the votes when Alan Greenspan was chairman to get rates so low and keeping them so low so long,” says his


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Market Commentary From David Rosenberg: Just Call It “Deflationary Growth”

Market Commentary From David Rosenberg: Just Call It "Deflationary Growth"

Courtesy of Tyler Durden

If the way to classify the September stock move as "a confounding ramp on disappointing economic news" gets you stumped, here is Rosenberg to provide some insight. Just call is "deflationary growth or something like that." And as for the NBER’s pronouncement of the recession being over, Rosie has a few words for that as well: "this recovery, with its sub 1% pace of real final sales, goes down as the weakest on record."

It’s a real commentary that the National Bureau of Economic Research (NBER) decision on the historical record mattered more than the actual economic data. The National Association of Home Builders’ (NAHB) housing market index is the latest data point in an array of September releases coming in below expected:

  • Philly Fed index: actual -0.7 versus 0.5 expected
  • Empire manufacturing index: actual 4.14 versus 8 expected
  • NAHB: actual 13 versus 14 expected
  • University of Michigan Consumer Sentiment: actual 66.6 versus 70 expected

It’s early days yet, and these are only surveys, but it would seem as though the economy remains very sluggish as we head towards the third-quarter finish line.

It is truly difficult to come up with an explanation for the breakout, which in turn makes it difficult to ascertain its veracity. If we are seeing a re-assessment or risk or a major asset allocation move, then why did Treasury yields rally 4bps (and led lower by the “real rate”, which is a bond market proxy for “real growth expectations”)?

If it was a pro-growth move, why did copper sell off and the CRB flatten? And where is the volume? Still lacking? So we have a breakout with little or no confirmation. All we can see is that many sentiment measures have swung violently to the upside in recent weeks and the VIX index is all the way back to 21x —- somewhat contrary negative signposts for the bulls.

But the price action is undeniable and the bulls are in fact winning the battle in September, a typically negative seasonal month, after a bloody August. The fact that bonds rallied yesterday is a tad bizarre and perhaps the explanation, if there is one, is that the equity market is enamoured with the cash leaving the corporate balance sheet in favour of dividend payouts and share buybacks and


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Initial Jobless Claims Jump while Philly Fed Signals Economic Contraction

Initial Jobless Claims Jump while Philly Fed Signals Economic Contraction

Courtesy of Rom Badilla, at Bondsquawk.com

Falling Businessman

The Philadelphia Federal Reserve released its manufacturing survey for August, which suggests economic contraction and may lead the Federal Reserve to promote additional stimulus measures.  The Philadelphia Federal Reserve Outlook survey or simply “Philly Fed” for August plummets to a negative reading of 7.7 versus economists’ surveys of +7.0.  This marks the third consecutive decline after the outlook survey peaked in May at 21.40.

Behind the headlines, components that represent economic growth were especially weak.  Specifically, New Orders dropped further into negative territory to -7.1 from a prior month’s reading of -4.3.  Inventories fell from +4.5 in July to -11.6 while the Number of Employees component dropped from 4.0 to an August reading of -2.7.

Inflation expectations should remain subdued and keep bond yields in check as price pressures fall, judging by some of the Philly Fed components.  Prices Paid dropped from +13.1 in July to +11.8.  In addition, the Prices Received component continues to drive deeper into negative territory.  The Prices Received component fell to -12.5 following prints of -6.5 and -8.4 in June and July, respectively.

The Philadelphia Fed numbers carry significant weight since the index is heavily correlated to the ISM manufacturing index and the index of industrial production, which both measure the health of U.S. economic activity.  ISM Manufacturing should it fall below 50 in the coming months may lead the Federal Reserve to act in providing stimulus measures via Quantitative Easing.

The number of people in the U.S. filing for employment benefits increased last week according to the Department of Labor. Initial Jobless Claims for the week ending August 14 jumped to 500k people.  The number of people who recently became unemployed and are now accessing government benefits was revised upward in the previous week by four thousand to 488k.  The increase, which the highest reading since November of 2009, highlights the beginning of deterioration of the employment landscape in the last few weeks as economists were expecting a reading of 478k.  Furthermore, the 4-week moving average, which is used to smooth out volatility to establish a better reading of trends, continues to inch higher to 482,500 people and is on the higher end of the recent range of 450-500k that has been established since last November.  With this in mind, the number is…
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58 out of 58 Economists Overoptimistic on Philly Fed Manufacturing Estimate; Median Forecast +7 Actual Result -7.7, a “Veritable Disaster”

58 out of 58 Economists Overoptimistic on Philly Fed Manufacturing Estimate; Median Forecast +7 Actual Result -7.7, a "Veritable Disaster"

Courtesy of Mish 

Pencil popping balloon

They may call economics the "dismal science" but it would be hard pressed to find a more optimistic lot than economists, anywhere in private industry.

Fresh on the heels of a perfect 42 of 42 overoptimistic predictions on weekly claims (Please see Weekly Unemployment Claims Hit 500,000, Exceed Every Economist’s Estimate; No Lasting Improvement for 9 Months), a perfect 58 out of 58 Economists were overoptimistic regarding the Philly Fed Manufacturing survey.

Unexpected Shrinkage

Bloomberg reports Factories in Philadelphia Area Unexpectedly Shrink

Manufacturing in the Philadelphia region unexpectedly shrank in August for the first time in a year as orders and sales slumped, a sign factories are being hurt by the U.S. economic slowdown.

The Federal Reserve Bank of Philadelphia’s general economic index fell to minus 7.7 this month, the lowest reading since July 2009, from 5.1 in July. Readings less than zero signal contraction in the area covering eastern Pennsylvania, southern New Jersey and Delaware.

Economists forecast the measure would rise to 7, according to the median of 58 projections in a Bloomberg News survey. Estimates ranged from minus 6 to 10.

The Philadelphia Fed’s survey was in sync with a report this week from the Fed Bank of New York. The bank’s so-called Empire State Index increased less than forecast, as orders and sales cooled.

Forecast for "More Modesty"!

“We expect the recovery that we’ve seen in our business to continue, but in a more moderate pace than we’ve experienced in the first half,” Chief Financial Officer Nicholas Fanandakis said on a conference call with analysts.

Fed policy makers last week voted to keep the benchmark interest rate at a record low and made their first attempt to shore up a recovery they said was likely to be “more modest” than earlier anticipated.

Philly Fed Business Outlook Survey

With that undoubtedly overoptimistic "modest recovery" out of the way, please consider actual results from the Philly Fed Business Outlook Survey.

Results from the Business Outlook Survey suggest that regional manufacturing activity weakened in August, after two months of slowing activity. Indexes for general activity, new orders, and shipments all registered negative readings this month.

Firms also reported declines in employment and work hours. The survey’s broad indicators


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Philly Fed Manufacturing Index Barely Positive, Future Expectations Overly Optimistic

Philly Fed Manufacturing Index Barely Positive, Future Expectations Overly Optimistic

Courtesy of Mish

The Philly Fed manufacturing index slowed for a second consecutive month and is nearly, but not quite in contraction. New orders and prices received are already in contraction.

Please consider the latest Philly Fed Business Outlook Survey.

Results from the Business Outlook Survey suggest that regional manufacturing activity continues to expand in July but has slowed over the past two months.

Large Gap Between Current Conditions and Expectations 6 Months from Now

History shows gaps narrow over time and most of the time are in sync, except at turning points.

The key question which we will get to in a minute is "Will the gap narrow by future expectations falling or current conditions rising?"

Philly Fed Components

click on chart for sharper image

Note that prices received is in contraction for a second consecutive month. That is not good for profits to say the least. Also note that new orders are falling. That is also not good for profits.

Yet, the overall diffusion index is 5.1 now vs. +25.0 six months from now, new orders expectations -4.3 now vs. 17.9 six months from now, and prices received -6.5 now vs. 10.1 six months from now.

Also note that Employees and Workweek were both in contraction last month but are now barely positive with expectations higher again.

Where To From Here?

If manufactures are ramping up production, even modestly, in expectations for a better second half, they are going to regret it.

Data suggests durable goods sales are about to collapse.

I made the case for a significant manufacturing slowdown in Expect Second-Half Housing and Durable Goods Crash. Please take a look.

Manufacturers may be more optimistic six months from now, but consumer attitudes suggest something dramatically different. Ramping up production is the wrong thing to do.

Mike "Mish" Shedlock


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Kimble Charting Solutions

Bearish Divergences Similar To 2000 & 2007 In Play Again!

Courtesy of Chris Kimble

Does history at important junctures ever repeat itself exactly? Nope

Do look-alike patterns take place at important price points? Yup

This chart looks at the S&P 500 over the past 20-years.

In 2000 and 2007 bearish momentum divergences took place months ahead of the actual peak in stocks.

Currently, momentum has created a bearish divergence to the S&P 500 for the past 20-months, as the seems to have stopped on a dime at its 261% Fibonacci extension level of the 2007 highs/2009 lows.

Joe Friday Just The Fact Ma’am; A negative sign for the S&P 500 with the divergence in play, would take place if support b...



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Zero Hedge

Libra Members Consider Quitting Project Due To Gov't Pressure: Report

Courtesy of ZeroHedge View original post here.

Authored by Marie Huillet via CoinTelegraph.com,

At least three of Facebook’s early backers for its planned Libra stablecoin launch are considering withdrawing their support in light of the fierce regulatory pushback.

...



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Phil's Favorites

The PhilStockWorld.com Weekly Webinar - 08-21-19

 

For LIVE access on Wednesday afternoons, join us at Phil's Stock World – click here.

Major Topics:

  • 00:01:28 - Checking on the Markets
  • 00:11:52 - TSLA vs. Walmart
  • 00:18:07 - Spitting Cobra Pattern
  • 00:22:00 - M & THC
  • 00:33:37 - IBM
  • 00:40:42 - Climate Change Miami
  • 00:42:28 - Greenland Ice Melt
  • 00:46:28 - Futures
  • 00:51:02 - Jobs created thru Trump Administration
  • 00:53:40 - U.S. Population Growth by Year
  • 01:00:00 - FED Minutes
  • 01:09:08 - Global Warming
  • 01:16:37 - LTP Review
  • 01:19:20 - STP ...


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The Technical Traders

Do Good Traders Make Good Gamblers?

Courtesy of Technical Traders

Without breaking the rules, have you ever made a trade that was guaranteed to make you money? A trade that was literally guaranteed to succeed.

If you’re struggling to come up with an answer, we’ll give you a helping hand, the word you’re searching for is likely no. Every financial trade ever made – no matter how sound and well researched using technical analysis – carries with it an element of risk.

Outside factors beyond your control always have the possibility of turning profits into losses and ecstasy into agony. In many ways, trading is similar to gambling. For instance, you may think you know ...



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Insider Scoop

Earnings Scheduled For August 22, 2019

Courtesy of Benzinga

Companies Reporting Before The Bell
  • Hormel Foods Corporation (NYSE: HRL) is estimated to report quarterly earnings at $0.36 per share on revenue of $2.29 billion.
  • BJ's Wholesale Club Holdings, Inc. (NYSE: BJ) is projected to report quarterly earnings at $0.37 per share on revenue of $3.38 billion.
  • DICK'S Sporting Good...


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Chart School

Gold Gann Angle Update

Courtesy of Read the Ticker

Everything awesome? Gold over $1500. Central banks are printing money to generate fake demand. Germany issues first ever 30 year bond with negative interest rate. Crazy times!

Even Australia and New Zealand and considering negative interest rates and printing money, you know a bunch of lowly populated islands in the South Pacific with no aircraft carriers or nuclear weapons. They will need to do this to suppress their currency as they are export nations, as they need foreign currency to pay for foreign loans. But what is next, maybe Fiji will start printing their dollar. 

Now for a laugh, this Jason Pollock sold for more than $32M in 2012. 





Ok, now call Dan...

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Lee's Free Thinking

Watch Out Bears! Fed POMO Is Back!

Courtesy of Lee Adler

That’s right. The Fed is doing POMO again.  POMO means Permanent Open Market Operations. It’s a fancy way of saying that the Fed is buying Treasuries, pumping money into the financial markets.

Over the past 6 days, the Fed has bought $8.6 billion in T-bills and coupons. These are the first regular Fed POMO Treasury operations since the Fed ended outright QE in 2014.

Who is the Fed buying those Treasuries from?

The Primary Dealers. Who are the Primary Dealers?  I’ll let the New York Fed tell you:

Primary dealers are trading counterparties of the New York Fed in its implementation of monetary policy. They are also expected to make markets for the New York Fed on behalf of its official accountholders as needed, and to bid on a ...



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Digital Currencies

New Zealand Becomes 1st Country To Legalize Payment Of Salaries In Crypto

Courtesy of ZeroHedge View original post here.

Bitcoin and other cryptocurrencies have been on a persistent upswing this year, but they're still pretty volatile. But during a time when even some of the most developed economies in the word are watching their currencies bounce around like the Argentine peso (just take a look at a six-month chart for GBPUSD), New Zealand has decided to take the plunge and become the first country to legalize payment in bitcoin, the FT reports.

The ruling by New Zealand’s tax authority allows salaries and wages to b...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Biotech

DNA testing companies offer telomere testing - but what does it tell you about aging and disease risk?

Reminder: We're is available to chat with Members, comments are found below each post.

 

DNA testing companies offer telomere testing – but what does it tell you about aging and disease risk?

A telomere age test kit from Telomere Diagnostics Inc. and saliva. collection kit from 23andMe. Anna Hoychuk/Shutterstock.com

Courtesy of Patricia Opresko, University of Pittsburgh and Elise Fouquerel, ...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

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

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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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