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With A 3 Week Delay, Deutsche Bank Discovers That Q2 GDP Will Collapse Following Plunge In Car Production

Tyler Durden's picture




 

Nearly three weeks ago, on May 17, Zero Hedge, when analyzing the complete collapse in car and thus Industrial production made the following observations: "The immediate impact: the drop in the industrial production already
seen, but the bulk of it due to delayed aftereffects will likely impact
the May number, as the follow through from the Japanese supply chain
halt starts ringing a loud alarm bell across Wall Street. Of course,
this is another thing that all those calling for a 4% H2 GDP could have
absolutely not foreseen (and in fact it was originally supposed to be
positive for the economy, eh Deutsche Bank?). Expect to see drastic
downward cuts to May Industrial Production and next, to Q2 GDP.
" Fast forward to today, when, in an example of poetic irony, none other than Deutsche Bank's grossly overpaid economists also known as Shaman witchdoctors in less than polite circles, have just come out with a note titled: "Quantifying the impact of autos on Q2 real GDP" in which they, gasp, discover that "a near 30% decline in motor vehicle production is consistent with roughly a two full percentage point drag on Q2 real GDP. In our forecast, we are assuming a decline of around 1.5% because we think that we might see a small bounce in June production that will push the quarterly decline in motor vehicle production to something closer to -20%." Well, better late and always cluelessly wrong, than never... and still cluelessly wrong.

From Deutsche Bank

Quantifying the impact of autos on Q2 real GDP

Commentary for Tuesday: Motor vehicle production will weigh significantly on output this quarter, and the risk is the impact could be even greater than what we have been assuming. As we went through the May employment report in more detail, we observed that motor vehicle hours worked, which have an 85% monthly positive correlation with motor vehicle production in the Fed’s data, were down 3.1%—this follows a -3.8% decline in April. A regression of motor vehicle hours worked, which combines motor vehicle employment and the length of the motor vehicle workweek, suggests motor vehicle production fell -4.0% last month. Following an -8.9% decline in April motor vehicle production, the level of production so far in the quarter appears to be down nearly -29% at an annualized rate relative to Q1. If sustained in June, this would be the largest drop on record, bigger than the -23% decline experienced in Q1 2009 during the height of the economic downturn. As shown on the chart below, a near 30% decline in motor vehicle production is consistent with roughly a two full percentage point drag on Q2 real GDP. In our forecast, we are assuming a decline of around 1.5% because we think that we might see a small bounce in June production that will push the quarterly decline in motor vehicle production to something closer to -20%. If there is any good news here, it is that the negative hit to production is due to Japanese-related supply disruptions—they turned out to be much more serious than what we had anticipated. Since this production cutback was due to a natural disaster, and not economic fundamentals, this quarter’s soft patch should prove temporary. If so, we should see the manufacturing data improve markedly over the next quarter, perhaps more than recouping the entire Q2 decline. Moreover, an expected snapback in production could temporarily distort jobless claims to the high side, because companies that normally retool their factories in July ahead of the model year changeover will do so in June instead. The seasonal factors on initial jobless claims will not anticipate this, so we could see some elevated readings over the course of this month. Conversely, when the seasonals anticipate the shutdown in mid-July, claims could print abnormally low.

 

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Mon, 06/06/2011 - 14:56 | 1344013 DoChenRollingBearing
DoChenRollingBearing's picture

"The immediate impact: the drop in the industrial production already seen, but the bulk of it due to delayed aftereffects will likely impact the May number, as the follow through from the Japanese supply chain halt starts ringing a loud alarm bell across Wall Street."

I am conflicted:

1)  Do we (our company there in Peru) buy more bearings ASAP from Japan, but we would need more capital?

or 

2)  Avoid putting ANY more money into Peru (with their new whacko President).

No good choice for me...

Mon, 06/06/2011 - 15:22 | 1344145 Oh regional Indian
Oh regional Indian's picture

I could help you source awesome stuff from here in India. The whole range, extremely competitive.
ORI

Mon, 06/06/2011 - 15:58 | 1344271 DoChenRollingBearing
DoChenRollingBearing's picture

Wheel bearings for Suzuki Maruti?

One of the codes (brg number) is:

Koyo DAC3562W-5CS35

The piece is 35 mm (ID) and 62 mm (OD).  

I do not have the other bearing ref handy.

1000 pcs each, please send complete details.  NOTE: There are a LOT of fake (counterfeit) bearings in India, especially SKF.

I would prefer an international bearing company with a plant there in India:

SKF

Koyo

NSK

NTN

Timken

Let me know by email!

Mon, 06/06/2011 - 18:16 | 1344857 hardcleareye
hardcleareye's picture

In all sincerity, this is why I enjoy reading the postings on ZH.....

Your never sure were it will lead, but chances are it will make you think about real world issues you have never considered before.. and some of the time from a very different point of view.

 

 

Mon, 06/06/2011 - 14:51 | 1344015 SilverDoctors
SilverDoctors's picture

QE to Infinity....AND BEYOND!!

http://silverdoctors.blogspot.com/

Mon, 06/06/2011 - 14:53 | 1344029 The Axe
The Axe's picture

Forget car production...the market is rolling over as in the Titanic!!!!!

Mon, 06/06/2011 - 14:53 | 1344031 oogs66
oogs66's picture

So much for the great boost the Japanese earthquake was for everyone!

Have to give them credit for avoiding the use of channel stuffing in prior quarters as a real reason why its dropping hard now.

Mon, 06/06/2011 - 14:54 | 1344034 Dreadker
Dreadker's picture

I thought earthquakes were transitory?

Mon, 06/06/2011 - 15:03 | 1344056 cossack55
cossack55's picture

They are. Normally in the 30 second or less range.  Its the triple nuke meltdown and earless rabbits that screw ya.

Mon, 06/06/2011 - 15:36 | 1344181 mayhem_korner
mayhem_korner's picture

changes aren't permantent...but change is.

-Tom Sawyer (Peart not Twain)

Mon, 06/06/2011 - 23:23 | 1345834 StychoKiller
StychoKiller's picture

Financial/Fiat quakes keep going, and going, and going... :>(

Mon, 06/06/2011 - 14:57 | 1344043 PaperBear
PaperBear's picture

Gold/silver will explode once the people realise the economic indicators are getting worse and worse.

Mon, 06/06/2011 - 16:24 | 1344330 He_Who Carried ...
He_Who Carried The Sun's picture

Try to feed that to your kids:

Nuggetspaghetti.

Why Gold?

I wait until everything is at 700 again and then I'll make another killin'... ;-)

Mon, 06/06/2011 - 15:04 | 1344057 kevinearick
kevinearick's picture

They are not selling cars. They are selling oil. They are not selling oil. They are selling control .... In a closed system, the price must go up if the volume goes down, regardless of real demand, resulting in implosion.

 

Speed vs. Resonant Acceleration

From the perspective of the universe, the speed of light across space is quite slow. You want to travel the neutral line, but you have no idea what is in there. You must anticipate.

The fulcrum of fulcrums is a stack / hash table connected to the neutral pendulum line with pivots, creating waves relative to the angle between the platform and the line as it swings. Resonance and orbit are symbiotic.

If a sub-fulcrum gets too far out of balance, it is automatically collapsed, with its constituents falling onto the ready platforms below, for filtering to their recycling destinations over processing time, to restore equilibrium.

The big land “owners” are on top of the skyscraper, but on bottom of the human part of the pendulum line, and the species below them have seen this show several times. In August, the existing nexus goes into the red, permanently, and we will be focusing on the interest on the debt, which means bankruptcy. Decisions, including 0s, omission (the most expensive kind), have consequences. Life is unfair in the short term, but extremely fair in the long term. For the herd in the nexus, who bet all in the TBTF casino, it is Armageddon at that point.

The start of the line had to be reconfigured before the end, to re-establish prime. How long it takes to get the economy flowing again depends on how long it takes a middle class to reform around the new assembly line, to re-establish a semi-neutral insulator with the required conductive pathway for the new amperage required. Yes, we will be discussing currency.

If you are expecting major defense cuts without a functional economic replacement, which is the best defense, you are waiting for something that is not going to happen. The kids are going to do all the heavy lifting. It would be helpful to have some competent mangers around, in the form of a market, but they are not necessary.

Beginning in August, it will be unlawful for any of us to fix anything on the global IC chip anywhere in the world, and we will obey Caesar. The machine will run on auto, until it doesn’t. Careful what you wish for.

Mon, 06/06/2011 - 15:08 | 1344089 Duuude
Duuude's picture

kevinearick

 

Please expand on the August timeline.

 

 

Tue, 06/07/2011 - 18:14 | 1348713 kevinearick
kevinearick's picture

I am passing along tools that will allow people to build their keys, to pass through the light-emitting glass. If you have already passed through, but found yet more "shape-shifters," then you moved through the multiplexer to another dc track. That usually happens because you are expecting a crowd to physically greet you and turn when you don't see them. It's another dimension.

Do not depend on the senses that the nexus has controlled since birth. Those that are successful will bump into others randomly, trying to avoid contact. The global nexus information system is specifically designed, through algebraic reduction, to identify these collisions and track the participants.

As a result of the chase, the nexus has woven a rope around itself and is suffocating, while leaving a dye to make itself transparent, opening the curtain to the machine operators. The feminists are just a homogeneous class filter layer, controlling the men below them for the men above them, which they don't see, and assume "control" because their interface is an entertaining machine, causing economic circulation to stop.

In August, you will see plenty. The important thing is the learning curve of recognition, and its components. The upper middle class layer is about to go swoosh, and the herd is fully charged. Normally, the noose would just choke the females out, but this time is going to be a little different.

Thu, 06/09/2011 - 21:54 | 1356687 tip e. canoe
tip e. canoe's picture

"Do not depend on the senses that the nexus has controlled since birth. Those that are successful will bump into others randomly, trying to avoid contact."

thanks kev.   trusting the random flow is good exercise for sure.

btw, i see how the dark current of feminism you've been writing about lately is now the latest episode of "All the World's a Bank".    nice way to pickup on that pre-haste.   guess we should feel content that the veils at least are beginning to lift themselves.

Mon, 06/06/2011 - 15:03 | 1344059 Mae Kadoodie
Mae Kadoodie's picture

Softpatch! Softpatch!

Mon, 06/06/2011 - 15:00 | 1344060 slewie the pi-rat
slewie the pi-rat's picture

L0L!  just short of an apology.  missed it by that much!

Mon, 06/06/2011 - 15:10 | 1344066 Miles Kendig
Miles Kendig's picture

Real Shaman witchdoctors can actually see shit coming.  Well, usually, and don't need DoucheBanks sugar & dope boosted vinegar enhancements regardless.  All they do is attract more flies than even their supreme level of excellence in attaining decomposition would warrant.

Mon, 06/06/2011 - 15:07 | 1344087 Temporalist
Temporalist's picture

Real Shaman smoke things other than hopium.

Mon, 06/06/2011 - 15:59 | 1344276 Miles Kendig
Miles Kendig's picture

And Harry Wagner's wank, speaking of DB

Mon, 06/06/2011 - 15:04 | 1344072 Boston
Boston's picture

Excuse me while I buy some more Treasuries......

Mon, 06/06/2011 - 15:07 | 1344085 Manthong
Manthong's picture

"this quarter’s soft patch"

I do hope all those patchy references are transitory.

Mon, 06/06/2011 - 16:11 | 1344307 Miles Kendig
Miles Kendig's picture

Transitory patchiness will give way to transitory skid marks as DB & Associates move I'Zheet M'Drurz with amazing rapidity to a top spot from their Hamburg cell where he has been working the ag complex with stupendous results judging from all reports out of that region.

http://www.funrestarea.com/pages/snl_robert_deniro.shtml

Mon, 06/06/2011 - 15:08 | 1344091 Missiondweller
Missiondweller's picture

So when 2Q GDP comes in around 0% and we find out inflation is accelerating (even though the real inflation was already 5%) THEN will it be time for QE3?????

Mon, 06/06/2011 - 15:15 | 1344107 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Or, just as likely a crash in all complexes, 2008 redux X 10!?

 

Tuco Benedicto Pacifico Juan Maria Ramirez

Mon, 06/06/2011 - 15:17 | 1344127 Seal
Seal's picture

sounds like sell in May and go away

Mon, 06/06/2011 - 15:34 | 1344189 mayhem_korner
mayhem_korner's picture

So...what are these scheme-hatchers so busy with that they miss big game-changer stuff?

Mon, 06/06/2011 - 15:47 | 1344233 Whoa Dammit
Whoa Dammit's picture

Supply chain problems with car repairs are happening too.

I got a safety recall notice in the mail a couple of days ago. It said " We are working to obtain the necessary parts to correct this condition as quickly as possible. As parts become available, we will send you another letter asking you to take your vehicle to an authorized Mercedes-Benz dealer to have the repair conducted free of charge." 

The recall is for a cruise control problem. In the past, notices for other recalls always said to bring your car in right away.

 

Mon, 06/06/2011 - 15:53 | 1344246 cougar_w
cougar_w's picture

If it's a global economic disaster we're taking about then there's probably a fictional account of it:

http://madscienceunlimited.com/fiction/uncomfortableWithTheTruth.html

Where the destroyer asks the question: Can you really handle the truth? Well can you, punk?

Mon, 06/06/2011 - 16:16 | 1344314 dollarcoaster
dollarcoaster's picture

Prognostication: QE 2.5 will do it with all the bells and wwhistles. We might sell a QE4 % to europe-bitches

 

 

Tue, 06/07/2011 - 01:49 | 1346057 Cashboy
Cashboy's picture

I understand that German car manufacturers make most of their profit from export to China and India at the moment.

As China and India will be exporting less to the USA and European market as the demand has dropped as USA and Europe they are both skint and have run out of credit.  This will have the effect of China people having less income to buy German products.  This will result in Germany having a drop in manufacture of cars which will result in both unemployment and financial hardship in Germany.  The German people will then not be in support of a German government bailing out Greece (which would inevitably need financing again), Portugal, Ireland and later Spain which Germany will be in no financial position to do anyway.  This is when these countries will be defaulting and going bust and have no choice but to leave the Euro.

I actually do not see the great importance of being in the Euro anyway.

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