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Ahead Of Tomorrow's ISM Plunge

Tyler Durden's picture




 

From John Lohman

Ahead Of Tomorrow's ISM Plunge

As the reporting season for May’s Federal Reserve and Purchasing Managers surveys comes to an end, the markets prepare for tomorrow’s ISM survey.  As shown in the chart below, a best guess based on the regional surveys (Empire, Philadelphia, Chicago, Richmond, Dallas, and Milwaukee) would be 52, versus the Bloomberg consensus of 57.5.  Given that the regional surveys are more volatile (the CME has not yet figured out a way to raise margins on them), the ISM will certainly not fall that dramatically.


  
More interesting, however, is the rate and breadth of deterioration across the reports.  As shown in the second chart, May surveys had the largest ‘negative surprise’ since Bloomberg started tracking consensus estimates in 1998.  In addition, several of the reports have shown some of the largest two and three month rates of decline on record.  Whether this is indicative of a mid-cycle slowdown, or something more serious, a continuation of the recent deterioration could well set the table for QE3.

 

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Wed, 06/01/2011 - 00:17 | 1327603 Cookie
Cookie's picture

OT

Does anyone know what happened to Ambrose Evans-Pritchard of the Telegraph? I have not seen a piece by him since mid March

Wed, 06/01/2011 - 00:40 | 1327648 nathan1234
nathan1234's picture

From the Telegraph website:

Ambrose Evans-Pritchard is on sabbatical until the start of July.
Wed, 06/01/2011 - 04:39 | 1327807 bigwavedave
bigwavedave's picture

He is writing a book. 

Wed, 06/01/2011 - 02:05 | 1327701 TwoShortPlanks
TwoShortPlanks's picture

I only read his articles.

Wed, 06/01/2011 - 04:19 | 1327786 Michael
Michael's picture

THE FEDERAL RESERVE IS THE ROOT OF ALL EVIL!

WHY IS THIS NOT THE #1 BUMPER STICKER IN AMERICA?

WHY IS THIS NOT ZERO HEDGE'S MOTTO?

Wed, 06/01/2011 - 00:14 | 1327604 RockyRacoon
RockyRacoon's picture

Holy moley.

Wed, 06/01/2011 - 00:15 | 1327605 SilverDoctors
SilverDoctors's picture

Wait till Q2 earnings are released. They will all show the true extent of the damage Fukushima inflicted on manufacturing worldwide.  Thats when the real shit will hit the fan.

http://www.silverdoctors.com/

Wed, 06/01/2011 - 01:15 | 1327673 SeanJKerrigan
SeanJKerrigan's picture

If its at or near 0 percent growth, it'll be nothing short of jaw dropping.  The mainstream media will bury the story after a day though.

Wed, 06/01/2011 - 01:24 | 1327678 buzzsaw99
buzzsaw99's picture

Yep. If it's bad, blame it on Japan. If it's really bad, blame it on the weather.

Wed, 06/01/2011 - 03:35 | 1327750 Monedas
Monedas's picture

How do rogue elements of the CIA provide "firm evidence that the gold in Ft. Knox is not there" ??? It couldn't be video of empty vaults because they are full of tungsten bars, right ? If the tungsten bars have been stolen too....these are hard times ! Monedas 2011 Comedy Jihad World Tour

Wed, 06/01/2011 - 03:57 | 1327762 Orly
Orly's picture

The gold in Fort Knox has been leased out.  Most of the gold we have now is in Swiss banks near the border with Italy.

This paper was posted the other day by acrabbe and it is quite interesting.

http://www.scribd.com/doc/55864493/Unicorns-and-Glitter

Wed, 06/01/2011 - 10:25 | 1328433 Monedas
Monedas's picture

Thanks Orly....it's also quite long ! "It is not in the nature of the Hoarder Beast to not know where his stash is !"....Monedas 2011 Only Socialist governments could "misplace" 8,000 tons of Gold ??? Let me serenade you this morning ! http://trololololololololololo.com/

Wed, 06/01/2011 - 00:16 | 1327608 alien-IQ
alien-IQ's picture

if history is any indicator, the /ES will quietly make it's way to a 10 point + gain in the overnight session thus providing the market with a nice "gap up" in the morning. the news will hit, it will be shit, and the market will lose about half it's "gapped up" gains. At that point it will likely trade sideways til the 3PM viagra which will lead to the 3:45 market erection with the EOD pop shot to a new HOD.

The market is now officially a porno shoot. Everybody please...bend over.

Wed, 06/01/2011 - 00:21 | 1327613 plocequ1
plocequ1's picture

ISM... I tried looking up that stock symbol, But nothing came up. 

Wed, 06/01/2011 - 00:21 | 1327614 etudiant
etudiant's picture

He posted a comment on the Chinese push for thorium reactors here   http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/839398... which stated he was headed out to the Majan highlands for a while.

No idea when he is expected back.

Wed, 06/01/2011 - 00:22 | 1327616 SilverDoctors
SilverDoctors's picture

And @ Cookie, Evans-Pritchard is on sabattical until July
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/

Wed, 06/01/2011 - 00:40 | 1327647 Cookie
Cookie's picture

thx folks

Wed, 06/01/2011 - 00:23 | 1327619 Id fight Gandhi
Id fight Gandhi's picture

Long live bizzaro world.

How come you didn't do the Dallas fed today? The negative miss was a good setup for mirth making.

Wed, 06/01/2011 - 00:24 | 1327626 Tyler Durden
Tyler Durden's picture

Following the bloody economic trifecta, any additional reports of economic collapse would have merely forced the CME to reduce ES margins to < 0.

Wed, 06/01/2011 - 01:37 | 1327685 DeadFred
DeadFred's picture

They will give me money if I buy futures?... I think pass.

Wed, 06/01/2011 - 00:22 | 1327621 dwdollar
dwdollar's picture

That second graph is lopsided. It looks as though larger surprises are becoming more common.

Wed, 06/01/2011 - 00:25 | 1327622 Caveman93
Caveman93's picture

El Dorado ~ Iron Maiden

 

Gotta tell you a story
On a cold winters night
You'll be sailin for glory
Before you know what is right

So come over here now
I got a vision for you
It's my personal snake oil
It's just something I do

I'm the jester with no tears
And I'm playing on your fears
I'm a trickster smiling underneath this mask of love and death
The eternal lie I've told
About the pyramids of gold
I've got you hooked at every turn your money's left to burn

You'll be wanting a contract
You'll be waiting a while
I'd like to give you my contact
But that isn't my style

Well you only get one chance
And it's too good to miss
If I gave a lot to ya
Then I wouldn't exist

Greed, lust and angry pride
It's the same old, same old ride
The smoke and mirrors visions that you see are just like me
I'm a banker's face
With just a letter out of place
I know someone just like you knows someone just like me
 

El Dorado come and play
El Dorado step this way
Take a ticket for the ride
El Dorado streets of gold
See those over sold
You've got one last chance to try

So gone is the glory
And gone is the gold
Well if you need a story
I've come it has to be told

Well you can say I'm a devil
And I wouldn't say no
But out here on the dark side
Hey, on with the show

So is told
Big and bad and twice as bold
This ship of fools is sinking as the cracks begin to grow
There is no easy way
For an honest man today
Which is something you should think of as my life boat sails away

El Dorado come and play
El Dorado step this way
Take a ticket for the ride
El Dorado streets of gold
See those over sold
You've got one last chance to try

Wed, 06/01/2011 - 00:50 | 1327656 JR
JR's picture

US corporations not only offshored their production for US consumer markets, but they simultaneously moved offshore “US GDP, US tax base, US consumer income, and irreplaceable opportunity for American citizens.”

It is not news that many of the millions of jobs added from 1990 to 2008 are “non-tradable” or jobs that don’t produce goods and services that can be exported and, therefore, can’t be produced in locations distant from their markets, i.e., offshored.

But research just released from Michael Spence and Sandile Hiatshwayo shows, in fact, that almost all of the incremental employment of 27.3 million jobs created were non-tradable, with a whopping 10.4 million jobs in government and health care alone.

Paul Craig Roberts, in his major piece this week, “How Offshoring Has Destroyed the Economy,” says “tradable jobs” that are producing goods and services that can be exported, add more value to the economy.

Says Roberts: “When a country’s tradable goods and services are converted by offshoring into its imports, it is thrown back on low productivity domestic service jobs for its employment. These domestic service jobs, except for dentists, lawyers, teachers, and medical doctors, do not require a university education. Yet, America has thousands of universities and colleges, and the government endlessly repeats the mantra that ‘education is the answer.’  

“But with engineering, design, and research jobs offshored, and with many of the jobs that remain within the US filled by foreigners on HB-1 and L-1 visas, we now have the phenomenon  of American university and college graduates, heavily indebted with student loans, jobless, and living with their parents, who support them. 

Spence also acknowledges that the change in the structure of American employment from higher productivity to lower productivity jobs is the reason both for the stagnation in US consumer income and for the rising inequality of income. Sending middle class jobs abroad raised the earnings of capital. Spence understands that the lack of growth in consumer income has resulted in a shortfall in domestic demand, resulting in high unemployment.  He could have added that jobs offshoring also gave us the Federal Reserve’s policy of pumping up consumer debt as a substitute for the missing growth in consumer income. There is an obvious limit to the ability to maintain the growth of consumer demand via the growth of indebtedness."

Says Roberts: “To find a Nobel-prize-winner documenting the high cost of globalism to developed economies is extraordinary.  For the Council on Foreign Relations to publish it suggests that the Establishment, or some part of it, suspects that its hubris has run away with its fortunes, and that different thinking is needed to restore the US economy.”

Paul Craig Robert’s May 31 article can be found on Counterpunch.

http://www.counterpunch.org/roberts05312011.html

Wed, 06/01/2011 - 01:11 | 1327669 HungrySeagull
HungrySeagull's picture

I am into my second year at College some time ago and learn that the immigrants come over from India and other places, take over what is to be MY internship with a eye towards either taking MY future spot in IT or going back to India or some place to teach others.

Fook IT. There are other things that cannot be shipped off shore. Like truck driving. Not very many people can do that job for longer than 3 months anyway.

I got out of College with some Debt. I consider myself lucky compared to my class mates who hung in there and are now riding bikes to the auto parts store for part time work to get by with something to eat several times a week.

The rest promptly graduated and fled this no good dead end State for the big cities with it's never ending lust for "Educated" people to work the cases brought on by the unwashed masses.

Wed, 06/01/2011 - 01:21 | 1327677 SeanJKerrigan
SeanJKerrigan's picture

I'm headed back for grad school in the fall.  It might be worthless, but its pretty inexpensive.  Theoretically, I might actually make money on it depending on what my taxes look like.  I just hope the education bubble doesn't casue the school to go bankrupt before I get my masters.  After that, I couldn't give a hoot about my alma mater.

Wed, 06/01/2011 - 02:00 | 1327699 Id fight Gandhi
Id fight Gandhi's picture

Hats off to ya. IT ain't easy, contantly learning and working to earn your keep. Then some dickhead company wants you to train the new guy to take over your job at half the pay.

Wed, 06/01/2011 - 02:24 | 1327712 A Man without Q...
A Man without Qualities's picture

Paul Craig Roberts puts it very well.  The reality may well be that the miracle of post-industrial growth was illusory, based upon credit expansion and the willingness of the growig wealth of the mercantile nations to fund it.  I used to visit many businesses and stare at the staff sitting in their cubicles and wonder what they did and how it added value.  The suspicion was the legion of paper pushers were unnecessary, and eventually they would be jettisoned leaving high levels of service sector workers with nothing to do and nowhere to go.

We've created a jobless recovery through massive amounts of monetary stimulus, but there is no evidence we have created something that is sustainable.  Even worse, we have a conveyor-belt of younger people arriving into this mix with no skills or opportunities that make them useful, but who are somehow supposed to generate the output to cover the dotage of the retiring baby-boomers who've voted themselves the most generous, underfunded, entitlements imaginable.

But, TPTB are only focused on getting through the next day to look far enough ahead...

Wed, 06/01/2011 - 04:54 | 1327813 bigwavedave
bigwavedave's picture

This about sums up why we are here.... If you look beyond its conclusion and project any kind of roll back then which developed economy do you think would be most resiliant? Whose workers will take the $1 per hour job? Not the USA and not the Eurotrash. It will be the Japanese who come out ahead in any retro balance move. They will work for $1 an hour for the honour it brings (and a bowl of rice). Who will be hurt the most of the developing economies? China obviously. I forsee a revolt in China preceeded by years of brutal repression. 

Wed, 06/01/2011 - 01:49 | 1327691 chump666
chump666's picture

I think the market will cue on social/political now.  Japan could easy go into a fiscal meltdown which may send their govt into a meltdown.  Slight rumors on wires today about no confidence votes etc re: Japan

If a primer for QE3 is double dip fears for the US, Asia aint gonna sit back on this one - as they are slowing down too.

Global tension cycle kicking in...

There is no way the Swiss (weak econ), Finnish and German public are going to let Greece get away with another bailout.

Market has lost the plot at the moment, the way Asia was trading in the last 4hrs was mental

Wed, 06/01/2011 - 01:48 | 1327693 Orly
Orly's picture

How would that bode for the Swissie vis-a-vis the USD and EUR?

USDCHF trading at all-time lows and there is a long-term bullish Gartley pattern that has shown up on the Weekly chart.

Wed, 06/01/2011 - 02:40 | 1327716 chump666
chump666's picture

Europe is waking up now.  I think Asia lost the plot today, weird contrarian trades on the AUD and NZD...it was back to front.

As far as the CHF, a bullish patten is forming because it's all about EUR again.  It was (IMO) a false breakout on a wonky Greek article (deal being finalized). Bring up your risk trade (AUD) and risk averse trade (CHF) you'll see divergence forming.  Meaning = bull trap.

Huge shorts were sqeezed today on the AUD, like maybe a option stop had to be knocked out...hard to say.  Full on trading taking place now.  Watch your charts

Wed, 06/01/2011 - 02:42 | 1327721 chump666
chump666's picture

Orly, just in

*Greece may not be able to make the redemption payment on their 3.9% bond that matures in August, surely a new bailout merely pushes the inevitable further down the road, thus extending the crisis.
Wed, 06/01/2011 - 02:47 | 1327724 chump666
chump666's picture

Orly, just in

*Greece may not be able to make the redemption payment on their 3.9% bond that matures in August, surely a new bailout merely pushes the inevitable further down the road, thus extending the crisis.
Wed, 06/01/2011 - 02:41 | 1327717 chump666
chump666's picture

Europe is waking up now.  I think Asia lost the plot today, weird contrarian trades on the AUD and NZD...it was back to front.

As far as the CHF, a bullish patten is forming because it's all about EUR again.  It was (IMO) a false breakout on a wonky Greek article (deal being finalized). Bring up your risk trade (AUD) and risk averse trade (CHF) you'll see divergence forming.  Meaning = bull trap.

Huge shorts were sqeezed today on the AUD, like maybe a option stop had to be knocked out...hard to say.  Full on trading taking place now.  Watch your charts

Wed, 06/01/2011 - 03:02 | 1327729 Orly
Orly's picture

Great.  Thanks.

:D

Wed, 06/01/2011 - 02:10 | 1327705 FoieGras
FoieGras's picture

What "bizzarro" market? Market appears as bizzare or non-bizzare as any other period over the last 15 years to me.

Wed, 06/01/2011 - 03:53 | 1327760 Crab Cake
Crab Cake's picture

What market?

Fixed it for ya.

Wed, 06/01/2011 - 03:09 | 1327733 phungus_mungus
phungus_mungus's picture

This is like watching a train wreck unfold in slow motion... 

Wed, 06/01/2011 - 04:10 | 1327774 Crab Cake
Crab Cake's picture

I've been doing that, watching the wreck that is, for almost a decade now. The only good news is that I'm all the way down the DABDA ladder.

God grant me serenity,
to change the things I can,
accept the things I can't,
and wisdom always to know the difference...

Wed, 06/01/2011 - 03:36 | 1327752 squexx
squexx's picture

Don't fly planes into the IRS, fly them into the nearest Syn-agog or ADL building!

Wed, 06/01/2011 - 05:52 | 1327839 sabra1
sabra1's picture

OT:

Austerity related suicide on the rise, Goldman to introduce new ‘suicide collateralized adjustible mortgage backed derivatives’ (SCAM’s) to cash in on trend
Wed, 06/01/2011 - 07:06 | 1327866 luciusfargo
luciusfargo's picture

+1

Wed, 06/01/2011 - 06:41 | 1327858 writingsonthewall
writingsonthewall's picture

Meanwhile...on the other side of the atlantic....

 

The housing bust continues - it's more of a long slow deflate than a short sharp collapse (like the US)

Unfortunately - unlike other western nations - the entire UK economy is totally reliant on the housing market as it's been an 'atm' for most homeowners during the boom.

 

One thing that is certain - this picture shows what a 'square root' housing recession looks like.

http://www.housepricecrash.co.uk/graphs-mortgage-approvals.php

I dare anyone to look at the graph and claim there is light on the horizon. Even money printing isn't making any difference - and of course the asking prices for houses are still near the boom levels - showing that there is a diconnect in the brain between seller and reality!

New data out today in the UK - PMI into double dip territory and mortgage approvals hit an all time low (45,166) - although the graph begs to differ.

http://www.bbc.co.uk/news/business-13613303

 

Guess what's being blamed? - the 'extended bank holiday' - because nobody goes looking for houses on bank holidays do they??

 

Time to short the UK market - the cash cow of property is finished and there is no replacement in sight.

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