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Chicago PMI Subscribers Drive Market Down After "Flash Look" At Bad Number
The market tanked after the Chicago PMI index took a big bath on the second derivative double somersault. After hitting a better than expected 50 in August, the September number was 46.1, much weaker than the expected "expansionary" 52. the PMI is a useful advance indicator on the overall ISM, which is out tomorrow, and has been responsible for much of the presumed economic pick up in the past 6 months. As John Bougearel pointed out yesterday, ISM fans may be set for a major disappointment.
As a reminder the Chicago PMI is:
An index released monthly on
the last business day of the month to which it refers that indicates how
vibrant regional manufacturing activity is. An index value
of 50 or higher indicates increasing busi-ness activity; below that indicates
decreasing activity. The index breaks out readings for production, new orders,
order backlog, inventories, prices paid, employment, and supplier deliveries.
The PMI is a timely look at the strength of manufacturing industry in the
Chicago Federal Reserve regions, which comprise Illinois, Iowa, Indiana,
Michigan, and Wisconsin. The new orders and orders backlog indices are useful
in predicting future production activity.
And in case you were wondering why the market started tanking 3 minutes before the official release, it is because Chicago PMI subscribers get a 3 minute advance look on the number ahead of the general media. In other news, Flash Orders, Actionable IOIs and advance looks improve liquidity (and front running).
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Good to know the front runners were able to get their money to high ground before that little tsunami. I'm so concerned for their financial safety in these hard times.
They're not even trying to hide it anymore.
why would they, there's no one stopping them.
i would piss in the streets everyday if there was no threat of arrest
That's unfortunate...I mean that people only obey the law for ear of punishment.
no kidding, especially the "pissing in the streets" thing?
3 minute warning? My heart sooo bleeds for the rich
nowadays...
Getting that sinking feeling in the pit of my stomach
that says we may not be too far from karmic
bloodbath for front runners;
JubileeProsperity.com
This is an interesting battle today. At Quarter end there is an incentive to paint the tape for the close. Any fund manager who is up for the year, on the other hand, might feel like unloading into the pump. If enough folks who have beaten the average for the year decide to unload, this could be a five percent day. Belief systems are being tested.
In a normal (non-rigged) environment:
ADP NF Employment Change worse than expected + PMI worse than expected + FDIC (DIF) going negative today = 5%+ drop.
In our current (endless supply of gov't backstop money) environment:
ADP NF Employment Change worse than expected + PMI worse than expected + FDIC (DIF) going negative today = quick 1% drop (capitalized on by the frontrunners) and then a continuation of the same shennigans that got us 50%+ off the March lows.
I want nothing more than to see the market return to a normal environment, but I think it's going to take something more impactful to the broader public (sheeple) before we see this garbage turn around.
Actually, the pumpers need to find buyers to dump their trash. The only way to find buyers now is to drop the price.
Let the fools, I mean dip buyers, rush in.
so you as long as you pay $$ to subscribe, you have the right to frontrun?
looks like the SEC is once again fulfilling their mandate "to protect investors".
one would think that even the perception of a level playing field would mean something to the regulators.
Someone has to cover the fees for them to collect the data and produce the report... They are a non-for-profit, but not a publicly funded entity.
The people who are paying for this data are not "front running". They are getting a report that their fees pay to produce earlier than the public at large.
If you want to jump in front of the people paying for the ISM reports early, get a list of 400 industrial companies and your own flunkies to call them and put the data into Excel...
If this were government produced data (i.e. taxpayers paid to collect it), then there would be an issue here... but this is no different than individual hedge funds and other professional investors using their own staff to make estimates ahead of economic releases.
The GS flunky is baaaacccccckkkkk.
this has nothing to do with gs....only your
godforsaken ignorance running wild...
And now we have his cubemate flunky. Amazing how the parasites come out of the woodwork to support each other.
so true.
BULLSHIT
Sure. And Baltic Dry rates and the rest are not important either... What a friggin joke
someone has to collect fee's
so as long as i have paid for access, that justfies the ability to frontrun?
sort of like goldman being able to frontrun the market last sept 17 because they had access to hank paulson?
at this point one wonders why the regulatory agencies even exisit?
This is a private group of companies that pay to produce this report. If they didn't have the ability to profit from the report, it would not exist.
If all of our data came from sources where it was released to everyone at the exact same time - then all of our data releases would be coming from the US government (or pick your country for non US readers).
Should the data on http://www.shadowstats.com/ be free to all and publicly released at the same time that subscribers get it?
Perhaps we should also outlaw the business model of paying to get a copy of a non publicly posted newspaper?
Information and reports are not free unless they are produced by the government. If you try to level the playing field to the least common denominator in terms of data releases, then you end up with privately produced reports like the ISM not being publicly released, and everyone trades off of 15 minute quotes posted on Yahoo.
How that is better for anyone is beyond me.
To the guy who believes I work for GS - try again (I am self employed and do not pay to get ISM data in advance of public releases).
How does paying for material information that basically allows you to trade the market 3 mins ahead of the official release not constitutie, insider trading or frontrunning?
The mere act of paying for said material information does not negate the regulatory agencies duty to PREVENT frontrunning or insider trading.
They actually market it as a front running tool:
http://www.kingbiz.com/
+100 for lizzy
Correct. Materially significant information, regardless of its private or public source, is (supposedly) subject to the securities regulation laws.
Emphasis on supposedly.
Uh, you are pulling that out of your ass. There is no such law for a synthetic index like this.
If you want to compile some data, provide it to paid subscribers and then later make it available to the general public for free there is nothing illegal about it.
No sir, you need to read the law. The SEC can determine at any time that any information, private or public, is material information and thus subject to securities law.
If it is widely disseminated and has the potential to move the markets, it can be deemed material and thus subject to the law. Whether this is actually enforced is a different matter for discussion.
Take the exam for registered principle some time. It's right there in black and white. This is settled law.
I just wasted several minutes of my day on the website of the Chicago branch of the ISM, and did not see any indication that there is an early look for members... so while I wouldn't be opposed to such early data releases to those paying for its creation (and for all I know, that does happen) - I think this all falls in the camp of conspiracy theory at the moment. The release is media embargoed until 9:45AM, so there just as easily could have been a media leak.... or maybe there is a hedge fund out there that paid for their own staff to do their own private version of the Chicago PMI and they traded off of that information early...
While I am not a securities lawyer, I believe that either compiling ones own report, or getting a copy early through subscription would not fall in the camp of insider trading under the Mosaic theory http://en.wikipedia.org/wiki/Mosaic_theory.
In a capitalistic society where information is provided as a service, the people who value the data the most are always going to pay to get it in whatever form they believe is of greatest value to them factoring in the cost of that data.
I pay for several pundits newsletters (Marc Faber for instance). These come to me in e-mail, and their comments are later broadcast on TV and other media outlets. Trades that I make based on Dr. Faber's views from his newsletter before his comments are publicly distributed are neither immoral nor illegal, and I don't see this as being any different.
For each public data release, there are probably thousands of industry generated internal reports that inform various investors and speculators on their trades.
Not all information should be free and not all free information should be released to everyone at the same time.
The only effective way to level the trading playing field so that everyone has access to the same information is to halt trading. It has always been that way, and will always be that way.
Thanks Dixie Normus!
I was looking for exactly that.
Ok - so it is not a conspiracy theory but actually a 3 minute look ahead.... for the cost of $265....
I see nothing wrong with this, and think anyone who wants to trade off of the data should pony up the $265. It's a bargain.
While I agree that I could make my $265 back on this information the fact remains that some people are buying an actual market moving number before others can see it.
The difference between that and news letters and the like is a hard number vs. opinion.
If it is legal, I have doubts, then any outlet disseminating this information at 10:45 est should be required to provide a disclaimer along the lines of : "stay tuned for NAPM Chicago at 10:45 AM, 3 minutes after the buyers of the number get the info."
Either that or stop covering it, which was once the case with the Michigan "Sediment" number.
The numbers put out in the PMI are softer than some of the data in newsletters. These are surveys filled out by humans.... It is not a directly measurable number.
I don't understand why people here are upset at either Kingsbury International for doing the survey as a business, or for subscribers paying Kindsbury to do the survey to get the report before the public...
As for the media, I do agree that they should treat the "breaking news" at 9:45 differently... Anyone who is looking at free data that is not produced by a government (and even then sometimes) should always assume that other traders have had the information before them.
I agree completely with you - especially when they make it clear to everyone that they are sending copies to clients ahead of time. Besides, normally, Chicago PMI isn't a terribly important data point. It's only important today because it counters the optimism since Cash for Clunkers.
So as long as you putting up enough cash, nothing illegal. Got it, thanks.
The problem is that the Chicago Fed is commissioned by the governement and receives all its authority from government. They are supposed to implement US monetary policy and "foster a sound banking system and a healthy economy," not leak their information (which they can get easily because of their "gov't veneer") to private customers who then frontrun the market.
The real problem is they're still private bankers' banks (with a governemnt-sanctioned monopoly in their district, I might add).
& sorry, they don't have to charge a couple of their hedge-fund homies a few dollars to get a sneak-peek at their books. These guys can make their money off of check-processing fees. They don't need to make money off of leaking sensitive economic information just because it's not illegal. Again, they are a gov't sanctioned private monopoly that exists with a specific Federal Charter.
They can't make $$ to pay for <1400 employees with numbers like these (from Chicago Fed's website)? Ya think they could charge .001% more on their check processing fees?
Number of employees - 1,379 (2009)
Depository institutions in district - 2,647. This includes banks, savings and loans institutions, credit unions and others. (April, 2009)
Bank holding companies and state member bank supervised - 1,114 (April, 2009)
Checks processed - $749.6 billion (2008)
Counterfeit notes found per day - 32 (2008)
Currency received and counted - $45.7 billion (2008)
Unfit currency destroyed - $5.4 billion (2008)
So, these guys are a gov't-sanctioned monopoly bank that is charged with formulating notional monetary policy AND charged with regulating member banks AND they can still charge people for sneak-peaks at info that has a profound affect on the economy (particularly because they are gov't-sanctioned).
Man, it would be nice to be the Chief of a private no-bid contracted monopolistic Police force who just so happens to own thousands of acres of land in Columbia and Afghanistan. One could clean up!
It's not what is illegal, but what is LEGAL, that is scandalous.
Nothing to see here. Move along.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aX1da_F67k2M
"A measure of U.S. business activity unexpectedly shrank in September, indicating companies are likely to limit spending and production."
“Manufacturing is clearly pulling out of recession but we should expect the gains to slow in coming months,” Zach Pandl, an economist at Nomura Securities International Inc. in New York, said before the report.
USDZAR starting to move now. I highlighted this trade the other day too.
Well, all we needed to front run it was John Bougearel. JB, thanks for the analysis. Glad ZH is publishing it now as TBP has gotten a tired feel.
"It's (GDP) not an earth-shaking revision, but it does show a healthier picture than before because domestic spending is less weak. It's unlikely to change perceptions about the third-quarter outlook," said Pierre Ellis, a senior economist at Decision Economics in New York.
LESS WEAK?
that's like the recession being technically over, or
most likely behind us, the market being growthy,
or being partially pregnant....
When i read this line:
"This will probably mark the last quarter of decline in output for the U.S. economy, which slipped into recession in December 2007."
In a CNBS web site post re: the Q2 GDP numbers I thought to myself, self - do they mean forever as in never again decline?
TD, I think the "flash" was a lot more than 3 minutes. it actually started to tank about 9:45 ET, a full 15 minutes before the release. Just a huge drop out of the blue.
The executive assistants that fill those surveys out finally got tired of following instructions and reported what they actually know of conditions at their firms in the best possible light.
+10
SHop Craigslist.com for XMAS...
It the right thing to do. Its green,its in the spirit of XMAS and it helps others have a better XMAS.
My way of helping out the economy is to give money directly to those who need it not Wal Mart!
Pass it on ,lets start a movement, and sell your stuff on Craigslist too!
Christmas
XMAS looks like you're yelling. Is that a ticker symbol?
there was an intelligent post on ZH yesterday basically saying this was going to miss substantially. The logic was sound and warning signs were there. You could have front run this yesterday.
There is a difference between sound deductive reasoning leading to warning signs etc. and the actual market moving number being released to buyers of the info.
I thought last week that RIMM was a piece of crap and that they would project a rough road ahead. But I can't pay the CFO to give me the info early.
This is no different because for 3 minutes, buyers of this info had the actual number and were able to trade on it BEFORE CNBS, Bloomberg, Fox or the internet were able to distribute the data.
i think your point is fair, but honestly you can never rely on timely information (to the tune of 3 min). Cause sometimes mkt moves before info (speculation) and sometimes mkt moves opposite of what the printed number would lead one to intuitively expect. Just look at any Fed meeting announcement day for an example of this.
i'm not saying its right for this to have happened, but get over it, it surely happens all the time and i would definitely not construe this as front-running or insider trading.
There goes the V shaped recovery !
TD, We need some more info on the pre release to insiders. What is that about? Three minutes is forever in these fast markets.
Anybody know why AMZN is strong today?
No-one sells GS ahead of Lord Blankcheck. Alright, who didn't get the memo?
BTW, last day of Q3, no way we end lower.
Not to stand in a way of a good conspiracy theory, but do you have a source that says subscribers get early access?
The Bougearel piece was interesting but he overlooked one thing that is in the ISM but not in the PMI: Exports. Weak ISM is not a slam dunk given the weak $. Just saying.
Conspiracy theory is perhaps the most overused term in the world. But because I hate it so much I looked around to find PROOF (whose definition should we use?) that there is no theory in this case:
http://www.kingbiz.com/
3 minutes it is (guess we need to check on the definition of "embargoed until 8:45 AM CT.") Thanks. $256/month. Vat a bargain!
(But the ISM vs. PMI comment still stands.)
"The natives are quiet, I don't like it Sir."
Nobody was getting much sleep, that night.
Looks to me like a ramp job is in progress...I mean we get bad news yet the markets can barely drop 1%...theres something wrong here.
Dollar is being sold in a so-far futile attempt to prop things up. Looking at huge bounces in the metals.
Nothing speaks to inflation in metal prices like a contraction in manufacturing output...
Silver up 3% on this! The dollar manipulation knows no ends. This would be a whole lot funnier if it wasn't being done on the backs of Americans' futures.
I guess no one really cares about global catastrophies these days as long as the markets are up. Well, I guess with the earthquake wiping out a couple of thousands of people, there will be less competition for food sources going forward. SP will close in the green.
Well, I guess that could explain Wheat down to a new low today...
And the US Fed might want to think twice about plans to auction off the nation's silver treasures to fund QE2:
http://cnews.canoe.ca/CNEWS/Canada/2009/09/28/11172361-sun.html
What drop are you talking about? Wake up at 7 am in Hawaii and every index is green. You wouldn't know that the DJIA was down over 100 points 2 hours ago.
This volatility is sickening.
Can't you see those little green shoots pushing the market back up?
Dude, get some glasses. :>)
I am 20/20 and I cant make any sense of anything lately...maybe if I use these 3d glasses things will look greener.
upticks now! the fuckfaces are at it again
The pimp-in-chief was touting the 5000 new healthcare jobs that were being created.
Doesn't anyone get it? Healthcare, especially the service side is not the way to build and economy. There are only so many jobs and so little income in helping each other get out of bed. Healthcare expenses are a drain on a productive economy. We need to do for healthcare what has been done for computers. Better drugs and medical devices to reduce the labor costs of healtchare. Not more healthcare jobs. Yech.
Well, spending $1M per 'job created' is a sure fire way to tank the dollar even faster than Benny has scheduled. Which is a fast way to gun the equity markets. Which is an easy way to promote increasing CONfidence numbers. Which equates to higher economic forecasts...
All under Government control. Relax, everything is under control.
Are good friends at shadow stats has it as
The SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated "discouraged workers" defined away during the Clinton Administration added to the existing BLS estimates of level U-6 unemployment.
1. Cuurent SGS= 22%
2. BLS Broadest U6=16.4%
3. Official U3=9.7%
I'll take number 1
Wow... OK... you guys need to calm down a little.
You can subscribe to Chicago PMI and also Michigan Consumer Sentiment. Every desk in the world has these subscriptions, and has had them for years... as in more than 5 years.
If you are trading for a living and need tick by tick data, you have these subscriptions.
Keep in mind that these are private reports that are published for market dissemination. These aren't "official" government reports.
I agree, there is no restriction as to who can subscribe to this data, and it is not very expensive to do so, no one should complain that it is available to subscribers ahead of the public release. The company that compiles this data has no obligation to release it to the public at all, for that matter. This is not company-specific data, it is general economic data.
However, the MSM should disclose that his is private information that is available in advance to subscribers, if I hadn't read this site I would not have known that.
Can't break the dollar today, so it's time to push on crude.
US trading seems to come to a grinding halt once Europe closes these days. Watch Skynet and Hal take over now, to march stocks higher for quarter end.
The message behind the madness seems to be that in case there is any risk of a collapse in the markets, the Fed will open the floodgates. If there were to be a cross board currency devaluation, the only way you would see it is in higher commodity prices - oil, copper, gold. They will try to keep a lid on soft commodities to prevent CPI spiking (thus blowing up social security quicker than it will go anyway.)
Savers are going to suffer, especially those idiots who think Treasuries are a smart investment...
I take it back. Can we break the dollar? Yes we can. You just need to push hard enough on crude so they come into line.
Don't you just love being in control! Too easy.
Ok silly rally complete back short at 1058.
Please rescind this article.
Sincerely,
the PPT
nasdaq up .5%. the sellers were the fools i guess they forgot that they needed to window dress...
A blink of an eye and the poor economic data of the last few days was gone. Now that's magic!
Rahmp it up! Gun baby gun! Yihaaaaaa...
The Deathstar is at it again. Down 100 and then in the green. They were gunning crude prices as well I'm guessing. Consumer confidence is the true story
That's goverment markets for you.
The midday ramp up is a completely manipulated event. All economic data was terrible-even shocking in some instances as the PPI took a headshot.
The problem is I am not 100% sure that the owners of the DOW or S&P have a profit motive at this point. Basically, primary dealers(JP, Goldman, PIMCO etc.) have been slipping the FED toxic waste and those have been converted to Treasuries. The primaries also buy treasuries during auction and hold for 2 weeks. They then drop them on the open market, where the FED sops them up. The cash received for the FED open market buying(this is just delayed quantitative easing) has been controlled into the stock market(or the primaries hold treasuries as "money reserves."
If you got GE stock for toxic junk, then even in a massive drop in the stock market, it's better than the worthless trash they traded in for. I am sure they are instructed to buy the market with their newly inflated-by-trade-in cash and HOLD no MATTER WHAT.
So the question becomes-who owns the stocks in the stock market? There is something like 4 trillion in sidelined cash(funds and retail investors) so I can bet that most of the stock traded on the market is now US government-owned or controlled via primary FED banks. Then the primaries are asked to sell stock back and forth to collect a 1/4 cent rebate per share(NYSE Special Liquidity Program). That generates a lot of money and compensates for the paper losses that they could have on the stock market. Lucky for the banks too, the market is not allowed to fall, and their holdings are reflating. So far a no lose situation to reflate the equity bubble. The average PE of the S&P is like 30. If it's general accounting standards I have read up to 90.
This is an exploratory trade moving into a traditionally weak time of year. I suspect if the rally is allowed to continue into Oct. then the stock market is fully controlled by the banks and it's not worth even speculating in anymore-which is what happened 1 year ago to the average 401k investor.
The stock market is very broken and it's thinly traded. On some days the losers are 4 times the winners on the NYSE, but the DOW and S&P futures move up. Volume is generated for the sake of normalcy.
A live feed from the s & p futures pit in Chicago would have given you a heads-up on the PMI.
2.46 pm SPX look it's a cup and handle, so it must go up! Let's buy!
Check the spy volume at the end of the day. Three 4M share bars, and now another 4M share bar at near 5pm.
Money chasing garbage.