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CPI Prints At 0.1%, Below Expectations Of 0.2%, And Lower Compared To Prior; Empire Manufacturing Comes At 10.6 Versus Expectations Of 5
The two big economic numbers today were a mixed bag: CPI came in below expectations of 0.2%, at 0.1%. Core was in line with expectations of 0.1%, an improvement from the prior 0.0%. Elsewhere, the November Empire Manufacturing index climbed from the abysmal reading of -11.14 (which was largely ignored due to its outlier status), almost exclusively due to a surge in New Orders, which jumped from -24.40 to 2.6. What is troubling is that the Employment index dropped from 9.1 to -3.4, which could be a shift in diffusion indices toward a decline in employment. Then again last month despite a surge in diffusion employment strength, the NFP plunged. So in this version of bizarro world, the worse the employment index, the higher the NFP will likely be. And just as troublingly, priced paid jumped from 22.1 to 28.40: "the future prices paid index was positive and rose sharply, indicating that respondents expected input prices to accelerate." Continuing margin contraction anyone?
More from the CPI release:
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in November on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.1 percent before seasonal adjustment.
The indexes for food, energy, and all items less food and energy all increased slightly in November. The index for food at home rose in November after being unchanged in October, with the indexes for eggs and nonalcoholic beverages both rising notably. Although the index for gasoline rose, the index for household energy declined and the increase in the energy index was the smallest in five months.
The index for all items less food and energy rose in November after being unchanged the previous three months. Increases in the indexes for shelter and airline fares accounted for most of the rise, while the indexes for new vehicles, used cars and trucks, and household furnishings and operations all declined.
What is most amusing in the release is total lack of admission that food prices continue to increase courtesy of surging input costs: a concern shared even by the Empire Index respondents:
The food index rose 0.2 percent in November after a 0.1 percent increase in October. The index for food away from home rose 0.1 percent while the food at home index rose 0.3 percent. Among the six major grocery store food groups that comprise the food at home index, the index for nonalcoholic beverages posted the largest increase, at 0.8 percent. The index for meats, poultry, fish, and eggs rose 0.5 percent, due mostly to a 6.6 percent increase in the index for eggs. The index for cereals and bakery products rose 0.4 percent, and the index for other food at home advanced 0.1 percent. The index for dairy and related products, which rose 1.1 percent in October, was unchanged in November. The only major grocery store food group index to decline in November was fruits and vegetables, which fell 0.2 percent after a 0.7 percent decline in October. Within that group, the index for fresh fruits rose 2.0 percent but the fresh vegetables index fell 2.0 percent. Over the past year, the index for meats, poultry, fish, and eggs has risen 5.8 percent and the dairy and related products index has increased 3.8 percent. The other grocery store food groups posted much smaller changes.
And the November Empire Manufacturing:
The Empire State Manufacturing Survey indicates that conditions improved in December for New York State manufacturers. After dropping sharply into negative territory in November, the general business conditions index bounced back above zero, climbing
22 points to 10.6. The new orders and shipments indexes also rose above zero, while the unfilled orders index remained negative. The inventories index was negative, indicating that inventory levels were lower over the month. The indexes for both prices paid and prices received were positive and higher than last month, suggesting that prices rose, while employment indexes were negative, indicating that employment declined. Future indexes were generally at high levels—a sign that conditions were expected to improve over the next six months. Significantly, the future prices paid index was positive and rose sharply, indicating that respondents expected input prices to accelerate.Indexes for both prices paid and prices received were positive and higher than last month. The prices paid index rose 6 points to 28.4—a sign that input prices were accelerating; the prices received index also rose 6 points, to 3.4. The employment indexes, both negative, indicated a drop-off in employment activity in December. The index for number of employees fell 13 points to -3.4, for a cumulative decline of 25 points over the past two months. The average workweek index edged further into negative territory, reaching -14.8.
Future indexes pointed to ongoing optimism about the six-month outlook. The future general business conditions index was several points lower than last month but, at 48.9, was still close to the relatively high readings seen earlier in the year. The future new orders and shipments indexes were also relatively high, with the latter continuing a four-month streak of rising values. The future prices paid index posted a notable increase, rising 18 points to 58.0, its highest level since 2008; the upswing suggests that manufacturers expect input price increases to accelerate in the months ahead. The future prices received index also climbed. Future employment indexes were positive and little changed. The capital expenditures index held steady at 22.7, while the technology spending index rose 9 points to 19.3.
Empire Index link
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The CPI must have "beat the numbah" because gold is getting slammed.
All metals are having their faces gang banged at the moment. They have been getting pounded since 8am, which is odd since nothing relevant was out at the time.
Its just end of the year profit taking. I was actually waiting and praying for this. Daddy needs more shinny and I have some linen burning a hole in my pocket.
This happens every day. We end up well over half of the time.
$1,387, down 1%? Meh...
is this another green shoot?
It's not a GREEN SHOOT until gas hits $5.50/gal and it costs $30.00 for a loaf of bread...
Then it's a green shoot.
The government needs to rethink how it calculates inflation. All I see are smaller sizes and higher prices. My cable bill, power bill, grocery bill, doctor's bills and gas bill keep going up. Yet all I read is that there is no inflation. Do the Federal Reserve governors not have a household budget they have to balance?
Are we seeing a runup in commodity prices as a prelude to serious deflation at some point down the road? If businesses cannot pass on the higher cost of materials to consumers will margins shrink and more businesses shut down?
If businesses cannot pass on the higher cost of materials to consumers will margins shrink and more businesses shut down?
Yes.
These are not the prices you are looking for. Keep moving along.
After the CPI print the next story on the terminal was "Kraft hikes prices for coffee". Instant coffe up 4%, beans up 12%. Sure does not look like 1% to me!
Well, when you, as the BLS employees, spend 75% of your salary on coke and hookers, a 4% growth in food prices really only translates to 1% overall.
did you read the story on the declining relations between the coffee retailer and Kraft?
If you were the Bernank you'd keep buying here also.
Why do you think the Fed is tolerating rising rates on the long end of the curve? (despite official QE policy to lower them)
Answer: they're manipulating CPI to look artificially better (surprise) by allowing mortgage rates to rise, which depresses housing. The Housing Component of CPI is Over 40% and easily cancels rising gas, food and staples.
Everyone is so bewildered by rising yields which directly contradicts QE and which the market is counting on. Well, yes they're providing liquidity to Wall Street. But no, they can't allow it to look like they're causing inflation cause that would blow them out of the water politically. A big fail.
Is it possible that someone is selling long maturities
faster than the fed can buy them?
SHHHHHHH! Do not look behind curtain number 7 (China's FM dumping US T's like there is no tomorrow.... oh wait! Maybe there is no tomorrow!)
Of course they're selling, the point is the Fed with it's unlimited printing press is mysteriously allowing it. They could buy up every single coupon with the click of a mouse.
You mean the fed has no conscience?
They are senseless?
They care not even about appearances?
I'm no supporter of the fed, however, even their
minds may be strained by the prospect of $1T in
purchase in the next six months.
Hehe, no I think they're utterly desensitized to numbers by now. Not since Ben embarked on his "I'll Save The World" campaign back in March 09. He is determined. Quadrillions don't make him tremble anymore. And if you want proof that he's worried that people are losing faith, ask yourself why did he find it necessary to go on national TV last week??
Yup Caviar, I'm asking myself why he went on TV
(and he didn't appear confident to me). And, I remain concerned. I feel like I want to go to the
market now and find something to short. Nice
talking with you.
Agree. He looked shady and nervous
Nice analysis and probably right on the money. We live in an age of such crass disinformation by "official sources" that most people are bewildered and will believe whatever MSM tells them. Sure, there is no inflation despite the fact that toilet paper rolls keep shrinking in size.
Anyone bought a Pizza Hut or Domino's Pizza lately? The portion sizes are just ridiculous - almost microscopic. They would reduce the box size too but then people would really notice.
The FED cannot tolerate rising rates for very long given the rollover of debt and, thus, the servicing costs of the debt... (aside from losing its ass on its prior purchases).
My guess is that we're setting up for a short squeeze... when you control the market, you make money on its volatility...
In the end, we're range bound in far too many categories to get too carried away... spinning plates so to speak. Maybe the plate start dropping before too long, but I wouldn't expect it while there's dry powder to burn.
Hyperinflation is here!
Uh, no.
what do they manufacture in Empire State, maybe Benjamins and law suits?
I've heard that they manufacture mortgage backed securities.
+1
No green shoots here, just mold.
Since the data release, which was all governmenty [which is also to say fake], the SPY is showing signs of more roaches. I think someone should simply spray Raid on the SPY. Sometimes, the simplest solutions are the best solutions. Someone should maybe send some SEC guys out there on the street to take a look at certain firm's positions on the SPY. In doing so, perhaps we could get a real sense of just how many times over the SPY has been made to represent the S&P. And by that I mean it would be nice to know the current ratio of infinity SPY shares that exist in relation to the actual underlying shares of S&P companies available....which I'm almost positive is not infinity.
But I am a very simple man. I like things simple, and I know that is not cool with criminal syndicate Wall Street investment bankers because it makes it harder to arbitrage to death all things on the surface of the planet if said things are simple. So go ahead and DON'T spray Raid on the SPY then...not that it will matte today if someone does not plug back in that damn creations unit machine over at the VXX. Sometimes the supply and demand for things simply take over...and well, no amount of unicorn dew can make things behave.
Can any knowledgeable monetarist help me get my head around something ? If the fed buys all in all mbs, cmbs and majority treasuries and marks them to fantasy and holds to maturity, then we assume long rates sell down to the 5 or 6% range, meanwhile inflation begins ripping on a collapsing dollar, slowly triggering wage inflation until it picks up momentum over the course of a few years... at some point if the fed jacks the fed funds/discount rate up into10% range (Volker style) does the fed earn the interest on that, and would it over time reduce the losses on it's holdings ? If it continues for years does the fed begin to eat into the losses on it's book via both the higher fed funds rate and housing prices catching a bid via this rampant inflation ? All this while we see dow 35k, gold 5k, wages doubled or tripled and housing finding support ?
The banks earn the interest on the overnight rate
that they charge each other (federal funds). The fed
earns the interest on the discount rate. The latter
has historically been kept higher than the former
to discourage it's use as the fed ostensibly does
not exist to profit.
You've got a few 'violations of assumption' here: in a Hyper-inflation scenario, the march of prices isn't orderly. Energy, food and staples go up way disproportionately to other things. Housing may actually decline as people spend all their income Immediately on staples and people and capital leave the country.
My theory of biflation encompasses a number of explanations of what is going on NOW as opposed to what happened under Volcker or Weimar. Some of our inflation will be dollar-independant. To some extent the dollar index is no longer a balancing force because of things like the China dollar peg and the huge, huge ocean of offshore dollars all over the world.
The Fed would be in full panic mode with a core CPI over 2.5%. Read my other post to see how they're artificially manipulating the number to make it look like less by allowing housing to plunge more.
thanks for the replies, I'm just wondering if there might be some back door way that they'll be able to pull a rabit out of a hat. Something no one is thinking of.
They will have to come up with something
that noone is expecting Scatterbrains as it
appears that even common men like you and me
are on to them.
Scary isnt' it?
Off to the market now, and try to make some
money!
Believe it. The Fed is massaging inflation numbers, using the power of biflation to hide the insidious and inexorable march of energy, food and staples prices. And they will rise and rise, have no doubt. We shattered commodity records this week that were very very significant. AND IN THE MIDDLE OF A DEPRESSED ECONOMY!
We actually have a BIG inflation problem and the Fed knows it. But to even admit it a teeny weeny bit would spook the markets, and cause a big run for the exists into gold and other safe havens. Also Treasury refinancing would be under a huge gun and the entire edifice might be under the threat of default.
YES INDEED. It is pitchfork time!
Inflation in the things the middle class NEEDS to survive, deflation in the things the middle class wants to sell. How French Revolution of them to fix things so nicely!
Yup. That is exactly what's happening. And everyone i saying it too. THere's been an internet swell since last year.
The Fed is saying "throw them to the sharks" so that it can cover up the rampant inflation that's going on. Gas prices have doubled since Obama took office.
Have you shopped for a pitch fork lately?
Seriously, a local retail outlet had them on sale
where I'm at for $89.00 These were US made
traditional looking forks with the wood handles
and nice strong steel prongs. My compost pile
sits waiting to be turned yet.
Actually, people are not really good at math. The price of essentials (food, energy, education, healthcare, insurance, etc...) have gone up huge. Family incomes have gone up some (as in it now takes 2 incomes to feed a family for what 1 could accomplish in the 1970s). As a consequence, certain products (non-essentials) have actually gone down in price while others (essentials) have gone up. If you look at it on a family budget basis, it makes sense. If you have only $100 to spend (as incomes have been flat), and prices of essentials go up (and are mostly not counted by CPI), the amount of money left for non-essentials go down. This is deflationary, as less money chases more goods. A MUST SEE video can see seen here:
http://www.thekidsvillage.com/content/coming-crisis-middle-class
And we wonder why our school system is failing. The worse we get at math the more lies they can tell us and the more lies we will believe out of ignorance.
Can you solve for "x?"
It's more than our schools that are failing us. It's not that simple. The problem with government agencies like the BLS is that they have a mandate to publish "positive" headlines. The real data is available for anyone to look deeper. But, we are all too lazy to care.
The HFT computers key off headline data, not real data. So, the system is being built to "game" by the TBTF. Governments game Wall Street, Wall Street game Washington, and both game the general public, who are too busy watching "Dancing with the Stars" and "Jersey Shore" to actually look past the headlines.
Personally, I feel that those running the system have taken "1984" and "Brave New World" as their "How to" books. They know that Huxley's approach will take care of the stupid masses. Orwell's approach is being used for the few that have actually developed "critical thinking" and are no longer buying into the mass propaganda message. So, they have to stop the flow of real information such as Wikileaks.
These numbers are such crap! Three weeks ago a dozen eggs was $1... 2 weeks, $1.30... this week $1.50! Good thing there's no inflation and I don't eat or drive to the grocery store.
Yeah and 3 weeks ago gas was $2.80/gal and it's now $3.29. That's almost $.50 MORE per gallon! On a 20 gallon tank, thats $10 MORE to fill up.
It's pitchfork time!
lube or no lube on the prongs?
I say no lube.
no worries, after their first use pitchforks are self-lubricating
The don't count food or energy in the CPI. Worse, when they do report food prices, they factor in substitutes. That means if one month, pork stays constant and chicken goes up 20%, the price of meat does not go up that month. The following month, if pork goes up 20% and chicken stays constant, once again, meat prices have not gone up, as people can "substitute" one meat for another. Of course, in 2 months time, both chicken and pork are up 20%, but government stats show 0% inflation. Got to love government numbers. The only way to really look at this stuff is YoY prices and not allow for seasonality, substitution, or other "tweak the numbers" to reflect accurate inflation numbers. This is why shadowstats.com is so valuable.
Wow its all just pure fukin magic.
Empire Manufacturing
Builders of Death Stars. heh
good one.
reminds me of the line that all the radio stations stole for their bumpers back in the day:
"This station is now the ultimate power in the universe"
Nothing but price increases in the imported apparel business. Increases range from 5%-25% for garments to be delivered in the Fall 2011 season.
Cotton garment prices for early 2011 delivery are running 25%-50% increases based on poor cotton crop and smaller factory capacity.
It doesn't really matter what the Fed reports. Each time consumers drive past the gas station and see rising fuel prices, they start altering their behaviors.
The price of eggs have risen sharply, as has orange juice and other staples that consumers buy weekly.
If that is not showing up in the Fed's numbers, they just are looking the other way.
No such thing as a down stock market. Just think what would happen if after spending trillions the markets went down. There is simply no way this market is going to fall.
All they do is tinker with the inputs to make the number suit what ever there agenda is, its that simple. Government statics are a tool.
I think biflation is correct (so well done) . As far as pulling something out of the hat to save the day for TPTB ?Never forget thas they can simply rewrite the reporting rules and or otherwise pull some absurd trick to make it appear anything they want it to appear by virtue of fed jingoism. They can and do change the rules as needed, just look at how UE is reported and inflation? Have the reporting parameters been changed over time to suit the game? Only problem now is we have the internet and instant information as well as many people paying attention. If not for that, PRAVDA would be able to fool all, not just the masses/sheep and TV zombies who believe exactly what they are told. No question inflation is and has been here for a while and is growing.
Actually I think some fo the hedgies are getting nervous and with enough fund redemptions and bond evacuations things could surely change, fed or no fed. No doubt they have been able to prop it up so far, but ? In reality they have simply dug a deeper hole ? NO?
Total Fucking Bullshit
Headline of the day: KRAFT RAISES COFFEE PRICES BY 12%
No wonder the market is spooked and rates are spiking. Did anyone really believe the CPI was flat? All this nonsensical chatter about DEFLATION is borderline fraudulent. Even more annoying is the fact that the price change became effective yesterday. Maybe those Tassimo single servings aren't such a rip off after all?
Welcome to Stagflation Nation, everyone.