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Dallas Fed's Texas Manufacturing Index Misses Expectations Of 17, Comes At 12.8, Inventories Surge

Tyler Durden's picture





 

Another diffusion index miss, another snooze in stocks, another surge in inventories, another plunge in new orders, and another harbinger of margin collapse: that's how one can describe today's only relevant economic datapoint. The Dallas Fed's December Texas Manufacturing Index came at 12.8, a big miss from expectations of 17, and a drop from the November print of 13.1. And as always, the really nasty news was behind the headlines: finished goods inventories surged by 11.1 to -1.1 (and a whopping 19.5% in the six month forward index), while materials inventories rose by 3.9%. On the margin collapse side prices paid for raw materials jumped by 9%, wages and benefits increased by 4.4%, while new order volume and growth rate bit plunged by 7.5% and 6.8% respectively. We expect the futures to go green imminently on this piece of economic data which no computer gives a rat's ass about.

Index detail:

From the report:

Texas factory activity increased in December,
according to business executives responding to the Texas Manufacturing
Outlook Survey. The production index, a key measure of state manufacturing conditions, was positive for the fourth consecutive month.

Other indicators of current activity also remained positive, signaling continued growth in manufacturing. The shipments index held steady at a reading of 8, and the capacity utilization index rose from 10 to 15, with 29 percent of manufacturers reporting an increase. The new orders
index declined in December but stayed in positive territory, with more
than three-fourths of firms noting increased or unchanged order
volumes.

Measures of general business conditions remained positive in December. The general business activity index came in at 13, with nearly a quarter of respondents noting improved activity. The company outlook
index edged down to 15, although the share of manufacturers who said
their outlook improved rose to its highest level since May.

Labor market indicators improved notably this month. The employment
index rose from 6 in November to 15 in December, reaching its highest
level since early 2007. Twenty-four percent of firms reported hiring
new workers, compared with 9 percent reporting layoffs. Hours worked increased again this month, and the wages and benefits index rose from 5 to 10.

Prices climbed again in December. Input costs remained on an upward trend, with the raw materials price
index rising from 35 to 44. Forty-six percent of manufacturers saw an
increase in prices paid for raw materials, compared with only 2 percent
who saw a decrease. Finished goods prices
rose for the second month in a row, although the great majority of
respondents continued to note no change. More than half of respondents
anticipate further increases in raw materials prices over the next six
months, while 37 percent expect higher finished goods prices.

Manufacturers’ six-month outlook continued to improve. The future indexes for production and shipments edged up further; more than half of respondents expect increases in these measures in coming months. The future new orders
index rose to its highest level in four years, with all firms
anticipating either increased or stable order volumes. The future general business activity index advanced from 26 to 37, and the future company outlook index rose to 38, with 94 percent of firms anticipating similar or improved conditions six months from now.

The Dallas Fed conducts the Texas Manufacturing
Outlook Survey monthly to obtain a timely assessment of the state’s
factory activity. Data were collected Dec. 14–21, and 96 Texas
manufacturers responded to the survey. Firms are asked whether output,
employment, orders, prices and other indicators increased, decreased or
remained unchanged over the previous month.

Survey responses are used to calculate an index
for each indicator. Each index is calculated by subtracting the
percentage of respondents reporting a decrease from the percentage
reporting an increase. When the share of firms reporting an increase
exceeds the share reporting a decrease, the index will be greater than
zero, suggesting the indicator has increased over the prior month. If
the share of firms reporting a decrease exceeds the share reporting an
increase, the index will be below zero, suggesting the indicator has
decreased over the prior month. An index will be zero when the number of
firms reporting an increase is equal to the number of firms reporting a
decrease.

 

d

 


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Mon, 12/27/2010 - 11:45 | Link to Comment malikai
malikai's picture

Everything is bigger in Texas.

Mon, 12/27/2010 - 11:47 | Link to Comment rosiescenario
rosiescenario's picture

.......but the financial press keeps telling me rising inventories are a sign of an improving economy....they signify business is confident about future sales.....

Mon, 12/27/2010 - 11:48 | Link to Comment TumblingDice
TumblingDice's picture

The fed is trying to trick us into thinking that the economy is not doing so hot so we stay out of stocks. Don't listen to them. Just buy the fucking dip.

Mon, 12/27/2010 - 11:47 | Link to Comment gwar5
gwar5's picture

The slow boats from China just cut their engines to save fuel

Mon, 12/27/2010 - 12:22 | Link to Comment Lionhead
Lionhead's picture

Here's the "new normal" ship of the future. Reduced size, smaller crew, huge reduction in carbon footprint, appropriately sized for a low growth global economy.

http://www.marinetraffic.com/ais/showallphotos.aspx?mmsi=261148000

The future is now!

Mon, 12/27/2010 - 11:49 | Link to Comment mynhair
mynhair's picture

Funny how the Fed report spins it:

Texas factory activity increased in December, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, was positive for the fourth consecutive month.

Other indicators of current activity also remained positive, signaling continued growth in manufacturing. The shipments index held steady at a reading of 8, and the capacity utilization index rose from 10 to 15, with 29 percent of manufacturers reporting an increase. The new orders index declined in December but stayed in positive territory, with more than three-fourths of firms noting increased or unchanged order volumes.

Mon, 12/27/2010 - 14:56 | Link to Comment HarryWanger
HarryWanger's picture

Labor market indicators improved notably this month. The employment index rose from 6 in November to 15 in December, reaching its highest level since early 2007. Twenty-four percent of firms reported hiring new workers, compared with 9 percent reporting layoffs. Hours worked increased again this month, and the wages and benefits index rose from 5 to 10.

-You guys must be high, this was a pretty decent report.

Mon, 12/27/2010 - 15:06 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

-What is U 6?

-Is the BLS accurate?

Mon, 12/27/2010 - 17:00 | Link to Comment Common_Cents22
Common_Cents22's picture

Warehouse help is needed to stack up all the production to make it fit in the warehouse.

Mon, 12/27/2010 - 11:55 | Link to Comment Cleanclog
Cleanclog's picture

Never mind.  TPTB will send the market higher on next to nothing volume to perpetuate the myth that everything is rosier.  

It was amazing at the various holiday gatherings of the past several days to hear so many people jazzed about the stock market and the good days around the corner that stock prices "suggest". When I would remind that those happy profits in their portfolios aren't actual money in their pockets unless they cash them in, (yeah yeah, I know how much fun I must be to be around)  that was pretty confusing to most.  Kinda like when they thought their house was worth $1million but doubt they could get $700K for it now.    

Mon, 12/27/2010 - 13:35 | Link to Comment Popo
Popo's picture

Yes, but here's the rub:

Equity markets will look healthier, while rising input costs destroy business margins.

At some point (sooner than you think) the margin-collapse kills the businesses.  No amount of green-shaded ticker symbols is going to hide the horrific number of business closings or the devastating spike in unemployment.

That's the point at which Baghdad Bob admits it's over, and runs for the hills.

Right now you've got hundreds of thousands of small businesses praying that holiday consumer spending saves the day.   That game is up in another week..

Mon, 12/27/2010 - 14:12 | Link to Comment voltaic
voltaic's picture

I heard the same "the market is rocking right now and I'm making money" routine over the holiday. No talk of why or how, just the it's going higher mentality. Kind of reminded me of the late 1990s conversations where all is profit and losses aren't possible. Buy the dip.

This is the only site that I've read that had this manufacturing report as less than great. Every other site that I have read has it as the best this and that since 2007. Hiring is on fire and expectations are nothing but positive. Odd, but the pump continues unabated. 

Mon, 12/27/2010 - 12:03 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Gold and silver testing resestence and platinum just broke out.  I would normally think PMs would break out here, but market sentiment has gone hugely PM bearish.  But I do think PM trumps all, and it will finish the global financial race to the bottom ontop.

Mon, 12/27/2010 - 12:05 | Link to Comment malikai
malikai's picture

Gold got a nice slashing last night and looks like it's just holding steady. If I had balls of steal I'd put a bunch of lowball longs in on gold waiting for another slashing to come along so I could buy the fucking dip. But I'd be in and out quick. I'm expecting bad news and a general pullback and everyone going to treasuries again. After all, they probably want those yields to come back down a bit.

Mon, 12/27/2010 - 12:07 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Treasuries?  Again?  Gold trumps treasuries, paper is worthless.

Mon, 12/27/2010 - 12:11 | Link to Comment malikai
malikai's picture

Fundamentals are so 20th century.

Mon, 12/27/2010 - 12:20 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Fundamentally gold is used as the first loan of recourse by every Central Bank and to prop up the FIAT ponzi system it has to hold its weight.

Mon, 12/27/2010 - 12:30 | Link to Comment malikai
malikai's picture

Just a bit of sarcasm. I like my gold yellow, in my hand, and a bit cool to the touch. I am forced to play in the casino to acquire my yellow substance, so I must learn how to beat the house. Every gambler must learn how to work the house to be successful.

Mon, 12/27/2010 - 12:36 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I gamble only with friends.  When it comes to casinos, I find breaking their vaults earns me the most monie.

Mon, 12/27/2010 - 12:55 | Link to Comment Red Neck Repugnicant
Red Neck Repugnicant's picture

When it comes to casinos, I find breaking their vaults earns me the most monie.

Fuckin' A!  That's badass!  Talk like that makes me want to do donuts in my '92 Camaro with a sweet fuckin' 350 under the hood. 

Who's the fuckin' gangsta NOW? 

Bitch-ass-TRICKS!

Mon, 12/27/2010 - 13:14 | Link to Comment owensdrillin
owensdrillin's picture

92 Camaro? Is that your mom's car?

Mon, 12/27/2010 - 13:38 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

You are such a tuff guy. 

Mon, 12/27/2010 - 12:44 | Link to Comment Red Neck Repugnicant
Red Neck Repugnicant's picture

Treasuries?  Again?  Gold trumps treasuries, paper is worthless.

Just a quick update: paper not worthless (yet) as of 8:27 this morning.  I went to Starbucks, nervously attempted to buy a cup of coffee, handed the cashier a FRN, and she took it.  It was a tense moment, though.  She took the FRN, called her manager away from the drive-through register and had a small discussion about it.  Moments later, she returned and said, "ok, we'll take this, but maybe not tomorrow."

I'll keep you updated today as I attempt to redeem other goods and services for those FRN's.  The situation seems very fluid right now.  Lots of wild cards out there.

From the frontline,

RNR. 

Mon, 12/27/2010 - 12:47 | Link to Comment malikai
malikai's picture

lol

Mon, 12/27/2010 - 14:00 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

You are pointing out that very few people understand the crime perped by the Federal Reserve Bank.  You are showing that slave training by the fascist eugenics has worked on certain people who  happen to be the vaste majority of the public.  The constitution says no coinage should be issued that isn't gold and silver.  You disagree with the constitution, do ya?

Mon, 12/27/2010 - 14:09 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

Billions of fed paper traded daily. Look at the paper mountain/fear trade that helps print/underpin  1,381.00 gold... Lol'

Mon, 12/27/2010 - 15:11 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

WHat is wrong with the dollar?  I heard it is the strongest currencie...Platinum has the markets in a belly to belly suplex.  Time to roll the hips!

Mon, 12/27/2010 - 15:21 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

Not sure . I thought it would be at 77' last week. 

Now its platinum...

What about all the gold miners getting blowtorched since Oct. 20th China hike (1) ??? Man, so many doomers have gotten monkeyhammered holding onto those miners.

Just buy "AIG,BankofAmarica,Us Steel,RAS" you will get those returns back.

Mon, 12/27/2010 - 15:57 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Buy Bac before the Fraudclosuregate, gotcha!  AIG after today?  You must be joking.  I like Silver @29 ;)

Mon, 12/27/2010 - 17:02 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

I bought AIG 2 weeks ago around 50.. .... major volume in 3 weeks was trading at 40-44 for 5 months before breakout.

Mon, 12/27/2010 - 17:13 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Want a cookie?

Tue, 12/28/2010 - 03:04 | Link to Comment Hephasteus
Hephasteus's picture

Only if it is used to store his logout information.

Mon, 12/27/2010 - 11:56 | Link to Comment TexDenim
TexDenim's picture

Richard Fisher takes this survey very seriously and personally talks to a circle of some 100+ local CEOs to get the more nuanced view of what is going on. This is a good survey. What I take from this is that production levels have exceeded the economy's capacity to absorb the new manufactures and that we are going to see a slowdown in 2011. As expected, if you read ZH.

Mon, 12/27/2010 - 12:01 | Link to Comment UninterestedObserver
UninterestedObserver's picture

Don't worry any slowdown will just be contributed to the snowstorm LOL

Mon, 12/27/2010 - 12:00 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Prices paid rising > prices received. Biflation. Margin killer. Buying power crusher. Only gold can help. 

Mon, 12/27/2010 - 11:58 | Link to Comment Dr. Doom
Dr. Doom's picture

Nothing to see here...Move along.

Mon, 12/27/2010 - 11:59 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Upcoming acts to watch...

1) When margin pressure finally emerges from the shadows of creative accounting to prove how hollow 2010's stellar corporate profits actually were.

2) When the M&A tsunami, made inevitable by supply-side-ism's inherent flaw, begins in earnest.

3) When "true" (hah!) prices are actually reflected on store-shelves

4) When something actually shrinks in Texas.

 

ORI

http://aadivaahan.wordpress.com/2010/12/17/straykitty-wrote-in-2/

Mon, 12/27/2010 - 12:11 | Link to Comment Caviar Emptor
Caviar Emptor's picture

1) Margin pressure has already taken a dire toll in some sectors. We're seeing some bankruptcies. 

2) m&a will be muted. Just listen to the big PE shops. If they're not buying, there's not much interest. I never believed that 'cash mountains on the balance sheet' are ever going to be spent on hiring, capex or m&a when it can just become a golden parachute. 

3) prices are hitting the shelves and are exceeding prior records despite high unemployment and low growth

4) Egos are outpacing performance

Mon, 12/27/2010 - 12:51 | Link to Comment Oh regional Indian
Oh regional Indian's picture

CE, my points were more like when will this stuff hit the headlines with undeniable ferocity, as opposed to their current hide-ability.

Also, I disagree that M&A will be muted. Companies who are missing economies of scale will unite or die. It's baked into the supply-side pie. What form it will take is less unclear. And this will not be PE fund driven. More like all-stock deals of the dot.con boom, only this will be the tale of the industrial bust.

As for prices, true for needs but not yet true for wants. That was what I was really referrign to. Manufactured goods.

Your points are well taken too though.

 

ORI

Mon, 12/27/2010 - 13:26 | Link to Comment owensdrillin
owensdrillin's picture

I agree that we will see quite a bit of m&a this year. However I think it will mostly be China purchasing companies in emerging markets or in Canada or Austrailia. They want something for the paper they hold other than gold.

In Canada, some purchases over the past two years have been 17% of Tech (mining) for a song at $17 bucks a share, now $58 bucks. Other purchases have been mid to larger Canadian oil companies which are now trading at approximatley double the price paid. Our dirty oil up here may get a little more popular now that Nancy doesn't have quite the say she did.

Mon, 12/27/2010 - 12:32 | Link to Comment plocequ1
plocequ1's picture

Margin pressure, What does margin have to do with stocks.. Besides,I dont eat Margin. I eat Parkay

Mon, 12/27/2010 - 12:15 | Link to Comment Sean7k
Sean7k's picture

I'm not sure 96 manufacturers that CHOSE to reply is statistically significant. Probably get a better picture from a telephone poll. According to the Texas Manufacturing Index, there are more than 25,600 manufacturers in Texas.

Higher inventories? How high? High because of new orders or because you can't sell stock?

Higher input costs? How much higher? What percentage of your product requires them?

More hiring- Part time or full time? What wage levels? Were there layoffs as well?

What were the margins on what you are selling?

If you chose to respond, is that because you want to sell the PR end?

There are few things worse than lousy statistics, when even well developed statistics are presented to give the best picture.

Mon, 12/27/2010 - 16:48 | Link to Comment hardcleareye
hardcleareye's picture

+++++

Mon, 12/27/2010 - 12:05 | Link to Comment RobotTrader
RobotTrader's picture

Investors are now cheering this news by buying financial stocks.

Meanwhile Blythe Masters is also happy, since her favorite "Plus Size" clothing store is up 5% today....

Mon, 12/27/2010 - 12:10 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Banks are rushing to the exits of the burning theatre.

Mon, 12/27/2010 - 12:28 | Link to Comment Prof Gulliver
Prof Gulliver's picture

Rushing to the exits? No, there is no exit strategy, nor do they need one. The Day of Reckoning has been forever cancelled, thanks to an endless supply of BennieBux.They are happily sitting in their offices cashing their bonus checks as everyone happilly snaps up their stocks.

Mon, 12/27/2010 - 12:46 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Look at aig, you don't think it is a pump and dump?  Cheer up, the banks are insolvent and so is the financial system.  Handing out IOUs as meal tickets only lasts until the first person stops accepting them.  I don't want paper, do you?

Mon, 12/27/2010 - 12:56 | Link to Comment malikai
malikai's picture

I wonder how FRNs compare to cat food on the caloric chart. Maybe dollars are a good investment after all?

Mon, 12/27/2010 - 13:00 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I heard Warren Buffett has his doolars mulched and turned into toilet paper.

Mon, 12/27/2010 - 13:14 | Link to Comment Red Neck Repugnicant
Red Neck Repugnicant's picture

I don't want paper, do you?

So far, the paper has proven to be pretty handy. 

Yesterday, I went to Nordstroms and bought some underwear on sale.  I went to the cash register and tried to barter with a couple chickens I had in a cage (any educated person that understands what our government is doing would take the chickens rather than the FRNs).  I just assumed all Americans knew about the paper money scam, but this dumb bitch behind the counter opted for the worthless paper rather than the chickens.  Unbelievable!  I got new underwear.  I kept my chickens and got rid of those bogus FRNs. 

You can't eat paper, you dumb bitch!  I'm going back today to see if she's working again.  If so, I'll notify all ZH readers which Nordstrom's it is.  

Dump your paper.  Keep your chickens.  Get goods and services for free, while the rest of America isn't smart enough to know what's going on!

   

Mon, 12/27/2010 - 13:58 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Chickens, do you live in an island economy?  Definitely use the paper.  It is not our fault that people have no concpt of not only what constitutes monie constitutionally, but that finance is rarely understood.

Mon, 12/27/2010 - 14:08 | Link to Comment Prof Gulliver
Prof Gulliver's picture

AIG and the financials are just pumps. No more dumps allowed. In 2011, the banksters will have a great year getting fees from private companies they "advise" to go public and public companies they "advise" to go private. Their clients and their clients' employees will ultimately suffer, but the pain will be spread around so no one notices. Insolvent is now a concept. The reality will be hidden forever. Any idiot with CNBC on their TV, an Etrade account on their computer and who can type the letters F-A-S had a very good year and will have an even better 2011. Sad, but true.

Mon, 12/27/2010 - 14:29 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Credit is created to be destroyed.

Mon, 12/27/2010 - 12:20 | Link to Comment plocequ1
plocequ1's picture

This can only mean one thing.. Buy AIG while its still hot.

Mon, 12/27/2010 - 12:52 | Link to Comment doolittlegeorge
doolittlegeorge's picture

AIG...interesting, isn't it.  "There's your financials....

Mon, 12/27/2010 - 12:24 | Link to Comment chancee
chancee's picture

Couldn't pump the ES pre-market due to bad weather so SPY has to suffice during normal market hours.  I can already hear the mindless blather on CNBC - 'Can't keep a great market down!'

Wake me up when this market isn't a manipulated joke.

Mon, 12/27/2010 - 12:27 | Link to Comment Everyman
Everyman's picture

I heard some idiot on CNBS saying that they are looking forward to "astrong ten years of market gains."  The BS is getting deep over there.  You visit CNBS you need hip waders.

Mon, 12/27/2010 - 12:43 | Link to Comment pazmaker
pazmaker's picture

I guess you will be sleeping forever then my friend... this market's manipulation will not end.

Mon, 12/27/2010 - 12:26 | Link to Comment Everyman
Everyman's picture

Is the report on this post the same as the one on calculated risk?

http://www.calculatedriskblog.com/2010/12/dallas-fed-manufacturing-activ...

Because over there they seem to have a much brighter report on it.

This is what kills me about these "Economic index's", you can pretty much say whatever you want with the results.  Two vastly different takes on the same report and data.  And we wonder about the inflation/deflation debate.  Shows me that the entire economic field is study is just a bunch of shit with statistics thrown around.  The point I take away is "if the data doesn't fit your postulate, then git rid of that data and find some that fits your postulate."  Definitely not a scientific method applied here.

Mon, 12/27/2010 - 16:33 | Link to Comment hardcleareye
hardcleareye's picture

When ever "executive summaries" of reports or data is given it is always a good idea to review the actual report and data.  ZH provided you with a direct link to the actual report, they even give links to the definition of the "data points" etc..they drew your attention to....  I think the intent was to give you a heads up on the "claimed" 21 month increasing trend of the "cost of raw materials" and the significant increase of companies "claiming" increased "finished good inventories"...

Regarding, "Definitely not a scientific method applied here."  That is a very funny comment (I truly appreciated the laugh), please read the

http://www.dallasfed.org/data/outlook/form.pdf

the information submitted on these forms are not "verified" "hard" "data" or real "numbers"....  It is just what the representative of the company filling out these forms (that's if they have time to fill it out that month) "believes", there is no way to verify the information on the form... its a WAG or ("I think this is what I should answer this month..").... and should be treated as such...  the "comment to survey response" is interesting reading.

Mon, 12/27/2010 - 12:33 | Link to Comment RobotTrader
RobotTrader's picture

When is Eric King going to interview the CEO of AIG?  One of the top performing stocks for December this year.

Mon, 12/27/2010 - 12:40 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The same aig that took tens of billions in taxpayer monie so GS could pay out from their positions on insurance scemes?  I would like to see that aig interviewed too.

Mon, 12/27/2010 - 12:55 | Link to Comment doolittlegeorge
doolittlegeorge's picture

don't give us none of your aggravation/we've had it with your discipline/saturday night's all right for fightin'/get a little action in

Mon, 12/27/2010 - 13:05 | Link to Comment Everyman
Everyman's picture

Robot do you know of any stocks that historically have increased 52% in a month or quarter, other than in this POMO'ed year(s)?

Mon, 12/27/2010 - 12:40 | Link to Comment Cdad
Cdad's picture

It really makes a guy wonder...

Just what is the metric for the stock market today, huh?  I mean really.  And by that I mean really really. 

I do think we will get an answer to that question this week.  The crowd at the Roach Motel [SPY] is so thin and the place so quiet that it will be more difficult to blatantly manipulate the market without a whole mess of Average Joes noticing.  Hey, many of them might still be home on vacation...those that have jobs, anyway.  And they might just head on into the Roach Motel [SPY] themselves to have a look around at the bar whose charge keeps coming through on their credit card statements.  Hey, this might be great week, indeed.

Someone really should check out the Blight on America party [one of the only groups there yet this morning] and check under the table to see if there is a creation units machine churning away, you know, making infinity shares of the VXX to sell into the market where shares did not previously exist this morning, and quelling that whole fear mongering thing while they impatiently wait for the bartender to flip the sign to OPEN BAR. 

 

Mon, 12/27/2010 - 12:45 | Link to Comment virgilcaine
virgilcaine's picture

sobering.. the Dow div yield in 1929 was 3.2%! 

today 2.7% ..!

 

the bear is lurking..

Mon, 12/27/2010 - 12:46 | Link to Comment monkeyfaction
monkeyfaction's picture

Don't worry it's different this time......

Mon, 12/27/2010 - 15:35 | Link to Comment hardcleareye
hardcleareye's picture

 "liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate… it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people."  Andrew Mellon

Mon, 12/27/2010 - 12:51 | Link to Comment kornholio
kornholio's picture

just buy the fucking dip

Mon, 12/27/2010 - 13:01 | Link to Comment A Nanny Moose
A Nanny Moose's picture

BTFD

Mon, 12/27/2010 - 12:57 | Link to Comment virgilcaine
virgilcaine's picture

TD is correct its the margin collapse that leads to reccesion, look at Csco, GAP, DLM.

QE is coming back to bite them you know where.

If you remember this article, I said that it is my thesis that economic Depressions come not from credit collapses so much as they do from margin collapse.  That is, the inability to make a profit due to input cost ramps while you are unable to pass through those costs to the consumer of your product or service.

This in turn forces you out of business, and you then lay off all your workers.  They now have no money, and thus can’t buy as much as they used to.  That in turn tightens the spiral on others in business – they have the input costs but can’t drop prices to what people with damaged incomes can afford.

 

Mon, 12/27/2010 - 15:09 | Link to Comment hardcleareye
hardcleareye's picture

I always enjoy Denninger's writings, (don't aways agree with him but respect his thoughtfulness)......  the logic seems " intuitively correct"... what am I missing.. this needs to be "flushed out" some more...

Maybe the TPTB fear the "social unrest" or the "global economic considerations" that will result from "resetting the bar"? 

Mon, 12/27/2010 - 13:16 | Link to Comment virgilcaine
virgilcaine's picture

That was a rare good article by KD.. lol

But it's  as simple cause and effect between QE monetization the cause and the effect of higher prices and costs. Its a downward cycle of weak sales, profits and hiring.

You can't tinker with an economy and expect no effects. 

Anyone have a front load Washer?  Put in too much Soap or the wrong kind and the machine goes haywire. It shuts down.  Highly sensitive machines they are costly to repair also.

Mon, 12/27/2010 - 13:48 | Link to Comment Boilermaker
Boilermaker's picture

Looky Looky Looky...

REITs just fly fly fly away...

The IYR is <again> up in disproportion and in-yo-face of the broader market.

The Piggly-Wiggly stores and barren strip malls are just way way undervalued.

Is there a bigger scam going than REITs?  No.

Mon, 12/27/2010 - 14:12 | Link to Comment Cdad
Cdad's picture

Yes, to answer your question.  Creation units machines are chugging away making infinity shares that can be sold here, there, everywhere thus perverting the natural effect of supply and demand on shares of many ETFs.  Another financial innovation brought to you by the criminal syndicate known as Wall Street.

Mon, 12/27/2010 - 14:21 | Link to Comment Boilermaker
Boilermaker's picture

If anyone can point to a more obviously manipulated ETF than IYR, I sure would love to see it.

Even today (as usual), it's a directly linear upward march based on jack shit.  Just perpetual quote stuffing over and over.

Mon, 12/27/2010 - 14:48 | Link to Comment Cdad
Cdad's picture

I give you the Roach Motel [SPY].  That one more broadly corrupts the ENTIRE market creating a much larger footprint of manipulation. 

Mon, 12/27/2010 - 14:07 | Link to Comment Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Don't worry. Be happy.

Remember that in cold weather, the AR bolt should be fairly dry ...

Mon, 12/27/2010 - 16:11 | Link to Comment obamacious
obamacious's picture

The question really is; are these numbers still important, when only 9.7% of the GDP are generated by manufacturing (making stuff using hands and machines)?

Why does this matter other than someone playing games with statistic trying to predict the "future"?

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