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Durable Goods Plummet: -3.6% On Expectations of -2.5%; 8% Monthly Swing From 4.4% Prior Print; Ex Transportation Consensus Missed By 2%
At this point there is no need to even highlight the stagflationary crunch the US economy has entered, although the just released Durable Goods number seals the deal: -3.6% on expectations of -2.5%, an 8% revised swing M/M! Ex transportation -1.5% with consensus of +0.5% (down from 1.3%). Q2 GDP now trending sub 2%. Absent the BOJ flooding the market with trillions of fresh Yen, QE3 is now inevitable.
New orders for manufactured durable goods in April decreased $7.1 billion or 3.6 percent to $189.9 billion, the U.S. Census Bureau announced today. This decrease, down two of the last three months, followed a 4.4 percent March increase. Excluding transportation, new orders decreased 1.5 percent. Excluding defense, new orders decreased 3.6 percent. Transportation equipment, also down two of the last three months, had the largest decrease, $4.9 billion or 9.5 percent to $46.7 billion.
This even with the now default increase in inventories (which will be liquidated eventually: thank you FIFO/LIFO).
Inventories of manufactured durable goods in April, up sixteen consecutive months, increased $3.2 billion or 0.9 percent to $350.5 billion. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 1.7 percent March increase. Transportation equipment, also up sixteen consecutive months, had the largest increase, $1.0 billion or 1.0 percent to $106.1 billion. This was also at the highest level since the series was first published on a NAICS basis in 1992 and followed a 2.4 percent March increase.
From SMRA:
April new durable goods orders were reported down 3.6%, following a revision higher to up 4.4% in March (previously +4.1%). This was near our forecast for down 3.5%. Expectations in a Bloomberg survey centered at a 2.5% decrease. The range was from down 5.7% to up 2.0%. While the decrease is fairly substantial, it needs to be taken in context with supply chain disruptions that had an impact on new orders for a variety of manufactured goods, but particularly for the manufacture of motor vehicles. Also, new orders typically seesaw between up and down months, and this appears to be the case for April.
Transportation orders fell 9.5% in April. Orders for motor vehicles and parts were down 4.5%, and civilian aircraft orders dropped 30.0%. Boeing had a scant two new orders in the month. However, as we noted in our Chart of the Day on May 6, it is not unusual for the number of orders for aircraft to be low in the months in advance of an airshow, and then jump in the week of the show and for a few weeks afterward. The last major airshow was at Farnborough in July 2010, so there may be some pent-up demand to which to look forward.
And so forth. There is no way to spin the data. In other news, the Japanese earthquake may after all end up not being beneficial to global GDP.
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So is war
Bomb GS now! Quit wasting the goodies on Libya.
If they miss I hope they hit JPM.
War is not invetible, concentration of power will most likely lead to war.
Pretty sure QE3 was always inevitable. You could tell because the delivery boy and the crack head both said it wasn't going to happen.
yup... that's why the crash of silver was a very temporary thing. Keep your powder dry and your silver close.
The spot (paper) price of silver isn't what is important right now. Only the open interest and the COMEX inventory are important.
The spot price will be important if it starts hitting new highs again, only because it will bring supply onto the market to avert a COMEX default.
The ONLY cure to a shortage is higher prices, as our good pal Jeff Neilson says. Too true.
70785 2011's left at apmex
Wow, that's a bit under 47,000 sold in the last week.
Thank you for the update.
I just looked at Tulving and saw that he recently changed his inventory from "over 450,000 oz." to 350,000. He has no ASE's in stock, but taking orders (shipping June 6th).
And the crack head made more money begging on the street corner than the kid with the honest job.
Is the major consensus at ZH that there will be qe3 immediately after qe2, or will shit fall apart first and to "justify" qe3.
Amazing how bad the data got so fast with qe2 still going.
QE3 will not start until 2012.
There is no political will for it.....YET.
That is so the electorate will go to the polls about the same time as the indices hit new lifetime highs.
agreed, and there is plenty of time for the market to head south until then
2012
Year or Dow?
I'd take the under on your prediction - don't think they'll make it to Columbus Day...
I don't know, the Obama administration always seems to do things earlier than you think they would for maximum effect. Killing Bin Laden in 2011 rather than 2012 for example. However, if what you wrote is true, I will be ready for it to take maximum advantage of the dump and pump.
Why would the Federal Reserve risk a stock market crash and a rise in T-bonds rates when pension funds, the federal gov and Social Security have never been so fragile? Even a 10% correction on the DJIA would wipe out a lot of mo-mo retirement pensions.
No, QE3 will be announced in August without any "falling down", to the great desperation of stock market bears.
Nobody thinks QE has created the rise in commodities, except libertarian rednecks. Ask the man in the street, he will blame speculators.
As much as I hate to admit it, I think you are spot on, young Master Hamy.
'Qe3 will be announced without delay or any market hiccup'....OK Hamy...THEN what? Overnite gold is $1,700, oil is $140, dollar is 65. So what then, start talk of Qe4?
"Overnite gold is $1,700" - Well I sure hope so. Stealth QE? Add a few more zeros, just simply forget to mention it.
Well, we're going to find out soon enough in just over a month.
Then why is oil at $100? Show me that it was "speculators". That's just a meme that reverberates nicely in the opinion echo chambers.
There will be a delay. Our "leaders" are not completely inept. They will begin withdrawing foreign aid and military support, or at least threaten to do so. It isn't just the sheeple in the U.S. that need to be begging for more QE. The central planners will make sure that the rest of the world is begging for it too.
Oh come on man, Im really gagging on this stuff now. So everything on earth now revolves around trickery and sleight of hand for QE3? Its not going to to any good, no way no how! Theyre tapping a dry well which no one believe in and only cause prices to rise on everything, so whats the point? 'The world will beg Ben to print more imaginary dollars'...whatever.
What, did the world run out of ink or, more importantly, the ability to add zeros to accounts? Who said anything about dollars? QE is nothing more than adding zeros in an electronic market. I am amused by all the comments focused on "paper". No one is trading paper, everything is electronic. The dollars have in fact been imaginary for some time now and yet the world has proceeded with numerous rounds of QE. It will continue, until the physical constraints of supply and demand blow it all up. Just saying, we have room to move on the latter. Maybe the plan is to blow gold, silver, oil, and all commodities to super high prices (they want inflation right) despite a real shortage in the physical world so that some new "emergency measures" can be enacted. Just saying, don't underestimate the possibilities here. Chance always favors the prepared mind.
And adding more zero's fools who?
Who cares, the point is that it hasn't stopped.
But sheep dog is right. The whole reason behind all of the QE's was this idea that it would pump-prime private sector economic activity into a self-sustaining cycle of growth. It's pretty clear that in that respect QE has been a failure. QE3 will do nothing to generate real economic activity and real wealth. Adding a zero to our bank accounts changes nothing.
It changes nothing until the money gets spent into circulation, then there will most certainly be an effect.
But you are correct in regard to the massive misallocation of capital that has occurred via all this QE. The Fed is indeed out of "traditional" options. Ergo, what comes next will most definitely be unexpected.
Japan's earthquake is a small glimpse of what will happen.
There will be shocks and aftershocks in the productivity chain.
Those depending on just in time chain or globalized consumable goods will be having the pains.
Not to speak for anyone else here, because there are much brighter/sharper guys than me, but I have shifted my own thinking in the past 2-3 weeks. I used to think there would be some kind of lull between QE2 and QE3, but now I think things have gotten so bad that they can't afford to risk it. If a few months go by and there is no QE3 announcement, things might simply collapse completely. The Dow might plunge 75% in a few days, or something from out of left field such as a new earthquake/terrorist attack that could turn everything upside down. They might lose control. Right now they are still firmly in control, and can tank things in the next few weeks to justify QE3 before things get worse. Either way they are fucked. If QE3 is announced in the next month, silver and gold probably double by year end. If not, the Dow will completely tank. Pick your poision, either way QE3 4 5 6 7 8 is coming. Of course there are always surprises when dealing with these douche bags, so who knows what will happen. Maybe the Euro will completely collapse. Maybe Korea decides to attack the US. Maybe Obama's birth certificate is a fake. Maybe the debt ceiling isn't raised. Who the fuck knows what tricks they will pull to distract everyone from all the monetizing that has happened and is coming.
So then announce QE3 of what, $2 trillion at least and what does that get them? Higher prices higher oil lower dollar. So day after QE3 what happens, promises of QE4 come? At some point soon, the total insanity must stop.
The Fed wants higher prices and a weak dollar. Now I am confused, are you arguing for more QE or not?
Well I dont care what the FED wants, Im not looking at it from the viewpoint of the maniacal monetizers.
My dream scenario is just what you wrote - there is a delay in QE3, the stock market crashes, ElvisDog takes a large position in the S&P 500, QE3 is launched, stock market doubles.
My hope as well. At the end of the day, unless you are a VC guy, the song remains the same, buy low and sell high.
The issue is not the official announcement, but the manipulation of perception. If they can get everyone to bail and attempt to get ahead of the lack of an annoucement of QE3, then they can probably start QE 3 on the heels of QE 2...
Keep in mind there is a delay in the impact of QE. So the current economic data is reflective of the early stages of QE2, compounded by abysmal fundamentals that it tried to paper over.
Full effects of QE2 are still in the pipeline, aided and abetted by Fukishima and the Euro meltdown. USD could stand to look safe relative to Euro for a stretch, but the card house is a wobblin'.
Yeah, that going to leave a transitory mark.
#brown shoots.
Everything indicator for the economy of the USA is rolling over after zero interest rates for 18 months and all the various QEs.
The federal reserve have no other bullets to fire other than another round of QE.
And who fancies another foreign war now ?
oh and they can't raise interest rates..
car burrowers, homeowners and students would be f"ed.. not good for business either.
No need for QE3, just let's let the USA default. Greece will provide the model this summer for us.
he who defaults first - gains most.
I hope Keynes can see this from the 9th Circle of Hell.
How do you blame Keynes?
The USA only relied on Keynesism after the crisis had started! If you think Keynesism is a solution to captialist crises - then you're wrong I'm afraid.
With Keynesism you would have been saving during the boom by paying down Government debt - as opposed to starting wars, taxing less and spending more.
Keynes advocated spending during the busts and saving during the boom - the Government acting a bit like an Uncle who you helps you out when you're unemployed.
For such scholars of economics there are some serious gaps appearing.
What the US has experienced is 'Monetarism on the way up and Keynesism on the way down'. A cobination almost guaranteed not to work.
Typical Monetarists - they claim their system is king throughout the boom - but then expect another system to take the blame when it inevitabley collapses.
Friedman has you all fooled.
The crisis started nine decades ago, Mr. Fozzy, sir.
It's been Keynesian from the beginning, with an accelerant of easy monetary policy in the past three decades.
Didn't Keynes expect nations to pay off debt during the good times?
Seems like a large error.
The Fed needs to step up its War on Savers and wipe them out once and for all.
yep, banks need to make sure they never allow a return on cash or cd's, starve the responsible, but will they will charge 29.99% on credit cards and leverage ur cash 10 plus to 1
Robotard
Post a momo chart of RL. lol
RL Robos favorite assless jeans company is taking a dump? OH NOES!
The world is now entering a lost decade. Or two, or three ... perhaps a century, who knows?
The U.S. mid-range future (through 2020) is Japanese in its outline. After that--- when OPEC has had enough, when the Asians in general have had enough, who knows. Stagnation is what we'll get this year and next, slow, grinding, endless stagnation. Isn't that what we've had since 2009 anyway?
yup, NO way to spin this data is correct! we've had ugly numbers all around. we're eff'd- but how many people are actually putting their money where their mouths are?
I am! Just yesterday bought 1,000 rounds of .308 and a couple cases of water.
Everything we have will accept both the .223 and .556 rounds. Also have our .308 firing rifles. Gonna be a lot of UN ammo laying around in the future.
Did some falconeering last year. very cool, and a very efficient way to hunt game birds. Not many folks left doing it though.
You're going to need a bigger boat, Ben...
http://www.hedgefundlive.com/blog/wednesday-morning-notes-markets-have-strongly-rebounded-off-their-lows
Stagflationary head on bus crash.
Thanks, Tyler, for all the work you do to keep this community informed. What would we do without ZH? I can't imagine!
Amen. I check this site about 1000000 times a day, will never view things the same as when I started coming here every day which was about 6 months ago.
same for me dude, same exactly.
What I appreciate as well are the non-financial stories like when an Icelandic volcano erupts.
Norway's Frontline, which operates the world's largest oil tanker fleet, announced an 81-percent decline in net income for the first quarter compared to last year. The company issued a grim outlook...
The operator of the world's largest tanker fleet gives up on the global recovery
Liesman is patheticly trying to explain away this number.
"This part of the number is VOLATILE, DAMNIT, and year over year it's not that bad..."
"And this part here hardly ever comes in on the same side of zero, so we can toss that out..."
Basically he's saying: it's all good, everything is fine, it's all transitory and volatile and will pass, BTFD bitchez. Oh, and PS- Goldman downgraded GDP. But that's nothing important. Government spending will pick up any slack there, yessir. Gotta go buy some SPYs before the ramp up starts!
AIG not even waiting for the market to open to take out the new issue price. Nice.
I can picture Bob Pisani now, at around 2pm when we are +95 on the Dow.
"Guys, there was this weird rumor out there late last night on some blog, that Greece was considering a snap election. That spooked the traders and the futures took a hit, but now that we know that's just nonsense, we can put that behind us and focus on the fundamentals, which have hit a soft patch but are looking up longer term. Sure, volume has been a bit light, but it's the summer doldrums coming. And the data has been awful, but that's to be expected in the short term since those readings are very volatile. And wooo-hooo-wee check out LinkedIn, up 5%!!!!"
Also does it piss anyone else off that the Europeans on CNBC can't pronounce "a's"
Like "let's throw it over to Berther Coombs" or "President Obomar is about to speak" or "Soder Stream!!!!"
For some reason every time I hear that I get pissed, probably because it coincides with the Dow jumping 10 points in 30 seconds.
Supply comming into euro and stocks.
http://deadcatbouncing.blogspot.com/
Nailed down that random AH movement last night. Someone got the info ahead of time.
Stop saying it's stagflation just because commodities went through the roof.Monetary easing does not cause stagflation. We are in a full blown depression. And deflation can be seen in all the numbers. Your graph shows it. Low demand ,low production. If QE would stop tomorrow and Greece would be allowed to restructure their debt silver would be 16 dollars , brent 50 and dow 7000.
Yeah, sure, because all that money just DISAPPEARS when QE ends.
lol
I think he was referring to the debt destruction that would occur if there was no central bank intervention. Debt and cash are equivalent in our fiat money system. If I default on a $1M debt it has the same effect as if I threw $1M in cash into the fire.
Not really. Sure, for consumer goods they are about the same, but for goods that are bought on almost all credit, like housing, or all "money", like gold, they are very, VERY different. Hence biflation. Hence the plunge of housing prices in every hyperinflation ever, always in real terms, and often even in nominal terms, while hard currency has always soared in purchasing power.
Hell, during the Israeli hyperinflation in the early 80's, you could buy goods with dollars or gold/silver. Dollars fetched a good discount, maybe 20%. The gold and silver fetched you a BIG discount, perhaps 50% off. The merchants wanted non-dilutible currency. This information is second hand. Anyone who lived through that period, feel free to chime in.
careful, one might argue that if QE ends all those "zeros" could be forced into circulation. Skip everything go straight to hyperinflation.
Here we go, again. DXY ramping up into the open...only to be smashed down right around noon while the Dow pops.
Rock and hard place: No QE? Economy in free fall
More QE? Biflation (inflationary depression) as far as the eye can see
Yes its not exactly 2008 anymore, where everyone was scared by the market plunge and the FED boys popped up and said 'My brothers got a kickass set of TV repair tools, we can FIX it! If we can just get that blank check we talked about....'
QE3 is going on right now with Yen. Just needs a little time to work its way into the system and be converted into dollars. QE is going world wide...next up the Euro....Remember, the same private owners control the printing presses.
Thank you - there it is. The addition of zeros will proceed. Everything works until it doesn't. Hedge accordingly.
I am looking at money velocity. and also at how and when the ppi is going to spill into the cpi. as of now the velocity is low and core inflation is low.monetary easing can only produce inflation if there is demand for that money. without it the money is used to fill the banks balance sheets.; If the recovery picks up (and in my opinion the system crashed 3 years ago and there's no way around it) we will see 8-11pct inflation. But we won't. No matter how much they print. You can have three things : speculative bubbles which depress consumers even more leading to a new recession , full blown deflation if the monetary stimulus stops or hyperinflation (less likely since the dollar is backed by petrol. and that's a bit more useful than gold). The likely scenario considering Ben's logic , is fuelling a huge asset bubble till unemployment starts going down. It's his best bet I guess and he knows he has political support for it. I think he really hoped that by now unimp. would be at around 8 pct. :)
Okay, you're the one that believes the governments ppi and cpi data!
Tuco Benedicto Pacifico Juan Maria Ramirez
Anyone who does not think QE-3 will come before the end of Obungo's term is not paying attention.
This whole soap opera is scripted...and if you don't think that an economy as centrally planned as this one can arrange a take-down of all necessary sectors, in order for the public, the politicians and the banking / financial sector to be begging for more "easing" and/or stimulus...you are kidding yourself.
The wheels are coming off....just be patient and prepared.
it seems like there is no data set bad enough to drop the /ES below the 100 day MA. That is a marker that has not been breached since September 2010. Touched it today and "Boing"!...Let's see if it finally breaks.
Another summer of recovery, I thought so.
The MSM spin on this latest bomb:
Bookings for Boeing Co. (BA) aircraft slumped last month and vehicle makers slowed production due to a components shortage that may be short-lived as Japanese factories recover. At the same time, rising overseas sales at manufacturers such as Deere & Co. (DE) and General Electric Co. (GE) indicate the industry will keep driving the U.S. expansion.
Full post at http://www.bloomberg.com/news/2011-05-25/durable-goods-orders-in-u-s-dropped-3-6-in-april-the-most-in-six-months.html
With durable good orders falling so dramatically, just think of what it is doing to the ROI of all of the capital that went into the factories and their supply chains. Even worse though, is that many have a TBTF status, and will not be allowed to liquidate, creating an even larger pool of capital that benefits only the banksters who hold it as collateral.
Malinvestment (and Mises), bitchez!
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