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Goldman: "Sorry, You Can't Blame The Philly Fed Collapse On Japan"

Tyler Durden's picture




 

The firm, whose only job now as in 2010, is to pave the way for QE "Oliver Twist" 3, pulls one of the crutches used by the depression apologists, and makes the secular decline case that much stronger. To wit: "Weakness in the Philly Fed cannot be obviously explained by
supply-chain disruptions or other special factors, as we argued in
yesterday's US Daily. For example, the latest Beige Book comments on
Philadelphia Fed district manufacturing activity said "declines in
orders broadened from producers of apparel and rubber products to
include producers of electronic equipment and instruments.
Failure to
pass a multiyear transportation infrastructure reauthorization bill and
the ongoing real estate slump were cited by five different manufacturing
sectors as hampering the recovery" (these comments refer to May rather
than June). Slowing in "electronic equipment and instruments" could be
related to supply-chain problems, but otherwise the weakness looks
related to other factors." As to whether this means that the next stimulus is another payroll tax cut as Obama is hoping the republicans will allow, or more 2 Year rate caps, is unclear. What is certain is that the Keynesian monster must be fed.

From Goldman:

MAIN POINTS:

1. The Philadelphia Fed index unexpectedly fell to -7.7 in June from +3.9 in May, mirroring the weakness in the Empire State index reported yesterday. To put this number into context, it is the lowest since May 2009. In the growth slowdown last year, the Philly Fed index reached a low point of -5.6.

2. The sub-indexes of the report also weakened (unlike the ISM, the Philly Fed headline series is not an average of components). The indexes for shipments and employment declined but remained in positive territory. The index for new orders slipped below zero, to -7.6. The worst performing sub-index was the supplier delivery time series, which fell to -20.5 from -2.3 previously. Except for the growth slowdown in 1995, this level has historically been associated with recession. The decline could possibly be due to supply-chain disruptions, but anecdotal commentary and the industry mix in this region do not strongly support this argument (see below). The components for expected activity in six months' time also fell. The six month ahead general activity index fell to +2.5 from +16.6 previously, and the six month ahead capital spending index fell to +12.9 from +23.1.

3. Weakness in the Philly Fed cannot be obviously explained by supply-chain disruptions or other special factors, as we argued in yesterday's US Daily. For example, the latest Beige Book comments on Philadelphia Fed district manufacturing activity said "declines in orders broadened from producers of apparel and rubber products to include producers of electronic equipment and instruments. Failure to pass a multiyear transportation infrastructure reauthorization bill and the ongoing real estate slump were cited by five different manufacturing sectors as hampering the recovery" (these comments refer to May rather than June). Slowing in "electronic equipment and instruments" could be related to supply-chain problems, but otherwise the weakness looks related to other factors.

4. Overall the early-June data (Empire, Philly and jobless claims) point to little improvement in growth from depressed levels in May.

 


As we noted earlier, expect Hatzius to put the nail in the coffin of the US H2 GDP hockeystick (and his own credibility) shortly.

 

 

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Thu, 06/16/2011 - 11:30 | 1374633 I think I need ...
I think I need to buy a gun's picture

tee up dollar devaluation

Thu, 06/16/2011 - 11:39 | 1374648 TruthInSunshine
TruthInSunshine's picture
  • 06-16 11:33: Goldman's Jan Hatzius says comet and/or asteroid will hit one of the G8 nations by this fall; calls for preemptive, extraordinary loosening of already incredibly loose monetary policy by Federal Reserve.

 

  • 06-16 11:34: Abby Joseph Cohen demands Bernanke commence 6.58 to 43.79 trillion in treasury note purchases in open market operations immediately.
Thu, 06/16/2011 - 11:43 | 1374671 Caviar Emptor
Caviar Emptor's picture

06-16 11:35: Cramer declares 'they know nothing!', calls for immediate monetary stimulus to save Wall Street errr the USofA from catastrophe

Thu, 06/16/2011 - 11:44 | 1374698 TruthInSunshine
TruthInSunshine's picture

06-16 11:43:  Paul Krugman & Larry Summers jointly propose 58 trillion USD fiscal stimulus in form of public works project to manufacture shovel ready projects (and shovels) to Obama Administration

Thu, 06/16/2011 - 11:47 | 1374714 SheepDog-One
SheepDog-One's picture

And Obama promises he wont joke about this new 'shovel ready jobs' promise this time around. 

Thu, 06/16/2011 - 11:33 | 1374649 Cognitive Dissonance
Cognitive Dissonance's picture

Blame it on Global Warming. Or on anal cysts. At this point anything is plausible in bizzaro world.

Thu, 06/16/2011 - 12:02 | 1374757 grunk
grunk's picture

Blame it on the snow.

Thu, 06/16/2011 - 11:34 | 1374653 alexwest
alexwest's picture

who cares what Golden asses from GS think ..

BUY BUY BUY BUY.. sp500 1 pct off 200avg, it cant go lower .. its once per life opportunity..

dont waste time reading GS junk,, bbbbbbbuuuuuuuuuuyyyyyyyy

alx

ps
it was joke..

Thu, 06/16/2011 - 11:39 | 1374657 Caviar Emptor
Caviar Emptor's picture

Nice try, Goldman...trying to say that now we need fiscal stimulus for infrastructure and housing....wouldn't Wall Street love another $5 Trillion orgy of economic inefficiency and wealth transfer.....too bad you still have feathers around your mouth from the monetary stimulus still ongoing

Thu, 06/16/2011 - 11:36 | 1374664 Alcoholic Nativ...
Alcoholic Native American's picture

Trickle down bitches.

Thu, 06/16/2011 - 11:47 | 1374693 TaxSlave
TaxSlave's picture

Need more shovel-leaning jobs.

 

Thu, 06/16/2011 - 12:00 | 1374752 tarsubil
tarsubil's picture

I bet slavedriver. Leaning on shovels is back breaking work. Our man will make sure that the shovels can just be stuck in the ground so the workers can sit in their car and roll smoke.

Thu, 06/16/2011 - 11:43 | 1374694 SheepDog-One
SheepDog-One's picture

All is well, as long as trillions in printed up fiats keeps flowing into our Wall St banks.

Thu, 06/16/2011 - 11:35 | 1374659 augie
augie's picture

You mess with the bull you get the horns. You mess with the squid.... 

Thu, 06/16/2011 - 11:44 | 1374676 Orly
Orly's picture

...you get the ink.

Thu, 06/16/2011 - 11:55 | 1374735 DoChenRollingBearing
DoChenRollingBearing's picture

LOL, very good!

Thu, 06/16/2011 - 13:35 | 1375092 Orly
Orly's picture

Domo arigato.

;)

Thu, 06/16/2011 - 11:39 | 1374661 Alcoholic Nativ...
Alcoholic Native American's picture

This economic downturn is a God send, finally we can get back to biblical values.

Thu, 06/16/2011 - 11:42 | 1374672 baby_BLYTHE
baby_BLYTHE's picture

Gold is holding up very well.

Very doubtful we see a collapse in price even if we were to experience another Deflationary panic like in 2008.

Within three years it will be recognized as the world's reserve currency. That is my bet.

Thu, 06/16/2011 - 11:51 | 1374715 qussl3
qussl3's picture

Wait till the ECB closes books on Q2.

Thu, 06/16/2011 - 11:57 | 1374732 DoChenRollingBearing
DoChenRollingBearing's picture

@ baby_B, price of gold could go down, maybe a lot.  Paper price...  So what.  

In the longer term (and your three years seems about right) gold will be floating freely among all the currencies.  At a MUCH higher price.

Ups and downs.  "The Ten Thousand Things rise and fall without cease."

Gold will endure and shine as the best wealth preserver in town.

Thu, 06/16/2011 - 12:25 | 1374841 I think I need ...
I think I need to buy a gun's picture

3 years???????????no way try 3 months

Thu, 06/16/2011 - 11:45 | 1374679 TaxSlave
TaxSlave's picture

So...

All I need to do is launch a new product: a piece of apparel made of rubber, with an electronic device and instrument integrated into the design.

Come until you go, all safely contained.

That'll save us for sure!

Thu, 06/16/2011 - 13:19 | 1375036 mattwett12
mattwett12's picture

you should sell it online. Once you have a website, you can IPO too. What a world we live in

Thu, 06/16/2011 - 11:45 | 1374682 Rainman
Rainman's picture

A gargantuan miss confirms a firm bottom.........and the market soaaaaaars ! 

Thu, 06/16/2011 - 11:44 | 1374703 TaxSlave
TaxSlave's picture

He said "firm bottom".  Heh.  Need more of those.

Thu, 06/16/2011 - 11:51 | 1374708 SheepDog-One
SheepDog-One's picture

With the sudden Greek EUphoria news I'd really expect more than +60 on the DOW...looks pretty weak to me and I wouldnt be surprised at all to see red or barely green close.

Thu, 06/16/2011 - 11:50 | 1374712 jtmo3
jtmo3's picture

STFU and buy stocks!

Thu, 06/16/2011 - 11:48 | 1374718 Fix It Again Timmy
Fix It Again Timmy's picture

You know we've hit the bottom when toilet paper companies are losing their ass...

Thu, 06/16/2011 - 11:50 | 1374724 agNau
agNau's picture

'Failure to pass a multiyear transportation infrastructure reauthorization bill' Wonder what it is they want to slip into this bill besides a few more $bills?

Thu, 06/16/2011 - 11:56 | 1374729 mayhem_korner
mayhem_korner's picture

The definitive word on what's to blame, courtesy Homer...

http://www.youtube.com/watch?v=hUVwR0rw5fk

Thu, 06/16/2011 - 11:53 | 1374731 TruthInSunshine
TruthInSunshine's picture

What is certain is that the Keynesian monster must be fed.

That is deliciously punny on so many levels.

Thu, 06/16/2011 - 12:01 | 1374744 DoChenRollingBearing
DoChenRollingBearing's picture

O/T, but on July 12 we meet with the head of a small rolling bearing manufacturer in Japan (who will be on visit to South America).  I am going to ask him his views on Japan's supply chain situation re bearings.

I just wish the meeting were to be tomorrow...

Thu, 06/16/2011 - 12:02 | 1374759 Fix It Again Timmy
Fix It Again Timmy's picture

Been waiting on an amp for months now -

As indicated previously on our website, the unforseen delay is due to a shortage of certain critical components.  According to our suppliers, the availability of these critical parts has been disrupted due to the recent devastating events in Japan.  From large companies like Toyota to small companies like ours, there has been a ripple effect as a result of the disruption in the supply of parts. Several suppliers have offered to provide us with "comparable" parts from other sources, but our engineers have rejected that option. We want to be able to assure our customers that the parts that go into the amp are authentic, and come from the original source.

http://www.glow-audio.com/glownews.html


Thu, 06/16/2011 - 12:14 | 1374779 Threeggg
Threeggg's picture

That's funny, all the financial people on Faux Business news are saying the Philly is down because of Japan and as long as "free and open" markets prevail everything will be fine.

Well, back to Oprah !

Triple Witch tomorrow............................!

Thu, 06/16/2011 - 12:48 | 1374924 Problem Is
Problem Is's picture

"Goldman: Sorry, You Can't Blame The Philly Fed Collapse On Japan"

Philly Fed: "But you can blame our Beige Book collapse on Goldman..."

Thu, 06/16/2011 - 13:14 | 1375011 Eireann go Brach
Eireann go Brach's picture

To use Keynesian theories in this unprecedented market is completely useless! It has absolutely no correlation to current market happenings due to the continued market manipulations and financial easings initiated by the Fed, IMF and EU etc. Not one of these fucking economists know what they are talking about, no one on planet earth has any idea what is coming down the pipe over the next 12-24 months considering what will happen has never happened before. So everything is just a guess..here is my guess..Europe is fucked and the US is fucked, and many bankers will be beheaded,and economists wil become more useless than than tits on a nun!

Thu, 06/16/2011 - 13:20 | 1375041 mattwett12
mattwett12's picture

So your saying pursuing a degree in economics is a mistake? uh oh

Thu, 06/16/2011 - 14:05 | 1375192 AgShaman
AgShaman's picture

Perhaps what you state is true....

...nothing will change what is inevitable...except maybe a global disaster like hundreds of millions of people getting intimately acquainted with starvation. Then maybe they'll snap outta their slumber and pay attention.

A real TARP is needed (Troubled Anarchist Relief Program)

"One looter managed to break into Chapters bookstore, but apparently no one bothered entering"

The livestock of the Merchants of Venice are busy with their worship of "bread and circuses"

Thu, 06/16/2011 - 13:28 | 1375060 slewie the pi-rat
slewie the pi-rat's picture

slewie is hungry.  thinking of some tasty philly dip...

what we have here is a failure of the backorder econom to sustain it's green shoots of succulent growth.

we'll know more when we hear from hazmat... 

Thu, 06/16/2011 - 14:49 | 1375385 Bertie Bear
Bertie Bear's picture

The investment banks are right . S&P still above 200 day moving average. This is surely a massive buying opportunity. I'm selling when Abbey turns bearish and not before.

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