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Goldman's Take On The ISM Number, Which Leapfrogged The Top Of The Economist Expectations Range
The ISM Number of 56.3 came higher than the top of the range of what every single economist had been predicting, which topped at 56.0. But at least the administration works in mysterious, if not so subtle ways. Here is Goldman's explanation for what caused the unexpected surge.
ISM Up on Output/Employment; Construction Falls from Downward-Revised Base
BOTTOM LINE: While we and almost all other forecasters had looked for a sizable decline, the ISM manufacturing survey rose slightly in August. The headline increase was chiefly driven by a strong read in the production index while new orders fell slightly, almost closing a gap between the orders and inventories indexes that was more than 20pts just three months ago. Construction outlays fell, from a base that was revised down sharply, with weakness tilted toward residential spending.
US-MAP
ISM mfg index +10 (5, +2), with -1 judgmental adjustment for composition.
Construction outlays -3 (1, -3), with -2 judgmental adjustment for large downward revisions.
KEY NUMBERS:
ISM mfg index up 0.8 pts to 56.3 in Aug vs. GS 52, median forecast 52.7.
Construction outlays -1.0% in July (mom, -7.9% yoy) vs. GS -1.6%, median forecast -0.5%.
MAIN POINTS:
1. The Institute for Supply Management (ISM) surprised on the upside, rising 0.8 point to 56.3 in August. This increase was mainly driven by stronger production and employment indexes (which rose by 2.9 points to 59.9 and 1.8 points to 60.4, respectively). New orders and supplier deliveries, however, both declined (from 53.5 to 53.1 and from 58.3 to 56.6, respectively). As the inventories index rose 1.2 points to 51.4, the difference between orders and inventories fell by 1.6 points to 1.7. Barely three months ago, this gap stood at 20.1. It is largely on this basis that we have applied a -1pt judgmental adjustment to the US-MAP reading, which still leaves +10 in the aggregate index. Regarding the components that do not enter the headline, prices paid rose by 4 points to 61.5 and customer inventories rise by 4.5 points to 43.5.
2. Construction outlays fell in July - more than anticipated by the median forecast but less than we had expected. However, data for May and June were both revised down significantly. The level of outlays in June appears to be about 2¾% below its previous level, prompting the -2pt judgmental adjustment noted above. The weakness, both in the preliminary gain reported for July and in the revisions, was concentrated in the residential component. Overall, the report confirms weak paths into Q3 in both residential and private nonresidential spending on structures.
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Goldman knows as much about economics as my golden retriever.
They don't know about economics, but they do know how to make a quick buck.
Can't help thinking your avatars are pieces of the same person. You know, synergy?
Bunch of jibber-jabber. Reality is its their last-ditch attempt to get some retail suckers back in this scam market to be scalped, and it of course wont work.
Sucker scalps will be accepted as money after fiat currencies meet their doom.
Gunga galunga... gunga, gunga-lagunga.
Kinda problematic when Goldman is the voice of reason...
Good gawd, good news.
my vix calls are getting hammered
The PPT has ordered the algos to:
Sell gold.
Buy banks.
Ut Oh ...
Johnny Bravo "SuperStar" will be on his high horse today ...
Probably. Robotroll shows up on every $2 drop. If you liked the ski jump picture at 1190 you will love it at 1243.
Notice that Robo posted a gold stock chart, not the gold price chart. It's called confirmation bias.
It's at $1246 not much of a drop. Silver at $19.30. Really the ISM report had very little impact on gold or silver. I think the GM sales, the ADP report etc. still have people nervous. Plus the Fed is quietly nibbling up UST.
http://www.newyorkfed.org/markets/pomo/display/index.cfm
Junking your post
Could someone please provide a clear explanation as to how all of the regional data is so decidedly negative yet the national number comes out so strong. I have been at this game far to long and have tracked these numbers until my vision blurs and damn it that number should have been in the low 50's when you use the combination of the regional data set. No more lies, NO more lies
Cook'n the Books Bitchez'
I wonder the same thing. Someone mentioned on an earlier post that this was a m/o/m number, and might have been influenced by GM not shutting down for July.
I should learn more about these diffusion indexes, composition, etc. So if prices paid go up, and inventories go up, does that mean the index would go up (even though the composition is bearish)?
GM not shutting down in July did indeed have a doubling effect on a seasonally adjusted basis but that was certainly reflected in the regional component. Prices paid and inventories also have an effect which others beyond me took into consideration. I'm going back through the components now but this looks like a bold face "call me a liar if you dare" manipulation which, I understand is the norm. Am I surprised, actually yes because this in my opinion is a new level for the Ministry of Propaganda.
Double post
IMVHO if you are a trader, you don't need to know anything about the guts of these sorts of stats.
If you're an economist, well of course go to it. You can't trade the ISM per se, so again IMVVHO, maybe it was just "time" for the stock market to rally? Maybe the ISM will be revised?
Maybe its a lie from the get-go? Maybe it will be honestly reported as stinky in October 2010 through October 2011 and no one will give 2 s---s about the number reported today?
I was told there would be no math. Weren't you?
No problem....the numbers will be revised down and all will be well.....again.....
CAC40 up 4%, UK up 3%, on one point of good news... imagine, the Algos' were being cautious before
Can someone explain to a dummy like me why the Dow just jumped up $250?
PPT ramp + short squeeze = 250 point bonanza
$3.59 up 5.25% today.
Pump up the trash.. pump it up,pump it up ...
http://www.youtube.com/watch?v=1K7fL5s_1ac
Again, for all who are getting squeezed today...
http://www.youtube.com/watch?v=IPiNIzSM3RQ
Goldman appears to be a training school for the rogues.
I would' nt hire any of them unless i had no ethics
Maybe the ADP number is driving markets as they expect QE2.
But hang in there, my friends...
http://usawatchdog.com/little-growth-means-big-trouble/
The rally today and likely over the next week or so is and will be a gift from the heavens. Short stocks and if you are worried about QE 2 then just continue to buy physical gold, gasoline, and foodstuffs.
The problem is that the bears feet have been held to the fire for so long with these kind of ridiculous ramp jobs that there will be very little short interest left after Ben is done with this money printers. I am sick of losing money in this market. I plant to close up and take what I have left and invest in some real estate outside the country.
totally agree on the time frame... i'm expecting 4-5 days of rallying.
Who the H is ISM anyway? AS for the short covering you nailed it. The Admin/Fed have the fix in = Market cannot go down. And what got it all going, CHINA NUMBERS, now that is a concept worth pondering.
f*** goldman
misinformation monster
what surge.. ?? :)
during previous economy expansions ISM averaged something around70p,
which is 20p bigger (see Rosie)
alex
Meanwhile, back in reality, here in OKlahoma, with low UE, low taxes and pretty fisdcal conservative gubmint, we have this ray of light
http://www.tulsaworld.com/news/article.aspx?subjectid=32&articleid=20100901_32_A1_Tlaaeo823296
Here's another explanation at why the ISM was above expectations... ready? Economists CAN'T PREDICT WITH ANY RELIABLE ACCURACY. They guess, using formulas and mathematics, when the economy is run by humans who make human, and not "perfectly rational" decisions. Economics is only good at evaluating the past - anything regarding anything 1 minute from now is pure charlatanism.
Evaluating the past is exactally what the ISM is desigened to do which is why today's number is complete shit.
How can one make any prediction based on the all doctored data as input!
I would rather trust a rattle snake than the government.
"A penny saved is a penny earned" Ben Franklin
"A penny scalped is a penny earned" Ben Bernanke
Your penny is our penny says Obama
"A penny saved is a penny counterfeited and spent anyway" - Central Banker
compared with yesterday's close:
nyse advancing volume -58% (-64% vs Fri's close)
nyse declining volume -98% (-99% vs Fri's close)
vix well off the lows and climbing hand in hand w/ spx (weird ?!)
couple that with yesterday's 'funny' close - unusually large buy imbalance (not sec's problem i guess )
magnificently staged distribution day
btw anyone noticed algo's strange fetish/fascination w/ fib levels ?
Same start on Monday August 2 2010.
http://www.marketwatch.com/story/us-stocks-off-to-a-flying-start-in-august-djia-up-167-2010-08-02
all this good news and gold doesn't even budge hmmm
Since the AUD/JPY has been a good indicator, we can see that it is still in a Bearish Continuation Pennant since late May. We could see prices as high as 79 and still maintain the overall integrity of the pattern. That would equal 110 - 111 SPY. A move over 80 would likely induce more buying and negate the pattern pointing to higher prices.
check out spy @ 11:25 - 11:27 range h: 108.28 l: 105.39 around 2.7M shares
for those w/o trading platform http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximize...
this is 2min candle chart - two large candles just before close of markets in Europe... coincidence or chart error?
no, 3 different trading platforms are showing the same thing + google, stockcharts, barchart etc ...so definitely not a misprint
provided these all have the same data source, this is an odd movement
like the level above 108 is artificial and the level at 105 is "real"...
How much money does one of these candles represent (i read about 1.5 million SPDR in each candle)?
11:25 - v: 1,350,426 moved the stock from 108.26 to 105.391
11:27 - v: 1,394,590 moved the stock from 108.28 to 105.391
2.75M x avg 106.8 = 300M fictitious money
to keep things in perspective:
10:00 - v: 5,738,726 moved the stock from a l: 106.94 to a h: 107.72
10:01 - v: 4,278,613 moved the stock from 107.72 to a h: 107.89
10:02 - v: 4,167,202 moved the stock between a l: 107.76 and a h: 107.94
why don't you check your own trading platform ?
yahoo shows them too, in one minute candle chart
and my platform's charts as well, two spikes at 11:26 and 11:28
perhaps ZH can pick in on this?
TOS is showing it too on 1 min and 5 min, but I see something similar at 9:00
So, I'm guessing the "improvement" was due to increased sales of pink slips and card board packing boxes?
Nothing to guess.
The whole market is manipulated a la Ben Street
Translation: "The composition numbers suck at best. Production is about to collide with inventories. Things are drifting sideways. But sideways is better than down. So we're calling it a recovery."
This jibber-jabber will last about 3 days, then reality will catch up again. We've got another 24 months of this crap at least before anything good is going to happen.
When the children are through playing, the adults are going to punish everyone that followed them. Don't buy Goldman's report at face value. Look at the manufacturing activity which was adjusted for what it was:
Auto manufacturers did not shut down and retool as they normally would. The entire survey is suspect IMHO as the seasonal adjustments are NOT designed to take this into account. I think the distortion will be reversed next month in the revision and with the deterioration in consumer spending as reflected in the "back to school" retail reports.
Updated S&P500 charts:
http://stockmarket618.wordpress.com
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