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Guest Post: NFIB: No Improvement In The Domestic Economy
Some follow-up thoughts from Thermidor on the largely disappointing NHIB data we disclosed earlier:
When I was traveling a few month ago I gave a presentation called "As Good As It Gets" in which I outlined how I believed Q2 would mark the cycle high in the global economy as the inventory cycled peaked. I then showed a few charts relating to the National Federation of Independent Business survey, which outlining why I so was so concerned about the sustainability of the recovery in the US. Well the NFIB survey was out this morning so I thought I'd see if the outlook had changed? Unfortunately, the survey that covers 99% of all US firms and claims that its members have created 65% of all jobs since to 2000 still just looks crap.
The most startling observation is the MASSIVE divergence between small businesses i.e. the NFIB and large players represented by ISM. Indeed, the difference is unlike anything we have seen in the last 35yrs. However, I believe it's explainable by a few factors.
1) Small firms are telling you that they still can't get access credit. Indeed, the credit question in the NFIB survey has remained stuck between -12 and -16 since the lows of 2008. This month it printed -12.
2) Small firms have a harder time participating in the "global rebound" and are mostly domestically focused. PS if you chart Michigan consumer confidence vs. NFIB it's the same chart and the bounce is pathetic off the 2008 lows. The domestic US economy is still CRAP
3) Small firm's participation in the inventory rebound has been modest in comparison to their big brothers and indeed is now rolling (see chart). This tells me that small firms aren't going to support the continued inventory rebound that Norbert Ore the head ISM hoped for a couple of months ago. Indeed, I'd point out that in 2008 small firms appeared to have been far better at managing their inventories that the big boys, who if anything were wrong footed going into the recession (see green circle). It appears they maybe the better indicator again.
PS The NFIB inventory question at these levels implies ISM inventories of 40 (see dotted red line) and that implies ISM headline of 45!
NFIB vs. ISM ...one hell of a divergence
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No worries the devalue and inflate trade is ON
As John Taylor pointed out on June 28: "We are scary, scary owners of euros,” , “We are keeping our fingers crossed that maybe the euro’s appreciation lasts through July and into August. But then the euro is just going to get crushed as it’s an impossible situation in Europe.”
Probably stocks are going to rally through July (specially with the result of the test on July 23) but after that it's going to be a great short opportunity... the highest it goes the better...
I have no idea what your comment says because I am so damn mesmerized by your avatar. nice job!
yeah, it was cool for the first five seconds I saw it
its been annoying ever since; though not as much as the flopping tits.
I'm kind of slow I guess, Jake. Took me much more than 5 seconds, but I'm with you now. i can't even be on the same page with that fucking ZH Bernanke Zh Bernanke shit. Makes me pissed and queasy. It's kind of poseur-ish too.
Oh, and the floppies haven't gotten to me yet...
Ben realizing that Zero Hedge has exposed his game?
Apologies for the off-topic, but this needs attention. The link pointed to on the "disappointing NHIB data" gives a "Page Not Found" error.
Now it's working. You're welcome.
No big surprise on this divergence. The big corporations went out and borrowed billions with bonds to keep them afloat for the next couple of years. The small guys didn't have that option, and in fact had their credit lines taken away or reduced significantly. Bernake can cry all he wants about the banks needing to lend more to small business but the reality is that alot of small businesses aren't really needed. The reality is many were formed on the basis of a loose credit economy that isn't coming back (I hope).
Of course the worst part is we don't need alot the big corps either......much of their business achieved through lobbying and manipulating our political system. But those "jobs" will be harder to kill.
You do know that the Fortune 500 has not created a single net job since about 1970? All net employment growth in the US has been in small and medium size businesses. If they aren't hiring, we will not see the unemployment rate fall.
"we will not see the unemployment rate fall."
Incorrect. The number will fall when the masses move into the governments "No Longer Counted" bucket.
OMG that avatar is freaking me out!
The question is, is there ANYTHING in the "financial asset" class that is trustworthy? Can you rationally plan for anything in the long-term utilizing pieces of paper created by governments (or businesses that depend on those governmental pieces of paper)?
Are "hard" assets the only way to save and preserve wealth, if you are not a "trader"?
Can a typical non-"trader" American rely on the valuation of anything in these markets?
Do rhetorical questions require answers?
Agreed. All looks like crap, I am reposting what I just posted in earlier confidence numbers thread. I just logged on, to quickly scan ZH before I have to head out.
Canucklehead and Boilermaker, you are BOTH right. As a small biz owner, I have been luckier than most. If I didn't operate w/o debt financing I would be gone already. My biz has been growing phenomenally the last 5 years, was wondering when all of this would catch up. Finally went flat in May and June, but no decline. July numbers are looking abysmal. Month to date for July, biz down 75% YoY! With flat, declining revenues and a totally fucked up regulatory environment, rising costs, etc., there is NO WAY I am investing or hiring. Preserving cash and trying mightily to not lay off any of my employees (Taking a personal wealth hit for that).
The decline enforces the view. The bizzes I do biz with are in the same boat or worse. They cannot expand or invest capital in anything right now.
Quite a falloff for July. What general industry are you in?
I closed my small business a year ago, and have been wondering if I want to start another one - to no real avail yet. How can you compete with the Big Boys these days? Beat Amazon/WMT on margins/prices? Customers will simply bleed you for advice and time and then call them and buy from them.
Wall Street (no surprise) is just focused on the earnings of the top 100 companies. AA can squeeze 35,000 employees, and the stock goes up. The logical fallacy of this is obvious - you'll end up with just a few really profitable companies and a terrible economy - which means these companies will no longer be that profitable. It's no wonder that many of the futuristic movies have bleak futures ruled by a select group of mega-corporations.
It's good for your stocks until it isn't...
traderjoe, sorry for the late response, but I am a working biz owner, no country club CEO here, 16 hr day today, my fingernails get dirty. I have 3 distinct and very different segments to my biz. In general I would say engineering services, but that might not quite accurately reflect two parts of my biz. I am not retail at all, although I have been in the process of developing a product (energy related) for the past year. That has been put on "hold" until economy recovers and I can afford to invest in that again.
The sad news is, the largest part of the stable revenue I have right now, is not coming from the US. I am wondering how I am going to be able to justify keeping the US portion of my biz. That would be bad for 2/3 of my employees, they would not or could not relocate out of the country.
If I cut and run, I, personally, would be better off for it, but I love my country (or what it used to be) and my employees. I still have some hope that after the TSHTF, if I can last that long, I will do better. I get frustrated and angry though, cuz I see nothing changing to get rid of the parasites and criminals, I will probably stroke out from working too much and worrying too much.
We are living in a Potemkin Villiage.
The unemployed self-employed aren't counted. The big boyz are going to start running out of customers pretty soon; and as theya re cannibalizing themselves to maintain earnings, that can only go on for so long. And when that ends, it will do so with a thud. Rising unemployment will just continue feeding the vicioius cycle down. No way in hell they can prop that up.
Look at BP just taking a dump LMAO
Needless to say, this weekend is going to be killer out at The Hamptons...
LOL...
Yummy! Nice work Robo
Sis, put some clothes on. You know Mom reads Zero Hedge.
Where is this on this Map...
http://williambanzai7.blogspot.com/2010/07/planning-map-of-east-hampton-...
http://www.youtube.com/watch?v=OYpwAtnywTk
KKR and GM and ton of other NI needs to get done hence spike mkt to draw in the sheep for yet another shearing
We are going to get some form of pre-election stimulus to try and goose the economy through the end of the year. It looks like the markets (and the predictable shills) have already priced in this next fix. 2011 is going to get ugly in a hurry.
You may be right, but a month ago, every other post on this site was predicting a crash in July.
I actually agree with your sentiment completely, except I am losing faith that this market will ever go down. It has no reason to go up, scores of reasons to tank, no sellers, no long term buyers, just BS manipulation. I fear that the time it will take for this market to reflect reality will be so long that all of my clients will be sick of me saying "wait for it. Let's err on the side of caution. Wait for it."
I mean, it'll suck looking at 14000 again from so far below.
No kidding. I jumped in back in February 2009 with a wait and see attitude. American employers and producers only. Figured that the country would make it long term, the immediate panic was a bit overboard. Rode the market rally up and then a fair bit of the way back down.
What we've been doing since the late 1980s is suicidal at best. America the middleman is an abomination. I hope we have the will to change course. Every day this farce goes on, the more helpless and stupid I feel for participating in this clusterfuck.
Don't know why someone junked your comment. I think it's spot on. The market seems to be running on fumes, but what's to stop it from going on further? My guess is that most of us on ZH thought the game would be up a long time ago.
Just look at today - CSX down 2.5%, AA up just a bit - and all of the commentators talk about how they represent how the global recovery is on. AAPL down, and one talking head said a recall would be a "catalyst for upside".
As farcical as the EU stress test are, what really matters is how they are spun and perceived. Seems like the FinMins are winning that battle with an assist from the MSM.
Far more people have taken the Blue Pill and not the Red Pill. Will it crash someday? Most likely - there's simply too much debt, and not enough growth, to roll it all over. But when? What's the catalyst?
Economy? We don't need no stinking economy.
it appears obama s aim is to: bribe the upper class (with fed help), kill the middle class and small business (increase tax at 250k while billion $ corps pay little) and enslave the lower class with entitlements - socialistic control
I don't buy the "Obama wants to kill us all and Michelle's no better" rhetoric. This economy was fucked up over several administrations (Dem and GOP). I don't see how Bush II doesn't bear a shit ton of the blame for our current fiasco.
I'm pretty sure Obama doesn't want to "kill us all" - after all, he's going to need an army of willing "voters" to make him King someday, right? (OK, that's hyperbole too.) But it's pretty hard to argue against the premise that his policies are absolutely fatal to the middle class (what little is left of it, anyway). So it's hard to argue with the "enslavement" argument, in other words.
This economy was fucked up over several administrations (Dem and GOP).
Absolutely spot-on.
I don't see how Bush II doesn't bear a shit ton of the blame for our current fiasco.
Oh, he certainly does. As does Clinton, Bush 1, etc. etc. etc. Thing is though, Barry seems intent upon hitting the wall at Warp 9 whereas Bush 43 could only manage about Warp 3. But that doesn't change the fact that we were already a long way down this vector before Barry or even Georgie was installed.
Well said. I guess I'm mainly saying that I think our problems are more structural in nature than related to the designs of an evil dark (skinned) dictator. I know that's not what you said, docj. But the ultra right rhetoric I read/hear sometimes is so shallow and ignorant. Again, thanks for the thoughtful response. I'll always enter into a debate with a cogent and articulate adversary.
No worries.
Cheers -
I believe our structural issues are a direct result of our captors' desires. You're simply describing the effect of their policies.
Yep.
Folks get caught-up in the FALSE two-party paradigm, when they actually know better... it's a one-party corporatocracy. We elect the most bribe-able & least capable among us, and they go to work for the banks and multinational corps (serving "everyone's" best interests, of course). Pretty simple system, actually.
Of the 530+ elected reps. in Washington D.C., the number of reps. NOT owned by banks & corporations can be counted on one hand. This is our reality and our country - bought and sold to serve the interests of corporate elites who don't live here and don't pay taxes here.
The POTUS is just another corporate shill. One would think a 'democrat' would be less obvious about their corporate allegiance, but BO has been a blatant corporate pissboy since Day One.
Forget politics. That game has been rigged for 1000x longer than our now fictional markets.
Drop out, grow food, barter, and reject the corporate system at all levels. It's the only path to liberty remaining in the US.
I don't trade the stock markets, but I can assure you that you won't get better advice than the hound dog's, anywhere. . .
even if you don't want to give up your urban trading lifestyle yet, buy a bit of land and get someone out there growing for you - be ahead of the curve. . . there are plenty of people willing to trade their time and energy for a space to live, grow food, smallholdings. . .
Makes sense. If we're going back to a feudal system, I'd rather be a landowner than a serf.
There is just one small problem with the theory that Obama and Bush II are only different in degrees....
Yea besides all of that and more Bush and Obama are just alike.
Not saying that Bush was terrific....he was awful but he was awful in a politicians way of being Awful...Obama is awful in the revolutionary way. Every single decision that he makes is the wrong one....after a while you have to come to the conclusion that he isn't mistaken, he is on the other side.
Go back to watching Glenn Beck.
Obama's not bribing the 'Upper Class'. He takes his marching orders from them while they allow him the 'illusion of control'. Such is how it is in America, and the world at large.
And he's not after 'socialistic [sic] control', but that of the fascist. And when he's gone, he'll hand over the reins to the Republican fascist, just like Bush handed them over to him after instructing him 'to write two letters'. And back and forth goes the political tennis match that has so entralled the rubes for lo these many years.
interesting to watch liberals. just a few months ago they were touting obama saving the world, creating jobs, providing health care for all, improving world relations and fixing the "mess." now that its painfully obvious even to most liberals that none of the hope and change is happening, liberals resort to talking about bush, palin and beck and screaming racism.
few cult followers here will be with obama to the end.
Now I KNOW you aren't calling me a liberal.
Yeah, the Libs are talking about Bush, blah blah. Right. And it's lame blame game shit.
Just as lame the blame-game of the Cons blaming problems on Clinton four, five years into Bush II (whom I voted for).
But sure, if you want to continue to believe there are two distinct parties, rather than two theatre troups, well, I'm sure you'll be waiting for the Tooth Fairy, Santy Clause and all those other mythical constructs to finally deliver the goods.
The Illusion of Control.
*gah*
de-junking you here, and "up there" too - why anyone would still be mystified about the way amrka is owned by the financial elites is beyond me - but if you have to defend your (un)reality, I guess there will be a "good vs. evil" mindset, pick yer team & pom-poms, go cheerleaders!
Cross dressers with skirts/pom poms or while linen slacks/tight sweaters... The juxtaposition of politics & economics out of the closet & in full view.
The term recovery is hilarious. In this instance:
"...why I so was so concerned about the sustainability of the recovery in the US."
How can there be a recovery based on hiding more toxic assets and providing the public with more fiat? It is so simple.
We have never been in an economic system that was anything other than a control structure.
Why people turn away from reality, don't deal with it, and call pure China White injected into the carotid a "recovery," when it is the Death of the Addict, is a diagnosis of their condition.
An aside (but not really): "During World War II, the 101st Airborne Division led the way on D-Day in the night drop prior to the invasion. When asked to surrender to surrounding German forces at Bastogne, Brig. Gen. Anthony McAuliffe answered "NUTS!" and the Screaming Eagles fought on until the siege was lifted."
Similarly, this is why people who don't understand from Adam, don't get people who are holding Gold. When we look at them and their stance (bent over to receive squid probe) asking us why we are so pedantic. We just say: "NUTS!"
This may be a no-win situation, but so what.
Wow, that was a fractured telling of WWII history. The "Nuts" comment was spoken during the Battle of the Bulge in the winter of 1944-45 - well after D-Day.
Yes you are correct Elvis. It was General Anthony Clement "Nuts" McAuliffe at Bastogne.
http://en.wikipedia.org/wiki/Battle_of_the_Bulge
If you lie often enough and long enough you will end up believing it.Most people now don,t believe a word they hear anymore."Carry on into the Great Depression".
I have come to the conclusion that the only people who can save us are the lawyers.
How can we make the lawyers hate the bankers & their puppets in the 2 houses badly enough to declare war?
That, Horatio, is the question.
Well, to catch a thief . . .
...the 5K1's want to give up the real perp...
http://www.ussc.gov/2003guid/CHAP5.htm
The trick to utilizing the lawyers in this mess is the same as the BoA mess. Effectively, you have to pit the lawyers against management. In general, this means making allegations against management for improprieties that the lawyers knew about and/or facilitated. This may or may not result in charges against the attorneys, but should at least get you more of the picture as to what management did and hopefully bridge the gap made by the illustrious attorney-client privilege. (any player worth a shit always makes sure an attorney is present to scratch his ass, just in case an impromptu privilege needs to be asserted).
Unless of course they all cut a deal with the SEC...
*caveat, need a judge with balls to hold companies' feet to the fire.
You cannot create demand growth in an economy based on consumption when many of the consumers are tapped out. We are not Germany or China. We are presently incapable of exporting our way out of this mess. Welcome to the new normal.
I wish all the politicians, economists, talking heads and business kleptocrats would get on the same page and puplically admit that most financial businesses and people need to take the big haircuts coming down the piked and dig themselves out of debt. The problem is the country is full of dirtbags who won't look in the mirror and admit they caused the problems we have now. I can look in the mirror and know I was never part of the problem. Debt free since 1992....
Oh but we can export our services right? They honestly believe that there is a need for more shell passers in the U.S. economy. Something truly needs to be done about manufacturing in this nation. I will still never understand the concept of a low currency so that people will purchase your goods it is the most backwards logic in economics and one that only the Keynesians love because it is an excuse to inflate the middle class to death.
How about a strong currency and the ability to purchase goods in other nations for a fraction because of the high value of our own currency backed by a strong manufacturing base. Unless things change drastically America has seen it's heyday. Even I cannot believe what an illusion this dream has manifested itself into.
I honestly think our citizens are only interested int he following:
Civilization 5 debuts in September. That's what I am going to be doing instead of participation in this sham market:)
The new pitch I heard on TV the other day is that we are going to be able to exist off our exports of our intellectual property. We don't need to export hard goods only ideas and entertainment that we collect licensing fees for. The assumption is that Americans are so clever and superior that the rest of the world is waiting with baited breath for the next good product idea, movie or video game. The US military will bomb any country who tries to sell a fake iPod or copy the next Disney DVD. Don't you know that Terrorists are funded by fake American goods?
Yea great job international laws do protecting manufatcurers from counterfeiting. The ports are no better at preventing the flow either. I'm sure the borders are also sieve-like for that. And most of the real products come from the same countries that make most of the counterfeits (China).
It is a good thing everything I buy is fake because it makes my life seem more real ; )
They will never admit it. They are slowly taking their last little (or big) bit out of the economy. Some are doing it intentionally, and some because they think what they are doing is the "best thing". They are creating their escape plans. They will never come clean. First, it's too hard to face yourself in the mirror like that, and secondly they would never man up to the resulting lynching...
As warned about earlier, DOW/SP500 remains bullish for now ...
http://stockmarket618.wordpress.com
Meanwhile, here comes the full-court-press for Crap-and-Tax:
http://www.politico.com/news/stories/0710/39590.html
Yeah, the economy is doing so well, let's haul another trillion in new taxes on top. What could possibly go wrong?
I read recently that those with trouble accessing credit was 8%. That those creditworthy either don't want or need credit. Businesses look forward and need certainty, while Washington provides neither. Everything coming out of Washington is punitive and anti-business. Who in the Hell, in their right mind would expand or hire in this environment?
BS.
You cannot blame Washington for this. The tax rates, regulation and fees were traditionally much higher in the past during the times of heavy growth. The problem is that most businesses are already heavily in debt. They are debt junkies. They all want to grow faster than their profits would allow. The average business that wants to borrow is doing so to pay the bills. Many who apply have no collateral that the bank can easily liquidate in case of a default. Since there is no guarantee the bank will ever be paid back why would they lend? The fact that many small businesses need a loan to stay solvent is a big red flag. Too many small business owners use the loan to cash out and then let the business die and stick the bank or the SBA (US taxpayer) with the bad debt. Look at the default rate of SBA loans for franchises. They are off the hook. People need to go to jail not be bailed out.
the divergence between nfib and ism is explained by totalitarian fascism...the powers of government are being used by the sociopathic banksters to crush all competition....
He fumbled the Presidential oath..that was a warning. Uhh, um ahh. Before the days of the tprompter.
The sheeple bought the Pkg now all thats left is a empty paper bag..
ah yes, because everything was A-ok with the economy, the nation, the world, before that "fumble" lost yer game. . .
never mind, perhaps Palin is the cheerleader that scores.
I'd take anyone from outside the One Party System.
I think the real problem is that people can't tell when someone is a bullshit artist; just like some people don't have a sense of smell.
+1
digalert. I am expanding and hiring right now.
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