Historic Collapse In Philly Fed Which Prints At -7.7 On Expectations Of 7.0, Weakest Since July Of 2009, Biggest 3 Month Drop Ever

Tyler Durden's picture

As we predicted following yesterday's disastrous New York Fed, we get the second confirmation that the economy is now contracting, courtesy of the Philly Fed, which just printed at negative 7.7 on expectations of 7.0%. This is the lowest number since July of 2009, and is the biggest three month collapse in the history of the series, plunging from 43.4 in March to -7.7 in June, or an over 50 point drop in three months. As expected, the Fed is telegraphing that the economy is collapsing and that stocks needs to plunge another 20% before Operation Twist (QE3) is given a green light. And make no mistake: the downside 3 month momentum in the series at -51.10 is the worst ever: all those buying stocks in advance of more easing are completely forgetting that they will take major losses before the market is low enough to allow actual easing to proceed.

From the report:

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from 3.9 in May to ?7.7, its first negative reading since last September (see Chart). The demand for manufactured goods, as measured by the current new orders index, showed a similar decline: The index fell 13 points and recorded its first negative reading since last October. The current shipments index fell just 3 points but remained slightly positive. Firms reported declines in inventories and unfilled orders, and shorter delivery times.

Firms’ responses suggested little overall improvement in the labor market this month. The current employment index remained positive for the ninth consecutive month, but only 14 percent of the firms reported an increase in employment, while 10 percent reported a decline. Only  slightly more firms reported a longer workweek (14 percent) than reported a shorter one (12 percent) and the workweek index was down only slightly from May.

There is good news: margins may finally improve:

Indexes for prices paid and prices received declined from May and continue a trend of moderating price pressures in recent months. The prices paid index declined sharply, by 22 points this month. Still, 37 percent of the firms reported higher prices for inputs this month, and 10 percent reported a decline. On balance, firms reported a slight rise in prices for manufactured goods: 17 percent reported higher prices for their own goods this month; 12 percent reported price reductions. The prices received index decreased 12 points, its second consecutive monthly decline.

Alas, the Hope is now extinguished:

The future general activity index decreased 14 points this month and has now dropped 61 points over the last three months (see Chart). The indexes for future new orders and shipments also declined, decreasing 9 and 14 points, respectively. The index for future employment fell 17  points and has declined 32 points in the last two months. Still, slightly more firms expect to increase employment over the next six months  (21 percent) than expect to decrease employment (16 percent).

And visually:

Next Zero Hedge prediction about to come true: Goldman will cut its H2 GDP forecast to sub 2% momentarily.

h/t Sean Corrigan

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
slow_roast's picture

Is this not the easiest fade of all time?  Start shorting and don't stop until you're in the green.  EA$Y

Bob's picture

Nah, surely it has been priced in!  Mr. Market doesn't lie . . .

I think I need to buy a gun's picture

next up.....gold revaluation

TruthInSunshine's picture

Negative official job prints by Q3 and negative GDP by Q4, bitchez.

Hello, double dip.


Oh, and ZH, let me play devil's advocate regarding this statement of yours:

all those buying stocks in advance of more easing are completely forgetting that they will take major losses before the market is low enough to allow actual easing to proceed.

Isn't that the 'easy' and 'expected' event? 1) There will be more monetary QEeesing, and 2) It will produce similarly stimulative and supportive consequences for equity, commodity and bond markets.

I beg to differ on either or both accounts, but maybe the absolute mass trampling the high plains in swarming herds is on the right side of that future mega trade...

smlbizman's picture

maybe they just got the captcha question wrong....those negative numbers can fuck you up.....eh?

hedgeless_horseman's picture

Markets love it.

Goldman will cut its H2 GDP forecast to sub 2% momentarily...

...DB, not so quickly.

dwdollar's picture

Bears got trampled to death.

SheepDog-One's picture

DOW down around -1,000 in weeks, and 'bears got trampled'? 

Liquid Courage's picture

Hmmm, if it's down minus 1000, doesn't that mean it's actually UP 1000? Gol'durn negative Captchas!

tmosley's picture

He's hanging upside down while typing.  Also, he's colorblind.

slow_roast's picture

We did?  I've added to my short positions on this "rally" as it'll be faded by the end of the day most likely.  Once POMO money fades off market will tank. 

Cognitive Dissonance's picture

Please consult your doctor if the market Viagra lasts less than 4 hours.

"Hello, is this Doctor Bernanke? Ya doc, I seem to be having a......problem with sustained levitation. Those damn pills don't work anymore doc. Ya gotta help me. I'm desperate."

Dick Darlington's picture

And Russell 2000 jumps instantly from red to +0,7%. Welcome to the centrally commanded "markets". Sackman is working overtime today... What a joke, lol

Iam Rich's picture

Yar...what the hell was that!  I saw the RUT before I looked at the report...assumed the report must be at least consensus.  Fell like an anvil through consensus....must mean it can only go up from here.

augie's picture

I think all the Algo's just reset to buy mode. 

dwdollar's picture

Maybe they are incapable of understanding a negative number.

if abs(philly_fed) > 5.0:


eureka's picture

No. They pump today so tomorrow's dump won't look as bad.

augie's picture

they break that 1268 level, it won't look so bad. This buying is precipitous. 

SheepDog-One's picture

Probably all it is, pump a bit today for Fridays big dump.

carbonmutant's picture

$DJI jumped 65 on this news.

Appparently the Fall of Greece has been baked in...

Founders Keeper's picture

Pump a rally to Sell the rally? Who knows.



augie's picture

Robo knows, ask him. 


Then do the opposite. 

SheepDog-One's picture

I see the DOW up 40. By noon -200 again like yesterday? Well who cares really, the markets are a meaningless joke now.

tarsubil's picture

I've wanted to say this for a month now but it will not reach the previous high as it hasn't done for the last 6 weeks. It is sliding and looking like it is about to fall off the edge. Of course, I've put this in writing so it'll magically bounce to the clouds.

kaiten's picture

QE3, here I come.

SheepDog-One's picture

There will be no QE, but I'd certainly welcome the huge jump in gold if they did. The party is over, everyone needs to stop gazing over at the keg, its empty bitchez, go home.

augmister's picture

No QE yet... everything will tank including the shiny, so get ready to back up the truck for a nice big haul of in your hand metals....

Ahwooga's picture

Don't you mean hand in your metals...

Djirk's picture

hmm this happened during QE, so much for a weaker dollar and QE driving to full employment....dear FED dont start printing bad numbers until QE2 is over.

Village Smithy's picture

I love this play. Levitate on low volume and then cash out heavy as it falls. No wonder those guys never loose.

geminiRX's picture

Tyler, could you add links under "zerohedge reads" for TFmetalsreport.com and Martin Armstrong's site? The info they post, in my opinion and hopefully others, has been invaluable.

DoChenRollingBearing's picture

+ $1530

Also add

fofoa.blogspot.com too

Robslob's picture

Jekyll & Hyde Market: We love high prices....no wait we hate high prices...no we really meant we love high prices...scratch that...we hate high prices again?

qussl3's picture

June 22, if the bernanke doesnt throw the market a bone, this shitshow is really going to hit the fan.

SheepDog-One's picture

Bend over market, Bernank's bone is headed your way.

LauraB's picture

TD: Biggest drop since July '07 or July '09?  Headline says '09, but article says '07.  Thanks!

Cdad's picture

Thank you, Tyler.  It is good to have ONE news source that doesn't have a creation units machine in the closet, attached to its economic lying machine, grossly spitting out utterly useless and unproductive assets while throwing a blanket over and beating the crap out of TRUTH.

And next up...pink slips in the wildly unproductive [in fact destructive] financial services industry.

holdbuysell's picture

OT: Tyler, the bottom of P has fallen out, now below IPO price.

RobotTrader's picture

Still haven't touched the 200-day EMA on SPY yet.

Close, but no cigar.



SheepDog-One's picture

And gold shows its the ultimate in strength.

oogs66's picture

CNBS was hilarious today.  They spoke about how much stocks could go up if the Philly Fed beat.  No concept that it could be worse.  Mind you stocks seem to like the bad data.


Liesman tried to point out that prices declined so that was good as no inflation - hmmm, he has been saying that inflation isn't a problem anyways.


Then finally, they pointed out that this doesn't preclude other data from coming in better than expected - ugh. 

SheepDog-One's picture

Only in the fantasy world that CNBC anchors live in could they believe production is rising. 

Cdad's picture

Wait a just a minute.  I thought, per the BlowHorn, we were rallying on less than abysmal housing data?

I'm confused.  Oh well, on with the "shooting of generals" as GROSS misallocation momentum stocks are experiencing trouble maintaining ballast.  Thank you Cramer, for blowing such dumbass market bubbles.

Oh well, onward and upward with absurdly irrelevant financial news coverage of things like the CA pot grower catalyst for fertilizer stocks, P, and shoppers going wild for things they cannot eat.


SheepDog-One's picture

100 P/E momo stocks are taking on water? Thats just terrible....and we were promised THIS time it really would be different!

Ah well, on to the next FED bubble blowing exercise.

Weird how this morning my cars veered itself into a mall, and parked me right in front of $9 burrito Chipotle store. Is it the new GPS chips taking over consumers cars?

TruthInSunshine's picture

Chipotle burritos are the new filet mignon.

tarsubil's picture

If the stock market collapses again, won't people start to see that it is simply a money laundering business for elites?