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Philly Fed Jumps By Ridiculous Amount, Even As Margin Collapse Accelerates

Tyler Durden's picture


Following one of the biggest drops ever in the Empire Manufacturing Index a few days ago, it is only completely logical that the Philly Fed would follow through with one of the biggest jumps in history. The Philly Fed prints at 22.5 versus expectations of 5, and a previous read of 1. GM, which was about to take out all the bids at 34.60 pre-news, the US Treasury, GETCO, and nervous flippers, all thank the Philly Fed. Then again, a look behind the headlines indicates that the scariest trend: that of margin collapse, is in full force, as the prices paid-received margin is over 40. From the release: "Price increases for inputs remain relatively widespread this month. Thirty eight percent of the firms reported higher prices for inputs this month. The prices paid index, which had increased in the previous month, increased 3 points. On balance, firms continued to report declines in prices for their own manufactured goods: Slightly more firms reported decreases in prices (16 percent) than reported increases (14 percent). The prices received index remained negative for the sixth consecutive month, although it increased 7 points this month."

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Thu, 11/18/2010 - 11:15 | 737623 TradingJoe
TradingJoe's picture

Too funny that they don't even bother what lying will do to this "index" and the aftermath of it! Becomes perfectly clear why all of us who can afford it should move the hell some place else!

Thu, 11/18/2010 - 11:16 | 737626 unwashedmass
unwashedmass's picture


amazing that this is happening, what with Harrisburg now on a respirator. how far is harrisberg from philly? maybe the people of harrisburg could drive over and bask in the sunny warmth of philly?

Thu, 11/18/2010 - 11:19 | 737634 Calvin Jones an...
Calvin Jones and the 13th Apostle's picture

Harrisburg is a two hour drive on I-76(most of which is also the PA Turnpike) from Philly.

Thu, 11/18/2010 - 11:23 | 737652 Id fight Gandhi
Id fight Gandhi's picture

Exact opposite of new yorks. Good timing too, gm might drop!

Harrisburg is so close to bankruptcy.

Thu, 11/18/2010 - 11:20 | 737639 SMG
SMG's picture

You know, I am just not going to look at the news for a month and let my inverse positions sit.  I just can't see how this is going to continue with global delveraging and stagnant global wages.

Thu, 11/18/2010 - 11:20 | 737642 RobotTrader
RobotTrader's picture

The only thing that matters is how the market reacts to the news.

And today, the market loves it.

Thu, 11/18/2010 - 11:22 | 737649 unwashedmass
unwashedmass's picture

do the markets love it, or do the governments' and Wall Street's computers love it?

as far as i know, the mutual funds are still seeing outflows....none of this is convincing the unwashedmasses to walk in and take all the crap off wall street's hands.......

won't get fooled again!

Thu, 11/18/2010 - 12:22 | 737847 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Wall Street's computers and hedge funds ARE the market. Who are we kidding? Don't diss on the Robo if he is right about the rigged game.

Thu, 11/18/2010 - 11:26 | 737666 tmosley
tmosley's picture

Markets are no longer relevant, Robo.

If you keep thinking that the little numbers flashing on your screen mean anything, you're going to be in for a big surprise when the capital runs out completely.  You might be up 500% on your Amazon shares, but your whole portfolio won't buy you a ham sandwich.

Thu, 11/18/2010 - 11:30 | 737682 spongeBOB
spongeBOB's picture

EUR/USD dumped but ES spiked up. Any Arb disconnect here?

Thu, 11/18/2010 - 12:31 | 737879 Orly
Orly's picture

Exactly.  Both the yen and Euro are tanking.

Man, nothing makes any sense any more!



Thu, 11/18/2010 - 12:52 | 737971 geminiRX
geminiRX's picture

Understand gold.

Thu, 11/18/2010 - 12:55 | 737990 Orly
Orly's picture


Thu, 11/18/2010 - 13:05 | 738020 geminiRX
geminiRX's picture

Knew I could make you smile:)

Thu, 11/18/2010 - 11:32 | 737683 Bartanist
Bartanist's picture

I suppose it could be a market. The supermarket dictates prices not based on supply and demand.

It is of course not a free market based on supply and demand. There is always someone in the middle controlling and dictating price.... for "liquidity's sake" ROFLMAO.

Thu, 11/18/2010 - 11:25 | 737663 Traianus Augustus
Traianus Augustus's picture

Wow look at that...the data really is improving!!!  Now if it was only based in reality, instead of the same old bullshit!!!

Thu, 11/18/2010 - 11:27 | 737667 Spalding_Smailes
Spalding_Smailes's picture

Got X ?

Thu, 11/18/2010 - 11:29 | 737674 Rainman
Rainman's picture

And in other news, Sears appliance sales in toilet.

Thu, 11/18/2010 - 11:32 | 737689 spongeBOB
spongeBOB's picture

sears had a TV ad here in Chicago for 3-door SS fridge for $699.

Thu, 11/18/2010 - 11:30 | 737679 risk-reward
risk-reward's picture

Today would make a good "reversal day"

Thu, 11/18/2010 - 11:30 | 737680 mule65
mule65's picture

Crickets around here.  Bears destroyed again.

Thu, 11/18/2010 - 11:32 | 737686 tmosley
tmosley's picture

What are you talking about?

The real bears know you can't short these markets.  They all have gold and silver.  They are doing just fine today, than you very much.

Thu, 11/18/2010 - 11:36 | 737702 unwashedmass
unwashedmass's picture


well said. sittin on my gold and silver and extremely happy camper here. particularly fond of the actual bullion i hold looking at all this crap going on....sheer insanity.

Thu, 11/18/2010 - 11:39 | 737713 RockyRacoon
RockyRacoon's picture

If you depend on government largess for your "market" gains then you are no better than those on the dole doing the same thing.  Looking to Uncle Sam for your sustenance is no different from folks on food stamps.

Thu, 11/18/2010 - 11:32 | 737690 shushup
shushup's picture

Wait till we find out it's a typo and the real number is 2.5 not 22.5

Thu, 11/18/2010 - 11:37 | 737703 Traianus Augustus
Traianus Augustus's picture

or the first 2 was supposed to be a "-"

Thu, 11/18/2010 - 11:57 | 737766 EscapeKey
EscapeKey's picture

With the revisions going on these days, I find it much more likely it will be revised to 225.


Thu, 11/18/2010 - 11:36 | 737700 Cognitive Dissonance
Cognitive Dissonance's picture

One must simply applaud the wildly successful manipulation of the markets in order to debut the GM IPO. The Philly Fed will be revised when it no longer matters. All that mattered today was the spectacular GM IPO payday being disbursed as I type.


Thu, 11/18/2010 - 11:44 | 737734 Withdrawn Sanction
Withdrawn Sanction's picture

Too right.  My bet is for an oddly misplaced decimal point.  The mea culpa will be something like,  "Oh right, it should have been one place to the left.  Ooops, sorry."

Thu, 11/18/2010 - 11:37 | 737704 Fix It Again Timmy
Fix It Again Timmy's picture

Flocks of lip-sticked flying pigs reported in Philly...

Thu, 11/18/2010 - 12:01 | 737776 The Rock
The Rock's picture


Thu, 11/18/2010 - 12:35 | 737900 cosmictrainwreck
cosmictrainwreck's picture

LOL me too - not precisely a double entendre by definition, but a double somethin'........a alluring image, to be sure

Thu, 11/18/2010 - 11:40 | 737707 99er
Thu, 11/18/2010 - 11:39 | 737715 Silverhog
Silverhog's picture

Next week is Kathy in reception dept. turn to spin the wheel. 

Thu, 11/18/2010 - 11:41 | 737720 goldmiddelfinger
goldmiddelfinger's picture

Philly- Philadelphia- Isn't that the urban nightmare whose credit ratings were just downgraded by Moody's yesterday?

Thu, 11/18/2010 - 11:44 | 737728 Popo
Popo's picture

Oh please. They'll revise it down next month, but everyone will have forgotten about it by then.

Oops, we accidentally helped the market soar during the GM IPO. What a coincidence...

Thu, 11/18/2010 - 11:44 | 737729 TideFighter
TideFighter's picture

GM IPO, 22b market cap, trades within 50 cents of its open and high. right. ReVolt. This thing will end up going as far as a Volt at a tracktor pull (except in Kentucky). Same union, self-admitted financial scamming (even on their own disclosures), same shitty product, same result. Philly Fed prints WHAT!!??


Thu, 11/18/2010 - 12:25 | 737852 the grateful un...
the grateful unemployed's picture

Do you suppose it's that hard to buy something you own (see Bernanke, front running Treasury auctions)?? answer no. Can the Fed buy the GM IPO. rhetorical question.

Thu, 11/18/2010 - 11:50 | 737745 scratch_and_sniff
scratch_and_sniff's picture

Well i suppose the old maxim stands true, if you are going to lie then make it a wopper! (Though personaly i tend to beleive it, and just think that you lot are a pack of curmudgeony old bastards, snigger snigger)

Thu, 11/18/2010 - 11:51 | 737747 aztrader
aztrader's picture

Another act of desparation.  With the holidays coming fast, they need to build confidence fast.   The past week took a lot of the confidence in the markets away and they are trying to replace it with more bullish economic numbers even though they most likely are phony using different accounting standards or the like............

Thu, 11/18/2010 - 12:16 | 737822 the grateful un...
the grateful unemployed's picture

This is what happened during GD1, the administration used price controls to help farmers, which had the opposite effect. Price controls, or putting a bid under prices, or stoking asset inflation, merely puts the price of final products out of reach of consumers who are in full out deflation. Of course with the Chinese pegging their dollar, we can still buy prison made goods, dumped on the global market by anti-free trade Socialist countries, but eventually the dollar refuses to go down and all hell breaks loose.

Thu, 11/18/2010 - 12:42 | 737925 HarryWanger
HarryWanger's picture

This is the perfect example of the psychology here at ZH. I post frequently that there is a strange phenomenon that occurs on economic news. If it's bad, like the Empire Manufacturing, it's taken as "proof" that the economy is in "dire straits". 

When we see a good or very good number like the Philly Fed, it's obviously a "lie" or a "fraud". Can't have it both ways. Not all bad numbers are gospel and good numbers frauds. 

Thu, 11/18/2010 - 12:49 | 737963 Orly
Orly's picture

Being analytical, one would think that a move from five to twenty-two is a little suspect, Harry.

Thu, 11/18/2010 - 12:52 | 737973 HarryWanger
HarryWanger's picture

And a celebrated drop of 26 isn't suspect??? That's the point. You guys act like the world's ending on a -26 drop on the Empire index but are "suspicious" of a positive 17 point move on the Philly. 

Thu, 11/18/2010 - 12:58 | 737996 Orly
Orly's picture

Please don't, "you guys," me, Mr. Wanger.  Last stock I traded was

Thu, 11/18/2010 - 12:59 | 738002 erik
erik's picture

There is an 85% correlation between NY and Philly Fed indices. 

The last time we saw this extreme divergence was Sept 2008 when the Philly went from -24.2 to -1.1 and the NY went from -3.15 to -11.54.

What did the Philly print in Oct 2008?  -38.8

Thus, Sept 2008 ramp in Philly was a complete outlier.  One of the two is telling the truth.  We will find out which next month.

Thu, 11/18/2010 - 13:29 | 738028 HarryWanger
HarryWanger's picture

One of the two is telling the truth.  We will find out which next month.

I would say "one of the two is more accurate". But I agree, we'll find out next month which one is more accurate. But of course if it turns out to be the Philly numbers, I can guarantee you'll hear more people here screaming "lie" or "fraud".

Thu, 11/18/2010 - 13:42 | 738131 erik
erik's picture

And if NY is right, I can guarantee you will be here making excuses for the bull case.  They're called opinions (and yes i know what those are like).  People here generally have strong opinions regarding bailouts, moral hazard, fascism, etc.  I respect them for that.  Some of the headlines are sensationalist, but it really isn't very different from listening to the Ken Fisher and Abby Cohen types on the other side of the spectrum.

Thu, 11/18/2010 - 14:30 | 738299 Cognitive Dissonance
Cognitive Dissonance's picture

Some of the headlines are sensationalist, but it really isn't very different from listening to the Ken Fisher and Abby Cohen types on the other side of the spectrum.

And that's the point. The gospel singer's song is always consider gospel.

Outrageous statements spoken in an environment conductive to acceptance of outrageous statements automatically washes the outrageousness out of them, but doesn't really diminish the truth or false nature of the statement. Thus Cohen and friends will always be considered reasonable.

ZH and a few other blogs are contrary to the status quo and thus anything said on these sites will always be branded as outrageous and ridiculous to the powers that control the status quo.

I submit that the followers of the Ponzi powers that be are even more sheep like than the passive population. The only difference between the two sectors is wallet size, arrogance and perceived self importance.

Thu, 11/18/2010 - 13:21 | 738063 emsolý
emsolý's picture

sooo...if everything is picking up again, what was that QE2 thing for? I guess it will be downsized now, since the Fed statement kept open the possibility to adjust as required by economic circumstances.

Thu, 11/18/2010 - 13:23 | 738067 emsolý
emsolý's picture


Thu, 11/18/2010 - 13:32 | 738095 Sophist Economicus
Sophist Economicus's picture

No need to get all worked up here, one way or the other.   These are diffusion indexes.    Our business participates in these surveys frequently.    I live in the greater Philly area.    All of the usual suspects are hurting (manufacturing, construction, pharma, real estate, etc).   However, this is the Christmas season and we have lots of food processing industries here.    Some of the lift may be coming from there.   But as I look at the numbers, I don't see any reason to get excited one way or the other.   Truth is, homes are still over priced and sitting.   Blue-collar guys in construction are getting ready for a really quiet winter, there are lots of folks that are living pay-check to pay-check, and many that are on unemployment.    No underpinning of a growth story in our area, and we live in the 'affluent' part of Bucks County, a bed room community to both Philly and New York city.

Thu, 11/18/2010 - 13:48 | 738149 overmedicatedun...
overmedicatedundersexed's picture

the message from the philly phed: numbers as symbols...

our "number 2" is dumped twice on you ( I try to do a number 2 twice a day my self)

if it was 11, it would have been number 1 twice which of course means..piss on your heads twice

today they did what to the publics head twice ??


Fri, 11/26/2010 - 23:37 | 756881 ownself
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