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Philly Fed Misses Expectations, Comes At 19.3, Admits Broad Price Increases

Tyler Durden's picture





 

A month after the Philly Fed surged and trounced expectations, printing at 24.3 in December, only to be subsequently revised lower to 20.8, the Philly Fed Business Outlook survey took another dip down, missing expectations of 20.8 and coming at 19.3. And as usual the real story is behind the headline, where one number continues to scream, namely the Prices Paid data, which rose from 47.9 to 54.3, the highest Priced Paid since July of 2008. Look for margin pressure to force companies to finally follow in Tiffany's example and start passing through costs to consumers broadly any minute.

From the report:

Higher Prices Are Reported

Price increases for inputs as well as firms' own manufactured goods are more widespread this month. Fifty-four percent of the firms reported higher prices for inputs, compared with 52 percent in the previous month. The prices paid index, which increased 6 points in January, has increased 42 points over the past four months. On balance, firms also reported a rise in prices for manufactured goods: More firms reported increases in prices (26 percent) than reported decreases (9 percent), and the prices received index increased 8 points, its second consecutive positive reading.

Pretty much explains why the Fed will now be forced to do everything in its power to crush commodity costs.

Full report.

 


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Thu, 01/20/2011 - 11:15 | Link to Comment Sudden Debt
Sudden Debt's picture

Nobody is right EVERY TIME!

sometimes people make mistakes and can be wrong about something...

YES! Even the FED can make a mistake to (open hand on hart)

Thu, 01/20/2011 - 11:13 | Link to Comment Xibalba
Xibalba's picture

Whenever LVMH raises prices, they sell more items. 

Thu, 01/20/2011 - 11:14 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Biflation rules.

Prices paid: UP

Existing home prices: DOWN

Oh and a few 100K or so new jobless

Lotsa Luck

Thu, 01/20/2011 - 11:18 | Link to Comment Sudden Debt
Sudden Debt's picture

Yes, but it's not the worst month in history SO THAT'S STILL A BUY SIGNAL!

 

as Cramer would say...

 

BOUYAH BITCHEZ!! bouyah...

Thu, 01/20/2011 - 11:25 | Link to Comment duo
duo's picture

Check out option pain on SLV.  A close below $27 helps a lot of people.

Thu, 01/20/2011 - 11:57 | Link to Comment papaswamp
papaswamp's picture

You are confusing GLD and SLV with physical....massive difference. GLD and SLV are paper and worthless in the eyes of those purchasing silver and gold for insurance/hedge purposes. That said, I doubt gold will be at $1600 anytime this year barring a black swan landing. Low to mid 1400's maybe. Silver I do expect to cross over $30 and stay in the low to mid 30's.

 

Thu, 01/20/2011 - 12:07 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

Cut your targets in half.

 

Thu, 01/20/2011 - 13:14 | Link to Comment Tortfeasor
Tortfeasor's picture

Cut the value of your FRNs in half.

Thu, 01/20/2011 - 11:28 | Link to Comment Spalding_Smailes
Thu, 01/20/2011 - 11:32 | Link to Comment Red Neck Repugnicant
Red Neck Repugnicant's picture

It's darkest before it goes pitch black.....

 

Edit in: Oops.  That was suppose to go to Turd and his "darkest before dawn" blog entry...

Thu, 01/20/2011 - 11:42 | Link to Comment d00daa
d00daa's picture

Got AIG?

Thu, 01/20/2011 - 11:55 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

Stopped out at 55 ... 10%-  should have taken the 20%.

 

But I should make that back quick with TZA -

 

Thu, 01/20/2011 - 12:04 | Link to Comment d00daa
d00daa's picture

LMFAO, of course.  Why did I even bother asking?

 

Tell me, master trader, are we rolling over or not?  Have you looked at any monthly index charts recently?  What are they telling you?

Thu, 01/20/2011 - 12:17 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

I'm look at all the stocks not holding recent high's ...

Most of the high flyers over the last 3-4 months have all pulled back breaking 50 days ...

The markets been rolling for months, its due.

Silver Wheaton down another 5% ..... First Majestic Silver down 15% today Lol'

You want to see blood in the streets , many, many miners down 25-35 % in 4 weeks .... Many buying the dip over the last 4 weeks ........ Uggg , A total wipeout last 2-3 days.

Thu, 01/20/2011 - 11:44 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

Not before $870 fool

Thu, 01/20/2011 - 11:59 | Link to Comment papaswamp
papaswamp's picture

Not going to happen...too much Asian and Indian demand. As pay and economy continues to rise so will demand...though I'll be impressed if Gold makes it past $1450 this year.

Thu, 01/20/2011 - 12:28 | Link to Comment trav7777
trav7777's picture

not sure I'm feelin this forecast, simply because of the production figures that have been coming out.  If gold is exceeding its previous 2001 production peak, then the extra supply will be a significant headwind against the price until production begins to materially decline again

Thu, 01/20/2011 - 12:33 | Link to Comment tmosley
tmosley's picture

Sort of like how urinating in the ocean causes coastal flooding.

Gold isn't used up.  You can't analyze its price in the same way you do other commodities.

Thu, 01/20/2011 - 11:17 | Link to Comment Village Idiot
Village Idiot's picture

Higher prices mean "quality"!!

 

Signed,

Mrs. Village Idiot

Thu, 01/20/2011 - 11:29 | Link to Comment Sudden Debt
Sudden Debt's picture

In the ESCORT serice THAT is TRUE!

 

I rather fuck on clean sheets then on dirty sheets!

Not that I'm a snob or Juppy.

It's just the way my parents raised me. 

Thu, 01/20/2011 - 11:18 | Link to Comment terranstyler
terranstyler's picture

This means inflation and higher PMs!

Wait, ehm, obviously just for people who don't have a degree in economy.

Thu, 01/20/2011 - 11:22 | Link to Comment TruthInSunshine
TruthInSunshine's picture

The producers and manufacturers are full of shit. None other than Ben Bernanke said that inflation is too low.

Thu, 01/20/2011 - 11:25 | Link to Comment Quintus
Quintus's picture

Exactly.  What would those dickheads out there in the real economy know about such things?  They probably don't even have degrees from prestigious educational institutions.  They should just shut up and leave things to the Bernank.

Thu, 01/20/2011 - 11:22 | Link to Comment ExploitTheMarket
ExploitTheMarket's picture

Can you feel the standard of living declining?   Stagflation, Biflation, whatever you want to call it, its here, and growing....

Thu, 01/20/2011 - 11:22 | Link to Comment sushi
sushi's picture

And all those "green shoots" were derived from putting 4 oz of product in a package sized for 24 oz. Same price, different quantity.

Now you are going to be getting 4 oz at the 32 oz price. But you get a free serving of "brown shoots" to go with.

Thu, 01/20/2011 - 11:24 | Link to Comment Lone Mad Minute...
Lone Mad Minute Medic's picture

PMs getting hit hard. Is this the short squeeze everybody has been talking about?

Thu, 01/20/2011 - 11:32 | Link to Comment terranstyler
terranstyler's picture

Maybe a liquidity short squeeze...

Thu, 01/20/2011 - 11:46 | Link to Comment Red Neck Repugnicant
Red Neck Repugnicant's picture

1

Thu, 01/20/2011 - 11:25 | Link to Comment Chicago bear
Chicago bear's picture

I brought up the question of higher gold and diamond prices to a member of the Mahendra brothers diamond mining family in India. He said diamond prices have not escalated substantially, and that the Tiffany increases are Tiffany's game to get more profit. The motive here may be to grab profit at the start of the year based on uncertain futures rather than certain commodity cost inputs.

Question though, any diamonds ETF out there to spread out commodity risk? I'm saturated in silver and PHYS. 

Thu, 01/20/2011 - 11:51 | Link to Comment serotonindumptruck
serotonindumptruck's picture

Diamonds are very abundant in nature. With few exceptions, they are not rare. The diamond trade is the epitome of a manipulated market.

Thu, 01/20/2011 - 12:05 | Link to Comment SheepDog-One
SheepDog-One's picture

Yea and look who runs it.

Thu, 01/20/2011 - 12:10 | Link to Comment serotonindumptruck
serotonindumptruck's picture

Tel Aviv?

Thu, 01/20/2011 - 12:16 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

Yeah, why settle for DeBeers when you can have DeSchlitz?

Thu, 01/20/2011 - 12:51 | Link to Comment SheepDog-One
SheepDog-One's picture

Yea exactly.

Thu, 01/20/2011 - 12:34 | Link to Comment Sean7k
Sean7k's picture

I heard a story from a jeweler once. He said when Black Opals were first discovered, every woman wanted one. They were beginning to threaten the diamond trade in wedding rings and pendants. 

The diamond consortium quickly began circulating a rumor that women that received black opals as wedding rings had a much greater chance of divorce and that the stone was "cursed". This of course, killed the burgeoning trade in Opals and diamonds remained the preferred stone.

To this day, I think the diamond is the most overhyped stone on the planet. Black Opals , especially the harlequins, are the most beautiful stone I have ever seen.

Thu, 01/20/2011 - 13:24 | Link to Comment serotonindumptruck
serotonindumptruck's picture

I've caused a few women to become quite angry with me after they attempted to impress me with their new (and very expensive) diamond engagement rings. I recall one vivid instance where her boyfriend/fiancee' wanted to kick my ass for making his soon-to-be bride sad and unhappy. The marketing campaign behind the diamond empire has been wildly successful at convincing the masses that these compressed deposits of anthracite are in fact quite valuable.

Thu, 01/20/2011 - 14:17 | Link to Comment MachoMan
MachoMan's picture

Dude.  You're buying for a woman.  It has nothing to do with the rationality of the purchase decision...  only the whims of the woman...  cost of doing business.  In a perfect world, we would sit them down and tell them that they're irrational and their feelings are irrelevant to their purchasing decisions...  but that will get your detached penis tossed out of a moving car in the middle of the night...

Thu, 01/20/2011 - 22:45 | Link to Comment 1984
1984's picture

True dat.  The same creatures who would make you throw money away just to see if you would.

Fri, 01/21/2011 - 12:46 | Link to Comment MachoMan
MachoMan's picture

I always laughed at guys who talked about their present significant others going out on their first date together and ordered the most expensive thing on the menu to judge reaction.  I married the first one that let me take her to mcdonalds.

Thu, 01/20/2011 - 11:25 | Link to Comment sushi
sushi's picture

the Fed will now be forced to do everything in its power to crush commodity costs.

Do you mean The Chairman will now be bending over for a line of Saudi princes? Will this be televised?

Thu, 01/20/2011 - 11:46 | Link to Comment SheepDog-One
SheepDog-One's picture

Part of the commodities problem is the flood of printed up money from Bernanke, throw in actual shortages due to poor crop yields, and theres not much at all you can do to manipulate the prices! Actual supply/demand popping up here, 'crush commodity costs' HOW... it cant be done!

Thu, 01/20/2011 - 12:13 | Link to Comment sushi
sushi's picture

Agreed.

 

It cannot be done and The Bernank has 15 minutes to do it.

Thu, 01/20/2011 - 11:28 | Link to Comment Miramanee
Miramanee's picture

Is the power of lies slowly unraveling:

http://www.youtube.com/watch?v=xZDKZZp0YUI

Thu, 01/20/2011 - 11:30 | Link to Comment buzzsaw99
buzzsaw99's picture

Someone is selling everything indscriminately. Gold, bonds, stocks. Someone is raising cash. If anyone has a theory I'd like to hear it. My guess, margin call.

Thu, 01/20/2011 - 11:40 | Link to Comment Sophist Economicus
Sophist Economicus's picture

RUMORS in some circles has it that there was a Pumping up of prices earlier so that some of these large funds that were winding down could exit positions without creating big down drafts.   Sounds like classic game of distribution.   Also heard some hedgies in CT are having some redemption requests and winding down winners in PM and commodities to raise cash and watch....

Thu, 01/20/2011 - 11:49 | Link to Comment buzzsaw99
buzzsaw99's picture

Sounds reasonable.

Thu, 01/20/2011 - 11:50 | Link to Comment SheepDog-One
SheepDog-One's picture

Of course it was pretty obvious that over the last 6 months the insiders were selling into the FED pumping. Now what?

Thu, 01/20/2011 - 11:53 | Link to Comment Sophist Economicus
Sophist Economicus's picture

To be clear, the guys that were selling were the ones pumping in these situations.   But wouldn't past anything past the FED either.   Will be fun to see when and at what price those closing funds exited thier positions...

Thu, 01/20/2011 - 11:37 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Digging through details of Philly Fed shows prices paid rising faster than prices received as predicted under biflation theory since companies can't pass on rising costs to constrained consumers with stagnant incomes and high job losses. This squezzes profit margins hard.

However there's a trend that at least part of the cost is getting passed on, which means there is indeed real inflation mixed into the fundamentally deflationary economics of high unemployment, ongoing downsizing of jobs with high weekly new jobless claims over the last 3+ years, declining real incomes and declining real estate prices. 

Biflation theory just serves to describe the facts : The US economy is downsizing and is in a post mega-bubble state. Costs are not supported by incomes and individual net worth. However the response by the Fed since the crisis and over the last 40 years has been reckless money printing, and this is combination with growing and expanding developing world economies means there are too many dollars in too many hands chasing too few raw materials. Hence deflation exists along side inflation, killing profit margins and consumers simultaneously as cost of living rises while net worth and incomes decline.

Thu, 01/20/2011 - 11:42 | Link to Comment SheepDog-One
SheepDog-One's picture

Shit you needs ta buy- Goin way up.

Shit you needs to sell-  Goin way down. 

I dont know the exact Princeton econ major term for it, but down here in the bayou we calls it 'Tough stretch of road we're on'

Thu, 01/20/2011 - 11:46 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Indeedy! My early read tells me that companies are feeling the heat of rising input costs so badly that they're willing to risk the suicide move of raising prices. That means they're willing to sacrifice volume in favor of maintaining margins. But of course that means they have to downsize and cost cut even more just to maintain profits. So the trend just continues. 

We Po' Nothern boyz might be joining you down there! 

Thu, 01/20/2011 - 11:47 | Link to Comment Sophist Economicus
Sophist Economicus's picture

Yup.   And the data shows that equities really suffer when you have a biflation OR strong commodity inflation environment.    The sweet spot for equities has just past, where you could slash costs fast and live with lower Top Line growth because bottom line contribution via cost reduction leads the curve going down.     This is why the Slope of Hope is so painful for the BULLS, they cannot wrap their heads around compressing P/Es till it happens

Thu, 01/20/2011 - 11:59 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Yup. And there's also the fear that the sweetest spot of all, nearly free money, is also in the rear view mirror. That hurts when you consider the alternative: actually earning money. I keep saying cash on balance sheets is not going to be re-invested in this environment. It's actually just a huge 'golden parachute'

Thu, 01/20/2011 - 12:20 | Link to Comment sushi
sushi's picture

My bet is that we start to see a surge in M&A activity.

One route to corporate survival in this environment is to buy market share buy taking out the competition. Then you rationalize product lines, cut the excess productive capacity and trim the workforce. Makes you look good for a few quarters until the ongoing bi-flation kills your newly found margin.

The reason all those CEOs showed up at the White House yesterday is that they need access to be able to sell into the Chinese market. Without that they face a long slide down.

Thu, 01/20/2011 - 12:07 | Link to Comment d00daa
d00daa's picture

+1

So, the obligatory 15% correction?

Thu, 01/20/2011 - 14:20 | Link to Comment MachoMan
MachoMan's picture

which also explains why biflation is a temporary phenomenon at best (won't get into an austrian school argument for the definition of inflation...)

Thu, 01/20/2011 - 11:59 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

Gold. Gold will surely rally on this.

Thu, 01/20/2011 - 12:12 | Link to Comment HarryWanger
HarryWanger's picture

Wake me up at SPX 1250. That would complete our 3-4% pull back. And a healthy, much needed one at that. Then you'll see the buyers step up.

Thu, 01/20/2011 - 12:18 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

If you promise not to post until 1250 I will wake you then

Thu, 01/20/2011 - 12:21 | Link to Comment d00daa
d00daa's picture

Then you'll see the buyers step up.

 

Heh.  You mean "buyer," right?

What are you basing this "analysis" on exactly?

Thu, 01/20/2011 - 12:24 | Link to Comment HarryWanger
HarryWanger's picture

This is the most expected pull back ever for the market. Everyone and their brother has been on show after show last week talking about this pull back. 3-4% is very healthy and that puts us at 1250 area. You think TPTB would let if fall any further than that? Ain't gonna happen.

Thu, 01/20/2011 - 12:33 | Link to Comment d00daa
d00daa's picture

Do you actually trade based on the nonsense you just posted?

On the off chance, however slim it may be, that your call is wrong, what do you do @ a breach of 1250?

"Most expected pullback ever???" Whatever helps you sleep through 1250, I guess.

Thu, 01/20/2011 - 12:40 | Link to Comment Sophist Economicus
Sophist Economicus's picture

Reminds me of the line in a Woody Allen movie:

 

"I'm a stock broker, I invest people's money till they go broke'

Thu, 01/20/2011 - 12:37 | Link to Comment Sophist Economicus
Sophist Economicus's picture

Why is it 'healthy' for 'TPTB' let the market fall to 1250?   If you are going to manipulate, why not REALLY manuipulate and control and put an absolute FLOOR on the market.    That would build confidence and stop the games.   Could it REALLY be that TPTB DON'T really control bubkus and when the bottom drops out, it drops out?    Will be a great show to WATCH either way....

Thu, 01/20/2011 - 13:04 | Link to Comment SheepDog-One
SheepDog-One's picture

'Most expected market pullback ever'....except just 2 days ago you said there would be no pullback and any slight dip would see a BTFD feeding frenzy. Must be nice to be HarryWanker and make all your trades in a hindsight time machine!

Thu, 01/20/2011 - 12:54 | Link to Comment SheepDog-One
SheepDog-One's picture

OH really Harry....I thought yesterday at close you said to wake you up when the S&P popped back over 1275 on open....nice sliding scale you got there Harry.

Thu, 01/20/2011 - 12:56 | Link to Comment Sophist Economicus
Sophist Economicus's picture

He better get used to sliding.....

Thu, 01/20/2011 - 13:12 | Link to Comment SheepDog-One
SheepDog-One's picture

'Wake you', Harry? How can you be napping with your on-fire retail consumer business goin wild? Arent you there 12 hours daily at least stuffing boxes full of urinal cakes?

Thu, 01/20/2011 - 12:12 | Link to Comment Dr. Porkchop
Dr. Porkchop's picture

Markets are in the red again. Did somebody unplug one of the robots?

Thu, 01/20/2011 - 12:16 | Link to Comment TruthInSunshine
TruthInSunshine's picture

I am involved in the construction/development industry, and if any of you could see supplier letters warning of impending price increases for construction materials, even on stuff there's very low demand for, it would make you that much more frustrated and enraged at the Bernank's steaming lies & bullshit.

Bernanke has sewn the seeds of the next crisis, and we're all going to see the consequences very soon.

Good job, Ben, you Harvard-M.I.T. genious, you!

Thu, 01/20/2011 - 12:22 | Link to Comment sushi
sushi's picture

Bernanke has sewn the seeds of the next crisis

 

No way!! He claims he can solve all these problems in 15 minutes.

That's probably how long it takes for him to turn in his resignation.

Thu, 01/20/2011 - 12:29 | Link to Comment TruthInSunshine
TruthInSunshine's picture

With 19 million vacant homes in the U.S., and large swathes of Americans unemployed, underemployed, seeing falling wages/benefits and rising costs of living, and many underwater on their current homes/mortgages, I'm sure the price increases in materials and everything else needed to meet whatever piddling demand their is for anything new won't have any detrimental effect on whatever remaining producers, suppliers, retailers, consumers there may be.

It will all work out,  because Bernanke is highly intelligent, just as many sociopaths are.

Oh, and as a bonus, I'm so glad that QE is achieving its originally announced primary goal of keeping interest rates from rising, too.

Thu, 01/20/2011 - 12:47 | Link to Comment Sophist Economicus
Sophist Economicus's picture

In our equipment repair business, every manufacturer has raised prices this year!   Some by as much as 10%

And while our insurances, gas, utilities, taxes etc climb, some of our large customers who are having a hard time passing cost increases to their customers have told us in no uncertain terms that they will not ENTERTAIN service cost increases -- so while we can pass along material cost increases, our margins are being compressed.    So, guess what, looking to eliminate more costs in our system.....

Thu, 01/20/2011 - 13:07 | Link to Comment redvetttes
redvetttes's picture

Do you see people buying new equipment or upgrading there present equ. Or trying to fix there equ.cheep with banding wire and duct tape?

Thu, 01/20/2011 - 13:12 | Link to Comment Sophist Economicus
Sophist Economicus's picture

Repair is in.   Our customers used to replace when costs exceeded 50% to 60% of new.    Not any more.    We're doing refurbishing work and putting the stuff back in the field for them.   Our book of business has stayed relatively flat during the last two years, but that's becuase we are lucky and happen to be with solid customers.    There are lots of folks that do/did what we do that are not so lucky...

Thu, 01/20/2011 - 23:56 | Link to Comment TruthInSunshine
TruthInSunshine's picture

This new Amerikan Economy under the stewardship of The Bernank can be summed up by 2 phrases:

1) Price sells (since The Bernank is breaking everyone not part of the inner sanctum).

2) Patch, not replace, please.

 

Thu, 01/20/2011 - 13:43 | Link to Comment ArkansasAngie
ArkansasAngie's picture

In NW Arkansas, quotes are being replaced with estimates and warnings that the estimates won't be good for more than a week to 10 days.

It used to be about saving on labor.  Not so any more.

Went to an auction Monday -- living estate -- the old guy had a steel fabrication hobby.  1x1 pieces of steel plate were being auctioned a piece at a time like they were silver.

Thu, 01/20/2011 - 13:06 | Link to Comment SheepDog-One
SheepDog-One's picture

No doubt 'problem solved' upon Bernanke printing off 1 extra piece of paper, his resignation letter!

Thu, 01/20/2011 - 12:46 | Link to Comment cramers_tears
cramers_tears's picture

I can vouch for this.  I'm a commercial subcontractor.  I can't get fixed material pricing for any bids over $250k right now.   So on a project w/ 1 Mil in material (today's prices), I'm being advised to build in as much as +20% for start date 4 mos out and as much as +45% for start date 8 mos out and later.  That million dollar bill for material is going to be 1.45M by Sep-11!  Thus, we're seeing a lot of bid solicitations being withdrawn and resubmitted w/ "value-added engineering" (cost-savings).  Of course, this makes owners snickity and we've seen a couple of projects simply shelved in the last month.  Another downward pressure on commercial construction right now.

Hoowaa! - THE BERNANK IS EVERYWHERE.  He's like "The Force" in the Starwars Movies.  Maybe we could just get Elle "The Body" Macpherson to do all the PR/60 Minute/Congressional Hearing work for the FED at least we wouldn't have to look at THE BERNANK'S ugly bald head anymore.

 

 

Thu, 01/20/2011 - 12:51 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Replacing Bernanke's ugly ass face and quivering lips with a non-offensive one would only delay the awakening of the sheeple, even moreso.

Thu, 01/20/2011 - 12:53 | Link to Comment DaveyJones
DaveyJones's picture

he's the dark side

Thu, 01/20/2011 - 12:16 | Link to Comment Thepnr
Thepnr's picture

The wind is changing, reality check coming.

Thu, 01/20/2011 - 12:18 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

Hey! What happened to gold?

Thu, 01/20/2011 - 12:35 | Link to Comment tmosley
tmosley's picture

Options expiration is next week.  Same old shit, different day.

I love how you gold trolls think a one day fall validates your idiotic theories even as the price continues to march up, up, UP.

Thu, 01/20/2011 - 12:41 | Link to Comment Sophist Economicus
Sophist Economicus's picture

NO FEEDA DA TROLL...Been ignoring the idiot for a while    Looks like Johnny Jizzpants is back....

Thu, 01/20/2011 - 14:47 | Link to Comment earnyermoney
earnyermoney's picture

J. Bravo is in the house.

Thu, 01/20/2011 - 12:29 | Link to Comment HarryWanger
HarryWanger's picture

BTW: When you dig beneath the headline of this report, it was actually very strong. New orders, employment surged higher. Read the full report, not just the cherry-picked points here.

Thu, 01/20/2011 - 12:42 | Link to Comment d00daa
d00daa's picture

"New orders, employment surged higher."

 

At the expense of much higher input costs.  Are you brain dead?

I hate to break it to you, but new orders and employment don't continue to "surge" (another ridiculous use of hyperbole) higher if input costs continue to "surge" higher.

Guess what this means?  Either input costs come down (read: commodities, and by extended correlation, stocks, get WHACKED), or prices rise and jobs are lost to preserve margin.

 

So again, I ask you, what are you going to do when your 3-4% drop turns into a full-blown 10-15% correction?

Thu, 01/20/2011 - 12:56 | Link to Comment TruthInSunshine
TruthInSunshine's picture

The correction is going to be much deeper than that.

Hairy Wang's sales book of 3 urinal cakes per month is going to collapse, too, as paradichlorobenzene and naphthalene are both skyrocketing due to QE.

Thu, 01/20/2011 - 13:22 | Link to Comment d00daa
d00daa's picture

I believe that ultimately we'll correct much deeper as well, but with regard to trading this market I try not to look past 90 days or so, regardless of what I believe and/or how overwhelming the evidence is. Anything can happen, and I have a feeling that at 10-15% (maybe sooner, who knows), as we move closer to the "end" of QE2, The Bernank panics and pulls off something big to at least temporarily stop the bleeding. I'd like to believe he doesn't have any tricks left up his sleeve, but I've been there and done that...

Thu, 01/20/2011 - 13:09 | Link to Comment cramers_tears
cramers_tears's picture

From the FT - buried toward the bottom.  http://www.ft.com/cms/s/0/04440ca6-249f-11e0-8c0e-00144feab49a.html?ftca...

The number of Americans claiming unemployment benefits also declined, falling by 26,000 to 3.86m. That was the lowest total since October 2008, but does not account for the 4.6m idle workers making emergency claims or claims for extended benefits.  ==>So U3 drops back to 5% through simple attrition.

Boy, you can tell it's option Friday tomorrow!  Give me some more that $27.50 Silver, baby.

C'mon the Bernank!!!!  Where's my 20K DJIA?!?!  I thought we were ridin' this pony to the moon, Alice!

Thu, 01/20/2011 - 12:56 | Link to Comment SheepDog-One
SheepDog-One's picture

405,000 more unemployed yea Harry theres a real huge surge up in hiring. BTW hows that study on market bears going, bout finished up I'd guess?

Thu, 01/20/2011 - 12:59 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Hairy Wang's study is complete; a flow chart illustrated on pastel colored construction paper, drafted in Crayola Crayon.

Thu, 01/20/2011 - 13:02 | Link to Comment SheepDog-One
SheepDog-One's picture

A real masterpiece! I guess he'll publish his report thru Fisher Price, then get busy packing another 5 urinal cakes and a few more dildos due to another huge order spike up Im sure.

Thu, 01/20/2011 - 13:03 | Link to Comment the grateful un...
the grateful unemployed's picture

come on people Bernanke has the inflation genie by the short hairs, all he has to do is jack up interest rates 1/4 point and jawbone commodity prices lower. Come on its all on spec, investors aren't piling into commodities because they think the economy is going to suddenly explode, they think Bernanke is ruining the dollar. Well once he puts his finger on the up button the spec money leaves the building, and the new cheaper commodity prices will make profit margins rise, because labor will never again  darken the door of American business. Course the dollar will have to get stronger, and that might cause some problems.

Thu, 01/20/2011 - 13:08 | Link to Comment SheepDog-One
SheepDog-One's picture

The commodity price rise is here to stay, flood of dollars along with floods of rain destroying crops means famine is sweeping the globe....cant CDS that shit.

Thu, 01/20/2011 - 14:57 | Link to Comment the grateful un...
the grateful unemployed's picture

that is until the pricing mechanism (government manipulated exchanges) disconnect from the delivery markets. If you buy commodities based on their value relative to the dollar, and not on the supply demand metric you are inviting this kind of dislocation. Once it becomes obvious that the markets are a sham, and they cannot guarantee delivery then the players will exit them (which is why perhaps gold is priced high relative to say natural gas, you can't put natural gas in a storage container, not easily anyway)

Thu, 01/20/2011 - 13:39 | Link to Comment cramers_tears
cramers_tears's picture

Yes, The Bernank actually has a little red button on his death-star panel that alerts the POMO Grad Students down in the lower decks to SELL!  SELL!  SELL! DAMMIT!  SELL!  (I always think of Ralph Bellamy as Randolph Duke in Trading Places talking to his Floor Trader after the true crop report comes out).   http://www.youtube.com/watch?v=S8H2FIf1oH4 

 

Thu, 01/20/2011 - 13:45 | Link to Comment Pez
Pez's picture

Unfortunately he CAN turn those machines back on.

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