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Industrial Production Soars As Sandy Reignites Economy: QEnding?

Tyler Durden's picture





 

In what must be one of the scariest data points for equity bulls, Industrial Production just printed above all economist's estimates with its largest rise since Dec 2010. This 2.5 sigma beat of expectations is the biggest beat since December 2010 and, given that it was data that Ben Bernanke did not have at his previous FOMC meeting, we suggest, ever so humbly, that surely this will play into his qualitative assessment of the economic thersholds and reduce the likelhood of him accelerating his bond-purchases scheme. The driver of such exuberant Industrial Production... Motor Vehicle manufacturing; which as we already know produced the largest channel-stuffing debacle in history. Sustainable? We don't think so... As previous downward revisions appear to have provided a much bigger than expected rebound from Sandy-scuppered prior levels.

 

A quick glance inside the data shows that a major part of the "beat" was the October revision from -0.4 to -0.7, a number which will be further revised downward in 4 months: "The Federal Reserve Board plans to issue its annual revision to the index of industrial production (IP) and the related measures of capacity utilization at the end of March 2013. The revised IP indexes will incorporate detailed data from the 2011 Annual Survey of Manufactures, conducted by the U.S. Census Bureau. Annual data from the U.S. Geological Survey regarding metallic and nonmetallic minerals (except fuels) for 2011 will also be incorporated. The update will include revisions to the monthly indicator (either product data or input data) and to seasonal factors for each industry. In addition, the estimation methods for some series may be changed. Any modifications to the methods for estimating the output of an industry will affect the index from 1972 to the present." And remember what happened when the Fed "revised" consumer credit data to the point it was both meaningless and showed huge contractions to credit in the past? Expect the same, but by then today's print will be long forgotten.

As for the specific reason given for today's surge? Why Sandy of course, which apparently had a huge downward impact in October (all 5 days it impacted October data), and served as a boost to November data:

Manufacturing output rose 1.1 percent in November following a decrease of 1.0 percent in October. Nearly all the decline in factory output in October is estimated to have been related to Hurricane Sandy, and the increase in November reflects a post-hurricane rebound in production as well as the solid advance in the output of motor vehicles and parts. Within manufacturing, increases were widespread in November across both durable and nondurable goods industries. The factory operating rate rose to 76.6 percent, a rate 2.2 percentage points below its long-run average.

 

The production of durable goods rose 1.6 percent in November. Output increased in all major categories of durables other than computer and electronic products, and aerospace and miscellaneous transportation equipment, which both decreased. Gains of more than 2 percent were recorded in the indexes for wood products; for primary metals; for electrical equipment, appliances, and components; for motor vehicles and parts; and for miscellaneous manufacturing. Capacity utilization for durable goods manufacturing was 76.7 percent, a rate 0.4 percentage point below its long-run average.

More related funny stuff here.

 


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Fri, 12/14/2012 - 10:33 | Link to Comment overmedicatedun...
overmedicatedundersexed's picture

this is why: "U.S. to send troops, Patriot missiles to Turkey" what's for xmass this year daddy: war

Fri, 12/14/2012 - 10:45 | Link to Comment otto skorzeny
otto skorzeny's picture

if the Turks are such bad-asses(just ask them) and want to be the neighborhood bully why can't they handle the shit without a broke Uncle sam helping out?

Fri, 12/14/2012 - 11:11 | Link to Comment IamtheREALmario
IamtheREALmario's picture

The US is run by the CIA and its masters... and the CIA and its masters are psychopaths. Isn't it obvious?

Fri, 12/14/2012 - 12:31 | Link to Comment Paul Bogdanich
Paul Bogdanich's picture

What happened to all the bullshit, propaganda pieces about how insured losses don't create economic activity in the real economy?  Something about a shopkeeper and broken window with no insurance.  Under the premise the broken window does not add to GDP because the shopkeeper had less to spend after paying for the window.  However, when the loss is insured what it serves to do is take money from the financial economy and place it to the real economy which grows the GDP of the real economy.  Which by the way, taking money from the financial economy and putting it to the real economy, is what we as a nation need to be doing from a policy perspective but are not and why Obama is such a disaster for the economy.  He's a bank dick as they used to say.        

Fri, 12/14/2012 - 10:40 | Link to Comment Dr. Engali
Dr. Engali's picture

Fuck yeah! Let's break some more shit up! Break all the windows and let's get this economy cooking!

Fri, 12/14/2012 - 10:51 | Link to Comment fonzannoon
fonzannoon's picture

Hey Doc and whoever else, that Santelli/Liesman exchange I was referring to yesterday is on CNBC site right now.

Fri, 12/14/2012 - 10:59 | Link to Comment Dr. Engali
Dr. Engali's picture

Thanks. That's a pretty good exchange.

Fri, 12/14/2012 - 12:29 | Link to Comment XitSam
XitSam's picture

Liesman lies. Deficits have not been coming down. http://www.reuters.com/article/2009/12/04/usa-budget-idUSN04180939200912...

Fri, 12/14/2012 - 10:52 | Link to Comment The trend is yo...
The trend is your friend's picture

don't worry the punch will not be taken away.  Citi, wfc, gs, ubs, gs, ms, and the rest of the criminal banks will be firing employees to maintain the open window at the fed

Fri, 12/14/2012 - 10:39 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Michigan seeing an uptick in riot gear production...

...also, big surge in "industrial" cannabis production in the Pacific NW.

Fri, 12/14/2012 - 10:39 | Link to Comment docj
docj's picture

Cue the "We had this whole thing under control, until those mean-old Waskly Wepublicans drove us off the fiscal cliff" jive from the chocolate messiah in 5... 4... 3...

Fri, 12/14/2012 - 10:41 | Link to Comment otto skorzeny
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I do quite a bit of driving in fairly white-bread areas and I NEVER see new cars

Fri, 12/14/2012 - 10:45 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Really???  I see 'em every day when I pass by the dealerships.  They're stacked five, sometimes six high.

Fri, 12/14/2012 - 10:46 | Link to Comment otto skorzeny
otto skorzeny's picture

stacked new pickups blot out the sky on lots around here

Fri, 12/14/2012 - 10:49 | Link to Comment mayhem_korner
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must be yer local version of the "freedom tower"

Fri, 12/14/2012 - 11:24 | Link to Comment nofluer
nofluer's picture

I'm still driving my 1982 Chebby trk. It runs pretty good... now. I had to replace the cam shaft (28,000 miles) and the engine (70,000 miles) and a bunch of other crappy original equip GM parts with after-market... but now it's good.

But then I bought it back when a person could afford a truck... $11,000 special order - delivered.

Fri, 12/14/2012 - 12:34 | Link to Comment gould's fisker
gould's fisker's picture

With the magic money tree in play for GM they can double down on failure:  Article entitled "GM to unveil new pickup even as it boosts deals on current model" admits after alot of next year we'll be dancing in a stack of sales hooey "In the meantime, GM's inventory of the current Silverados has soared to 139 days worth of supply.  GM has acknowledged its truck inventories were too high, and it would miss its end-year target of having U.S. inventory of no more than 220,000 pickup trucks, or about 85 days of supply. Automakers typically prefer to have closer to 80 days supply of pickup trucks."  Of course somebody is paying for all that stock to sit there--why not ship it off to dealerships and dump it on their floor plans that they have to pay a monthly percentage on.  As long as the majority owner's production reports look good:

http://news.yahoo.com/gm-unveil-pickup-even-boosts-deals-current-el-203729101--finance.html;_ylt=A2KJ3CY_U8tQDH0AuzXQtDMD

Fri, 12/14/2012 - 10:46 | Link to Comment CPL
CPL's picture

Lots of pre 2008 vechiles.  Good catch.

 

Means the after market parts industry is going to do it's thing pretty soon unless the auto makers build a car under 8 grand with 80 MPG and four seats.

Fri, 12/14/2012 - 10:47 | Link to Comment otto skorzeny
otto skorzeny's picture

is that why Auto Zone is worth $360 a share?

Fri, 12/14/2012 - 11:39 | Link to Comment youngman
youngman's picture

They have them down here in Colombia..the Renault TWINGO and Chevy has a cheap one.....no nothing...no ac...no airbags...no pollution control....no power nothing...they also have no power...but the locals wil fit 10 people in them with food and goodies and go tour for the weekend....pretty funny

Fri, 12/14/2012 - 10:47 | Link to Comment hugovanderbubble
hugovanderbubble's picture

General Motors Defaults again??? ups¡¡¡

Fri, 12/14/2012 - 10:49 | Link to Comment phoolish
phoolish's picture

Remember, flipping hamburgers counts as "manufacturing."

 

 

Fri, 12/14/2012 - 10:51 | Link to Comment overhere2000
overhere2000's picture

Amazing how modern manufacturing relies on port shipments and how they can change production numbers of specific industries.

Fri, 12/14/2012 - 10:52 | Link to Comment Orly
Orly's picture

Lance Roberts mentioned that this would happen.  He said, besides autos, most businesses in this cycle have done a good job not getting too far ahead of themselves and there should be a bounce in manufacturing as restocking takes place.

Looks like he was right.

:D

Fri, 12/14/2012 - 10:52 | Link to Comment asteroids
asteroids's picture

This does not jive with the number of people on food stamps. That number keeps on rising.

Fri, 12/14/2012 - 12:42 | Link to Comment gould's fisker
gould's fisker's picture

That's where they put the people who are no longer looking for work so the unemployment rate can keep coming down. The hope is the sheeple will not notice the relationship.

Fri, 12/14/2012 - 10:54 | Link to Comment SheepDog-One
SheepDog-One's picture

Gee so all we need to have a superpower economy and get us out of recession is a hurricane every few months. Got it!

Fri, 12/14/2012 - 11:08 | Link to Comment IamtheREALmario
IamtheREALmario's picture

Tell, me, is a country's prosperity judged by its income statement or its balance sheet? We know that the cash-flow statement is gamed through money creation, so that is useless.

I would argue that balance sheet destruction for the purpose of generating income can only go so far and that is how we got into this mess in the first place.

Back before it was fashionable to live off the difference between what you borrow money for and what you lend it for, the balance sheet was king in determining the health of an entity. Now, the rules of the world have changed or possibly we are deluding ourselves into believing that the cocaine-like rush from burning through our diminishing stash is as good as being healthy, fit and active.

Fri, 12/14/2012 - 11:09 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

I prefer to judge a country's prosperity by the balance sheets of its citizens...

Fri, 12/14/2012 - 11:16 | Link to Comment ptoemmes
ptoemmes's picture

I'd argue that, aside from the few of us here and elsewhere, it is "judged" (not rigourously mind you) by media headlines screaming the spin of the central planning propaganda machine outlets.  Man, does that sound conspiratorial or what?!

Fri, 12/14/2012 - 11:16 | Link to Comment kill switch
kill switch's picture

Gee so all we need to have a superpower economy and get us out of recession is a hurricane every few months. Got it!

Your right Doc,, I have an idea,, lets blow up Chicago and rebuild it...Then L.A. , San Fran, Dallas, Miami, Fucking economy will be humming!!! And with the military industrial complex bringing on the carnage, go long depleted uranium, Raytheon, Booz Allen Hamilton, Mitre, Lockheed Martin. Fucking napalm in the morning, reminds me of_______________ victory.

And I came up with this before noon!!!

The Kill Switch

Fri, 12/14/2012 - 11:23 | Link to Comment John Law Lives
John Law Lives's picture

Good ole Jamie Dimon says the economy could be "booming" with a fiscal cliff deal.

http://finance.yahoo.com/news/economy-could-booming-fiscal-cliff-1435393...

What has he been smoking?

Fri, 12/14/2012 - 11:27 | Link to Comment pragmatic hobo
pragmatic hobo's picture

"given that it was data that Ben Bernanke did not have at his previous FOMC meeting, we suggest, ever so humbly, that surely this will play into his qualitative assessment of the economic thersholds and reduce the likelhood of him accelerating his bond-purchases scheme"

shirly, you must be joking.

Fri, 12/14/2012 - 11:32 | Link to Comment AnAnonymous
AnAnonymous's picture

It soars when it plummets elsewhere.

Tough days for 'americans' residing in Europe, the more time passes by, the more it looks like they are the ones to be pushed under the train to save the 'american' world.

In a no growth environment, undubiously, the rich man's gains come from the poor man's losses.

Time to blob up.

Fri, 12/14/2012 - 12:44 | Link to Comment akak
akak's picture

YES!

And we have our first "blob up" in many a Chinese shitizenism moon!

Fri, 12/14/2012 - 11:36 | Link to Comment Thorny Xi
Thorny Xi's picture

And December 2010 was such a spectacular moment.  Flatline, with noise.

Fri, 12/14/2012 - 11:43 | Link to Comment GoNavy
GoNavy's picture

Increased production (real or not) and increased inventories leading to a decrease in prices and anticipated inflation in the CPI!!!

Quick! Tell Bernanke to prime the pump before we get into a liquidity trap!!!

Forget that the "deflation" is driven by productivity gains (maybe) or an over-supply of inventory (which is certain.) After all, there's that "bigger agenda" that Bernanke and the Oligarchy need to pursue -- DEFAULT!!!

When you're down $16.5 TRILLION,and continuing to lose, Big Liberal Government can't cut spending (for fear of riots) and it can't raise enough taxes (for fear of recession, save for an entirely politically oriented class-based tax on "The Rich").

The only answer is default; not in the conventional "bankruptcy, can't pay" sense, but in the sense of that creditors will get paid back a debased currency that's worth about $0.15 (fifteen cents) on every dollar borrowed.

 

 

Fri, 12/14/2012 - 13:53 | Link to Comment NitneLiun
NitneLiun's picture

With this nice ecoomic boost from Sandy, just imagine how great our economy would be if the Yellowstone caldera blew up.

Fri, 12/14/2012 - 15:01 | Link to Comment ZFiNX
ZFiNX's picture

My public university just got a shiny new fleet of chevy's. Channel stuffing bluffing?

Fri, 12/14/2012 - 20:00 | Link to Comment StoleYourMoney
StoleYourMoney's picture

Yes 5 days of Sandy is def to blame for the -0.7 October number. It's not the US recession that Lakshman Achuthan, Hussman and Mish say were in. Nothing to do with David Rosenberg's hints of a US recession either http://www.businessinsider.com/rosenberg-core-capex-orders-recession-2012-9

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