Empire Fed Misses, Prints Negative For Fifth Consecutive Month, Hopium Rise Continues

Tyler Durden's picture


Whereas last month's negative print in the Empire Fed index (which beat expectations), was attributed to Sandy, it will be difficult to see what attribute can be blamed for this month's major miss, in which the NY Fed just disclosed a -8.1 General Business Conditions update, down from -5.22, and below expectations of -1. This was the fifth consecutive month in which the index has printed negative, and the 6th miss of the past 9 reports. The new orders index dropped to -3.7 from +3.08, while the shipments index declined six points to 8.8. At 16.1, the prices paid index indicated that input prices continued to rise at a moderate pace, while the prices received index fell five points to 1.1, suggesting that selling prices were flat. Bad news for anyone that needs positive margins (i.e. everyone). But that's ok, because the Hopium index, i.e., the Six Month Ahead index, which is the only thing those who fail to see what Bernanke's just announced $1 trillion injection means for the economy have to fall back on, rose from 12.88 to 18.66. So it is all about the future, forget the present, but whatever you do, don't look at the forward Prices Paid indicator which soared to 52, the highest since May: surely NY corporations are optimistic due to the fact that they can now kiss margins goodbye for at least half a year.

Behold the hopium: 6 month forward New Orders:

And Prices Paid:

The blended diffusion index shows a coordinated US slowdown is imminent, government data massaging and manipulation notwithstanding:

From the report:

Continuing a fi ve-month streak of negative readings, the general business conditions index fell three points to -8.1—a sign that business activity declined at a modest pace for New York manufacturers in December. Fifteen percent of respondents reported that conditions had improved over the month, while 23 percent reported that conditions had worsened. After rising above zero last month, the new orders index fell seven points to -3.7, pointing to a small decline in the demand for manufactured goods. The shipments index gave back some of its gains from last month, declining six points to 8.8—evidence that shipments rose at a slower pace than in November. The unfilled orders index climbed five points to -6.5. The delivery  time index was little changed at -2.2. The inventories index was also similar to last month’s reading and, at -11.8, indicated that inventory levels were somewhat lower.

Labor conditions:

The prices paid index inched up two points to 16.1, suggesting that input price increases remained moderate in December. The prices received index fell five points to 1.1, indicating that selling prices were generally fl at over the month. Employment indexes, negative for a second consecutive month, pointed to weaker labor market conditions. The index for number of employees rose fi ve points to -9.7, while the average workweek index declined three points to -10.8.

Kiss your margins goodbye:

In a series of supplementary questions, firms were asked about past and expected price changes overall and in a number of categories. In general,  respondents predicted that prices paid for most budget categories would increase by about the same rate in calendar 2013 as in 2012. The steepest price increases—both actual and expected—were reported for employee benefits, up 6.4 percent, on average, in 2012 and expected to be up 7.2 percent in 2013. Respondents were also asked how they expected their selling prices to change over the next year. The average expected increase in the current survey was 1.0 percent— down from 1.8 percent in last year’s survey and 3.2 percent in the December 2010 survey. Manufacturers were also asked about superstorm Sandy’s recent and expected effects on revenues: Downstate establishments estimated that revenues in October and November were 7 percent and 5 percent lower, respectively, than they otherwise would have been.

Full report here.

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Mon, 12/17/2012 - 09:58 | 3070875 Who is John Galt
Who is John Galt's picture

so Gold spikes on THIS news?

Mon, 12/17/2012 - 10:08 | 3070895 Confundido
Confundido's picture

They won't allow it. Now they figured it's easier to sell it at 8pm ET on thin market, than the usual 10-11am ET. Unless of course, there is a major announcement that challenges it, like last Wed, when they had to sell it after crossing $1,718/oz. It will be like this until it can no longer be like this. Been there before, personally. They always lose though, and of course, we all lose too, because even if our savings are not devalued, the quality of our life inevitably will be.

Mon, 12/17/2012 - 10:13 | 3070906 GMadScientist
GMadScientist's picture

QE until UE == 6.5 + UE likely to head higher == QE4EVAH...party on paper-pushing pundit pablum parade!

Mon, 12/17/2012 - 10:40 | 3070976 yogibear
yogibear's picture

Looks like Bubble Bernake's and the fed's printing continues until people join in worldwide and dump the US dollar. 

Their pushing for massive inflation.

Mon, 12/17/2012 - 10:34 | 3070947 hugovanderbubble
hugovanderbubble's picture

Long Gold / Short Silver for next 8 -15  months

Mon, 12/17/2012 - 10:02 | 3070886 Shizzmoney
Shizzmoney's picture

The steepest price increases—both actual and expected—were reported for employee benefits, up 6.4 percent, on average, in 2012 and expected to be up 7.2 percent in 2013.

How is this thing still propped up?  It's gotta crash soon, right?

Mon, 12/17/2012 - 10:50 | 3070994 DeadFred
DeadFred's picture

Yes, but the key is your definition of soon.

Mon, 12/17/2012 - 10:03 | 3070888 stocktivity
stocktivity's picture

It's all Bullshit! QE 5 is coming soon where Bennie prints money out of thin air to buy up Apple shares. All the hedgies and stock funds own Apple and we can't let those 401K's go down. People need to think they're doing well so they can spend, spend, spend.

Mon, 12/17/2012 - 10:06 | 3070894 Who is John Galt
Who is John Galt's picture

The tea leaves I am reading say deflation.

Mon, 12/17/2012 - 10:20 | 3070926 ekm
ekm's picture

Do you remember the ZH article saying that households are not deleveraging, they are simply defaulting.


The same case here. Deflation or deleveraging was possible in 2008 onwards. Now it's no longer possible. This market can only default.

Mon, 12/17/2012 - 10:23 | 3070930 Winston of Oceania
Winston of Oceania's picture

The shadow banking system is what is deflating, derivitives and the like, all 1600 trillion dollars worth. Ben is buying up that shit with our dime.

Mon, 12/17/2012 - 10:50 | 3070995 Sean7k
Sean7k's picture

In a system that allows banks to control the value of currency, as well as the volume, that can place said debt on the backs of the people through taxes and pursues a strategy that buys all US debt- how long until they force their employees in DC to confiscate everything we own to pay the debt?

They even get to print the debt without making an investment of their own wealth. 

Maybe we are in the matrix. 

Mon, 12/17/2012 - 11:13 | 3071049 Ignorance is bliss
Ignorance is bliss's picture

Ben is buying all that shit with his dime. Whatever is in your pocket also belongs to the FED. In the game Monopoly, the Bank issues and owns all the money. We are simply nearing the end of the game. Just like in Monopoly where 1 or 2 players have all the money and the rest are sitting on the sidelines broke. Unfortunately, for us we need to wait for the game to reset before our stack will buy multiples more then it does today. The Fed is buying all their properties with magic money. After the reset, they will own the board. Its a rigged game.

Mon, 12/17/2012 - 11:56 | 3071165 livid levity
livid levity's picture

The house always wins

Mon, 12/17/2012 - 12:08 | 3071193 ekm
ekm's picture

The house can't win if there are no customers.

That's the case right now, the house has no customers. It's going down.

Mon, 12/17/2012 - 12:42 | 3071280 tip e. canoe
tip e. canoe's picture

well, right now, the house is doing a pretty damn good job in manufacturing customers to keep the house in a state of suspended animation ala wile e. coyote.   but yes, for anyone who is sick & tired of playing a rigged game overrun with bullies, the answer is in simply taking your toys and going home.   unfortunately, the game has permeated the sandbox of our collective minds so much that that simple action is far beyond the current capabilities of most people's perceptions.

Mon, 12/17/2012 - 13:19 | 3071392 livid levity
livid levity's picture

is it time to overturn the tables?

Mon, 12/17/2012 - 13:53 | 3071479 tip e. canoe
tip e. canoe's picture

well, that is an option, but this guy HeyZeus apparently tried that long ago and he ended up nailed on a cross supposedly and 2,000 years of mass ritual sacrifice in his name followed.   i would suggest that it might be better this time around to just go with trav's middle finger & a smirk & just walk away & let karma run its course.   but who knows really?

(note to xtians, please note the above is not intended to denigrate your faith in any way, only to question the narrative that's been used to just justify actions that completely contradict the teachings of your Son.)

Mon, 12/17/2012 - 12:35 | 3071257 tip e. canoe
tip e. canoe's picture

Whatever is in your pocket also belongs to the FED.

an essential point that should always be in the back of one's mind when seeking to understand any of these phenomena.

Mon, 12/17/2012 - 10:34 | 3070951 hugovanderbubble
hugovanderbubble's picture

Exactly...and thats waterfall counterparty risk

Mon, 12/17/2012 - 10:44 | 3070980 yogibear
yogibear's picture

Bubble Bernanke and the fed will just race to devalue the US dollar even more. They will keep printing until the US dollar is the joke of the world.

Mon, 12/17/2012 - 11:37 | 3071044 LawsofPhysics
LawsofPhysics's picture

Once you understand that actaully doing anything or producing anything of real value requires work (energy),  you realize very quickly that there is no such thing as deflation.  Population is growing exponentially, available energy, not so much.  More people competing for the remaining resources.  In terms of made-made paper promises, yes, the "price" of plastic crap, your home and other things that are not necessary for survival, is very much deflating.  Now, tell us, what has the cost of food and fuel done again? Don't be chump, what was fuel 5 years ago, ten years ago, 15 or 20 years ago.  20 years isn't that long for a human.  What are you, an HFT machine?

Mon, 12/17/2012 - 13:21 | 3071400 livid levity
livid levity's picture

What would you propose?  What is the peoples plan of action?

Mon, 12/17/2012 - 11:16 | 3071052 Quinvarius
Quinvarius's picture

There is no such thing as deflation in this monetary system. Why do you let the TV jackholes control your brain? You think that deflation idea is something you came up with on your own?  You didn't.  It was put there.  They need morons to believe we have deflation so they can print money.  Do some GD math and stop thinking with your CNBC oatmeal brain.  There is only accelerating hyperinflation coming.  This is a credit/fiat collapse where the fiat is backed by the credit.  Printing causes inflation.  Debt default causes hyper inflation.

Madness.  There has never been anything but hyperinflation coming our way.  Do you realize that priced in gold, our current debt is 3X the Weimar Germany war debt that they printed their way out of?

Mon, 12/17/2012 - 10:22 | 3070928 Atlasshruggedme
Atlasshruggedme's picture

Until the masses see the problems with QE (1-5) and QE4EVR nothing will change. Your best bet would be to continue stocking metals, before the masses figure it out. You will be 10 steps ahead. It's not if, but when.

Mon, 12/17/2012 - 10:36 | 3070953 fuu
fuu's picture

Like the masses can change anything at this point.

Mon, 12/17/2012 - 10:09 | 3070896 ekm
ekm's picture

I've been saying it and I will say it again:

We are beyond the point of controlled decline.

The stock casino can only and only and only collapse, otherwise it will creep up until 1 or 2 primary dealers collapse. Primary Dealers are the operational arms of the Fed and they backstop the system eating as much shit as they can (meaning buying everything anybody else sells).


I'm thinking this time it won't be US based primary dealers collapsing.

Deutsche Bank securities and/or UBS primary dealers arms in USA could be the ones going boom boom.

Mon, 12/17/2012 - 10:36 | 3070954 hugovanderbubble
hugovanderbubble's picture

Bank of America is in default Period.


EKM +1



Mon, 12/17/2012 - 10:35 | 3070955 hugovanderbubble
hugovanderbubble's picture

Bank of America is in default Period.


EKM +1



Mon, 12/17/2012 - 11:46 | 3071138 Mark Carney
Mark Carney's picture

until 1 or 2 primary dealers collapse.

Well, MF Global is 1....so, just one more then eh?

Mon, 12/17/2012 - 13:45 | 3071460 ekm
ekm's picture

Exactly. Nov 2011. That's when the Fed and ECB started with swaps.

Mon, 12/17/2012 - 10:10 | 3070900 pragmatic hobo
pragmatic hobo's picture

"NY corporations are optimistic due to the fact that they can now kiss margins goodbye for at least half a year."

they will make up for the negative margin with higher volume.

Mon, 12/17/2012 - 10:11 | 3070902 GMadScientist
GMadScientist's picture

Mr. President, Mr. Speaker, the audience is listening.

Mon, 12/17/2012 - 10:15 | 3070910 SheepDog-One
SheepDog-One's picture

YAY for Clownbux!

Mon, 12/17/2012 - 10:20 | 3070917 Freddie
Freddie's picture

We have the medical records, drug records, video game records and the list of parents involved in LIBOR gate. 

The mass atrocities by the regime's Manchurian candidates will continue until guns are confiscated and morale improves.

Mon, 12/17/2012 - 10:17 | 3070918 overmedicatedun...
overmedicatedundersexed's picture

all data points come in each week showing a poor economy in most of the world: the finance press has been told:not to report the bad, only" that it could be worse, and in fact things are great"..propaganda is telling the masses things are great..reality is telling us tax units- things suck..eyes wide shut the order of the day.

Mon, 12/17/2012 - 10:18 | 3070922 Cursive
Cursive's picture

Sandy should have goosed this number upwards.

Mon, 12/17/2012 - 10:31 | 3070943 Hobbleknee
Hobbleknee's picture

Is hamburger assembly still considered manufacturing?

Mon, 12/17/2012 - 10:59 | 3071026 GMadScientist
GMadScientist's picture

Pink Slime Division.

Mon, 12/17/2012 - 10:32 | 3070944 hugovanderbubble
hugovanderbubble's picture

Release the Kraken¡


Hopium gonna be baumgartnered¡



Mon, 12/17/2012 - 10:48 | 3070990 yogibear
yogibear's picture

Currency wars. Bubble Bernanke and the Fed fed want to make the US dollar the cheapest. 

Asia and the rest of the world will be sitting on greatly devalued  US dollars.

Mon, 12/17/2012 - 11:01 | 3071032 StoleYourMoney
StoleYourMoney's picture

And were up 9pts on the S&P

Mon, 12/17/2012 - 21:05 | 3073323 AynRandFan
AynRandFan's picture

Clearcut analysis. One of the better pieces I've seen on here or anywhere.

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