• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Biggest Philly Fed Miss In 7 Months Ignored As Fed Injects Reserves Via Repo

Tyler Durden's picture


A month ago we mocked the Philly Fed number which printed at an outlier level of 8.1, slamming expectations of a negative print, and sending algos into overbuydrive. A week ago we were validated when the annual revision brought that number down from 8.1 to 4.6. Today we get confirmation that the December print was a total farce, with a January Philly Fed print which is once again solidly in negative territory, or -5.8, which just happens to be the biggest miss to expectations of 5.6 in seven months. Yet while a month ago the huge beat was a reason for the robots to ramp stocks, today's miss is a reason to... ramp stocks even more. Why? Because moments before the disappointing announcement the Fed decided to inject even more liquidity in addition to the now daily unsterilized POMO, following the resumption of repos, which injected some $210 million in reserves into dealers. This is in addition to the $3 or so billion that today's POMO will add as stock purchasing dry powder for banks.

This is how today's Philly Fed looked: note the collapse in number of employees, which apparently nobody cares about anymore:

From the report:

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from a revised reading of 4.6 in December to -5.8 this month (see Chart).* The demand for manufactured goods showed slight declines this month: The new orders index declined from a revised reading of 4.9 in December to -4.3 in January. The shipments index remained slightly positive but suggests no overall growth — the percentage of firms reporting increased shipments was mostly offset by the percentage reporting decreased shipments (26 percent). The indexes for both delivery times and unfilled orders recorded slightly negative readings this month.


Labor market conditions at reporting firms deteriorated this month. The employment index, at -5.2, fell from -0.2 in December. The percentage of firms reporting decreases in employment (16 percent) exceeded the percentage reporting increases (11 percent). Firms also indicated a decrease in the average workweek compared with last month.

And why was this huge miss completely ignored by algos and bank prop desks? Here's why, courtesy of the first Fed repo operation of 2013:

To summarize: two big misses to unadjusted data massaged by seasonal adjustments, and a major miss to a diffusion index, all ignored and offset by even more Fed liquidity.

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Thu, 01/17/2013 - 11:21 | 3162249 slaughterer
slaughterer's picture

I fought the Fed and the Fed won.

Thu, 01/17/2013 - 11:24 | 3162271 Zer0head
Zer0head's picture

hey folks, it's over as slaught says the Fed won.

now please proceed to the nearest processing center for your monthly psychological evaluation

Thu, 01/17/2013 - 11:25 | 3162282 Manthong
Manthong's picture

Strange game.

The only way to win..

Thu, 01/17/2013 - 11:28 | 3162298 spastic_colon
spastic_colon's picture

payback for a good employment and housing number, equities were beginning to think a recovery was really happening

Thu, 01/17/2013 - 12:25 | 3162551 NotApplicable
NotApplicable's picture

Well, maybe to the three remaining CNBS viewers. Most everyone else can see the paint still drying on the tape.

Thu, 01/17/2013 - 12:37 | 3162603 Randall Cabot
Randall Cabot's picture

Marketwatch has it figured out:

Jan. 17, 2013, 11:22 a.m. EST

Stocks rise as economic view brightens

Housing starts rise more than expected, jobless claims drop sharply

 By Kate Gibson, MarketWatch

NEW YORK (MarketWatch) — U.S. stocks advanced on Thursday, with the S&P 500 index extending gains into a third day, as upbeat data on housing and jobs gave Wall Street some respite from other concerns.





Thu, 01/17/2013 - 11:25 | 3162281 TotalCarp
TotalCarp's picture

wow.. what a total fking farce.. but hey.. at least yellow metal's outperforming!

Thu, 01/17/2013 - 11:32 | 3162324 CPL
CPL's picture

That's because when the fed fixes things, it only owns one tool to fix things.  A printer.


Long PM's, Oil and Food.

- Slaughter

What was the call for the 13th's gap up.  1497 we go short?  There was an article last week and I can't find it for the life of me.  It's a hedge fund manager that measures the business cycle and his theory is the market shits the bed on the 13th piece of 'good' news.  Trying to figure out if this qualifies under his idea...

Thu, 01/17/2013 - 12:53 | 3162684 Mark Carney
Mark Carney's picture

I thought it was a cycle of 13 solid buy "up" days???? 

Thu, 01/17/2013 - 13:11 | 3162747 Randall Cabot
Randall Cabot's picture

Posted on 1-10:

According to DeMark Trend Exhaustion Sequential™ indicator (based on DeMark's theory as he described it in his book), after the close today, the "official sell" 13 count signal was triggered at ~1470 ES and ~1472 SPX today (contrarily to Bloomberg reporting, blowoff to 1492 is no longer needed to trigger DeMark sell signal).






Thu, 01/17/2013 - 11:28 | 3162286 TruthInSunshine
TruthInSunshine's picture

Bernanke's legacy will be his (false) narrative on the economic good & sustainability of his "virtuous circle" theory, so the Fed will do everything in its power to postpone the inevitable crash that destroys that theory.

As it is, it's the flow versus stock (as ZH and others have made abundantly clear time and time again) that matters most in the battle to keep equities (and other asset classes) artificially propped, and their ability to maintain sufficient flow to accomplish an ever-lasting erection of risk asset classes is already compromised (not to even mention the entire "diminishing returns" or half-life/duration of action memes).

When the next major crash occurs, and equity investors are forced to face the fact that paper returns on equity investments are fleeting, nebulous, largely uncaptured, here today & gone the next minute/day/month illusions, The Bernank can only hope he has already left his position as Fed head.

Thu, 01/17/2013 - 11:32 | 3162320 Dr. Engali
Dr. Engali's picture

The Bernank is hoping for an external reason for the market to crash...war...false flag or whatever. If it doesn't come he is praying the whole thing holds together for one more year until the next guy takes the reigns.

Thu, 01/17/2013 - 11:56 | 3162419 spastic_colon
spastic_colon's picture

i know i've said this before....but the only "risk" left in equities is "event" risk (and our taxes may have already paid for that protection too)

Thu, 01/17/2013 - 12:37 | 3162607 NOTfromSanFrancisco
NOTfromSanFrancisco's picture


"The Bernank is hoping for an external reason for the market to crash...war...false flag or whatever."

I honestly can not see how someone in B's position, with his contacts, could not possibly know that the 'External reason(s)' have already been planned and timed... IMHO...

Thu, 01/17/2013 - 11:27 | 3162292 Spider
Spider's picture

Love to have someone help me read that (hint hint you Fed gurus) - so is this report saying $210 M repoed at .1% interest for a period of 1-day?  Whats the big deal if its over 1-day?

Much thanks in advance!

Thu, 01/17/2013 - 11:29 | 3162305 Dr. Engali
Dr. Engali's picture

Until the S&P closes above 1560 and stays above that the fed hasn't won a thing.

Thu, 01/17/2013 - 11:36 | 3162342 spastic_colon
spastic_colon's picture

coming soon to an index near you

Thu, 01/17/2013 - 11:44 | 3162379 Dr. Engali
Dr. Engali's picture

Which one? The Dow?....Even I don't think it will fall that far.

Thu, 01/17/2013 - 11:53 | 3162408 spastic_colon
spastic_colon's picture

touche'.......maybe the RUT 2k

Thu, 01/17/2013 - 15:06 | 3163329 TruthInSunshine
TruthInSunshine's picture

High beta and smaller market cap containing indexes are easier to reflate, so that's why the R2k has been on the most centrally planned glorious tears of all.

Then of course, consider that I'm all conspirac-y, even claiming crazy things such as The Bernank admitted targeting the stock "markets" for fiat carpet bombing on 60 Minutes.

Thu, 01/17/2013 - 11:30 | 3162312 King_Julian
King_Julian's picture

Looking at prices paid, is that inflation I see?

Thu, 01/17/2013 - 11:34 | 3162335 CaptainSpaulding
CaptainSpaulding's picture


Thu, 01/17/2013 - 12:28 | 3162568 NotApplicable
NotApplicable's picture

"Move along now, this is not the inflation you're looking for."

Followed by...

"Off to the reeducation camp for you!"

Well, at least that's what my implant tells me. YMMV

Thu, 01/17/2013 - 11:41 | 3162362 Snakeeyes
Snakeeyes's picture

Philly Fed and Bloomberg Consumer consider fall despite good report on jobless claims. This crazy, lazy economy!!!


Thu, 01/17/2013 - 12:17 | 3162522 SheepDog-One
SheepDog-One's picture

OK so the FED 'won'....so now what?

Thu, 01/17/2013 - 12:28 | 3162565 LongSoupLine
LongSoupLine's picture

I fucking hope Bernanke has a head on collision with a fucking freshly loaded fucking septic truck and his fucking mouth is open when it happens.

Fuck you Federal Reserve and fuck you primary dealer ass sucks.

Thu, 01/17/2013 - 11:23 | 3162250 Silverhog
Silverhog's picture

Hey, Philly Fed brings a stinking diaper to our big recovery party this morning. Some nerve. 

Thu, 01/17/2013 - 11:21 | 3162251 GrinandBearit
GrinandBearit's picture

PM's going balistic on this.

Thu, 01/17/2013 - 11:21 | 3162252 EscapeKey
EscapeKey's picture

If all you have is a hammer, everything looks like a nail.

Thu, 01/17/2013 - 11:23 | 3162260 100pcDredge
100pcDredge's picture

I Like "General Activity Indexes"!! :D

Thu, 01/17/2013 - 11:22 | 3162263 Waterfallsparkles
Waterfallsparkles's picture

Bernanke loves his short squeezes.  Especially around weekly option expiration.

Thu, 01/17/2013 - 11:23 | 3162265 Cognitive Dissonance
Cognitive Dissonance's picture

The POMO beatings injections will continue until morale the stock market improves.

Thu, 01/17/2013 - 12:18 | 3162524 SheepDog-One
SheepDog-One's picture

And it never will because retail will never again touch this mess with a dime.

Thu, 01/17/2013 - 11:23 | 3162267 ShankyS
ShankyS's picture

Horse shit!

Thu, 01/17/2013 - 11:23 | 3162270 SmoothCoolSmoke
SmoothCoolSmoke's picture

$210 million can ramp the SP 4 points?  Wow. 

Thu, 01/17/2013 - 11:26 | 3162290 RSBriggs
RSBriggs's picture

No, but 3 billion at 10x leverage can.

Thu, 01/17/2013 - 11:28 | 3162299 AC_Doctor
AC_Doctor's picture

200x leverage in gold and silver.  Too bad it will take 7 years for the Fed to return 300 tons of AU...

Thu, 01/17/2013 - 11:40 | 3162359 madcows
madcows's picture

It takes a lot of fillings to make 300 tons.

Thu, 01/17/2013 - 11:50 | 3162398 pods
pods's picture

Well first they have to pay Methman $5 per ounce to dig silver out of the ground, then there is the exchange ratio of gold and silver...................

That takes a long time!


Thu, 01/17/2013 - 11:25 | 3162279 Sudden Debt
Sudden Debt's picture


Fri, 01/18/2013 - 01:31 | 3165340 Notarocketscientist
Notarocketscientist's picture

I want gold DOWN - so i can buy more.

It will go up - WAY UP - in due course.

Thu, 01/17/2013 - 11:25 | 3162284 PUD
PUD's picture


Thu, 01/17/2013 - 11:26 | 3162288 AC_Doctor
AC_Doctor's picture

Sure worked like a MthrFckr on the shiny. barbaric relics.

Thu, 01/17/2013 - 11:26 | 3162289 Everybodys All ...
Everybodys All American's picture

what can go wrong? /sarc

Thu, 01/17/2013 - 11:27 | 3162293 razorthin
razorthin's picture

And the equity bubble is heating up...

Thu, 01/17/2013 - 11:31 | 3162294 CaptainSpaulding
CaptainSpaulding's picture

I just checked in with my financial advisor Joe Weisenthal. He says the markets are up.

Thu, 01/17/2013 - 11:30 | 3162304 TonyCoitus
TonyCoitus's picture


For fuck's sake BTFD.

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