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.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
slaughterer's picture

I fought the Fed and the Fed won.

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

Manthong's picture

Strange game.

The only way to win..

spastic_colon's picture

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

NotApplicable's picture

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

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.

TotalCarp's picture

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

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...

Mark Carney's picture

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

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).


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.

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.

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)

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...

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!

Dr. Engali's picture

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

spastic_colon's picture

coming soon to an index near you

Dr. Engali's picture

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

spastic_colon's picture

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

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.

King_Julian's picture

Looking at prices paid, is that inflation I see?

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

Snakeeyes's picture

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

SheepDog-One's picture

OK so the FED 'won' now what?

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.

Silverhog's picture

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

GrinandBearit's picture

PM's going balistic on this.

EscapeKey's picture

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

100pcDredge's picture

I Like "General Activity Indexes"!! :D

Waterfallsparkles's picture

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

Cognitive Dissonance's picture

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

SheepDog-One's picture

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

SmoothCoolSmoke's picture

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

RSBriggs's picture

No, but 3 billion at 10x leverage can.

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...

madcows's picture

It takes a lot of fillings to make 300 tons.

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!


Notarocketscientist's picture

I want gold DOWN - so i can buy more.

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

PUD's picture


AC_Doctor's picture

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

Everybodys All American's picture

what can go wrong? /sarc

razorthin's picture

And the equity bubble is heating up...

CaptainSpaulding's picture

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

TonyCoitus's picture


For fuck's sake BTFD.