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Producer Prices Plunge, Empire Fed Slides To First Negative Print Since January

Tyler Durden's picture




 

One of these days we might just get a positive economic print, of the kind that the meandering Tepper was saying is visible everywhere now. Just not yet. Moments ago we got the releases of the May PPI and the Empire Fed, the first of which dropped -0.7%, on expectations of a -0.6% drop, the lowest MoM PPI since July 2009. driven by food and energy producer prices as economic slack continues to persist, while PPI ex food and energy dropped from a +0.2% increase in April to just 0.1%, in line with expectations. Technically, this is bullish for the E-Trade baby as it gives the Fed carte blanche to continue QEternity as long as needed.

But it was the Empire Fed index that was even more disappointing, as it crushed hopes for an increase from 3.05 to 4.00 in May, instead posting the first contractionary print since January, printing at -1.43. It gets worse when one digs through the data: New Orders dropped from 2.20 to -1.17, Shipments also slid into negative from 0.75 to -0.02, Unfilled Orders deteriorated even more from -3.41 to -6.82, Inventories contracted from -4.55 to -7.95, Prices Paid and Received both contracted, but worst of all, the Average Employee Workweek dropped from 5.68 to -1.14, meaning the collapse in the average workweek persists, and even if the BLS reports a positive print for May, the report will once again mask the declining aggregate end demand for labor.

What is worst, however, is that even the Hopium has now run out, with the future general business conditions index declining for a second consecutive month, dropping six points to 25.5. Add to this the just 1.2% expectation in increasing prices received - the lowest on record - and one can see why the US manufacturing sector is collapsing.

From the report:

The May 2013 Empire State Manufacturing Survey indicates that conditions for New York manufacturers declined marginally. The general business conditions index fell four points to -1.4, its first negative reading since January. The new orders index also edged into negative territory, and the shipments index fell to zero. The prices paid index declined eight points to 20.5, indicating a slowdown in selling price increases, while the prices received index was little changed at 4.6. Employment indexes were mixed, showing both a modest increase in the number of employees and a slight decline in the length of the average workweek.  Indexes for the six-month outlook were generally lower, suggesting that optimism about future conditions had weakened.

 

In a series of supplementary survey questions, firms were asked about past and expected changes in both the prices they paid for inputs and the prices they charged their customers. The same questions had previously been asked in surveys conducted in May 2012 and in May of earlier years. Respondents to the current survey, on average, expected the prices they paid to climb by 2.8 percent—the smallest anticipated rise since May 2009. 

 

Moreover, the average respondent anticipated an increase of just  1.2 percent in prices received—the smallest expected increase recorded since these questions were first asked in May 2007.

 

General Business Conditions Index Falls Below Zero

 

After three months of modestly positive readings, the general business conditions index fell four points to -1.4 in May, pointing to a slight   deterioration in business conditions for New York manufacturers for the first time since January. Twenty-five percent of respondents reported that conditions had improved over the month, while 26 percent reported that conditions had worsened. The new orders index also fell below zero, declining three points to -1.2. The shipments index was little changed, holding at zero in a sign that shipments were flat. The unfilled orders index declined three points to -6.8. The delivery time index was unchanged at -3.4, and the inventories index fell three points to -8.0, suggesting a modest decline in inventory levels.

And visually:

 

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Wed, 05/15/2013 - 08:52 | 3564214 Mercury
Mercury's picture

The future's so bright David, I gotta wear shades...

Wed, 05/15/2013 - 08:53 | 3564229 ejmoosa
ejmoosa's picture

Better bring a flood light.

Wed, 05/15/2013 - 08:59 | 3564245 Mercury
Mercury's picture

Here's another hedge fund manager calling for the governmnet to just start printing money to pay its bills:

                                  Bring On The Hellicopter Money

 Both of these guys are probably (with their private wealth) up to their eyeballs in hard assets.

Wed, 05/15/2013 - 09:00 | 3564254 buzzsaw99
buzzsaw99's picture

what difference would it make? they are doing worse than that right now. the fed is buying everything that isn't nailed down and sending all the interest back to the treasury.

Wed, 05/15/2013 - 09:30 | 3564348 espirit
espirit's picture

Green Chutes, everywhere!

/sarc/onoff/ Iforgetwhich.

Wed, 05/15/2013 - 10:02 | 3564462 King_of_simpletons
King_of_simpletons's picture

This news is good. Only goes to prove that economy is in "early stages of recovery".

Economy these days is measured in eons.

Wed, 05/15/2013 - 09:28 | 3564340 yogibear
yogibear's picture

David bought big before his rosey appearance at CNBS. Got exactly the response he expected. Made millions on it.

Wed, 05/15/2013 - 09:31 | 3564349 azzhatter
azzhatter's picture

Rally Time

Wed, 05/15/2013 - 10:01 | 3564455 B2u
B2u's picture

Is it safe?

Wed, 05/15/2013 - 08:51 | 3564215 buzzsaw99
buzzsaw99's picture

Bullish - long e-trade babies

Wed, 05/15/2013 - 08:50 | 3564217 LetThemEatRand
LetThemEatRand's picture

My eyes -- and the Empire Fed Index apparently -- have been exceptionally dishonest as of late about the economy recovery that is supposedly going on all around us.  

Wed, 05/15/2013 - 08:50 | 3564218 Dr. No
Dr. No's picture

And with Mt. Gox shut down.... Its time to hunker down.

Wed, 05/15/2013 - 08:51 | 3564219 q99x2
q99x2's picture

There's as much as a 3 point dip on the S&P. Better to try to get in on that sucker while there is time.

Wed, 05/15/2013 - 08:52 | 3564226 rogeliokh
rogeliokh's picture

Yeah and where the heck Silver is going now? $9? Non-stop whacking.

Wed, 05/15/2013 - 09:14 | 3564300 tuttisaluti
tuttisaluti's picture

It can't get lower than zero.....but what then...:-0

Wed, 05/15/2013 - 08:52 | 3564228 digitlman
digitlman's picture

Good for another 100 pts on the DOW!

Wed, 05/15/2013 - 09:30 | 3564347 yogibear
yogibear's picture

Bubble Bernanke and the Fed are stuck buying treasuries until the US dollar blows, just like with the Yen.

Last ditch effort to print all the fundamental problems away. Like wishing on a star. A death star.

Wed, 05/15/2013 - 09:39 | 3564235 realtick
realtick's picture

the day is coming when we all wake up to the fact that the fed is long term irrelevant

The Empire Trends Lower

PPI Drop - The Fed Is Powerless Against Deflation

Wed, 05/15/2013 - 08:56 | 3564236 Silverhog
Silverhog's picture

Empire numbers sucked. A couple of years ago, Gold and Silver would be in a big spike upwards. No more, nobody wants that paper shit. Stay with the real stuff, BUY PHYSICAL. 

Wed, 05/15/2013 - 08:58 | 3564238 Caviar Emptor
Caviar Emptor's picture

Biflation continues, unabated. And the Fed continues its policies, unfettered and unflappable.

Wed, 05/15/2013 - 09:14 | 3564299 Ness.
Ness.'s picture

Unfettered?  Didn't we get enough of that unfettered shit from Jay "Carnival" Carney yesterday? ;)

Wed, 05/15/2013 - 08:56 | 3564244 NobleSavage
NobleSavage's picture

Is this the proof of a US Manufacturing Renaissance?

Wed, 05/15/2013 - 08:59 | 3564251 Caviar Emptor
Caviar Emptor's picture

Yes! He meant we go back to the 1400s, the Italian Renaissance.

Wed, 05/15/2013 - 08:57 | 3564246 Cognitive Dissonance
Cognitive Dissonance's picture

Engage Warp Drive Mr. Sulu.

Full (market) speed ahead and damn the falling macro data.

Wed, 05/15/2013 - 08:57 | 3564248 Tsar Pointless
Tsar Pointless's picture

Here in Pittsburgh, the only statistic that matter is 4-1.

That was the score by which the Penguins NHL team beat the Ottawa Senators in their playoff game last night.

Everything else is trivial and unimportant.

Not to mention disregarded fully by the vast majority of our citizenry.

Wed, 05/15/2013 - 10:02 | 3564460 B2u
B2u's picture

Blackhawks RULE !!

Wed, 05/15/2013 - 09:02 | 3564256 CrashisOptimistic
CrashisOptimistic's picture

This damages the narrative.  The talk of QE exit plan is clearly silly.  Q2 GDP projections are nudging down towards 1%, and this somehow means QE's job is done?

The tax increase in January and the Sequester were and are destimulative.  There is no escaping that.  If the GDP growth is 1% with 85B/mo printed, outright contraction looms on exit.

Wed, 05/15/2013 - 09:07 | 3564277 the not so migh...
the not so mighty maximiza's picture

QE exit was always a fairytale

Wed, 05/15/2013 - 09:10 | 3564287 SheepDog-One
SheepDog-One's picture

We'll just wake one morning to find all these people have run for their deep underground military bunkers....there's no EZ landing coming.

Wed, 05/15/2013 - 09:16 | 3564305 kridkrid
kridkrid's picture

Outright collapse looms on exit. It looms with or without exit, but is instant upon exit. There is no way out.

Wed, 05/15/2013 - 09:34 | 3564362 MiltonFriedmans...
MiltonFriedmansNightmare's picture

The Black Swan may be political this time around. Someone big wants the Obamination out, and there are rumors that there is one more shoe to drop.

Wed, 05/15/2013 - 09:57 | 3564443 the not so migh...
the not so mighty maximiza's picture

trillions of us dollars coming back home will be the breaking point, that will mean other countries are using some other form of money.

Wed, 05/15/2013 - 09:03 | 3564265 Caviar Emptor
Caviar Emptor's picture

Reagan proved deficits don't matter.
Obama proved debt doesn't matter (student loans forgiveness program to be expanded under new proposal in the budget)
Bernanke is proving that currency doesn't matter

Wed, 05/15/2013 - 09:24 | 3564335 Seer
Seer's picture

Got a book-keeping problem? just get rid of the books!  Clearly we've been making it way more complicated than necessary.

Wed, 05/15/2013 - 10:11 | 3564504 Shizzmoney
Shizzmoney's picture

RE

student loans forgiveness program to be expanded under new proposal in the budget

This will NEVER pass.  It's all subterfuge.

There is no way that Wall St is going to take a loss on these loans.  They will threaten to crash the market before that happens.

 

Wed, 05/15/2013 - 09:03 | 3564267 tornado_watch
tornado_watch's picture

The seasonal emanating from '08 - '09 still reaking havoc with all the adjusted data. That said, even if you try to counter the tendency for over-stating winter / spring and under-stating spring / summer data, the rolling 12-period data is clearly deteriorating with the 12-mo average print in the Empire effectively 0. The month to month myopia of the mo-mos has clouded the fact that the YoY is atrocious, be it jobs / production / or even today's GDP #s from the great growth cauldron of Europe. Germany's YoY unadjusted GDP dropped by 1.4% (that's -1.4%) against estimates for a rise of .2%... the quarterly adjusted miss was bad enough, but the YoY is downright ugly. YoY, France / Austria / Netherland (-1.7%) / Italy (-2.3%), etc. etc. Oh yeah, and the UK's great path of growth apparently has to carve through increased unemployment.

Wed, 05/15/2013 - 09:06 | 3564273 Yen Cross
Yen Cross's picture

   Where's the morning Bill Gross tweet? T10s are down 1 whopping basis point Bill. You better jump in before the Fed. does.

Wed, 05/15/2013 - 09:09 | 3564286 CrashisOptimistic
CrashisOptimistic's picture

More like 4 bps.

Wed, 05/15/2013 - 09:17 | 3564293 Yen Cross
Yen Cross's picture

      U.S. 10-Year    1.973    1.982    1.985    1.950   [ -0.009 ]   -0.45%    13:00:40

   US Generic Govt 10 Year Yield Analysis - USGG10YR - Bloomberg

Wed, 05/15/2013 - 09:24 | 3564332 CrashisOptimistic
CrashisOptimistic's picture

It closed at 1.98 yesterday.  It's 1.94 now on Bloomberg.  I don't know what you're looking at, but I will for sure not criticize you because the fluctuations have gotten big and maybe you saw a 1.97 for a few seconds.

Wed, 05/15/2013 - 09:37 | 3564376 Yen Cross
Yen Cross's picture

  I just sent 2 quotes to you, so you didn't think I was doubting you. Thanks for your post. Nothing is as it seems these days. :)

Wed, 05/15/2013 - 09:06 | 3564275 BullyBearish
BullyBearish's picture

Translating Tepper from yesterday, "Hold my bag, please"

Wed, 05/15/2013 - 09:32 | 3564354 azzhatter
azzhatter's picture

that's illegal in most airports

Wed, 05/15/2013 - 09:42 | 3564386 Legolas
Legolas's picture

The TSA holds a lot of peoples' bags in the airports.

Wed, 05/15/2013 - 09:08 | 3564278 SheepDog-One
SheepDog-One's picture

They were actually expecting a 1 point jump? That's lolz-y.

Wed, 05/15/2013 - 09:08 | 3564280 Lost Wages
Lost Wages's picture

I think I need some E-Trade Diapers.

Wed, 05/15/2013 - 09:09 | 3564282 kito
kito's picture

wait!!!wait!!! let me fix this growth issue:

i promise to contibute 5 billion dollars to my employees retirement fund this year.........

...that should be good for a few bumps up in gdp............................oh...and everybody should be doing the patriotic thing today.....download itunes songs.....that will also help our gdp!!!....MUST...... HAVE........ GROWTH!!!!!...

Wed, 05/15/2013 - 10:40 | 3564621 WhiteNight123129
WhiteNight123129's picture

Here is the strategy of the central bankers.

Speech from Bernanke

~The Fed research team has noticed that many times a tail wagging dog seems to show electric brain impulses and other behavrior characteristics that strongly imply that the dog is happy.~  (People which make a living at trading go. No fucking kidding!!!!)

Bernanke continues

~We have therefore decided to build a machine with new technology that will automatically vigorously wag the dog´s tail. It should result in an unlimited amount of happiness for this dog if we increase the speed of the wagging in an unlimited fashion~

~In order to operate and make the machine work however, we need energy and we have decided to shave first and then burn the dog´s hair (bond holders). ~ It should be of a minor consequences, since teh weather is warm right now. Winter is in the long run, and in the long run, as Keynes famously said we are all dead. So if the dog is freezing to death in winter, it is of a minor problem as demonstrated by Keynes. In the meantime the dog will have according to our new machinery and model a ~hell~ of a good time.~

SUMMARY

Collect the shower of money with stocks in US, Japan (better) while you can and then convert that quickly to assets nailed to the ground.

 

 

 

Wed, 05/15/2013 - 09:09 | 3564283 jowenchrist
jowenchrist's picture

Can someone give me the link to the POMO schedule ?  thanks -

Wed, 05/15/2013 - 09:15 | 3564301 jowenchrist
jowenchrist's picture

damn - only a measly billion today - WTF -

Wed, 05/15/2013 - 09:10 | 3564284 jowenchrist
jowenchrist's picture

Can someone give me the link to the POMO schedule ?  thanks -

Wed, 05/15/2013 - 09:10 | 3564289 orangegeek
orangegeek's picture

It just doesn't matter!!

It just doesn't matter!!

It just doesn't matter!!

It just doesn't matter!!

It just doesn't matter!!

It just doesn't matter!!

It just doesn't matter!!

It just doesn't matter!!

It just doesn't matter!!

It just doesn't matter!!

 

http://www.youtube.com/watch?v=XM4jJc8w4H0

 

 

Wed, 05/15/2013 - 09:16 | 3564303 tuttisaluti
tuttisaluti's picture

we are heading to free silver for everybody....LOL

Wed, 05/15/2013 - 09:20 | 3564319 the not so migh...
the not so mighty maximiza's picture

free paper silver!!!!! yay!!!

Wed, 05/15/2013 - 09:23 | 3564331 jowenchrist
jowenchrist's picture

For anybody that trades grains - Talked with a Kansas farm buddy of mine and the winter wheat crop is projected to be substandard this year; a lot of winter kill and drought; gets worse the farther west you go.

Wed, 05/15/2013 - 09:27 | 3564339 CrashisOptimistic
CrashisOptimistic's picture

Longest, coldest winter I can recall in the intermountain states, and I can recall many.

If folks on ZH would just lean back, or better stand up, and think for a moment, they'd be in farmland.  Dollars have no meaning.  Gold has meaning only inside people's heads.  The value was invented.

Calories are real and 10 years from now will be the only thing that matters.

Wed, 05/15/2013 - 09:33 | 3564357 Seer
Seer's picture

Food, Shelter and Water.  Oh, sorry, you were saying? :-)

Wed, 05/15/2013 - 09:24 | 3564334 FJ
FJ's picture

Happiness is just around the corner...another short squeeze imminent. Buy, buy, buy moar

Wed, 05/15/2013 - 09:28 | 3564341 CrashisOptimistic
CrashisOptimistic's picture

Stop Trading.

There is no market, and you know it.  There is only HFT.

Buy farmland.  Do you really think 10 years from now you'd regret that?

Wed, 05/15/2013 - 09:34 | 3564366 madcows
madcows's picture

a bit late to the party, huh?  I believe farmland is also in a major bubble.  You'd be buying high, sorta like precious metals right now.

I moved into treasuries in april.  They're in a bubble, too.  But to me, it's about capital preservation.  I figure they're the best terd in the bowl.  Stocks are going to correct.  Precious metals historically have followed the market down in a correction, so i'm out of them.  I missed their rocket up, anyway.

I'm just looking for the best place to hide when reality finally exerts itself.    Note, the last place I want to be is in Euro bonds.  In a normal world those assets would have to return 15%+ for "investors" to consider them, and their in the 4-5% range.  The CB's have truly destroyed the markets.  Run and hide.

Wed, 05/15/2013 - 10:03 | 3564467 drdolittle
drdolittle's picture

Farmlan has been going up 10% annually recently. It's sorta bubbly. Cash rent maybe 5% of the price of the land, if that.

Wish I'd bought ten years ago but ten years ago my priority was getting out of debt.

Wed, 05/15/2013 - 09:31 | 3564351 yogibear
yogibear's picture

The bots have taken over, all is well. That is all.

Wed, 05/15/2013 - 09:34 | 3564363 q99x2
q99x2's picture

Average Employee Workweek dropped from 5.68 to -1.14, meaning the collapse in the average workweek persists

Who's got the acid?

Wed, 05/15/2013 - 10:25 | 3564557 Dan Conway
Dan Conway's picture

Not many green months since mid-2011 on that bottom chart.  Maybe red is new green or something.  Buy stocks!

Wed, 05/15/2013 - 10:39 | 3564630 venturen
venturen's picture

And the IDIOITIC FED print more money to drive interest down...without realizing its knock on effect. Bernanke doesn't believe in capitalism.... Which is what would fix this if the government...didn't own 90% of the mortgage market...and Wall Street hadn't carved out every single tax loophole. The SYSTEM is broken...and Bubble FED continues its failure after failure!

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