Chart Of The Day: Goodbye Manufacturing Profits?

Tyler Durden's picture

There are many hopes and dreams surrounding the massive multiple expansion of 2013 (that Goldman has warned is entirely unsustainable). Top-line growth is already disappointing in the current results season. The bottom-line is going nowhere but faith remains that we are not near 'peak margins'. While financial engineering (e.g. buybacks) remain possible (though harder in a Fed tapering, rising rate, credit saturated environment) the following chart from Philly Fed data indicates that a 'belief' in the margin story is over - as the spread between prices paid and prices received plunges to its lowest since April 2009 (and in line with previous recessionary periods).


Profits anyone?


And over the past 30 years, this has not been a good sign...


Charts: Bloomberg

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yogibear's picture

Down the economy goes again. Profits go along. The Fed can keep printing and buying US treasuries.

The Fed's using mark to fantasy accounting, just like it's banks.

max2205's picture

The last 30 years never saw the worlds reserve currency being printed to buy up worthless bank assets. ....fixed it

ejmoosa's picture

For anyone looking beyond the profits per share numbers, which are being bought with long term debt, the rate of corporate profit growth has been falling year over year since the third quarter of 2010.  Just look at their own numbers reported in the BEA report that is released along with the GDP.



SDShack's picture

Sum Ting Wong

Prah Fits Tu Lo

Ho Lee Fuk

Ding Bang Ow

Dr. Engali's picture

Profits....Lol those are sooooo last century. We don't need any stinking profits, we have old Yeller.

Groundhog Day's picture

We don't need revenue growth either. All we have to do is take the cheap old yeller money and buy back stock qtr after atr and bingo! higher EPS for all the monkey analysts that take the information that the companies give them and plug it into their excel spreadsheets to come up with mark to fantasy projections

Oldballplayer's picture

Well, we are not in recession.  Yet.

We will be.

CarrierWave's picture

Sorry ZH. Another suggestive article as to 'how bad things are'  right?

But note even in your own chart that there were many cases where a recession was not in play at these levels.

Try again.

Generally, the barrage of doom-and-gloom articles on ZH in the past 2+ years only served to sway potential investors away from the stock market, thus causing those who listen to your negative articles to miss the huge run in the Stock markets, or worse (for those who actually shorted it based on ZH 'forecasts' for an impending Market collapse).

It's time you and the readers get into their heads that 2009 was very unusual. Not to happen again for a very long time.

Things are under control (of Central banks and what not).


Stay with the trend, select entry points intelligently and use stop loss smartly. This market will go higher in 2014.


pods's picture

LOL, good one.

Tough to enter a recession when you are actually in a depression.

And, if you wish to post on ZH, please use the term "market" okay?


teolawki's picture

Well, despite the fact that we're up to our necks and sinking into the sewer, our head is still just above the excrement. So we're good, right?

maskone909's picture

there are youtube clips from when the S&P sold off overnight in the futures market in 2008, guys losing their life savings and smashing furniture ect..  stop orders will not protect you.  how do you explain 2011?  just 2.5 years after the 08 episode the market nearly collapsed again because of a political budget fiasco.  the point is that pretty much anything can trigger a panic.  the mere fact that central banks are using unprecendented emergency measures for the last 6 years should tell you something.  things are in no way under control.

maskone909's picture

and just like santelli says- this tapering is like somebody ordering 10 cheeseburgers and a diet soda. -paraphrasing


spekulatn's picture

Profits. We ain't got no profits. We don't need no profits. I don't have to show you any stinkin profits.



teolawki's picture

Disposable income anyone?

B2u's picture

What???  CNBS is not reporting  these facts?

maskone909's picture

the big question; what happens when we go into a cyclical recession and we are ALREADY under emergency CNTRL-P panic fail pwnage?

earnyermoney's picture

Bernanke, Ol Yellin and the FED pull a Jim Jones at the Eccles building?

enloe creek's picture

wait didn't I just hear that the natural gas suppy will bring about a reaissance in US manufacturing and the trade agreements will bring about a new era of prosperity . and government is being run by the smartest president in history. Makes me want to go out and buy some stuff before it is all gone

Quinvarius's picture

I wonder what the banker idiots thought was going to happen when they tried to reprice the ultimate global collateral down 40%?  Certainly they didn't expect the globe to call their bluff.  And certainly they did not expect the massive stall in the economy caused by trying to lowball bid the chosen saving vehicle of 90% of the planet.  It is no different than any other asset class, except more important.  You can't just run around whacking stuff without getting whacked back--Especially not gold.  Lower gold prices just mean you lose your's faster.  I guess if you actually have a religious zeal about your paper, you might make that mistake.

BuddyEffed's picture

Isn't profit strongly tied to growth and surplus, and across the board for all parts of the real economy?  I'd venture so far as to claim that the relationship between profit, growth, and surplus is causal and structural.

Seer's picture

"I'd venture so far as to claim that the relationship between profit, growth, and surplus is causal and structural."

From maintream thinking that might be a bit out there, but as far as reality has it it's no stretch at all.

Economies of scale in reverse are going to really unravel things.  I think that we're out of smoke and mirrors (for effect) and the seams are soon to start popping... high debt levels; high energy costs; high unemployment; no way growth is going to make a come-back.