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Schrodinventory

Tyler Durden's picture




 

So which is it?

On one hand, the record build up of inventory in the past year and especially in the last two quarters, is the primary reason why so many economists were fooled into believing the US economy was approaching escape velocity, as can be seen in BEA data. On the other hand, the composite of the manufacturing and non-manufacturing ISMs suggest that not only did inventory accumulation halt in the second half, but with a most recent print of 47.5, imply that inventory was already being rapidly liquidated as 2013 was ending.

One thing is clear: they can't both be correct.

If the BEA data is accurate, then the GDP heading into 2014 will be a major disappointment as $127 billion in inventory will be subtracted from whatever consumption-driven growth there is in the new year (and judging by retailer performance in Q4 as well as the collapse in the personal savings rate, there is hardly anything left in the pocket of the US consumer to drive consumption higher).

If the ISM data is accurate, then recent GDP is set for the mother of all downward revisions, as it becomes clear that growth in H2 was artificially inflated precisely as we explained in December, and about 2% of annualized economic growth has to be removed from Q3 and Q4 numbers, suggesting that the Fed made an epic miscalculation with its Taper timing, withdrawing much needed "flow" injections just as the economy had in reality hit a brick wall.

We eagerly look forward to finding what the answer is to this latest Schrodinger riddle of a schizophrenic economy which, like in China, can magically grow and contract at the same time and but whose real purpose, is to baffle as many with bullshit as possible.

 

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Sun, 02/02/2014 - 14:04 | 4393645 Smegley Wanxalot
Smegley Wanxalot's picture

What do you mean they can't both be correct?

Sure they can.  It just depends on the day and the short-term whims of the Fed and the politicians.

Sun, 02/02/2014 - 14:14 | 4393664 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

It's one of those deep koans like "Free beer Tomorrow" or "the sound of one hand clapping".

Sun, 02/02/2014 - 14:57 | 4393745 Headbanger
Headbanger's picture

Or imaginary numbers!

Sun, 02/02/2014 - 15:36 | 4393786 onewayticket2
onewayticket2's picture

it's simple.....one counts "intangible" inventory, the other, not.

/sarc, i think.

Sun, 02/02/2014 - 15:18 | 4393789 TBT or not TBT
TBT or not TBT's picture

The inventory exists in a superposition of its possible states.

Sun, 02/02/2014 - 15:49 | 4393883 Winston Churchill
Winston Churchill's picture

In a sopositry.

That would be very painful.

Sun, 02/02/2014 - 16:10 | 4393936 Son of Loki
Son of Loki's picture
Novartis to cut or transfer up to 4,000 pharma jobs: paper

 

http://finance.yahoo.com/news/novartis-cut-transfer-4-000-110603091.html

 

Forward!

Sun, 02/02/2014 - 17:05 | 4394052 UnFed Mass
UnFed Mass's picture

Loud chant heard from BEA Boiler Room: "Must". "Balance." "Forward guidance equation for the overlords...unh."

Sun, 02/02/2014 - 14:17 | 4393668 remain calm
remain calm's picture

If you can't dazzle them with brilliance then baffle them with Bullshit.

Sun, 02/02/2014 - 14:36 | 4393710 thunderchief
thunderchief's picture

Took the words out of my mouth

Sun, 02/02/2014 - 15:38 | 4393855 Ban KKiller
Ban KKiller's picture

Books are cooked to give any recipe you need. Totally trustworthy...no.

Sun, 02/02/2014 - 14:05 | 4393646 ebworthen
ebworthen's picture

"...but whose real purpose, is to baffle as many with bullshit as possible."

That's about it right there.

Sun, 02/02/2014 - 14:51 | 4393731 booboo
booboo's picture

or buffle them with dazzleshit

Sun, 02/02/2014 - 14:05 | 4393648 Winston Churchill
Winston Churchill's picture

Its working .

Can they add garbage in = garbage out  to GDP, or have they already

done it.

Sun, 02/02/2014 - 14:19 | 4393673 OutLookingIn
OutLookingIn's picture

False data = false conclusion.

The aim? Confuse and befuddle.

ANY governmental statistical economic metric, is now highly suspect in this "new normal".

As with unemployment, inflation, GDP, etc. ALL are falsely reported. They KNOW how bad the real numbers are and pull out all stops to hide the truth from the sheeple. So, yes. Garbage in = garbage out.  

Sun, 02/02/2014 - 14:29 | 4393696 El Vaquero
El Vaquero's picture

When they are not outright falsely reported, they are measuring one thing and making it sound like they are measuring another.  Take U3 unemployment, for example.  They call it unemployment, when it is really the ratio of people collecting unemployment benefits vs the workforce.  It doesn't count people rolled out of the workforce because they didn't qualify for unemployment benefits or because their unemployment benefits ran out.  They could give an accurate measurement of U3 and it would still be bullshit to baffle us with.  That they have been known to manipulate even U3 further (initial reports being overly optimistic, and revised downward later,) adds to the odoriferous pile of bovine effluvia.

Sun, 02/02/2014 - 16:08 | 4393927 wackydog
wackydog's picture

Well. THAT explains how they can "not know" until they heard about it "on TV".

Sun, 02/02/2014 - 14:05 | 4393649 Dr.Engineer
Dr.Engineer's picture

I hereby propose a new political maxim for the current administration:  The truth of an economic metric is inversely proportional to how it benefits the 0.01% psychopathic narcissists on Wall Street.

Sun, 02/02/2014 - 14:11 | 4393655 Dr. Engali
Dr. Engali's picture

The only thing that matters to the robots and the sheep is the initial headline lie. Later downward revisions are all ignored.

Sun, 02/02/2014 - 14:14 | 4393666 Panem et Circus
Panem et Circus's picture

So very true unfortunately. Baseless lies are front page above the fold, retractions are on page 3 in small print.

Sun, 02/02/2014 - 14:24 | 4393682 monkeys.pick.bottoms
monkeys.pick.bottoms's picture

@Dr. Engali: How about we use "headlie" instead of "headline"?:)

Sun, 02/02/2014 - 14:51 | 4393728 NoDebt
NoDebt's picture

Exactly.

"If the ISM data is accurate, then recent GDP is set for the mother of all downward revisions, as it becomes clear that growth in H2 was artificially inflated precisely as we explained in December, and about 2% of annualized economic growth has to be removed from Q3 and Q4 numbers"

Wish I had been saying that since August.

Sun, 02/02/2014 - 14:14 | 4393665 Trucker Glock
Trucker Glock's picture

I wish Maobama would stream SOTU real-time updates so I can know what's really going on.  He doesn't visit my town, so it's hard to keep up to date on the status of the economy. 

Sun, 02/02/2014 - 16:16 | 4393946 Winston Churchill
Winston Churchill's picture

Its all in Our Dear Leaders' five year plan , including the figures to

be announced in the future.

Sun, 02/02/2014 - 14:24 | 4393681 Flakmeister
Flakmeister's picture

It may not be possible for them both to be correct, however, it is very possible that they are both wrong...

Sun, 02/02/2014 - 14:37 | 4393713 sunny
sunny's picture

+1

Sun, 02/02/2014 - 14:29 | 4393695 ms8172
ms8172's picture

It's going to end badly...just keep printing!

Sun, 02/02/2014 - 14:40 | 4393717 Herdee
Herdee's picture

Come on,take some damn advice...phone your mom&pop once in a blue moon...

http://money.ca.msn.com/video/?videoid=194b780f-e0ea-44cb-b71e-4d54bac6250d

Sun, 02/02/2014 - 14:57 | 4393741 MollyHacker
MollyHacker's picture

I'm calling this one a "no-brainier". Corperate bond and stock by back through the last two quarters had to be fuel somewhere.

Sun, 02/02/2014 - 15:09 | 4393767 novictim
novictim's picture

The sad thing that underlies this story and every other mainstream story dealing with the "economy" is the inability of economic reporters/authors to "see the forrest through the trees".

Of course we have declining consumption!  And of course consumers/workers are broke.

Capitalist economies go through cycles of growth and prosperity inevitably leading to consolidaiton/monopoly and declining pay leading to declining consumption leading ultimately to collapse.  Add water.  Repeat.  

 

This is not ideological.  This is observable history.

 

Without socialism (by a variety of other names) riding to the rescue through wealth redistribution (also by a vaiety of methods) you -always- get to a point at which the wealthy achieve dominance and control in an economy that tanks.

Is it going to be hyperinflaiton this time?  Confiscation of IRAs and savings accounts? Higher taxes/inheritance taxes/capital gains taxes?

Can you ZH monkeys handle this truth?  Or are you going to say the solution to capitalism is MOAR capitalism?  (I love capitalism, btw...just for the record!)

Sun, 02/02/2014 - 15:13 | 4393783 Oldwood
Oldwood's picture

Wealth redistribution is less sustainable than corruption. Just another bandaid to conceal the true severity of the wound.

Sun, 02/02/2014 - 22:24 | 4394659 o2sd
o2sd's picture

Unfortunately, we really don't have that many observations. Western societies were basically feudal until the renaissance, and even then, not truly what we understand to be capitalist until the industrial revolution. Since then, we have what appears to be a 90-100 year credit cycle, with intermediate credit cycles of 8-10 years in the intervening period.

Socialism has traditionally been very poor at wealth distribution, but good at wealth destruction, which does achieve wealth equality, but not in the way it was hoped for. Wealthy people are traditionally good at leaving a sinking ship before the mob takes over government and confiscates their assets.

The real problem with capitalism is that capitalists will continue increasing their profits, even when their product or process kills all of their customers. You always get disequilibria when their is only a single target that excludes all else, including the people aiming for the target.

Mon, 02/03/2014 - 00:53 | 4394945 Flakmeister
Flakmeister's picture

A few valid points, bit if you went to Denmark or Sweden, hell even Germany, they would laugh in your face...

Debate your point, but simply making shit up or being disingenous ain't going convince anyone... Unless you really think trying to resonate with the echo chamber is not intellectually bankrupt....

Mon, 02/03/2014 - 07:10 | 4395233 o2sd
o2sd's picture

Neo-socialism only works in homogenous populations, which Germany, Denmark, Sweden and Japan essentially have. Even then, it's long term effects are yet to be seen. Both Germany and Japan have only implemented neo-socialism post 1945. Really, to be accurate, the system wasn't completely in place until the 1970s. 40 years is a little early to be claiming victory. The Bolsheviks came to power in 1922, and it really took 50-60 years for everyone to be convinced that the experiment had failed.

And the Bolshies didn't have a Mittlestand or Keiretsu to make them an export powerhouse, which certainly helps pay for socialism, but has the unfortunate side effect of being totally economically exposed to the fortunes of your largest trading partners.

Debate your point, but simply making shit up or being disingenous ain't going convince anyone... Unless you really think trying to resonate with the echo chamber is not intellectually bankrupt..

You really shouldn't write rubbish like this if you are seeking debate.

 

Mon, 02/03/2014 - 10:52 | 4395586 Flakmeister
Flakmeister's picture

Still think the Bolsheviks were "socialists" eh? I think that is your first mistake...

So how does the Mittelstand lead to such exposure? Is that not the case with any country that is involved in trade...

BTW, I never knew Canada was a homogenous society....

Actaully the long term effects are being seen in those countries espousing social democracy in the form of higher upward mobility, happier populations and just about any other measure you can come up...

So take your ideological claptrap and learn something about using empirical data to base your objective view of reality and you might get somewhere....

Tue, 02/04/2014 - 05:55 | 4399442 o2sd
o2sd's picture

So how does the Mittelstand lead to such exposure? Is that not the case with any country that is involved in trade...

No. It is the case with countries that subsidise their export industries (and their trading partners by lending them money). In the short term, as long as your trading partners can afford to run a deficit, you have a surplus which with you can pursue social policy. Socialism is not free.

BTW, I never knew Canada was a homogenous society....

BTW, you didn't mention Canada in your original post. Canada is resource rich with a small population. In a commodities boom, the government of Canada (and Australia) pursues socialist policy but suppresses dissent with high wages. Once the commodities boom comes to an end, government policy takes a sharp swing to the right.

Actaully the long term effects are being seen in those countries espousing social democracy in the form of higher upward mobility, happier populations and just about any other measure you can come up...

Define "long term". The social democracy you speak of is less than 60 years old, and it occurred in the longest period of peace on the European continent,and a period of cheap energy and rapidly rising productivity, all of which helped pay for it.

So take your ideological claptrap and learn something about using empirical data to base your objective view of reality and you might get somewhere....

Maybe you should learn the basics of accounting before accussing others of ideology.

Sun, 02/02/2014 - 15:25 | 4393812 all-priced-in
all-priced-in's picture

If you like your inconsistent data you can keep your inconsistent data.

This is really not uncommon - sort of like the published statistics also show no sign of inflation and the unemployment rate also dropping.

You can accept these things as long as you don't recall what you use to have to pay to fill up your gas tank or eat, or have not been trying to find a full time job.

 

 

Sun, 02/02/2014 - 15:41 | 4393859 Oldwood
Oldwood's picture

Given the "economy" is largely a fictional metric, maybe we can sustain our "miracle of gorwth" through the legalization of pot and public service messages on the positive contribution of alcohol on our society. Forward! or is it Foreword?

Sun, 02/02/2014 - 16:27 | 4393971 F22
F22's picture

2+2=5  We are at war with Eastasia and we've always been at war with Eastasia ....just employ doublethink

Sun, 02/02/2014 - 17:52 | 4394149 moneybots
moneybots's picture

" ...suggesting that the Fed made an epic miscalculation with its Taper timing, withdrawing much needed "flow" injections just as the economy had in reality hit a brick wall."

 

I thought the FED had to taper, so what would be miscalculated about it?

Sun, 02/02/2014 - 22:24 | 4394661 SweetDoug
SweetDoug's picture

'

'

'

Do we hear "Seasonally Adjusted GDP"?!?!

 

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