Dallas Fed Tumbles Below Lowest Estimate As Commodity Crash Comes Knocking

Tyler Durden's picture

Who could have possibly anticipated that the one state that contributed the most high-paying jobs during the "recovery" on the back of the shale miracle, is facing recession (as JPM predicted)? Certainly not economists, who have correctly predicted exactly zero of the last 20 economic recessions, and whose lowest estimate for today's Dallas Fed manufacturing outlook survey was 5.0 (with 12.5 on the high side, and a 9.0 consensus mean). Moments ago we got the official number and it was a doozy, plunging from 10.5 to just 4.1, the lowest print since the Polar Vortex swept away economic activity across the US and when the Dallas Fed printed a tiny 0.3. The drop of 6.4 from the November print was also the largest slide in economic activity since October 2013.

Surely this latest proof that the US is not decoupling from the rest of the world, will be sufficient to push the S&P even higher on hopes that the US is, all evidence to the contrary , decoupling.

 

The full breakdown by component - virtually every component posted a decline since November, except for wages which rose a meager 1.2. However, the more than proportional offset: hours worked tumbled from 5.7 to 0.0, resulting in lower overall compensation.

Some of the other highlights (from the report):

The general business activity index fell from 10.5 to 4.1. The company outlook index was almost unchanged at 8.4, with 21 percent of respondents noting an improved outlook.

 

Labor market indicators reflected unchanged workweeks but continued employment increases. The December employment index held steady at a solid reading of 9.2, with 17 percent of firms reporting net hiring compared with 7 percent reporting net layoffs. The hours worked index dropped from 5.7 to 0, indicating no change in hours worked in December.

 

Upward pressures on prices eased, while wage pressure increased slightly. The raw materials prices index fell from 15.3 to 10.2, its lowest reading in eight months. The finished goods prices index declined as well to a 13-month low of 4.2. Looking ahead, 26 percent of respondents anticipate increases in raw materials prices over the next six months, while 24 percent expect higher finished goods prices. The wages and benefits index ticked up from 23.9 to 25.1. This index has been consistently elevated this year, suggesting continued upward pressure on compensation costs.

 

Expectations regarding future business conditions remained optimistic in December. The index of future general business activity fell from 18.3 to 13.9, while the index of future company outlook edged up to 24.1. Indexes for future manufacturing activity moved down in December but remained in solidly positive territory.

But the most notable component, Capital Expenditures, which is now a harbinger of what is about to happen to capital spending across the energy sector in 2015, unambiguously crashed from 13.3 to 5.6. And just like that trillions in job-creating capital spending is mothballed.

Which, of course, is good news for management: just think of all those pent up buybacks that will now be enabled, courtesy of the indefinite freeze in capex. Surely that alone will send stocks to newer all time highs as nothing but financial engineering is left.

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rccalhoun's picture

punch line is always the same........ stocks are up

KnuckleDragger-X's picture

Of course they are, after all, what can possibly go wrong. As for the Dallas bankers, they are relearning the lessons of the oil patch, win big, lose big.

spastic_colon's picture

so s-n-p 2130 lookin pretty good right now....before the end of 2014

Soul Glow's picture

I hope you are long when banks get margin calls on their oil positions.

LawsofPhysics's picture

Texas should simply secede and use their commodity wealth for the advancement of their own people and own living standards.  They already have a considerable amount of the active duty members of the military and nukes.  What will the asshats in D.C. do about it?

If you want any of their commodities or other products I am sure they will exchange them for real money or other commodities/assets.

Something about avoiding reality, but not the consequences of avoiding reality come to mind.

 

 

GovernmentMule's picture

Funny you should say that. The Mises Institute is sponsoring a conference with Ron Paul, Lew Rockwell, Tom Woods, and Jeff Deist on that very subject:

Mises Circle Southwest Regional 2015 in Houston January 24, 2015Houston, Texas

Breaking Away: the Case for Secession

disabledvet's picture

Contrary to popular opinion Texas is a massive energy consumer. It's also heavily urbanized. They've been wise in building out their energy infrastructure to include a massive amount of renewables. (Wind in particular.). This commodity collapse including in oil will be great news (eventually) as I think the goal remains pushing real estate to nosebleed levels (and there are only so many foreign buyers.).

The rest of the USA (and China) runs on coal not oil. Fuel is still the major component of refining...and you have to include ethanol in all that now.

AynRandFan's picture

Boy are you ever right about "urbanized".  I grew up in Texas and left for Colorado in the late 80's.  I went looking for a retirement home back in Texas and found that the population had boomed in my absence, spreading the urban areas across a huge expanse of east and central Texas.  I finally found the Texas of my youth - but only 70 miles from the Rio Grande.  It won't be long at the current rate for all of the hill country to be just one big neighborhood.

KnuckleDragger-X's picture

I avoid the I-35 corridor as much as possible since they won't let me to mount heavy weapons on my vehicles...."talk friendly, drive mean" the unofficial motto of Texas....

roadhazard's picture

"The case for secession"

 

You can have all the case you want but it ain't going to happen. Been tried once before.

KnuckleDragger-X's picture

Not the same, this time we are the ones with the heavy industry but I've changed my mind about secession, we should kick all the blue states out instead.

sun tzu's picture

Secede and let them keep the Fed and DC debt

Fed-up with being Sick and Tired's picture

I actually think that many of the "components" of Martial Law are in place:   they can seize a vehicle now, if you have say $5K in cash, and call it "drug money;   they can seize your home as well RIGHT NOW.   You have to hire an attorney.   The police are already Militarized;  they are ALREADY killing indiscriminately, and are being excused by Grand Juries (I AM ABSOLUTELY SURE that that fat man, selling Cigs without tax, was STRANGLED TO DEATH by that little Copper handing on his back (I am a choke hold specialist, and can take on the biggest monsters as I also know Judo and wrestled as a young guy);   They are tracking every dollar we spend;   the Financial Wizards who screwed us out of money preceding this DEPRESSION are not in jail (Oligarchy)..we could go on and on.  WE ARE THERE!

jstrack's picture

Yes, looks like activity is down, but geez...  Its a roller coaster with this indicator...  Nothing that special.  

 

Some people look at the silver lining to everything, but this site looks for the dark cloud to everything...  Not that there is not plenty to be worried about and the threats are huge...but the credibility of the screamer of shock and doom at every darn economic report is tiresomely declining.  Thre are real problems and the economy willl go into a sharp and sustained decline sometime in the future...but geez this negativity is so tiresome...

GovernmentMule's picture

If you derived income from the oil patch in any shape manner or form, or industries even remotely related to it, your opinion would be markedly different. Cheap gas? Be careful what you wish for... It is getting really, really ugly...

AynRandFan's picture

I worked in oil exploration for 10 years until 1989, when I figured out there was never going to be any safety in that career.  It took years for the industry to downsize.  What we have so far is just a few months of a price collapse.  Projects are being delayed, but everything, and probably most everybody, is still there waiting for a rebound.

sun tzu's picture

MLP's are still popping up like weeds

Farmer Joe in Brooklyn's picture

It's ugly work, but someobody's gotta do it...

BandGap's picture

I used to think the same thing. In fact, there are times when I do not come to this site as it can be overwhelming.

That being said, I think the information (albeit, mostly negative) is accurate and actionable. Just look at it as scenes from a tragic play. In a sense it is very fascinating. The downside is that it will directly affect us quite soon.

I'd rather know the bad stuff than ignore it.

weburke's picture

Just buy health care stocks, one at a time is fine. sell what you can that you own  and buy more stocks, join the guys at the top in what they are doing. 

Hazlitt's picture

Don't forget to long the dollar.

Possible Impact's picture

"Longing the dollar" is the root of all Evil... :)

Hazlitt's picture

All underlying data is negative, countries on every continent slowing down, defaulting, or hyperinflating, and GDP and stock markets decoupling from everything due to near-record low savings and broken window fallacy-style healthcare policy while oil is tanking. 

 

There's something really familiar about all this. Therefore, BTFATH.

wrs1's picture

Anything greater than zero is expansion right?  

nakki's picture

Just repeat after me "its just a survey." Good or Bad "its just a survey." More  meaningless numbers since "its just a survey." 

q99x2's picture

North Dakota Titty Bars Go Bust.

AynRandFan's picture

A blip reported as a crash. Nothin means nothin til Japan wakes up to a depression.  Then the tide goes out everywhere.

Soul Glow's picture

Watch Dallas Fed ask for moar QE haha.

rsnoble's picture

Does this mean redneck dumbasses with no skills other than brute force won't be driving $50k pickups and keeping the bars full anymore?

Fed-up with being Sick and Tired's picture

The only thing wrong with "dumbasses" is that the proper word is "ignorant."   Otherwise, you are spot on.  It has amazed me how much money, before the down-turn, that otherwise very sharp uneducated guys were minting millions installing pools and building out 4000 sq foot houses sold to "middle class" income folks.  I know of one guy who was a pool man, that was driving around in a Prevost bus (his pronunciation:  "PREEEE-VOHHST."   Made me LOL, as I corrected the pronunciation, and it almost caused a fight at the Grand Prix races back in Reno in the 90's....those guys, I am sure, his blue collar (very wealthy Construction firms) pals looked at me like I was a sissy from SF.   Man, I laughed out loudly so much that they could not help themselves.

 

Fed-up with being Sick and Tired's picture

The only thing wrong with "dumbasses" is that the proper word is "ignorant."   Otherwise, you are spot on.  It has amazed me how much money, before the down-turn, that otherwise very sharp uneducated guys were minting millions installing pools and building out 4000 sq foot houses sold to "middle class" income folks.  I know of one guy who was a pool man, that was driving around in a Prevost bus (his pronunciation:  "PREEEE-VOHHST."   Made me LOL, as I corrected the pronunciation, and it almost caused a fight at the Grand Prix races back in Reno in the 90's....those guys, I am sure, his blue collar (very wealthy Construction firms) pals looked at me like I was a sissy from SF.   Man, I laughed out loudly so much that they could not help themselves.

 

TeethVillage88s's picture

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lakecity55's picture

"....mysterious earthquakes...."
Oh, no, the Yellowstone Caldera is going to Blow!

AlamoJack's picture

70 miles from the RIO??!!  The foot traffic in your area is like a stampede.  Check your game cameras Hoss.  Ain't no 8 pointers eating your corn.