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Biggest Inventory Build In History Prevents Total Collapse Of The US Economy
While we already observed that in Q1, US GDP rose by an appalling 0.2%, far, far below the consensus Wall Street estimate (in case you missed it, here again is the one thing every Wall Street economist desperately needs) and precisely in line with the Atlanta Fed forecast which we brought attention to in early March, confirming yet again that US stocks no longer reflect any fundamentals but merely Fed and global liquidity injections, there is something far more disturbing under the surface of today's GDP report.
Inventories.
Specifically, the $121.9 billion increase in private, mostly nonfarm, inventories in the first quarter.
Cutting to the punchline, this was the biggest inventory build in history.
Another punchline: in Q1 2015, the US economy rose by a paltry $6.3 billion in nominal terms to $17.710 trillion.
Here is how the total GDP growth compares to just the increase in inventories, which as we wrote earlier this week, is the primary reason why the world is now gripped in a global deflationary wave.
In other words, if US inventories, already at record high levels, and with the inventory to sales rising to great financial crisis levels, had not grown by $121.9 billion and merely remained flat, US Q1 GDP would not be 0.2%, but would be -2.6%.
Oh heck, just round it down to -3.0%
Which means that as this massive inventory overhang is eventually cleared out (once the US runs out of space to store all these widgets, gadgets and raw materials, here's looking at you Cushing) US GDP will be pressured even more with every passing quarter, or else the moment of deflationary rapture when everyone is forced to liquidate and/or dump this inventory at the same time, will result in a monetary supernova which will leave the Fed with no choice but to literally paradrop money on the continental US.
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(Yellen): We're in the pipe 5 x 5.
Yellen: Spunkmeyer? God damn it...
(Yellen attacked by drooling Derivative Insectoid)
"which will leave the Fed with no choice but to literally paradrop money on the continental US."
aka, fiscal stimulus checks for $2k per family. And the Fed can print this new debt the Treasury adds.
Hopefully Jeb gets elected. He'll drop the rebate checks.
Fuck Jeb and his entire family. The Clintons too while you're at it.
I'd prefer to give them the 'cartel' treatment. Pool boy? Pool boy?!
Stimulus to familes? No way - banker bonuses are threatened by this. Wall Street gets the money and hopefully some will trickle down to the rest of us.
$2k to all 1040 filers? 65m x $2k = $130,000,000,000 (laugh track deafening)
This might be true. I'm noticing the Ford over-flow lots in Ypsilanti, MI are filling fast.
But I can't be sure this isn't a summer inventory build-up.
Time to triple up on sub prime auto offerings
Inventories of what....iWatches?
Work boots.
Should we expect massive discounts in prices or massive dumpings in the sea..
How much of that inventory build is oil?
Well you can't drink ethane....but you can probably get high off it. So there's that.
Excellent point. I don't have the numbers handy, buy any oil savvy folks out there could take the Q1 builds in barrels and run it by the average price for Q1 at storage facilities and give you a number with a B(illion) on the end.
Regards,
Cooter
US oil storage capacity is 600 million Bbls. so at 100% full with an average price of say $45 / Bbl that would be only $27 Billion Gross - so even if shot up 25% in the Qtr - that's only $6.8 Billion
so that means there is a lot of other stuff building huge stockpiles - if it is in finished goods - other than low labor input commodities - the level of employment is ready to crack big time
Interesting perspective. If oil were included in the inventory figure you'd likely have seen a drag on valuation when the price of the existing (pre-crash build) oil stored (say the other 450m bl) were marked down from $100 to $45/50, this would have been a -$24.7bn, although I'm sure futures and other paper valuations mean you don't have to be so dramatic.
Has anyone worked out whos holding that loss on their book?
Assuming FiFo - First in First out go to cost of goods sold and 6 month decline should have the high cost materials out the door
so should be 45- 65 av cost - I picked 45 - lowest end of range to get lowest effect on number change for oil component
GAAP is soooo last century.
Regards,
Cooter
QE will not be able to solve that problem...its too late now
The emperor is naked.
... and wanking in front of a window.
As work for hire with no residuals.
Make my money drop in shiny yellow kilogram bars please.
You mean shiny barbarous relics?
Of course he is, but you're not allowed to say it...
Change "Prevents" to "Proves" and your headline will be accurate
When the Warehouses are full then the next thing that will happen is, sorry we dont need you now, go home and mybe in two month time you may have your old job back with less pay.
This is what happened during the Great Depression...to the the fortunate ones. General Motors production droped to 30% of peak output and took about 10 years to come back to 1929 levels. Currently, automobile inventories have been setting new records for the last couple of years. The inflationary glut is everywhere.
...First by inflation, than by deflation... If you get to keep a job, prepare for a wage/salary haircut. Then the currency cancellation will be discussed next. They'll have all their fn bases covered to kill all economic hope. We'll beg for their ready made "solution" sooner rather than later.
Their solution will involve a new constitution under UN oversight.
The destruction of our rights has been in the crosshairs for decades.
The US economy is behaving like a doomsday prepper?
The cart is before the horse.
Bring on the crisis!
Where is the bride?
The church is full, but no bride yet.
This bitch is going to look ugly!
If the fed does paradrop money people will use it to pay off debt rather then buy all the excess inventory.
To bad those Big Macs decay so rapidly. Maybe if they preserve them by soaking in petrochemical resin the masses can still 'buy' and 'eat' them.
What time does Obama come on TV to tout how great the American economy is doing solely due to his efforts?
That chump has his own bail out package.
Buying 'all the things' hand over fist while free money is free!
Fuck it, with a hint hint here, and a delay delay there, the Fed will reverse this drop by 3pm today.
The beatings will continue until moral improves...
Keep bidding yellen, you fucking pig!!!
Quick lets put out another propaganda on cash article from the .FED so we can get the sheep to spend their mattress money...
---> Green Shoots
---> Brown Shit
If you ever wanted to see outright fraud by computer...just watch the market today. Things bouncing around a dollar at a time. And mysterious massive bid in the e-minis
Its pretty much been that way since bernanke
Try Volcker, if not Eccles.
Sarao got access to a PC obviously....damn him!!!!!
The toilet is full. No one was taught to flush by their parents. This is like a gas station toilet in Baltimore. Since this is treated as normal by the tards in charge, I would like to see the WhiteHouse and Fed toilets to test a theory.
some investment coming to baltimore - good for da gdp - moar krugman
More keystone cops, more Kevlar, and more "healthcare".
Things happen when a nation falls... 'The USA has Fallen!' http://www.prepsite.org/2015/01/the-usa-has-fallen.html?spref=tw
Diidnt the Kenya liar tell the American people the economy was robust?
Yes, Mr. Kucinich, now get down off that box, we need the microphone.
Yeah, shadow of some shit passing by or something to that effect.
What is the difference between stacking and inventory builds?
Somebody will want what *you're* stacking.
So who wants gold? I know I need gasoline for my car, gold not so much.
China. India. Alabama.
When Uncle Sam wants your gold, you will give it up, cheap, and if not "of your free will as per law or executive decree" then at gunpoint.
LOL! They already do that with my income. That's not really the question though. Who really wants the gold? No one has addressed that yet.
What gold?
Don't forget about the channel stuffing that Ford and GM are doing.
The car dealers are so stuffed with pickups and cars that they are parking them off their lots up hear in ND. I've never seen so much inventory.
Same here, but the stupid fucks aren't putting much cash on the hood, so fuck them. Let the crap rust.
Doubt I'd buy the shit anyway, even of there were a lot of cash on the hood. My 13 yr old truck runs like new, and I have zero desire to feed this fucked up economy or pay sales taxes to the state fuckers.
The two dealerships I drive by(one Ford and another that sales both Ford and Dodge Trucks) are overflowing. Trucks as far as the eye can see lol. Newest vehicle I have is a 2004 Suzuki Areio, has 186K.
What motivation does your local casino operator have to loan money to start up businesses? None. There is your answer to how much money is going to go into the economy as long as banks abuse their special privledges in the economy to create money and are allowed to trade for themselves. That is not their roll. That is not why they exist. This situation is why our currency system will fail as long as it is unbacked. They create and loan themselves endless useless money at 0% to cover gambling losses and make bets with zero structure in the system to put in limit to that money creation. A bank's roll in this system is to loan money to the economy...full stop...end of roll.
I'm staggered that someone who writes so intelligently doesn't know the difference between a roll and a role.
I am "staggered" that anyone gives a crap...
spell check can fubar your intent if you do not watch
Yes! It was spellcheck that did me in! Haha.
I use Microsoft Outlook E-mail, and I correspond with someone who's last name is Odermatt. Outlook always wants to change their name to "Oh doormat", and I must be careful to always go and change it back to Odermatt.
what do you call a guy with no arms and no legs who smells bad and lies in front of your door?
Crap! I can't edit it now either.
He did mention casinos and the role of the dice!
But Hatzius, the greatest living U.S. analyst told us that ........
There isn't a road in IL that isn't under heavy construction...keeping the unions happy. Always a sign of desperation in D.C.
union welfare
How much more can we borrow from the future before the note comes due?
Subtle difference between borrowing and counterfeiting where the FED is concerned.
So does this mean tha in Q2 a load of shit I don't need or want will be on sale? WOOT!
They've done what every Western economy has done - reach into the future and bring forward the economy which leaves a massive void ahead.
Ouch, this is going to be bad because the "prey and delay" hasn't worked.
Well stop making stuff for the poor and middle class.....marble for mansion, $10k hand bags for Hollywood folks, more servants and bigger houses for wall street billionaires, diamond $1 Million IWatches....should do it.
OLED-studded iCockRings!
I detect a scent on the air, no two, one of layoffs this way coming, and another of large discount sales.
As I have always said, QE is the CAUSE of the decline and it was done on purpose.
I've always said that GDP growth has been negative since 2011 worldwide
The Nazis and Satanists have weakened a country.
You're move.
America is mirroring nazi Germany pre-WW2
the bankers need to repay us
From the horses mouth, the Director of the Economic Offices of the Comintern, Ms Yellen ensures the Party that soon the planning for a successful American economic resurgence will be forth coming. In the meantime there are still areas of wealth that have not been "harvested".
GDP grew 6.3B (from 17703.7b to 17710.0b) in norminal term vs. private inventory build of 28.6b (from 93.3b to 121.9b). It is still a massive inventories buildup.
OK..."folks" say why do you "prep"? Guess I will have to blame the Cub Scouts of America for instilling in me "Be prepared". Also I can't help but help little old ladies across the street and even open doors for them too.
Where are these warehouses and what do they contain that is of value? Cheese? Powdered milk and eggs? Toilet paper? Or just raw materials of one kind or another?
Decentralize and localize....TPTB hate that as much as they hate you making a garden or raising any of your own food.
Stuffing channels (of deflation!)!
At least we got to put off reality for that shit, huh Kiki?
Yea... What else is left in the magic bag?
If you build, they will come.
/sarc
If you build a one-world government, They will be forced to come.
Governments around the world are engaged in activities that resemble the process of applying lipstick on the pig to make it look good without any effort to solve the main problem causing the crisis. They are manipulating economic data to spread the false perception that QE and low interest rates are helping the real economy to recover, while doing nothing to contain the core problem of excessive debt and rampant speculation which is causing misallocation of capital and feeding the financial crisis.
http://www.marketoracle.co.uk/Article40231.html
The pigs all look prettier at closin' time.........and it's definitly gettin' close to closin' time.
Chatted briefly with a woman, who was also in line at the grocery store, the other day. She was from Asia. She asked me if I realized how much the US could charge if it would Sell citizenship....
Perhaps she doesn't realize that the great ponzi scheme of the US to keep the "growth" numbers up is a direct result of legal/illegal immigration. The UK, when they wanted to know Exactly how many people were actually in the UK, asked the grocerers. The grocers can tell you how many to a person since everyone has to eat; meanwhile, our Census bureau continues to call American whites "non-hispanic white: (How all those white guys who died during WWII must roll in their graves!) and Refuse to provide real numbers.
35 of the US 50 largest cities are minority majority; San Francisco is more than 50% asian, as is Bellevue, Washington and Sugar Land, Texas. The asians and the mexicans are dividing up the US among themselves; they'll tell you when they are done.
They aren't dividing anything. Asians are to white people as Bruce Jenner is to females. They both feel trapped in the wrong body/race and want to be something they are not.
Tyler and all, if you were trying to convince the average Joe that the debt/Fiat system/general economy is in the sh!tter (hell, explain what that system is), what YouTube video would you point them to. I've seen qute a few, but at the moment, I can't remember the best one to point people to. And that would probably be a good menu link to give people a taste of what to expect on ZH.
Thanks.
This sums up ZH's political position -
http://thehill.com/blogs/ballot-box/presidential-races/237958-report-jeb...
Jeb Bush can pretend to be Hispanic as long as he cuts my taxes.
He wont cut your taxes, but he will lie and tell you that.
That's ZH in a nutshell.
Thanks, but I'd like a video explaning the debt/Fiat system/general economy, not politics (even though that plays a role in the system).
Here you go -
https://www.youtube.com/watch?v=AnpTWKKWQ1o
This is what America has to look forward to post collapse.
Thank the nazi satanic bankers!
The blood is the life.
The documentary, Money for Nothing, is awesome!!
I made my whole family watch it when I was home last. It spells the entire history of the fed reserve system ponzi in detail and in terms that someone with only moderate financial literacy can understand.
I wish I could buy up all of the network prime time airtime and run this movie. People would be pissed about missing American Idol and Dancing With Stsrs, but they will live and be much better off for it.
Thanks Farmer.
The Hidden Secrets of Money series by Mike Maloney is excellent. Episode 4 in particular has a great presentation on the current fiat debt-money / fractional reserve system.
https://www.youtube.com/watch?v=iFDe5kUUyT0
1. Process and Reality
2. A Different Universe
3. A Mathematical Theory of Communication
4. Ten Philosophical Mistakes
How much of this inventory build is related to the build in oil inventories?
When are the Tylers going to figure out that the adspamware-loading cunts at
TREMORVIDEO.com
(Tremor Media)
are hijacking/crashing their readers' browsers?
I have to do a system-level force quit just to get out of ZH because of these $2 stock (TRMR) cocksuckers.
So why the inventory build in the face of sagging sales?
Couldn't be industrial hoarding of foreign goods prior to a currency devaluation could it?
Ammo hoarding!
"if US inventories, already at record high levels, and with the inventory to sales rising to great financial crisis levels, had not grown by $121.9 billion and merely remained flat, US Q1 GDP would not be 0.2%, but would be -2.6%."
This is all wrong
straight from report:
"The change in real private inventories added 0.74 percentage point to the first-quarter change in
real GDP after subtracting 0.10 percentage point from the fourth-quarter change. Private businesses
increased inventories $110.3 billion in the first quarter, following increases of $80.0 billion in the fourth"
the $110.3 billion is the ANNUALIZED number
edit: OK, i see what ZH did ... used "current" rather than "real"
still, the $121.9 billion is ANNUALIZED
Corporate Hoarders!
Ah this makes sense & the Empire & Technocracy Ziggy & his CFR / Tri Lateral Commission "COTERIE" envisioned may be drawing it's last breath's as his Technocrats or "the BORG" are running out of excuses & pseudo-theories. They envisioned a Neo Industrialization in America based on a Technocracy model of Energy as the metric the economy would be centered on. All unproven theory of an ENERGY based metric driven economy instead of supply & demand model of production based on past industrialization resources. This will be problamatic for America since the outsourcing of American Jobs to multinational / globalism countries for reduced labor costs to salavating corpocracy / facism ideologies of technocrats. Crunch time coming as the can cannot be "kicked down the road" & the Bilderberger meeting in June w/ the Sept. / Oct. timeline & Oct. 20th FED Us Treasury annoucement for new currency or not comes into focus clearer imo.
Do bribes to the Clinton Foundation by foreign entities count towards GDP? You got hookers for Bill, lipo for Shillary, blow & travel; if so, GDP rose by 3.6%.
www.traderzoo.mobi
I work with the small SME's, You know, the ones who actually hires people to do real work, the ones who are drowning in taxes bureaucracy and theft and corruption and state and federal regulations, and which are now shrinking at the fastest rate ever, due to both the boomers selling up and getting out, closing their company's because they are fucking pig sick of the predations of the fucking crony corrupt wall street backed ponzi share buy back free money multi national lobby spending criminal enterprises, and the rest that are fighting to just stay alive and make a buck.
When this over capacity in China and the bigger dumping starts in real earnest and their prices drop another 10 to 20 % as they fight to stay alive too and this inventory gets dumped, guess who will be left with no sales, no chances and zero profits and a layoff that will ripple like a tsunami of job losses across the US.
steel prices are already a disaster from dumping from everywhere in the world - pipe / rebar / everything but coils for automotive
Data clearly shows very gloom picture. It could end the bull market. Today!
Wednesday is the best day to crush the market.
And Tyler was ranting apocalyptic about China's growth dropping to a mere 7%.
I just heard that song by "Ace" entitled "How long has this been going on".
I started singing with it and realized I had committed a Freudian slip because I had changed the words to "How long can this keep going on".
Martin Armstrong has been saying for years... Oct 2015
Not again. What a bunch of misinformation.
I'm having a hell of a time buying pistol gun powder and .22 ammunition.
How can this be with all of the "overstocking" of stuff?
The Federal Government is in fact, neckbeards?
The weight of big government will always crush an economy. It's happened before: Wilson, Hoover-FDR, LBJ-Nixon, now Bush-Obama.
just wondering if somehow future contracts are included in this figure ...virtual inventory!
just wondering if somehow future contracts are included in this figure ...virtual inventory!
If the economy is rolling over, why would businesses, seemingly most, embark upon such a inventory build?
if we can't trust the data regarding employment, housing sales, etc what makes us so sure about the data regarding an inventory build.
It doesn't make sense in a world entirely programmed to a JIT (just in time) inventory replete with electronic feedback on supply and demand.
I can't put my finger on it but just looking at what some suppliers provide with day to day snack food we never get enough. It's gone in one or two days and demand is through the roof since that "frito" bag is all those paid minimum wage can buy. Isn't there enough corn or oil to make the snacks?
TBTF led to a recession - thank the dumb black muslim
Sigh.
Ok, if inventories are this high, (and they probably are), then isn't this where the government sticks it too those inventory hoarders, in the name of taxes? There is a big reason why the Walmarts and others, use just-in-time inventory strategies, to avoid the taxes. And according to the graph/time line, the government should have been raking in mega taxes since 2010, from unsold inventory,~~~I don't think it is the public that has been buying this overstock, so what is the new normal trick commonly being used these days?
wwxx
you know what that is? you report on every Wednesday. it's been up 16 weeks in a row. and moreover, it's still priced at the price it was when it was added to inventories
I freelance over th? internet and earn about 80-85$ an hour. I was without a job for 7 months but last month my paycheck with big fat bonus was $15000 just working on my computer from my home for 5-6 hours. Here's what i have been doing... www.globe-report.com
I think the economy has been dead for years.Maybe since 07. No growth. Business closed down all over the place. Very few jobs available. The market numbers and most numbers from the fed are lies. It's all smoke and mirrors. Insane money printing and borrowing has been going on to keep everything afloat.And there has been no real change in the way the Bankers and Wall street do business. Everything points to a economic collapse coming. The government is getting ready for it. The police/military hardware build up is for the coming riots and civil unrest. Do what you can to prepare.It's going to be really bad.