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America's "Lumbering" Economy

Tyler Durden's picture




 

While crude and copper have been christened the great economic forecasters of our time, the data shows that there is another, more highly correlated, commodity to the economic cycle. Lumber prices are the most correlated with ISM and GDP of all industrial commodities and that is a problem...

First, Lumber prices have collapsed to 4 year lows. The 33% Year-over-year plunge is the biggest since the financial crisis and is flashing a big red recession alarm...

 

Second, Lumber prices have historically led stocks and are pointing to significant downside from here...

 

and finally, Third, it appears lumber's decline points to notable downside for manufacturing...

 

But apart from that, everything is fine... Oh wait...

 

Charts: Bloomberg and @Not_Jim_Cramer

 

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Thu, 09/24/2015 - 20:19 | 6591137 ceilidh_trail
ceilidh_trail's picture

Hopefully, this will show up at the retail level soon. I'm getting ready to build a storage shed soon...

Thu, 09/24/2015 - 20:23 | 6591155 Gambit
Gambit's picture

Nah, they wont let us little guys enjoy the goodies that comes of this. 

Thu, 09/24/2015 - 20:50 | 6591234 Occident Mortal
Occident Mortal's picture

I call bullshit.

 

In 2001, Lumber rockets and... the dotcom bubble takes down the economy. Not such a great bell weather there.

 

So from 2004-2007 Lumber was in a terminal downward trending market... What was the economy doing back then? Oh yeah it was going batshit crazy one-time globalisation full steam ahead.

Thu, 09/24/2015 - 21:51 | 6591424 willwork4food
willwork4food's picture

Hopefully, this will show up at the retail level soon. I'm getting ready to build a storage shed soon...

Yes, Home Depot still charges and arm & leg for a 4x8 3/4 ply. Seems like the futures are getting cheaper and the CEO's are getting greedier.

Thu, 09/24/2015 - 22:58 | 6591608 Osmium
Osmium's picture

Similar to the paper price of silver and the premium for real silver?

Fri, 09/25/2015 - 02:30 | 6591909 tarabel
tarabel's picture

 

 

Buy your lumber on the futures market, take delivery and sell the extra 19,000 pieces to someone else who also needs to build a shed. Other than that, wash your hands before grabbing your ankles. Don't want to get your socks dirty.

Thu, 09/24/2015 - 21:06 | 6591286 mtl4
mtl4's picture

Just like lower crude prices means $2 gas at the pumps too........go ahead, squeeze the consumer while you can.

Thu, 09/24/2015 - 20:30 | 6591171 Winston Churchill
Winston Churchill's picture

The Pole barn is going to get larger.

Thu, 09/24/2015 - 20:20 | 6591140 holdbuysell
holdbuysell's picture

Timber!

Well, someone had to say it.

Thu, 09/24/2015 - 20:32 | 6591182 ZippyDooDah
ZippyDooDah's picture

Stop!  You're giving me a woody!

Well, someone had to say it.

Thu, 09/24/2015 - 21:57 | 6591447 newnormaleconomics
newnormaleconomics's picture

Someone wood have to go out on a limb and say that, driving all of us up a tree and barking nuts.

Oakay, maple that's not very poplar, but it's just fir a laugh, yew know, so I'll leaf it there. 

 

Fri, 09/25/2015 - 05:45 | 6592004 Offthebeach
Offthebeach's picture

Your mother was a fine piece of Ash.

But your dad was a son-of-a-birch.

Fri, 09/25/2015 - 07:35 | 6592123 willwork4food
willwork4food's picture

Yea, he was a sap for a nice ash, living in the mountains.

Fri, 09/25/2015 - 10:54 | 6592875 White Mountains
White Mountains's picture

He tapped that sweet sugar bush with his hairy woodpecker

Fri, 09/25/2015 - 13:01 | 6593476 Jumbotron
Jumbotron's picture

After 20+ plus years of marriage my lumber is down as well.  But as we can see....it's a lagging indicator.

Thu, 09/24/2015 - 20:20 | 6591141 NoDebt
NoDebt's picture

Raise them rates, Janet.  I mean after you recover from your mini-stroke earlier today.  Take all the time you want.

Fri, 09/25/2015 - 00:07 | 6591719 Son of Loki
Son of Loki's picture

All of you depress me when it's so Bullish out there:

 

Forest Park Medical Center Frisco facility files for Chapter 11

 

http://www.dallasnews.com/business/health-care/20150923-forest-park-medi...

 

 

'Let no sector be spared the Robust Recovery," the Messiah in DC proclaimed!

Thu, 09/24/2015 - 20:22 | 6591148 A Lunatic
A Lunatic's picture

Shiver me timbers, Bitchez............

Thu, 09/24/2015 - 20:22 | 6591150 NoDebt
NoDebt's picture

It's all the 3D printed houses made out of plastic waste, old tires and formaldehyde that is displacing the need to use trees.  The bonus is that it's much more environmentally friendly, just not for the person living in a house made out of medical waste.

Thu, 09/24/2015 - 20:32 | 6591181 . . . _ _ _ . . .
. . . _ _ _ . . .'s picture

Trees grow back. Paperless offices use more electricity which comes from coal and gas and nuclear. How is all that environmentally friendly? And electric cars are only good if your state produces hydro. None of this shit is friendly at all.

Thu, 09/24/2015 - 20:46 | 6591222 Boondocker
Boondocker's picture

Shhsh. ..the sheeple don't know that....

Fri, 09/25/2015 - 01:08 | 6591809 daveO
daveO's picture

Lumber is sold in feet. A lot of the composite material is just small trees ground up for chips. They're making joists out this stuff along with decking. Lots of glue. No thanks. 

https://en.wikipedia.org/wiki/Particle_board

https://en.wikipedia.org/wiki/I-joist 

Humidity plus mold will eventually ruin it.

Thu, 09/24/2015 - 20:23 | 6591157 arbwhore
arbwhore's picture

Its almost as if the business cycle still existed.

Thu, 09/24/2015 - 20:28 | 6591166 NoDebt
NoDebt's picture

No, we just traded it in on the Fed cycle.  Every time they stop providing emergency stimulus the economy begins to revert to it's natural state- depression.

Thu, 09/24/2015 - 20:36 | 6591190 Winston Churchill
Winston Churchill's picture

Death you mean.

The FedRes is just applying the paddles to a corpse.Jolts it a few more heartbeats out of

it, but doesn't stop the decomposition.

Thu, 09/24/2015 - 22:01 | 6591453 newnormaleconomics
newnormaleconomics's picture

Take that back! Auntie Janet is doing her best to repeal the business cycle and bear markets (and any vestige of capitalism she and her rentier-socialist benefactors can find). 

The bloody nerve of some people to question our intellectual superiors. Bloody cretins. 

Thu, 09/24/2015 - 20:23 | 6591159 . . . _ _ _ . . .
. . . _ _ _ . . .'s picture

Oil and lumber are down. Looks like Canada is out of business. Maple syrup anybody?

Thu, 09/24/2015 - 20:25 | 6591162 NoDebt
NoDebt's picture

That's actually made from crude oil now.  DuPont has the patent.  It's sold under the brand name "Aunt Jemima".

Thu, 09/24/2015 - 20:33 | 6591187 Big Corked Boots
Big Corked Boots's picture

Wait. It isn't made from high fructose corn syrup derived from genetically modified roundup soaked corn anymore?

Thu, 09/24/2015 - 20:54 | 6591256 BurningFuld
BurningFuld's picture

That's so 2000's. Now It's steamed Bitumen procesed by genetically modified syrup shitting bacteria.

Thu, 09/24/2015 - 22:03 | 6591461 newnormaleconomics
newnormaleconomics's picture

I prefer my bitumen syrup with corn bread, blood loaf, and pickled pig knuckles, but not on Jewish holidays.  

Thu, 09/24/2015 - 22:37 | 6591567 newnormaleconomics
newnormaleconomics's picture

Okay, just for the down vote, I'll eat the blood loaf and pig knuckles on Jewish holidays, too. 

Some people are hard to please. Humph! 

Thu, 09/24/2015 - 20:31 | 6591178 oddjob
oddjob's picture

Canadian sawmills will be operating long after the sawmills down south are idled.

Thu, 09/24/2015 - 20:56 | 6591263 BurningFuld
BurningFuld's picture

Full steam ahead round these parts...including the Zinc-Silver Refinery....is there still a demand for Silver?

Thu, 09/24/2015 - 21:11 | 6591310 oddjob
oddjob's picture

always.

Fri, 09/25/2015 - 13:40 | 6593698 TxExPat
TxExPat's picture

Not at volume.  The western half of the country has too much Pine beetle damaged forest to ramp up or even continue to operate at current capacity.  They will have to limp along on the less heavily damaged areas for the 20-25 years it's going to take to restore the forest...

Fri, 09/25/2015 - 13:40 | 6593699 TxExPat
TxExPat's picture

Not at volume.  The western half of the country has too much Pine beetle damaged forest to ramp up or even continue to operate at current capacity.  They will have to limp along on the less heavily damaged areas for the 20-25 years it's going to take to restore the forest...

Thu, 09/24/2015 - 20:24 | 6591160 NoDebt
NoDebt's picture

You would think this data would be like a 2x4 to the back of the head for Wall St. analysts and PhD Economists.

Thu, 09/24/2015 - 20:31 | 6591177 Ban KKiller
Ban KKiller's picture

Would (pun intended) love to hear that sound. 

Thu, 09/24/2015 - 22:08 | 6591478 newnormaleconomics
newnormaleconomics's picture

Fully kiln dried, they're really 1.75" X 3.75", but I'd be happy to use one green or dried to strike repeatedly the back of the head of a Wall St. analyst or an eCONomist. 

A 32" Louisville Slugger would do the job more efficiently, I suspect, and it makes a nice cracking sound on impact. 

 

Thu, 09/24/2015 - 22:39 | 6591571 newnormaleconomics
newnormaleconomics's picture

Down voter, should I use Mizuno or Marucci instead? We aim to please. 

Thu, 09/24/2015 - 20:30 | 6591174 Ms No
Ms No's picture

This market is getting ready to tank, it's converging from everywhere.  Yellen stroking out or pretending to sure doesn't uphold the facade of stability.  The war story provides a great distraction from the market news.  They better bring out Tiny Stanley and the helicopters soon.  

Thu, 09/24/2015 - 20:36 | 6591188 A Lunatic
A Lunatic's picture

Only 91 more days until Christmas......

 

Christmas Countdown 2015 - Find out how many days until ...

Thu, 09/24/2015 - 20:55 | 6591260 nmewn
nmewn's picture

lmao!

Thu, 09/24/2015 - 20:43 | 6591212 Greenie
Greenie's picture

Maybe somebody slipped the lumber graph in Janet's prepared remarks.

"Toward the end of the speech, Yellen, 69, paused twice for several seconds, appearing to have lost her place in the text. The Fed said in a statement later that Yellen "felt dehydrated at the end of a long speech under bright lights."

The Fed statement said she was seen by emergency medical personnel and "felt fine afterward and has continued her schedule Thursday evening."

http://news.yahoo.com/yellen-says-she-expects-fed-raise-rates-years-210155871--finance.html

Thu, 09/24/2015 - 20:47 | 6591223 A Lunatic
A Lunatic's picture

After a refreshing glass of blood 'donated' by a nearby taxpayer she felt just fucking great..........

Thu, 09/24/2015 - 21:13 | 6591321 Falling Down
Falling Down's picture

+1

Or the blood of an infant.

 

Thu, 09/24/2015 - 22:21 | 6591527 newnormaleconomics
newnormaleconomics's picture

What type of infant blood do Jews prefer today? I'm a bit behind the times. Just curious.

I prefer the blood of prepubescent females named Aubrey, but I have discriminating tastes, as it were. 

Fri, 09/25/2015 - 08:53 | 6592287 Question Reality
Question Reality's picture

Souls of infants, blood of taxpayers.

They think they're doing the infants a service since they have no hope anyway under the mountain of debt.

Thu, 09/24/2015 - 21:01 | 6591273 Glass Seagull
Glass Seagull's picture

 

 

Enough with these facts...where is the next 10,000% gaining stock?

Thu, 09/24/2015 - 22:33 | 6591559 newnormaleconomics
newnormaleconomics's picture

https://www.youtube.com/watch?v=ID0qsqr3j00

One has to admire a bird with ambition.  

Thu, 09/24/2015 - 21:05 | 6591288 blown income
blown income's picture

"After a refreshing glass of blood 'donated' by a nearby college student she felt just fucking great........."

 

Adjusted/...........

 

 

Thu, 09/24/2015 - 21:07 | 6591298 ISEEIT
ISEEIT's picture

Not trying to be a dick..but isn't lumber consistently seasonal? Stands to reason that as fall/winter approaches, futures would be affected. I realize this 'economy' is just as full of shit as are the 'markets'....

However I think this particular data point may not be particularly significant. Even the Cat data in and of itself isn't necessarily a systemic alarm.

What's most worrisome for me (terrifying?) is the obvious breakdowns all across the planet right now. The GLOBAL nature of it.

Individuals fail. Friendships fail. Groups fail.

Organizations fail. Gangs fail. Species fail.

Governments fail. Empires fail. Religions fail.

At this point, they are all failing..In epic fashion.

Simultaneously.

Thu, 09/24/2015 - 21:11 | 6591312 Policraticus
Policraticus's picture

Finally, some good news.  I think it is time for me to make that bed room set for my daughter.  I think I going to choose black walnut.  Perhaps even quarter sawn black walnut.  Not to mention all the hand tools I have purchased over the last 30 years are now worth there weight in gold.  Today is Thursday which is the day of the week that I try to be Magnanimous, so perhaps I should give Mr. Yellen some thanks and praise.  After all, in her attempt to promote fiat money she unwittingly moved us towards the barter system.  Life is good for the free and the capable.  

Thu, 09/24/2015 - 21:12 | 6591320 homebody
homebody's picture

Corn cobbs are ok but I prefer toilet paper (from trees)

Thu, 09/24/2015 - 22:27 | 6591541 newnormaleconomics
newnormaleconomics's picture

Leaves work, too, but they typically can't be turned over and used twice like toilet paper. 

$h!t in the hand is better than in the bush, at least that's what she says.

All I know is that my bird hasn't been in a bush for a long time. 

Thu, 09/24/2015 - 22:15 | 6591509 My Days Are Get...
My Days Are Getting Fewer's picture

this is not BS - I own much timberland and have been following timber prices for more than 15 years.  What is written here is true - you can not imagine how much the price for all timber has fallen in the past 8 years.  It takes 100 hundred years to grow a cherry tree to maturity in the NE.  The kiln dried wood - veneer or solid - is prized for cabinetry or furniture.  10 years ago, most all of my cherry logs were exported to Taiwan for cutting, drying and finishing.

Prices for finished wood reflect consumer demand - it is that simple.  When people are under financial stress - and still want new furniture or a kitchen - they substitute materials of lesser quality and price.

Fri, 09/25/2015 - 01:40 | 6591860 toadold
toadold's picture

When making concrete pours you have to make framing for it.  Sometimes you can use steel for framing  large structures but that framing is expsnsive.  Sometimes it gets buggered beyond re-use.   Most framing is made from wood and they try to recycle that.  When your soft structural wood prices are going down, the wolf is at the door.

Thu, 09/24/2015 - 22:18 | 6591521 Redart
Redart's picture

Past does not predict the future. Lumber out, concrete in

Thu, 09/24/2015 - 22:29 | 6591549 newnormaleconomics
newnormaleconomics's picture

The present predicts the past, the future doesn't exist, and I don't know what day it is, which means my meds are working even better with bourbon.  

Thu, 09/24/2015 - 23:00 | 6591615 Dragon HAwk
Dragon HAwk's picture

You mean after they push the ground around with a Cat Dozer, they have to put up some framing.. ?

Fri, 09/25/2015 - 02:31 | 6591905 tarabel
tarabel's picture

 

 

Prices paid to the producer of the lumber may be dropping, but it is certainly news to me that the retail price has fallen. Not where I live (CO) or for the lumber I use the most (WRC). Hasn't budged a centavo in more than a year. Not even on sale much for the big summer home-fix-it 3-day weekends, as is usually the case.

Fri, 09/25/2015 - 04:31 | 6591968 My Days Are Get...
My Days Are Getting Fewer's picture

Here are the charts for the price of plywood - take a look at the 10 and 15 years charts:

 

http://www.indexmundi.com/commodities/?commodity=plywood&months=180

I agree with you that the price for small quantities of material at HD has not fallen - but, get a bid on plywood or 2 x 4's for a pallet load, you will see that the prices are lower now.

Fri, 09/25/2015 - 06:26 | 6592042 robertocarlos
robertocarlos's picture

Nothing beats a steel and concrete house.

Fri, 09/25/2015 - 07:06 | 6592078 pc_babe
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