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Recession Looms - Business Inventories-to-Sales Surge To Cycle Highs
Business Inventories were unchanged in August (less than the expected 0.1% rise) with manufacturers down 0.3% - bad for Q3 GDP but Business Sales tumbled 0.6% MoM (the biggest drop since January), down across the board. So clearly no inventory liquidation has started yet (so the pain is yet to come) and this has driven the inventory-to-sales ratio up to 1.37x - the highest in this cycle. The last 2 times the ratio was at this level, the US was in recession.
This trend is not your friend...
Ugly across the board...
Recession?
Charts: Bloomberg
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do we continue to perpetuate the media lie that we are not in a depression?
As a "corporatewhore" I am sure you already know the answer.
They got pills for that shit. It makes your dick soft though.
Come on, they have a pill for the soft dick as well.
The "bankers" are dragging this on long enough to dump their longs and LOAD UP on shorts...then, and only THEN will it fly apart...
Does anyone really still think that you can continue to have growth forever and ever in a consumer based economy in the finite biosphere?
LMFAO!!!
Oh well, stupid is as stupid does I guess. Perhaps I can interest you in a financial "product" of mass destruction?
Get long sharecropping and guillotines, beat the rush!
It's all fun and games till somebody looses their head. :-) Then it's called payback!
My time. It is coming.
I get the feeling that the after Christmas sales will rise to a whole new level this year and I can hardly wait to see how CNBC spins it....
Long Cash
I can't speak for others but my own company yes we see something unique. The sales are down but that could be due to lack of good sales efforts. However, we see stable volume of customers just weaker sales. A bit like in Thailand where the malls are packed but people just go there to enjoy the air conditioned pleasant atmosphere but don't buy much. Consumers are tapped out finally?
We can not keep up. In particular, the demand for walnuts and pecans is fucking insane.
Seems like the 7+ billion, and growing, still like to eat. In the case of nuts, remember, these are considered a luxury in most places. So just like real estate, the richer folks are loving it right now.
How sustainable that is, is another matter.
Riddle me this; Do you consider someone with a SNAP card a "customer"? From where I sit they are a fucking liability. Eventually, the laws of physics and Nature will re-assert themselves and if you don't perform real work, then you won't eat.
California nuts may be in high demand due to drought and uncertainty? I love walnuts.
Snap users are entitled to that benefit./sarc/
My favorite is when the Snappers get all the fritos and shit and then present the frequent customer card that earns them rewards (like cash) for the food that is bought and paid for by taxable citizens. Did you know that you can also get cash from your Snapper card? You can then use that to get your rillos and smirnoff shots or lottery numbers
Heard from a friend so hearsay but a big black thug-talking woman came in this shop to buy an expensive imported canned food product that would be like zero food value in terms of nutrition, $90 using E Bee Tee. The abuse of that system is "off the hook".
A 100 years ago when I was a child ,I worked at a grocery store and learned about life. Then food stamps were paper notes. Mom would be in front buying the food, behind her 5 kids, all with a one dollar food stamp. They would buy one piece of gum and get coin change back, then mom would gather the change and buy smokes. It was easier to just sell them for 50 cents on the dollar if you wanted to buy booze
This pain that they speak of, this is for who (or whom)? All of us? The producers, the consumers?
Personally, I could go for some deflation. I would turn pieces of paper into all kinds of things at a discount!
Let's get this thing moving, have to reach a point of equilibrium again even if it is a few miles down.
Still see Brand new 2014 autos on dealer lots. Meawhile the media says the economy is great.
LOL
I wish you could see this index in its full historical extension since the '80s (Bloomberg ticker MGT2TB Index). During the '90 the index range was between 1.60 and 1.40, and during the 2000/3 recession it actually went down from 1.40 to 1.30... It doesn't look like a great indicator to me...
I wonder which sector will be the first to really crack and start the dumping (deflation)? Watch corn, there are still millions of bushels of last year's corn on concrete pads outside full silos. The harvest is rolling and notes will be coming due
Corn, like rice, is food for the peasants. Fucking irrelevant. Like rent in the fucking ghetto. Okay fine, the farmers will eat, about time to starve the fucking bankers/financiers don't cha think?
Ag steel (tractors, planters etc...) have been in a bubble of their own for several years. Cheap credit and strong prices means new toys. If farmers fart Deere, Dow, Cat ,Monasanto etc smell it. There is always a straw that breaks the camels back.
Who the F##K is buying all the cars they say is keeping the economy growing (slightly). Is it all Zero down and 84 months?
If this is the case, I got to invest in the repo business.
It's called Government Motors for a reason.
You're onto something here
Has a divergence between sales and inventories ever lasted this long before? It looks like to me we are in uncharted territory.
From 1980 to 1995 it was well above 1.5, in 1983 it reached a peak of 1.70, so to speak we are definitely not in unchartered territory...
that was the birth of supply side economics....so the tacit approval of produce produce was met with declining tax burdens and dramatically increased govt spending. probably something that will be reintroduced circe 2025
Thanks.
IMHO the media served bullshit is still being taken with a smile. I regularly chat with our CFO (electical distribution) and he seems clueless to what's happening. His last coment was that after Q3 reports come out he expects a big turn around. I talk to lots of different people everyday...99% are cluesless as to whats going on and most think I'm a nut for stacking...
Since it's taken so long just to acknowledge this...
...wonder how much longer it'll take to own the original cause (middle class jobs outsourcing)?
Decades to get here; maybe days now till it goes up.
Watch the "hold cash" stuff. That's the right call initially, but it will not last long. When the goods available disappear, prices skyrocket no matter what happens to the dollar.
And if the dollar goes after, or as a part of, THEN hyperinflation.
One more thought...Mad Max benefits no one. The more behaved we are the less we'll inspire Big Brother to react badly.
And if he does, we'll need each other to "calm" him down.
m
the dollar will be giong up dramatically at the outset of the shitstorm....the 'remedy' will be massive devaluation, helicopter money debt jubilee to most irresponsible....then the lack of goods (due to step 1, and no jubilee for producers-thus they only produce what they can sell which leads to scarcity) drives prices up up up. this inflation will be 'good' until it hits like 6% pa in the first 6 months and the fed cant raise fast enough....Bernie would do well to get a libertarian leaning vp
The real indicators of meaning are hard to track.
- Consumer defaults
The debt-based fiat monetary system is an inverted pyramid, with some (currently officially discredited) assets at the base, and successively larger layers of debt piled on top.
When the debt service costs on the largest layer at the top of the pyramid are larger than the productivity of the assets at the bottom (smallest layer) of the pyramid can support, the pyramid collapse becomes inevitable.
That happened in 2008.
Since that date CB's have essentially been delaying the collapse by artificially lowering the cost of servicing the accumulated debt, and by unsterilized (though officially sterilized...of course) money-printing to allow the banks to deny they are insolvent.
Since the 'official' institutions have CB top-cover via what essentially amounts to fraud, wherein whatever money is needed to make an insolvent institution is added to their account without any corresponding increase in the value of their assets, the collapse will start with those who have no such topcover.
Consumer and Small Enterprise Defaults.
But the bankrupt banks are the reporting entities.
The world-wide monetary system can collapse at any moment today.
All that need happen is a monetary shock that reveals the extent of current defaults.
Many invest in social media and game companies who are now realizing that they must push advertising to show some revenue. Wait until the advertising is no more than ineffective BS. Life on TWATER will end soon.
Where do service industries warehouse their inventory?
They lay them off, they are people
The impending "debt-ceiling" joke should be a fantastic event, second only to the bullshit olymics (otherwise known as the presidential election cycle).
I continue to have this recurring dream in which the CFTC and the Federal Reserve buildings are burned to the ground. My dream always ends the same way when a broadcast of the 67th "dancing with the stars" is interrupted with breaking news citing the investigation findings of the source of the combustion. "It was a pile of Federal Reserve Notes that started the blaze" says the ditzy blonde... And then I wake up.
I know part of the reason is that the consumer is tapped out but the kicker is that those of us with money can't think of another thing to buy.