80% Of The World's Industrial Activity Is Now Contracting

Tyler Durden's picture

Tomorrow's NFP may or may not beat expectations, following some modestly better than expected employment-related data points (then again last month NFP was again supposed to come in solidly above 100K only to cross below the critical threshold), but keep one thing in mind: with the average June seasonal adjustment being a deduction of over 1 million jobs, several tens of thousands in marginal absolute job numbers + or - will be nothing but statistical noise. Furthermore, with seasonality playing such a huge role tomorrow, it is quite likely that merely the ongoing seasonal giveback will result in June being yet another subpar month. And that does not even take into account the quality assessment of the job number, which if recent trends are any indication, will be another record in part-time jobs at the expense of full-time jobs. Yet no matter where the NFP data ends up, the following chart from David Rosenberg puts a few thousand job into perspective, showing that regardless of how many part-time jobs the US service industry has added, there is a far greater problem currently developing in the world: "We now have 80% of the world posting a contraction in industrial activity." This is the second worst since the great financial crisis and only matched by last fall, when in response Europe launched a $1.3 trillion LTRO and the Fed commenced Operation Twist. Now except the occasional rate drop out of the PBOC or modest QE expansion out of the BOE (not to mention the Bank of Kenya's rate cut earlier), there is no real, unsterilized flow of money coming from central bank CTRL-P macros to stabilize the global economy. Which leaves open the question: just where will the latest spark to rekindle global growth come from? And no, 10 hours a week waitressing jobs in Topeka just won't cut it.

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orangedrinkandchips's picture

Why do I get the feeling the number tomorrow will be fixed and create a big short squeeze.


It's common know that things suck balls


nobusiness's picture

because we have seen it time and again out of these data manipulating scum.  When times get tough you need to lie

Stock Tips Investment's picture

In the coming months, the European authorities and the Fed will do its "best efforts" to show a global economic situation in good shape. Save time. That seems to be the goal at this time. How long? ... for what? just to try to invent something else that allows them to earn a little more time. Do not forget that reality, at the end of the day, always prevails.

Manthong's picture

Well, at least with their 35 hour work week, six weeks of annual vacation, and retirement at 60, the French will be able to relax through this next little downturn.

Kitler's picture

"We now have 80% of the world posting a contraction in industrial activity."

Ha. Ha. Ha.

Looks like the joke is on all those nations we outsourced all our industrial production to. Sucks to be them.

Now all we need is for Ben to print us up some more GDP so we can leave these clowns in the dust.

dexter bland's picture

Yep. This is a much bigger problem for China than the US. Overcapacity which they are still adding to and can't generate the domestic demand to support it. They will run out of space to stockpile all this stuff.

"just where will the latest spark to rekindle global growth come from? And no, 10 hours a week waitressing jobs in Topeka just won't cut it."

A demeaning definition of the service sector, you might include IT, communications, finance, education, media, tourism, healthcare, retail, wholesale, transport, legal, arts/recreation/culture, government, pharmaceuticals, engineering, armed forces etc. Mining, ag and construction are also included in the non-mfg ISM survey. Manufacturing is less than 9% of the US work-force these days. Machines are better at making stuff, but they give a lousy hand-job.


Gief Gold Plox's picture

Your post got me thinking and it seems to me that a full out financial collapse would be best orchestrated in the middle of Northern hemisphere's winter. Several reasons. Snow, wind and low temperatures deter the masses from protesting, the effect of empty grocery shelfs is amplified by the fact that no food can be grown locally en mass, people in metropolitan area are extremely dependant on infrastructure and will chill-the-fuck-out as soon as they're presented with a few warnings in the form of black-outs and heating reductions. Late December would be perfect as the banks can be "closed" for seasonal holidays without much suspicion.

What the hell, indulge a few nut-jobs and do it on the 21st.

hettygreen's picture

If it's anything like last winter (what winter?) your thesis might be in trouble.

As long as power reaches the tv set things should be okay.

Skateboarder's picture

Winter 2011/2012 was like a continuation of Fall 2011. I was thoroughly disappointed with the weather machine.

jeff montanye's picture

g gold p: your idea is intriguing but what tptb are now doing is looking less and less like orchestrating. 

Abitdodgie's picture

The Feds charter is up on the 21 of Dec 2012, they will want there money back , hope you dont have a mortgage.

slaughterer's picture

I have a sick feeling in my stomache that--with either a gigantic miss or a gigantic beat--the market will squeeze above ES 1400 tomorrow on some "big bang" tit headline. 

Village Smithy's picture

My sentiments exactly but you beat me to it.

hettygreen's picture

Apart from entertainment value (and that's no reason to have an upset stomach) who fucking cares? Shorting this market, given the absence of retail, absence of any real panic engendering fear (yet) and extremely tilted playing field and you deserve an ass pounding. None of these ETF short bets have a chance greater than a lottery ticket of paying off in this type of environment anyway. Want to see true price discovery? Long or short, just pick up your marbles and go home...unless someone is forcing you to be in this totally rigged market I say fuck it and the government coddled HFT horse it rode in on.

Village Smithy's picture

But this market is so FUBAR'd who knows what would cause a short squeeze, a miss or a beat?

slaughterer's picture

Either/or: it does not matter anymore.  It will be the Europeans taking their deposits out of the ECB to buy AAPL and NFLX tomorrow. 

Miss: QE3, fuck yeah!

Beat: Recovery, fuck yeah!

J 457's picture

Told ya, smoooothe sailing thru mid to late August.  Earnings will be "better than expected" later this month and EU will cool down, as will Iran and Syria.  SPX 1,400, or maybe a bit higher, then the trap door opens with another US debt downgrade and more budget impass as the Repubs make one last effort to sink Obama in Nov.  Revist 1,150 before Ben steps in mid-late Sept.

N. B. Forrest's picture

Got to get our communist dear leader re-elected.

Quinvarius's picture

The bankers got theirs.  Everyone else can suck it.  All you have to know is that the Fed has two mandates:  1.  Bank profits.  2.  Government spending.  The economy that they wreck in the process of supporting their dual mandate is of no concern to them.

q99x2's picture

But it is different this time because the stock market keeps climbing higher--as if all by itself.

SAT 800's picture

It always climbs "all by itself"; and it's always a surprise when it starts down. What you don't understand is that your various mental models and schemes and "understanding" of the news don't model anything; they are just human psychological machinery idling. People have to have an "explanation" for things, and if you can pretend that your "explanation" is "right"; then you get to feel "smart", which is sort of an extra bonus, but it's all nonsense.

Sudden Debt's picture


francis_sawyer's picture

If someone handed me $1 million right now in an electronic trading account & said...

"Here... Make a bet with this based on the NFP number tomorrow... If you make a profit, we'll skim 50% off of that to fund 'false flag' operations in the ME & you keep the rest... If you LOSE, you won't have to pay anything, but the amount of your loss would get entered into a ledger & heaped on the national debt to be taxed out of peeps later..."


I'd say "FUCK YOU"...


Quinvarius's picture

We have established you are not Jamie Dimon.  He would have taken that bet and asked for another 10 million so it could be bigger.

azzhatter's picture

Dimon would leverage it x 50 and bet

LawsofPhysics's picture

Dimon would leverage it as much as he could, far more than 50x.

francis_sawyer's picture

& probably lose... (but based on the arrows ~ I guess that makes him a HERO)...

Oh well, the little people can pay...

Sudden Debt's picture


I WOULDN'T! sure I'd take the money!
everybody would!
But it's up to the govenrment to NOT ALLOW IT!
don't walk in front of a bear with a honey pot! he'll just take it. it's in his nature. just like greed is in the nature of humans.

LawsofPhysics's picture

My response would be, which primary dealer do you represent asshole?

SAT 800's picture

If you don't have anything sensible to say, you can always remain silent. He merely reminded us of the nature of reality; hardly a justification for being called an asshole.

SeattleBruce's picture

I think he was referring to the hypothetical presented, not the poster...

Sudden Debt's picture

look at unemployment numbers that are down....
Kids summerjobs that went to grownups who need a income and are taking kids jobs... 2012.... nice...
it also means that gadget sales will be down in the comming months.

Shizzmoney's picture

Eh, the gadgets will be fine.  That shit continues to deflate, especially if the cell company can get you to renew the contract.

It's the rent that I worry about......

slaughterer's picture

Rent and landlords no longer matter with all those thingamajigs keeping the homeless happy.  

AlaricBalth's picture

I like my IPad with some fava beans and a nice Chianti!

SAT 800's picture

"The gadgets will be fine" People who are worried about then rent, buy less gadgets. Try think sometime, it no gon broke the head, bro.

MrBoompi's picture

When all else fails, lower your expections to the point where the numbers always come in better.  Have you ever seen a dumber way to evaluate anything?



Citxmech's picture

Hey, if it taking the Titanic 4hrs to sink, and you project it will take three - just work your projections a few more times and she'll float - problem solved!

Village Smithy's picture

Obviously the author didn't get the memo indicating that an "adjustment " to the seasonal adjustment was being made and this month  only 100,000 jobs would be deducted.

reader2010's picture

Nice porn! It looks like everyone needs to jerk off by now.

Debugas's picture

classic Karl Marx's desribed phenomenon - capitalism overproduction crisis which in reality is a lack of payable demand crisis due to deficit of money

LawsofPhysics's picture

So infinite growth and production isn't possible after all. Say it isn't so.

RobotTrader's picture

Dow should be at 8,000, not 13,000


What happens when things improve?

slaughterer's picture

When things improve, the Fed raises rates, the US goes bankrupt, the market plunges.  Easy as that. 

oddjob's picture

Speaking of Netflix, its up today 13%...only another $225 per share and you'll be even steven.