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And Now The Inventory Accumulation "Miracle" Is Over
Last week we pointed out that the export miracle leg-of-the-global-growth stool had been kicked out. Today , the second leg of the stool of main GDP drivers appears to be splintering as Wholesale Inventories dropped MoM for the first time since Dec09 (-0.1% vs +0.5% expectations). We patiently await LaVorgna's GDP downgrade...
Chart: Bloomberg
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senior offical lies-man rumor imminent
the euro is done; any shorts who held on from a 1.32 to 1.42 move is never giving up
"...the stool of main [nominal, not real, but rather, driven purely by fiat conjuring] GDP drivers..."
Also known as Bernank droppings.
Don't shit on the nation and then tell everyone that shoveling that shit into barrels and hauling it away creates shovel ready jobs, Bernank.
'Last week we pointed out that the export miracle leg-of-the-global-growth stool had been kicked out.'
BDIY is grim indeed.
While Italy is in the spotlight China is in slow-mo implosion.
This stat always confuses me. Isn't it a good thing that inventories drop? That means stuff is selling at the retail level thus reducing wholesale inventories which then leads to restocking. Can anyone explain this seeming contradiction?
It's the nature of consumer spending that decides the positive vs negative ramification.
Big consumer spending that is going for gasoline priced 30% above last year's price is not really big consumer spending.
And thus inventory rise, in the absence of consumer demand, is the only source of demand for factories. It's telling GM to produce cars to pay their union workers and then shipping the cars to sit on dealership lots, unbought.
That has been the only source of manufacturing demand. Not end demand, inventory demand.
If they were restocking, the inventories wouldn't drop.
Try thinking in dynamic terms. There is some sort of normal amount of sales necessitating a normal amount of restocking. If there is channel stuffing ongoing, inventories rise far above normal levels and give the illusion of increased economic activity. But this can last only for so long before the financial cost of the channel stuffing becomes too high. Normal levels of sales lead to a reduction of inventory while production falls because there is no need to replace inventory, since inventory levels were stuffed way too high. Statistically, there is a fall in production activity, not a gain.
Tyler has presented stats in the past showing that in many industries inventories had surged to very high levels. Accordingly, the end of channel stuffing does not mean that restocking will occur. It only means that production will decline, augmenting the decline which follows a drop in exports.
Means nobody is making anything, means the following.
No salaries
no insurance payments
no car payments
no home payments
nothing to collateralize against
Nothing extra to sell.
Ships stay in dock,
Bribes drop off
Crews for those ships are laid off
The truck drivers aren't needed (regardless of the government saying that there is a shortage of truck drivers)
gas isn't purchased
auto insurance costs drop.
Product insurance drops.
It's an indicator of a six week process that shows how "awesome" Christmas retail is going to be.
Basically that 1200 jobs FedEx announced yesterday? Don't count on that happening. At least not 1200 jobs.
So low/no inventories means need to restock yes?
Only if there are orders.
It is a direct consequence of consumer confidence indicators.
The "hope" is people will kill each other in the Black Friday nonsense and drive the anemic sales up. Otherwise all indications and interviews regarding this years Xmas is a 20-30% drop in what people will be spending.
The "new" thing is to just have supper with family and not send presents.
So you want good numbers, hallmark will do well enough this Xmas. Everything else is...well, forget about it.
Joe might still be at the bank trying to figure out why his check didn't clear last week after that jobs prediction. Wishful thinking I know.
Now watch! The market will melt up on this 'great' news.
Moving right along now.
No problem, just another blip that can be taken off the screen.
There are numerous solutions here, to wit:
Oh the many ways you can skin a cat when you have tens of thousands of government financial analysts pouring over figures looking to turn a turd into a hot dog!
Excellent ideas. The Commerce Dept. is loaded with people expert at doing just this sort of thing. Gives them a nice break from the porn.
Oh no, produtivity drops remarkably without a balance between porn/work.
Enter Dual Monitor Workstations for ALL gov'ment employees justified by yet another analyst via proof of improved efficiency with unlimited access to porn.
Offiicially, of course, all departments have implemented the Productivity Improvement Movement via Porn Subscriptions. Net result, much more number crunching and many more ways to get minds and money changed in line with government needs.
In other words ... without P.I.M.P.S., we'd never get screwed!
Well they "Rumor Inventory" is fully stocked. They will be releasing some in a couple of hours.
Hmm, Market way down and Au green. The Robo formula had died yet again...
Slowly the fictional foundation is washed away by the crashing waves of realty.
Reality. Realty on the other hand... not so much.
Looks like they are trying to save that house just like the global economy, stick a 2x4 under it. That'll work.
OMFG ... I MISSED that 'support strut' under the right foremost corner of the house ... AWESOME spot BlueS ... and an even more PERFECT visual of what's happening with debt!!
Thanks... 2+ pots of coffee and I'm as sharp as a tic tac.
No the architect is drawing up plans to build a shiny new mansion spot on the shambles whereof.
welcome to you nu.folkz, blue_s and I_notMe
++^C_D^++
tyler may want to purloin this pic and keep it w/ the "deer in the headlights":
"stick save", BiCheZ!
Is that the headquarters of the ECB ... or Big Ben's house?
Your avatar rocks.
Thx ... I try to help :~)
shit, that was a beautiful house.
Looks like it was built with adult Lincoln Logs...
come over for coffee, Y_W_K; fresh pot brewing
use the back door, ok?
What??!??! There's no water there! Some duct tape and a few bits of reinforcement and it's all good! That "alledged" water was clearly transitory and unusual!
The situation is contained. That looks like a nice house. It probably has a nice view too, right on the water. The sunrise/sunset is probably beautiful. How much do you want for it? I can't go higher than $1.5 mil.
Sold to the sucker with the great hair. :>)
you can go higher. think big: record low interest rates. there is no way to lose. take advantage of this historic opportunity to secure the future you deserve.
......and nobody couldof possibly seen this coming ;)
Meanwhile, Joe American, iPad in hand, prepares to open the front door of his secluded mountain retreat and step outside to enjoy a lovely morning sipping Starbucks on his front porch while catching up on the financial news at cnbc.com.
Gotta be somewhere's around Seattle. My old town! Hundred years of houses sliding into the Sound, and they still build 'em like that.
Nothing to worry about here, just put on a new roof.
Transitory, no worries
Simple...it was all of those pre-Black Friday sales emptying shelves.
The orders to replace stock will be coming in any second.
Any second now....
I am not sure you have ever waited for anything patiently Tyler :)
You guys really are the best. I want to post the video of "the Black Knight" of "Search for the Holy Grail" fame...but I don't know how to do it from my phone. "just a flesh wound!" Zero Hedgers! "Just a flesh wound"!
Here ya go. http://www.youtube.com/watch?v=zKhEw7nD9C4
ISDA rules that's not a foundational event.
He really does not know much about the Market. But, he is a snappy dresser. And, I like all that gooo in his hair, it can be used to fix a squeaky chair or door.
Small caps are going loony. Rumor is imminent
Panic is over already?
This deflation scare cycle has lasted longer than expected. But dont you guys remember the inflation hysteria last spring?
Take on risk when deflation/collapse fright is at its highest.
Risk off when inflation hysteria comes back.
It has worked great so far.
http://globaleconomicanalysis.blogspot.com/2011/11/spotlight-china-shipping-downturn-hong.html
DOW chart reveals very overextended price action and another Wile E Coyote scenario...
http://stockmarket618.files.wordpress.com/2011/11/2011-11-09_dow_4_zb.png