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Bursting The Permabullish Bubble: 11 Out Of 13 Economic Indicators Have Missed

Tyler Durden's picture


Back in early 2011, even as the global economy was at best flatlining, the one goalseeked explanation to justify a levitating stock market (which was rising solely due to the short-term effect of transitory QE2 liquidity), was soaring corporate profitability (which only lasted as long as companies could trim some residual SG&A fat; they have now cut into the bone in terms of layoffs). This time around, with corporate margins having peaked, there had to be some other validation to explain away the "narrative" of the latest bout of central bank infused stock market levitation: it just happened that this time it was once again that old faithful, and always wrong, justification - decoupling. After all one just has to listen to 5 minutes of CNBC to hear it taken for granted that the US economy is doing oh so swimmingly. Here is a newsflash for all the permabulls out there. It isn't. Not only that, but as David Rosenberg highlights, 11 of the 13 most recent economic indicators have missed consensus expectations, and one can demonstrate that the other 2 - car sales and jobs - have been simplistically manipulated into a favorable outcome. So now that the market is turning over, with Europe and China both solidly into contractionary territory, with Corporate profit margins turning over, and with US data missing virtually every print, how long until the permabullish validations all go up in smoke, and the one true source of stock market "nirvana" - cheap money - is once again in high demand from the central planning cabal. In turn, the Chairsatans of the world will do as requested, as they always do, however not with crude (the real one - Brent, not that Cushing-buffered substitate) at $125, and with the risk that Israel may attack Iran any day now, with or without the blessing of the Fed's Class A director.

From David Rosenberg:

It is truly amazing how many people out there believe the economy is improving just because the S&P 500 managed to get to 1,400 this past week. The market doesn't always get it right.


But a look at the data flow suggests that beauty is in the eyes of the beholder.


Much emphasis is being put on the employment data. Outside of that, only auto sales really managed to surpass expectations regarding the U.S. data flow that has been released since the start of the month.


Meanwhile, personal income, consumer spending, ISM, net trade, NFIB, IBD/TIPP economic optimism, industrial production, NAHB, housing starts, University of Michigan consumer sentiment, and now, existing home sales, all came in below consensus estimates. So 11 indicators have missed, just 2 have beat, and supposedly we have some sort of nifty growth spurt going on. Incredible.

Speaking of the "auto sales recovery", we have previously demonstrated that this is purely on the back of yet another record month of channel stuffing by GM. Alas, just as the AOL coasters, pardon AOL OnLine activation CDs, channel stuffing always ends up in catastrophic failure. And this time around we doubt that the US population will have the stomach for yet another bailout of the insolvent automotive company whose crowning post reorganization moment has been the retraction of the Chevy Volt.

As for the other "beat" - jobs: why it is simply a case of applying the wrong seasonal adjustment factor to the months of one of the warmest winters on record.

The current edition of Maclean's runs with this on its front cover: The Year That Winter Died. This is the warmest winter in 65 years and with the least amount of snowfall as well. In fact, going back to 1960, I found a dozen times when it felt a bit like March in February. This past January was warmer than each of the prior two Februaries and four of the past five; January felt like February; February felt like March. And somehow nobody outside of us, the economists at my old shop at Merrill and NY Fed President Dudley have figured this out — how the data have been completely distorted by this weather pattern.


We estimate that if we had applied the February seasonal factor to this past January's raw payroll data, and if we had applied the March seasonal factor to the February data, both months would have shown a decline! Instead, the world buys into to the reported data that suggests that payrolls surged 511k in the first two months of 2012 (even better, the Household survey shows +1.28 million ... the best in 12 years!). Sure ... and the Leafs are making the playoffs.

The take home message here is that the redirection narratives (those displacing the true cause of the market ramp: CTRL+P) explaining the market rise have now been disproven. Which means that the magician behind the curtain is about to be exposed, and the only thing that can prevent that is for more printing to distract those who are more than happy to be distracted with yet another 5-10% rise in stocks on the back of nominal currency devaluation.

Because now that the permabullish bubble has popped, woe to the market unless the Consortium of Chairmen does not step right back in, and further 'expound' the already exponential chart of central bank balance sheets...

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Thu, 03/22/2012 - 18:43 | 2282017 nope-1004
nope-1004's picture


Car sales (GM channel stuffing) and BLS (employment farce) are both CONTROLLED by the govvy, so ya.... should be 13/13.


Thu, 03/22/2012 - 18:45 | 2282025 Mr Lennon Hendrix
Mr Lennon Hendrix's picture


Thu, 03/22/2012 - 19:33 | 2282104 economics9698
economics9698's picture

Green shoots.

Thu, 03/22/2012 - 19:59 | 2282146 UP Forester
UP Forester's picture

The Leafs are making the playoffs!

Thu, 03/22/2012 - 22:05 | 2282396 SwingForce
SwingForce's picture

Please, how NOT?

Thu, 03/22/2012 - 22:38 | 2282444 markmotive
Thu, 03/22/2012 - 23:14 | 2282525 sof_hannibal
sof_hannibal's picture

Print until this whole shit house goes up in flames. I say increase the money supply until the scam can't be hidden any longer; let them eat green backs

Fri, 03/23/2012 - 03:01 | 2282747 AldousHuxley
AldousHuxley's picture

only 1 economic indicator is important....


money supply in the system.



Fri, 03/23/2012 - 04:11 | 2282768 Spirit Of Truth
Spirit Of Truth's picture

Yep....what does reality matter when you can print money? After all, when you run out of money, only then does "reality hit"....right? Unless, of course, you are a target of those who don't share your value for "money".  Then you're simply dead.

Thu, 03/22/2012 - 19:15 | 2282070 ihedgemyhedges
ihedgemyhedges's picture

I assure you, my WIFE is in control of channel stuffing.  I tried to stuff the channel last night and was told "No!"......

Thu, 03/22/2012 - 19:26 | 2282090 spinone
spinone's picture

Rodger that

Thu, 03/22/2012 - 19:34 | 2282108 ihedgemyhedges
ihedgemyhedges's picture

Thanks for the affirmation spinone.  Today, as I knew, my "other dealer" had no problems accepting more inventory........

I highly suggest having a second dealership as a backup plan.........."backup" being the key word...........

Thu, 03/22/2012 - 20:22 | 2282196 ihedgemyhedges
ihedgemyhedges's picture

Guess I got dinged by a pissed off married woman.  If so, I'm USED TO IT!!!!!  I just happen to be a fan of Bill Clinton.  And given Hillary, well, you can probably understand the situation I'm in.........................

Thu, 03/22/2012 - 21:17 | 2282312 Miffed Microbio...
Miffed Microbiologist's picture

Oh dear...someone may need to, hummmm, work more on their technique? Mr Miffed just needs to smile and crook his finger and he's counting ceiling tiles. No, I didn't ding you, post is too sad to ding. Seems like there are lots of frustrated males at ZH. Good grief guys, there's one thing this government hasn't taken from you! Oh wait....my bad.

Thu, 03/22/2012 - 21:48 | 2282374 ihedgemyhedges
ihedgemyhedges's picture

2 words to describe you:

Virgin and naive.................now please go to the Justin Bieber website and enjoy.............

Thu, 03/22/2012 - 23:15 | 2282526 Miffed Microbio...
Miffed Microbiologist's picture

Whoa...don't know who Justin bieber is. Being 51 and not watching tv must have left me a bit behind in the times, don't think I'm missing much. Can't say I'm a virgin either...wow total strike out. Well, just got back from the shooting range, gotta clean the Glock and wash up. Better luck next time.


Fri, 03/23/2012 - 09:35 | 2283112 kekekekekekeke
kekekekekekeke's picture

stupid to call someone else a "virgin" when you're the one who can't get laid

Thu, 03/22/2012 - 20:10 | 2282170 Silver Bug
Silver Bug's picture

Don't worry the Bernake can keep things going forever right? right? I think not.



Thu, 03/22/2012 - 20:44 | 2282235 LongSoupLine
LongSoupLine's picture



All I know is PCLN is a super buy here at $700 according to CNBS...and they say it's going over $1,000.  Shit, good enough for me...I'm all in balls deep.

Thu, 03/22/2012 - 20:59 | 2282274 ihedgemyhedges
ihedgemyhedges's picture

"...I'm all in balls deep"

Oh really, does your significant other know you're laying the wood to Priceline???????

Thu, 03/22/2012 - 22:50 | 2282466 stocktivity
stocktivity's picture

Did these expert economists adjust their monthly data down to reflect an extra selling day in February?  An extra day to buy cars, homes, retail products, ect.....probably not.

Thu, 03/22/2012 - 18:44 | 2282023 A Lunatic
A Lunatic's picture

Perma Broke, Bitchez.

Thu, 03/22/2012 - 18:45 | 2282026 Mr Lennon Hendrix
Mr Lennon Hendrix's picture


Thu, 03/22/2012 - 20:01 | 2282153 UP Forester
UP Forester's picture

Perma-grin \________/

Thu, 03/22/2012 - 20:38 | 2282227 Crab Cake
Crab Cake's picture

When the tech bubble had finally popped well and true, and the floor was giving way, what happened?

9/11 happened, followed by an energy grab. Afghanistan first bc its a roadblock on the route to power projection in the ME for Russia and China. Iraq second because they had oil and it was easy.

The Chairsatan will not be allowed to let the eltes be well and truly exposed, the naked emperor. Nope, there is a false flag coming, and it can be seen a mile away. World War 3 is on the docket.

The bankers, corporations, and corrupt politicians are the real TERRORISTS. Not a comfortable thought, but dont worry you are not going to actually DO anything about it, are you?

Very few of you realize we are already at war.

"I pledge to defend the US Constitution against all enemies foreign and domestic." Sound familiar? Fuck the cops, politicos, and military for forsaking their oath. They are traitors, with all that word entails.

Thu, 03/22/2012 - 22:42 | 2282456 MSimon
MSimon's picture

Oath Keepers

Thu, 03/22/2012 - 23:29 | 2282549 Crab Cake
Crab Cake's picture

Oh yeah, the oath keepers have made a real difference....

Thu, 03/22/2012 - 18:52 | 2282032 Cursive
Cursive's picture

Tax season is a boon in the car business.  You can't get financing?  Then you scrape together whatever you can find, wait for your tax refund and then grab the best deal you can find.  This also works for people who can afford financing, but not a down payment.  After May, the salesmen are back to having to earn their commissions.

Thu, 03/22/2012 - 19:15 | 2282069 ReallySparky
ReallySparky's picture

Recently I have been in the market to purchase a used pick up for my hobby farm.  So after scouring the classifieds, craigs list and determining that all the private sellers were buried in their vehicles, I started looking at used inventory at dealerships.  I am here to tell you, they are choke full.  GM was running a deal here in the mid-west on pick-up trucks 0% for 72 months, also I think there was some cash back too. Who in their right mind would finace a vehicle for 6 years?  Good Grief.  I asked the salesman if the new trucks were moving, he said, no not really because of gas prices.  Most folks were bringing in their 4 door trucks, and trying to trade down, but they couldn't do those deals because the margin was not in the new smaller cars.  Most of the used trucks that I inquired about were traded in on a smaller vehicle.

Gas prices are biting, and all folks are buried in the cash for clunker units.

Thu, 03/22/2012 - 19:25 | 2282087 Cursive
Cursive's picture


I'm in Louisiana/Deep South.  We just had our best February ever for car sales, but our economy does not track the broader American economy and our entire local economy gets a huge boost from the EITC and tax refunds in general (the average person really appreciates Uncle Sam's forced savings).  For instance, we had a porter at the wash rack who walked off the job becuase he got an ~$8000 tax refund check.  That will buy you a lot of Mad Dog 20/20.

Thu, 03/22/2012 - 22:16 | 2282411 pursueliberty
pursueliberty's picture

Car sales are very dependent on location.


Just to the north of you we sold 35% more new cars YOY for the month of February.  That is a pretty good sign. 

Of course, 4 of the 5 top sellers were full size american pick up trucks, with the camry coming in 3rd.  I don't think fuel prices took any sales away last month, but it will be another 3 weeks until I see March numbers.

Fuel prices sure haven't affected used prices in the slightest.  In Summer 08 I purchased a 06 Dodge 2500 diesel with 20k miles on it for $20k.  I'm about to sell it with 120k and a couple dings for $15k.  I'm seeing a few 07-09 trucks asking within $5k of new pricing for that year model.  I'm friends with a local GM of a honda dealer.  He cannot get good used cars for his lot without paying well over loan value.  His new cars sales have been pretty average this winter.

Thu, 03/22/2012 - 19:32 | 2282103 infinity8
infinity8's picture

hobby farm? you gotta splain that for me.

Thu, 03/22/2012 - 19:42 | 2282117 Big Corked Boots
Big Corked Boots's picture

Farming for fun, for excercise, for good food, and maybe to ride ol' thunder for an hour a week.

Profit is NOT part of this plan. Ask me how I know.

Thu, 03/22/2012 - 20:07 | 2282166 A Lunatic
A Lunatic's picture

Well that explains it.........I've been hobby investing.

Fri, 03/23/2012 - 00:10 | 2282612 RockyRacoon
RockyRacoon's picture

That makes my whole life a freakin' hobby.

Thu, 03/22/2012 - 22:38 | 2282447 Luffk73
Luffk73's picture

If your looking at a used GM truck, have the brake lines checked. The brake lines on my 2003 Sierra have to be replaced because they rusted away.

Thu, 03/22/2012 - 18:51 | 2282034 BORT
BORT's picture
New Moon (GMT) Last:

7 hrs and 13 mins ago


Just saying

Thu, 03/22/2012 - 18:53 | 2282036 quidam
quidam's picture

Timothy Geithner-

 "We are encouraged that GM has repaid its debt well ahead of schedule and confident that the company is on a strong path to viability."

Thu, 03/22/2012 - 21:19 | 2282317 Meremortal
Meremortal's picture

Timmy just said GM is not a viable company. Interesting.

Thu, 03/22/2012 - 18:53 | 2282037 putbuyer
putbuyer's picture

What about that secret email weeks back saying that Greece will default on the 24th?

Thu, 03/22/2012 - 21:23 | 2282325 Meremortal
Meremortal's picture

If it's secret how do you know about it?

Thu, 03/22/2012 - 18:53 | 2282038 absente reo
absente reo's picture

The SPX is probably most highly correlated with jobless claims.  I believe the index will follow jobless claims.  As long as they trend lower, SPX will trend higher.


Thu, 03/22/2012 - 18:54 | 2282039 mr_T
mr_T's picture

Silly rabbits have you not learnt anything these last 3 years... fundos don't matter. Recovery is hat trick away....QE3 biachezzz...

Thu, 03/22/2012 - 19:02 | 2282050 kito
kito's picture

qe3 is a great mantra......a bit overused already....perhaps you can try ohmmmmmmmmm................

Thu, 03/22/2012 - 19:23 | 2282085 mr_T
mr_T's picture

Ohmmm? WTF you learn that at some boys club ashram?

Thu, 03/22/2012 - 23:22 | 2282536 MSimon
MSimon's picture

I like ohmmmmmmmmm's law.

Thu, 03/22/2012 - 19:06 | 2282055 noob
noob's picture


Thu, 03/22/2012 - 20:04 | 2282161 UP Forester
UP Forester's picture

They're building a THIRD Queen Elizabeth?

Thu, 03/22/2012 - 22:12 | 2282402 noob
noob's picture

dirty bird

Thu, 03/22/2012 - 18:55 | 2282042 transaccountin
transaccountin's picture

We estimate that if we had applied the February seasonal factor to this past January's raw payroll data, and if we had applied the March seasonal factor to the February data, both months would have shown a decline!


If this is the case, can you explain when the jobs numbers will be bad? Since we are taking jobs from the future due to warm winter, when will we see the bad numbers?

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