Chicago PMI Beats Modestly As Respondents Get More Despondent

Tyler Durden's picture

While it is unclear today if good news is bad, bad news is good, or if economic news even matters when all that matters is how much money central planners are willing to release into the market, the just released Chicago PMI did post a modest rebound after the near record May plunge. Printing at 52.9, the number was modestly better than May's 52.7, and higher than expectations of 52.3. The question then is whether this is good or bad for hopes of more NEW QE?With 8 of 11 respondents clearly noting that business is slowing down as inventories are rising, those who are concerned no more easing will come this year can likely breathe a sigh of relief. And while most of the indices were more or less in line, the forward looking spread between backlogs and inventories (indicative of future business demand) is the highest it has been since December 2008. What happens when one has too much inventory that can not be sold? Ask NKE longs this morning.


Backlogs less Inventories:

Finally, the respondents are getting quite bearish:

  • Have reached a steady plateau of order intake and order shipments. Projections for growth this year are pretty much out the window.
  • Business seems to be a little slower in the past 2 months.
  • Definite dry patch. Hopefully, it's the Summer soft spot versus an indication of an overall downturn.
  • Business is still sluggish going into June. Total opposite of last year at this time. 30% less over the same time period as last year.
  • Order intake continues slower than it has been, but sales is still optimistic about future orders.
  • Quoting is still busy.
  • Business is slowing down to a degree.
  • With oil coming back down costs have eased a bit...The reality is prices are decreasing now. The price outlook is relatively stable; the only thing we need is some business to support our favorable position.
  • Our orders have slowed a bit, but they normally do this time of year, fuel prices even though they have dropped some lately is causing a lot of our commodities to go up in price that we purchase.
  • Raw materials keep rising as well.
  • Our inventories are beginning to increase.

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mrktwtch2's picture

short of nuke going off in new york..this market will stay up today

Cognitive Dissonance's picture

"short of nuke going off in new york.."

That can be arranged by your friendly neighborhood false flag attack town hall planning department.

Hold please.

/sarc......just in case anyone would take me seriously. We all know that the false flag department is actually run out of the CIA and various other three letter evil empires.

SilverTree's picture

Four Kilos of silver for me today!

Cognitive Dissonance's picture

Don't worry Tyler. With Europe all fixed the US will come roaring back.

It will re-couple after de-coupling.

Can't wait for the first CNBC mouth breather to mention that it is time to BTFD. :>)

buzzsaw99's picture

NKE is funny but TPX is hilarious! Robo will now explain the bear case on an up day. :when hell freezes over:

AccreditedEYE's picture

This market doesn't learn well... you can't front run the Fed in equities. If Ben's top bogey is the equity markets, YTD right now DJIA +4.72%, SP500 +7.55% and Nazz +11.30% WHERE is there room for easing? The market continues to do the Fed's bidding without them having to lift a finger. F-ing insane...

RobotTrader's picture



  1. 10:07 Brian Sack withdraws resignation from NY Fed MarketWatch
  2. 10:07 Sack to be adviser to NY President Dudley MarketWatch
slaughterer's picture

The new rider in Sack's contract: he no longer needs to draft justificatory quant articles, he only has to press the BUY button with the help of 4 NYU coeds.  

TideFighter's picture

from Chicago???

Chicago'd /SHi'Kogo'd/

Noun: 1. Wrongful or criminal deception intended to result in financial or personal gain.

2. A person or thing (see*Rhambied) intended to deceive others, typicall unjustifiably claiming or being credited with accomplishes, gains, or qualities.

Village Smithy's picture

This excess inventory pisses me. If you are a business owner and you don't have time to read ZH, and you just gather your info through the normal shill channels, you have been duped by your own government into buying (literally) into a recovery. Now you're left holding the proverbial bag.

CheapBastard's picture

Defaults and contractual breaches are soaring...people order and then refuse to pay or default....that's what I am hearing from friends who have online retail business... as written above, they have stopped ordering any more inventory....can't sell it....not even those "thingamajigs."

There was a ZH article about the Chinese defaulting on their contracts for commodities from OzLand but guess what, many people are doing it here also....the recession is not isolated to one group of one country. Remeber that old catch phrase...'The World is Flat"?....It's gonna bite us now.

Good luck with that "summer of recovery."

Kayman's picture

You get order with large corporation. You build up inventory to fill order. Large corporation cancels order. Large corporation has lawyers on retainer and says, "So sue us."

Your move...

Welcome to the real world.

CheapBastard's picture

exactly, kayman...very true....unaccountability reigns!

blunderdog's picture

It's just business.  Competition and all that.  If there were anything like morality or ethics involved, it wouldn't be business.

pauhana's picture

Wow!  Look at this march higher - to infinity and beyond.  I just want some of whatever these folks are smoking!

adr's picture

What is slow in manufacturin in June, ends up being total destruction at retail in September. Factories produced over a years worth of inventory in Q1 after they already produced enough inventory for 2012 in Q4 2011.

The channel stuffing in 2012 has been epic. Corproate retail buyers aren't placing orders for anything, and they want better margins on what they have already bought. In other words, they need to discount product to sell and they want the vendors to pick up the tab.

See in the real world Store A buys 350% of what they need to make Company B's earnings release look good, so the directors of Store A can pile into Company B's shares. The directors buy the stock and sell it after the great earnings report. It's like printing money. Then Store A buyer tells company B that there is too much inventory and they either have to take it back, or accept a 20% discount that will be split 10% between the two. When Company B must give Store A 60% margin just to get on the door, that extra 10% means they may losemoney on the goods sold. Since there is already too much inventory in retail channels, Company B must accept the terms. The next quarter may not look so good. This just happened to Nike.

There is your new normal business lesson of the day. Nothing is real, the entire economy is a scam.

Shizzmoney's picture

My company is actually buying BACK stock to resell in piece meals (at a discount) to those same companies, due to our shit not selling in big box retail stores.

Yet my company's stock is up around $1-$2 dollars (corporate buy backs FTW!!!111).

Hype Alert's picture

Soft sales, declining backlog and rising inventories.  It's just a dry patch.  Time to party!

MFL8240's picture

No employment, no growth in Europe, Asia and the US and the PMI is up?  Bullshit, this is more from the sewer that gave us Obama.

Snakeeyes's picture

Big deal. Employment still sucks, consumers are losing confidence. Throw in the job killing, liberty killing Obamacare and we have a disaster on our hands.

Obama's regulation mindset - Say hello to my little friend!