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Chicago PMI Misses As Survey Respondents Warn Oil Price Shock "Tipping Point Fast Approaching"
As expected, the latest economic data point, ahead of what we now believe will be an NFP miss, the Chicago March PMI, has come and gone and it was merely the latest in a long series of misses. While the headline disappointment was modest, printing at 62.2, below expectations of 63.0 and down from 64.0, it was at the subcomponents that the pain was most acute: New Orders dropped from 69.2 to 63.3, Prices Paid soared from 65.6 to 70.1, the highest since August, any growth focusing again on inventory build up - hence hollow - from 49.6 to 57.4, the largest gain since December 2010 as the restocking continues furiously in what appears forever, but most importantly, the Employment Index which slid from 64.2 to 56.3, the biggest drop since February 2009, and virtually all job gains in 2012 have now been given up. Yet the biggest caution was not anywhere in the indices, but in one of the survey responses: "Tipping point for oil pricing and impact on raw materials and Total Cost of Operations (TCO) is fast approaching." Once the tipping point for oil comes and passes, that's the ballgame, and the only option for the Fed will be to create another Lehman-like deflationary collapse.
PMI Employment Index:
And discrete responses:
- The last few weeks our orders are up compared to previous months, hope this is a good sign for months to come.
- We have a big issue as related to available capacity in the foundries. The availability of trained machinists is still a serious issue.
- Our business isn't bad but we are not booming.
- Real estate lending remains weak. C&I lending beginning to improve but is very competitive. Small businesses remain weak.
- High oil prices are having a negative impact on most chemicals and on freight costs. Major commodities are costing more because of higher fuel prices.
- Some key suppliers are quoting shorter lead times because of their decreasing backlogs.
- New orders were very light this month but our backlog may have discouraged some of those looking for short lead times.
- Tipping point for oil pricing and impact on raw materials and Total Cost of Operations (TCO) is fast approaching.
- Aluminum lead times have jumped.
Full report link.
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Wave the wand! Drop the price Blammey!!
no no no
Bloomberg told me this morning that the American consumer has adjusted their lifestyle to accommodate $4 gas by moving closer to their workplace and buying energy efficient cars and Bloomberg also told me that what American's saved on heating costs this mild winter will offset higher gas prices.
The pain endured once or twice every week filling up will soon eclipse any memory of the light winter. It already has for me at least.
OT Visa, MasterCard warn of 'massive' security breach.http://krebsonsecurity.com/2012/03/mastercard-visa-warn-of-processor-breach/#more-14393
Put your OT threadjacks in the response box at the bottom. People have enough to read here already. Better yet, send it to Tyler as a possible article.
Putting it so it stands out at the top is dickish and gets you on "The List" (congrats).
my friend's aunt makes $72/hr on the internet. She has been without work for six months but last month her payment was $19183 just working on the internet for a few hours. Here's the site to read more ..... http://lazycash9.com
lol!
Bernanke & The Gang of Thieves, fronting for the Crony Capitalists (aka Socialists), who have a heavy concentration in the banking sector and on Wall Street, will just keep pumping liquidity (from 8.7 trillion of 'electronic credits' so far), and they will be Heroes again, if even for one day, before the shit collapses.
After all, there are no trade-offs to blowing what quite possibly could be the largest simultaneous bubbles in equities AND bonds (neat trick that is...), as the prices of everything from gasoline (and anything oil-derived, which is most things) to food explodes higher, because everyone knows that producers can merely keep raising their prices and consumers can keep buying the same real or even greater amounts of output at said higher prices (with stagnating or falling real wages and massive structural unemployment/underemployment coupled with unsustainable sovereign deficit spending), and that demand destruction is all a big myth. /sarc
As The Atlantic and Time Magazine have rightfully opined, The Bernank is a true Hero who has saved the economy by temporarily inflating massive bubbles, ala kick the can, in equity and bond markets, at the cost of poundng producers and consumers into deleveraging oblivion.
Ben Bernank Blows Big Bubbles. Brilliant!
Let's see what awaits the world now that the foreclosure pipeline is unfrozen (just got off the phone with someone in the major league know 3 minutes ago on this subject) and now that Europe and PIIGS are unsaved once again.
But we are an obese nation, so higher prices are actually good, they mean we will consume less, lose weight, and save Obamacare $ in the future.
Well, if weight loss via higher prices is your thing, then the CME is doing your bidding on soybeans. Just check that front running chart on those beans this morning.
most interesting, always good to have a perspective reminder.
http://stockcharts.com/h-sc/ui?s=$SOYB&p=D&yr=2&mn=11&dy=0&id=p69732681014
http://stockcharts.com/h-sc/ui?s=$SOYB&p=D&yr=0&mn=5&dy=0&id=p69732681014
You mean money I don't spend isn't "income?"
Bloomberg takes the cake for stupidity. What choice is there? Stay home and stop working because Americans can't afford to commute in their old cars anymore? People have to work. I know, its shocking! The ivory tower idiots have a real hard time comprehending that main street Americans HAVE TO ADAPT or they will simply DIE. But how is that in any way shape or form POSITIVE or BULLISH?
I think the reality is that a lot of driving is descretionary. That goes first. The people who cannot will be the people who are at the low end of the income curve who live in the country. They're going to have to start organizing their trips to town with friends, cut the soccer practices, buy bootleg gas, etc. I don't know about in the US but in Canada the farmers get untaxed gas they are only supposed to use for their farming equipment - it has a dye in it so you know if it has been used in a non-farm engine. There won't be enough cops to reign in the use of this fuel for carpooling soccer moms to Wal-Mart in town, IMO.
MT has dyed diesel, but I'm not aware of dyed gas.
Sorry, that's what I meant. So it is only for people who have diesel trucks - which includes a lot of folks living in rural settings.
I think anyone who is prudent would start thinking twice about taking those long afternoon Sunday drives, whether they can afford to do it or not. The key, as I understand it, is to live beneath your means. That being said, I tend to think discretionary driving for the lower income bracket fell out the window during the last run up of gas prices. I could be mistaken, but seems to me that people never went back to driving the way they did before.
Live off grid in the stix?
Emigrate? Smuggle yourself out of the country?
You only "gotta work" if someone's got a job for you. Otherwise you gotta eat & work won't be part of it.
In my area back in 2008 a lot of SUVs disappeared and were replaced by Priuses. And it happened fairly quickly. What now? What can Priuses be replaced with? Europe has cars with 50+ mpg, but the USA doesn't.
Moving closer to their workplace? Not if you have kids. Not if you have an underwater house. Not if the job is in the city and that housing is too expensive.
Greater than $4 a gallon gas = total economic shutdown, and a change in Presidents. Rapidemente.
Saudi Arabia had better start pumping to offset QE3, or something hits the fan.
OK, I am seeing more scooters and bicycles.
Not very helpful on icy roads or for transporting groceries.
I'm not saying it is a good thing or a bad thing. I'll let individuals decide what they need. I'll agree that these modes of transportation will work for a small minority of Americans only, and will not solve this nation's energy problems.
Good point. It is a symptom of the problem, not a solution.
My bicycles have little 4 stroke engines on them. Allows me to cruise at 28-30 MPH, and not be worn out when get somewhere.
Nice for my bad knee too.
150cc scooters can do 80 MPH and get about 75 MPG in town. Yes, they suck in the rain, but if the weather is good I can commute for a whole week an a gallon of gas.
Schwinn, Trek, Giant, or any moped. Comradette Michelle wants us to be healthy afterall.
Bullish walking shoes!
Long-tails bitchez!
Yep found a bridge much closer to work to live under.
Pretty soon the 'american consumer' will have adjusted to higher prices and bankruptcy by moving into a tent.
Thanks to Occupy Wall street bringing up how people will be living in tents, by living in tents, that soon will be illegal. I guess you'll see all homeless shoved into prisons then so that the industrial prison complex can profit until everyone is a prisoner, a cop, a banker or emigrated.
Yeah it was so easy to sell my home and buy another closer to work, what with the high demand for homes. And that Hummer I had, also sold quickly so I could buy a new Leaf....you know, the car with 0 emissions because the electricity for it comes from a nuclear power plant.
Bloomberg has managed to become the print version of CNBC....I see them over and over having some sort of positive bs headline to an article that in fact is very negative. The WSJ is running a close second in the puffery race.
Now I get to experience what the Russians were reading during the Cold War when they opened Pravda.
As if one free issue of the Bloomturd rag and Forbes wasn't enough, they send two identical per week to the local landfill. The WSJ finally gave up after two years when I gave them a flat "no" to an active subscription.
Free propaganda shows how desperate they are.
SURPRISE!!!
But the consumer CONfidence number was super, damnit! Who doesnt feel great with $4.18 gas. I mean its not like they are polling only Obama's staff or anything.
$5 gas where I live is just a leading indicator of the consumers' strength....as are food prices. Since the consumers is able to pay these prices, the job market and wage rates must be really moving higher.
tipping point.. look at this s#$t http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=A123600001&f=M
Gruesome.
Fuck-a-Duck!
Americans drive too much anyway.
How is business? I'm bullish on your sector.
A couple things we need from you:
1) Bicycle powered well/water pumps, mechanical and 240 volts
2) Bicycle powered log splitter
Are battery powered electric bicycles good to go 50 miles at up to 50 MPH? That is what I need for my commute.
Business is good. I'm not sure there is a market for product (1). for product (2) are you envisioning a system that substitutes work for force? The electric bicycle you envision may never exist. As of now most cyclists insist on powering themselves.
Unless USA radically re-aligns the way it lives, the upside for bicycle transport is limited. And the USA cannot afford to re-align the way it lives.
(2) Yes, something that would raise a wedge against gravity and release at top (with hand brake safety release maybe), or would operate a jack somehow (pneumatic perhaps).
There will be a market for (1) as the electrical infrastructure crumbles. People will get sick and tired pretty quickly of pulling up their well bullet buckets.
The USA cannot afford NOT to realign the way it lives.
Can't afford NOT to re-align. Be it trains & buses that carry bikes or more subways and buses that fill in cities. Cities will otherwise wither and collapse under their own heavy cost of waste disposal, water treatment & attempting to get more food than they could hope to produce - for what work they do is not in any way helping those who produce food.
Much easier is a Stratified Downdraft Gasifier. Instead of wood chips to power your vehicle, a plentiful (and useless) fiat will work just as well.
Google, YouTube, etc.
http://www.gizmag.com/blacktrail-worlds-fastest-ebike/16290/
http://www.gizmag.com/conway-e-rider-electric-mountain-bike/16305/
http://www.gizmag.com/tag/electric-bicycle/
http://www.gizmag.com/specialized-turbo-ebike/21981/pictures#4
http://www.gizmag.com/ryno-one-wheeled-scooter/20385/
Peewee would be proud:
http://www.gizmag.com/electric-bicycle-batteries-go-100-miles/16322/
https://en.wikipedia.org/wiki/Electric_bicycles#cite_note-Glow_Worm_Bicy...
That's a huge drop. Is it the private or the public sector that suddenly stopped driving? This is only gasoline sales, not even considering fuel sales. I wonder who has an explanation for that and how they want to spin this as recovery?
According to the data we're worse off than in 2008, much worse.
goes back to 1984 levels.
this is chart of finished motor gasoline supplied .. not as dramatic as the other http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=wgfupus2&f=4 but still down big this year over last.
'09, '10 and '11 were pretty consistent in February for example.
we're now almost 10% off the highs when we're supposedly in a "recovery".
Looks like the next up-cycle peak ... was inverted.
This chart is a much better one than your first...
And, duh, we know that US demand is dropping... Gasoline is not for expensive joy rides any more...
Ask Best Buy!
In paper terms, we're far worse off than 2008, given 1) the psychological PTSD that consumers, workers/non-workers, and investors now have, 2) the vaporization of the 'wealth cushion' that a far wider swath of Americans used to have in terms of psychology given the over-flated values they saw when the looked at the NAR 'valuation' of their home (many of which had debt attached), 3) that the bubbles in the bond and equity markets which also reflect 'paper wealth' the Bernank has now blown only positively affect about 1/20th of the swath of people that the home/real estate bubble did back in 2007 and prior.
In real terms, we're even worse than above, because there's just air and no cushion (real or imagined) to brace the already shattered psychology of the overwhelming majority of people (i.e. consumers) who have seen no real benefit - and who in fact are worse off now - as a result of the equity and bond market bubbles (resulting in higher prices, a worsened real labor market, and near 0% interest rates for seniors and savers).
Great job with that Virtuous Circle Model of economic growth, Bernanke!
It's back to the future!
We are all Amish now! Or soon enough....
And Thats Real Change! Thanks, Comrade Braack!
And given the amount of "mandatory" usage, the amount of discretionary usage is probably down more than 50%. I know it is for us. We use to do regular weekend day trips to museums and festivals in the area. Now those are few and far between, the priority not being worth the cost. Thank goodness for the Internet and expansive XBox 360 games like Skyrim. They litteraly are keeping the cabin fever at bay. Your mileage may vary ;) .
R U talking about gasoline or LSD?
BWA!
Jason... not to downplay the trends but this chart is not the entire story..
To put it in perspective, 40 million gallons a day is about 1 million barrels a day or about 12% of US demand...
Me thinks, and I may be wrong, the chart shown corresponds to direct sales from refiners which likely reflects the changing role of independents and of refineries dealing with independent distrubutors.....
A more proper graph might be this:
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=C100000001&f=M
Jesus Christ! Thats what a collapse looks like....wildly rising prices and demand to all time lows.
Back down to '1984' levels.
Coincidence? I think not
We are so fucked.
Not if you're a machinist. If you can program CNC machines you can make 6 figures easily. The only problem...you need MATH skills and know the difference between a mm and an inch. And you may have to apprentice for a couple of years. Still cheaper than a history degree.
you need MATH skills and know the difference between a mm and an inch.
Pretty sure most of your ex-girlfriends know the difference...
I guess they can't replace the 6-figure American machinists with cheaper Chinese or Indian machinists fast enough. There was a shortage of nurses in this country. Not anymore. There were always shortages in certain sectors because government started to increase funding in these sectors and drove up the demand for qualified staff. Then we imported the "qualified" staff from places like India and by the time our people were qualified, the jobs had been filled. Now they're looking for machinists. I wonder for what industry? What are we building in this country that the Chinese can't build 90% cheaper? Heavy machinery would make sense but in order to sell heavy machinery, you need customers willing to buy it. I can't see how the demand for heavy machinery is increasing in the foreseeable future when there's already a glut of barely used equipment.
More "shovel ready" projects coming? Another stimulus package where this time, for sure we are building that bridge to nowhere?
indeed, CNC machining, or farming, is something I'm looking forward to as a possible future career.
Solid production of useful things plus I have a computing background.
Queue the SPR release...........again.
and poof...it's gone.
That took all of 3 days.
Southpark ... AND IT'S GONE
Interesting how the SPR release announcement was timed for 3 days before quarter end so as to get a lower price in the GDP price deflator calculation for Q1 GDP.
Anything at all left in the SPR? By now they must be using mops and squeegees.
Tipping point - more like a freight train.
This sums it up:
http://www.youtube.com/watch?v=QWNFB71MvTs
Everybody loves the concept of a tippiing point causing a catastrophic avalanche of change because in our hearts we all want a dramatic change. It would be the day of reckoning we all hope for and those of us who have been preparing for this will feel vindicated.
I continue to worry though, that such a satisfying event may never happen. It's just too much what I want to happen and there are just too many forces invested in keeping the game going. My rational mind says we're more likely to slowly submerge and largely not notice, like frogs being boiled alive.
Producers are stocking and channel stuffing, no demand for anything from the retail sector.
Consumers are tapping their savings to survive (savings decline) because incomes no longer afford them to live in light of rising inflation in the cost of food and gas.
This is the new mirage of an economy. What could possibly go wrong?
Of course it's here. Take a look at gasoilne consumption. I await with interest the next set of freight train utilization numbers.
Looking more indepth, its net energy that is at hand and that is what is breaking down and without new techology to get our energy flux density up, civilization is at stake. US way of life definitely at stake.
or we could reduce our per-person & per-day consumption of energy by being more innovative to deal with the lower net-energy we'll have available.
you know what we like to call that
.
5 BUCKS
16 to 2
This late in the game, the slaughter rule will be inforced. I can't wait for PMs to take the field in this double header.
Release the Kraken http://www.youtube.com/watch?v=gb2zIR2rvRQ
I doubt there will be a deflationary collapse. There will be a further economic collapse. But saying there will be deflation is a misunderstanding of fiat money. Fiat money has 2 gears. Inflation and hyperinflation. You get to hyper inflation via what would be only a harmless deflation in a hard money currency system. Fiat just dies.
Tell that to the Japanese.
Nice death spiral they've got going. Increased prices on everything due to increased fuel costs while the dollar gets weaker which increases the cost of fuel in fiat paper. It's an exclusive club and we ain't in it.
Nutshell +1
And on that data we march back towards dow 14k
PMI beats expectations - Rally Time!
PMI misses - Rally Time!
Insano
Tipping. The city in China you owe billions too.
I know that everyone thinks that the economy is recovering nicely, but look at the FHA. It is tanking fast as Bernanke discourages saving. Chris Whalen is right.
http://confoundedinterest.wordpress.com/2012/03/30/fhas-capital-personal-income-spending-and-savings-all-aboard-the-debt-train/
Everyone thinks the economy is recovering nicely? Aside from the MSM shills and a few Obama holdouts, I don't know of anyone who feels this way.
The funny thing about that OBAMA/france/UK/saudi arabia want to lower oil prices is that, they will fail. The idea that now, when inflation is about to get out of hand, you can somehow stop it by talking down oil prices and blame the on speculators, is totally absurd. The speculation has already been done. It was known as Ctrl+P and now we are just seeing the consequenses of it.
It is not possible in any economic environment (broken or not broken) to modify prices. Anyone who tries that will FAIL big! Just ask the USSR, they tried it and look at what happened.
Remember though, there is feedback that moderates the implosion. Higher prices reduce demand. This feedback loop has already happened once when prices cratered in 2008. This next hike in oil price strangles off the pretend economic recovery and prices reach a new painful normal. They aren't going to spike. This is like dying of ALS, not of a heart attack.
A storming of the bastille doesn't happen until people are hand to mouth. There is still a lot of luxury bullshit that has to be squeezed to death from the economy before the dam breaks. What fraction of the average American salary still goes to useless bullshit you can live without?
Rick Santelli just had a Chicago PMI spokesperson on that said as a result of high inventories, dropping orders and increased gas prices companies will now be forced to increase prices that they've resisted until now.
Makes sense in a supply market. But the reason why they're overstocked and inventories aren't moving is because there's no demand, there's an oversupply and rising prices will of course slow down sales even further.
and yet there will be no inflation
Sarcasm noted but that was the point - inflation.
And inflation is hitting people that feel it hardest like Meals on Wheels that says milk, bread and gas are straining already underfunded services especially for the elderly. Way to go Berdonkey/Obomba/Geetner:
Gas, bread and milk all cost more; So, how does Meals on Wheels cope?http://www.mariettatimes.com/page/content.detail/id/543114/Gas--bread-an...
So a legit question:
Does the PMI include how big/small the change in conditions are? From what I can see, it looks like its a ternary choice: better, same, worse. But, the magnitude of these aren't included in the number. So is this only a general overview from the purchasing managers?
The Ponzi will eat itself.
If they can suppress gasoline prices for just a few more months maybe folks will not care as much about how far they drive to browse all the beautiful 4,000+ sq. ft. homes selling so cheaply. I'm sure heating oil prices will come down by next winter too so that's good...and real estate taxes will finely stop rising after 50 years of increases. I also read that the fed can keep mortgage rates low forever so that wont be a problem either. My real estate sale's agent told me not to worry about my school loans as incomes are bound to rise. It's one of those things where you just have to dive in blindly and trust that everything will be ok.
Do I need to add /sarc ?
Need to add "It's a perfect time to buy".
My real estate sale's agent told me not to worry about my school loans as incomes are bound to rise.
Looks like yer RE agent skipped "anger" and went right to "denial".
Trickle down shit'o'nomics!
NO! Jokes aren't funny if you have to end them with, "That was a joke."
+1
The "Italics" bug prevented me from upvoting your comment.
Hear hear.
That said, it is more difficult to identify innuendo when you don't know the speaker well or there is no vocal intonation.
http://www.seattlepi.com/national/article/Complex-thinking-required-to-u...
Yep things are great here, nevermind gas and food prices skying....it HAS to be that pretty soon we'll be showered with plentiful great jobs and wildly rising pay!
My senators both told me that, being on Social Security, my worries are over. Or were they referring to Obamacare and the death panels? I forget which it was.
Most of the clueless people in this country are going to be truly stunned by the end of summer when instead of green shoots having magically appeared we are in the middle of another recession/depression. You can't run the nation without energy, especially gas for transportation.
I have a couple classic cars I drive on the theory that the lower maintenance costs cancels the energy costs (they are truly tanks), but I have cut back driving substantially, as anyone with an older car has. I'm even growing a victory garden, I'm so paranoid about the economic situation. As long as Helicopter Ben is destroying the currency, the only way out may be to try and Go Galt and become as independent as possible, just in case. http://www.futurnamics.com/goinggalt.php
Yep! By late summer this country will be cities burning from riots. Thats what I'm preparing for.
I only have one classic car, and I agree that the relative maintenance costs are much lower. Plus you don't need $20K for electronic equipment to work on the engine. Of course the twin-turbo 440ci engine gets about 8 mpg (downhill, in neutral, with a tail wind). When I punch it the mpg falls below 1: more like gallons per mile.
Much as I enjoy that car, my newer car (1998 Dodge Intrepid) just passed 198K miles, gets 30+ mpg on the highway and has been much more reliable. Glad I can afford both.
I sit on my son's skateboard and fire up the battery powered leaf blower.
Great for stocks though...as long as you catch the up-draft and sell maybe the dollars minus commissions and transaction fees and taxes MIGHT make the trade a break-even.
Ahhh.... smells so good, looks so fine...
"
Once the tipping point for oil comes and passes, that's the ballgame, and the only option for the Fed will be to create another Lehman-like deflationary collapse.
and...it's approaching fast...
so... we don't have much time...
better panic b4 it's too late... L0L!!!
keep drinking, tyler!!!
I am buying a still and make my own gas...My OLD car runs on alcohol so there. If it breaks down, i'll just drink my own gas and won't really give a shit. Problem solved.
Why can't we power our cars with the velocity of money?
This is not a joke: It's unanimous, Humpty Dumpty can NOT be put back together...a bandaid on open-heart surgery will NO longer hold, toothpaste can NOT be put back in the tube and the writing is on the wall (of ZH).
Buy physical gold and silver, and hold! Have a beer too.
This is your stock market ... http://thepoliticalcarnival.net/wp-content/uploads/2012/02/stock-market-...
This is your stock market on QE drugs... http://youtu.be/-0Xa4bHcJu8