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Has The US Been Living In A 'Field-Of-Dreams' Since Mar09?

Tyler Durden's picture




 

While the immensity of both fiscal and monetary stimulus in the US has been exponentially covered by any and all with some suggesting too much and some suggesting too little, we remain somewhat nonplussed by the disconnects we see from what seem 'sensible' and intuitive relationships of days gone by. We noted yesterday the retail sales vs confidence/sentiment disconnects continue to amaze but today's piece-de-resistance is the Inventory-to-Shipments ratio which continues to rise back towards Mar09 peak levels as GDP growth disconnects entirely. The 'if-we-build-it' mentality seems to have created nothing in terms of real demand and as we noted earlier this morning, absolute inventories continue to rise rapidly. Given, the empirical relationship between Inventories-to-Shipments and GDP growth, we would expect significantly weak economic performance (but we guess government-sponsored student lending or GM channel stuffing will continue to create the illusion of growth required for equity managers to pump).

The dislocation from the March 2009 lows is incredible as the Inventory-to-Shipments ratio (inverted in the chart) sends very different signals than the entirely goal-seeked GDP growth figure which appears to be back-stopped by transfer payments and band-aids.

Chart: Bloomberg

(hattip @andrewyorks)

 

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Wed, 10/26/2011 - 11:04 | 1812562 YesWeKahn
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Fear it or love it, this eventually will trigger a QE(n++)

Wed, 10/26/2011 - 11:06 | 1812579 trav7777
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summing up China too...all central planning systems.

Malinvestment as far as the eye can see

Wed, 10/26/2011 - 11:12 | 1812612 qussl3
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As long as they run a surplus, and can keep the masses fed, that malinvestment can continue longer than we think.

Most likely the ME blowing up is what brings the charade down.

Wed, 10/26/2011 - 12:09 | 1812908 dlmaniac
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Since 1990's I'd say after US became a net-debtor nation.

Wed, 10/26/2011 - 11:54 | 1812829 nyse
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We're basically in the Age of Malinvestment. When does it end?

Thu, 11/10/2011 - 04:57 | 1864991 jaffa
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Wed, 10/26/2011 - 11:57 | 1812837 LeonardoFibonacci
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"If you build it, they will come"

In the movie field of dreams, Ray Liotta tells Kevin Costner the above phrase.

 

On Wall Street the CEO's tell their salesforces, if you create CDS's and weapons of Fiancial Mass Destruction, the masses (sheeple) will gobble it all up.  But most of all everyone on WS will get rich creating garbage products except the sheeple that get fleeced!

Wed, 10/26/2011 - 12:00 | 1812868 LeonardoFibonacci
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Wed, 10/26/2011 - 12:37 | 1813044 common_sense
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Wed, 10/26/2011 - 11:05 | 1812564 SheepDog-One
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1) Print money.

2) Hand to banks and Corps to build up inventories.

3) ???

4) PROFIT!

Wed, 10/26/2011 - 11:06 | 1812574 GeneMarchbanks
GeneMarchbanks's picture

Matters not. We're a 'service' economy remember?

Wed, 10/26/2011 - 11:07 | 1812586 SheepDog-One
SheepDog-One's picture

Pizza delivery drivers in Hummers, bitchez.

Wed, 10/26/2011 - 11:38 | 1812759 Robert-Paulson
Robert-Paulson's picture

Apparently, pizza delivery guys are being robbed like hot cakes

 

 

http://www.google.com/webhp?hl=en&tab=ww#hl=en&sugexp=kjrmc&cp=21&gs_id=...

Wed, 10/26/2011 - 11:52 | 1812824 Piranhanoia
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armored, armed, and a blood test will be required if you want cheese.

Wed, 10/26/2011 - 12:26 | 1812995 piceridu
piceridu's picture

SD-1...that's funny!

Wed, 10/26/2011 - 11:08 | 1812595 J 457
J 457's picture

No, we're a bankrupt economy that needs to find a way to pay back 15 trillion.

Wed, 10/26/2011 - 11:09 | 1812599 srsly-wtf
srsly-wtf's picture

Domino's is hiring...

Wed, 10/26/2011 - 11:13 | 1812615 Steel_Preacher
Steel_Preacher's picture

We are the Borg. You will be assimilated. We will add your Financial and technological distinctiveness to our own. You will exist to service US. Resistance is futile.

Wed, 10/26/2011 - 13:51 | 1813327 Andy_Jackson_Jihad
Andy_Jackson_Jihad's picture

Q: What do you call a service economy with a trade deficit and no world-reserve currency?

A: A 3rd world shithole!

Wed, 10/26/2011 - 11:07 | 1812587 firstdivision
firstdivision's picture

This is what happens when there is ultra-cheap liquidity pumped into a system.  Momo's are showing what happens when that lidiquity starts to dry up.

Wed, 10/26/2011 - 11:07 | 1812589 The Axe
The Axe's picture

The amount of money that is hidden in the GSE's is nuts, add in the amount of disposal money people now earmark for personal spending vs paying their mortgage, also include the amount of money that is hidden on balance sheets, because of mark-to-market doesn't exist.

Wed, 10/26/2011 - 11:08 | 1812593 Tsar Pointless
Tsar Pointless's picture

Supply-side economics.

Epic fail.

Wed, 10/26/2011 - 11:14 | 1812627 srsly-wtf
srsly-wtf's picture

you are so clueless, not worth the time...

Wed, 10/26/2011 - 11:22 | 1812674 Tsar Pointless
Tsar Pointless's picture

No, please, I beg of thee - waste time for both of us and others.

Provide the reasons for how clueless I am.

Enlighten us.

Thank you.

TP

Wed, 10/26/2011 - 13:57 | 1813364 Andy_Jackson_Jihad
Andy_Jackson_Jihad's picture

Because fed easing in response to output gap is designed to address Ag. DEMAND. Supply side economics attempts to raise....guess now.... Ag. Supply! Which tsar position did black jesus appoint you to?

Wed, 10/26/2011 - 11:34 | 1812740 karzai_luver
karzai_luver's picture

THANK YOU.

;)

 

Wed, 10/26/2011 - 11:08 | 1812596 SheepDog-One
SheepDog-One's picture

Nevermind cops open fire on protestors....yea Im sure all this ends well, as long as more money printing is accomplished!

OCCUPY OAKLAND - PROTESTERS FIGHT BACK POLICE - EXCLUSIVE VIDEO - YouTube

Wed, 10/26/2011 - 11:19 | 1812650 Tsar Pointless
Tsar Pointless's picture

Apparently, one "bad apple protestor" began throwing rocks, prompting the violent police response.

Who wants to lay odds that this "bad apple protestor" was a policeman in disguise?

Like they would ever do something like that.

http://www.nytimes.com/2005/12/22/nyregion/22police.html

And we have 9/11 - the PNAC gift that keeps on giving - to thank for the massive expansion of the Amerikkkan police state.

What a country!

Wed, 10/26/2011 - 11:12 | 1812611 JustObserving
JustObserving's picture

Greenspan wants to bulldoze excess housing inventory.  Now he can extend the bulldozing to all excess inventories - after all the Fed can generate a trillion dollars or two with a few keystrokes.  

Bullish for CAT

Wed, 10/26/2011 - 11:17 | 1812640 srsly-wtf
srsly-wtf's picture

No...Ben should buy all excess inventories and ship to Greece. It would create lots of jobs and give everyone something to do while Rome burns.

Wed, 10/26/2011 - 11:32 | 1812728 RationalPrepper
RationalPrepper's picture

Great.  First "Cash for Clunkers" to take perfectly good, cheap, used cars out of service.  May as well bulldoze homes, too.  Though some of the homes that have been vacant for 3 years probably aren't worthy of much else but the front end of a CAT dozer.

Wed, 10/26/2011 - 14:01 | 1813394 Andy_Jackson_Jihad
Andy_Jackson_Jihad's picture

Ironically, I suggested the same thing back in 2008. As stupid as it sounds it really does cut to the chase in a just way. Anyone not leveraged gets price pressure relief by eliminating the money pit shadow inventory houses and the finance and insurance industries get left eating a shit sandwich. Win win!

Wed, 10/26/2011 - 11:15 | 1812623 LawsofPhysics
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infinite growth models meet the laws of physics.  As usual, nice catch tyler, now how do we trade this?

Wed, 10/26/2011 - 11:55 | 1812838 Piranhanoia
Piranhanoia's picture

walk in front of a GM car. You will stimulate the economy in so many ways!

Wed, 10/26/2011 - 13:37 | 1813270 Incubus
Incubus's picture

My GM beater has 177,000 miles on it.  Parts are all over the place at any junkyard, so I'm not complaining. 

Wed, 10/26/2011 - 13:58 | 1813367 slewie the pi-rat
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tyler writes of: "GDP growth figure which appears to be back-stopped by transfer payments and band-aids."

go long stars n' stripes band-aids b/c you are gonna lose some skin trying to slide home on asphalt and broken glass

Wed, 10/26/2011 - 11:15 | 1812624 karzai_luver
karzai_luver's picture

exactly what part of productivity gains into falling wages for the bottom 70-80% is still a surprise.

 

When you don't pay peeps they won't consume after the credit is gone.

 

Buy now.

 

hahaha

 

field of dreams since at least 1970 or so, but at least the drugs still mask their pain when they can afford them that is.

 

 

Wed, 10/26/2011 - 11:19 | 1812648 TheSilverJournal
TheSilverJournal's picture

The US has been living in a Field of Dreams since the Fed brought rates down to 3% in the early '90s. Or to go further back, since 1945 the US has been able to export dollars to the world's central banks in exchange for the world's goods.

Wed, 10/26/2011 - 11:21 | 1812667 alexwest
alexwest's picture

EVERYONE MUST UNDERSTAND  that GDP/SHIPMENTS/INVENTORIES/ETC are entirely crappy figures that being calculated / reported w/ only one purpose..

SHOW IMAGINARY GROWTH IN GDP.. period...

 on the contrary , real indicators AKA  taxes and anything that money involved SHOWS AT BEST STAGNATION FOR LAST 10 YEARS.. or downright in decline..

personal income, oil imports /etc.. everything that  related to real economy is stagnant for last 10 years... why is so huge divergence?  EASY.. DEBT..

US FED GOV PRINTS MORE THEN 10% OF GDP AND CONSIDER IT AS ITS NORMAL WAY  AND KEEP ON DOING FOR Foreseeable FUTURE until whole ponzi scheme collaps

alx

 

Wed, 10/26/2011 - 11:24 | 1812682 Debtless
Debtless's picture

Occupy Oakland pays a visit to a local JPMorgan branch.

Many are upset believing they have no voice in govt or media.

The longer they are ignored by both, the louder they will become.

Then the shooting will start.

See 1776.

 

http://www.youtube.com/watch?v=dVIhOtxdA5A&feature=related

 

 

Wed, 10/26/2011 - 11:29 | 1812709 peekcrackers
peekcrackers's picture

land of the free ! but not for you and me

Wed, 10/26/2011 - 11:51 | 1812813 AnarchoCapitalist
AnarchoCapitalist's picture

Alasdair Macleod explained why GDP is a false statistic:

http://www.financeandeconomics.org/Articles%20archive/2011.10.08%20GDP.htm

 

 

Wed, 10/26/2011 - 12:12 | 1812931 dehdhed
dehdhed's picture

blows my mind how ZH chooses to ignore the apparent 4.5 month backlog in unfilled orders.  nearly 860 billion worth.  that's the number going parabolic

'build it and they will come'  is entirely different than the reality of 'we can't build it and ship it fast enough'

a tractor salesman might have waited until he sold a tractor before he sent an order to replace it.   but now, if he has to wait six months to get the new one ... well, forget just-in-time inventory way of eliminating warehousing ... 

i've read where the trucking industry has someting like 200,000 driver shortage.   if you build it but can't ship it, better figure a new inventory method instead of just-in-time.

Wed, 10/26/2011 - 13:20 | 1813191 css1971
css1971's picture

Capital good orders are being brought forward from 2012 to 2011.

http://www.moneyweek.com/investments/stock-markets/us/no-us-recession-th...

HTH.

Wed, 10/26/2011 - 13:37 | 1813273 PulauHantu29
PulauHantu29's picture

“Gloom holds back the US economy,” says the FT.


Wed, 10/26/2011 - 13:43 | 1813293 Incubus
Incubus's picture

"Fat bankster, corporate, & politician trash hold back the US economy," says the Incubus.

Wed, 10/26/2011 - 13:50 | 1813320 Dr. Nancy
Dr. Nancy's picture

 

All that's happening is predictable, as there are 7 stages that any major economy goes through. Those who know how it works profit & massive wealth is transferred to them. You can see what one millionaire has to say about the 7 stages countries go through & how you can profit like the ultra-rich during these tough times. His free video "How To Create Incredible Wealth in Today's Economic Crisis"  is at:

http://theelevationgroup.net/presentation/register.php?a_aid=160667&a_bi...

Hope this helps everyone as it has me.

Dr. Nancy

 

 

Wed, 10/26/2011 - 15:17 | 1813855 slewie the pi-rat
slewie the pi-rat's picture

welcome to zH, you fuking troll!

here is yer styoopid post from  10.24:

All that's happening in the economy is predictable, as

there are 7 stages that every

major economy goes through.

 

Those who know how it works

profit & massive wealth

is transferred to them.

 

Several months ago 

I learned this information

from a millionaire

 

whose site I found

& am sharing it with

 

everyone I know.

 

You can see how

you too can profit 

 

like the ultra-rich

during these uncertain times.

 

His free video-

 

"How To Create Wealth in Today's Economic Crisis"

 

is at:

 

http://theelevationgroup.net/presentation/register.php?a_aid=160667&a_bi...

 

Hope this helps everyone

 as much as it has me.

 

Dr. Nancy

 and here is yer styoopid post from 10.25:

 

All that's happening is predictable, as there are 7 stages that any major economy goes through. Those who know how it works profit and massive wealth is transferred to them. See what one millionaire has to say about the 7 stages countries go through & how you can profit like the ultra-rich during these tough times. See his free video "How To Create Incredible Wealth in Today's Economic Crisis" at:

 

http://theelevationgroup.net/presentation/register.php?a_aid=160667&a_bi...

 

Hope this helps everyone as it has me.

Dr. Nancy

dear "dr nancy":

fuk you and the horse you are riding, too!

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