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ISM Defies Consensus, Surges In Best Consensus Beat In Past 7 Months

Tyler Durden's picture


Forget the Schrodinger "baffle them with bullshit" economy - it is now officially the Idiotmaker economy. Following the massive Chicago PMI drop yesterday, there were those who expected reality to revert and today's mfg ISM to plunge. No such luck, in fact the Manufacturing Data just came out and destroyed every single convergence thesis, printing at 54.8 on expectations of 53.0, and up from the March print of 53.4. This was the best ISM beat in 7 months, following the worst PMI print in 2.5 years yesterday, also the biggest MOM jump since June 2011, and the biggest 2 month rise since April 2010. Go figure. The only one who predicted the correct outcome? Why Zero Hedge, courtesy of none other than Joe LaVorgna.

As per our tweet from one hour ago:

The full ISM breakdown:

From the report:

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The PMI registered 54.8 percent, an increase of 1.4 percentage points from March's reading of 53.4 percent, indicating expansion in the manufacturing sector for the 33rd consecutive month. Sixteen of the 18 industries reflected overall growth in April, and the New Orders, Production and Employment Indexes all increased, indicating growth at faster rates than in March. The Prices Index for raw materials remained at 61 percent in April, the same rate as reported in March. Comments from the panel generally indicate stable to strong demand, with some concerns cited over increasing oil prices and European stability."


Of the 18 manufacturing industries, 16 are reporting growth in April, in the following order: Furniture & Related Products; Printing & Related Support Activities; Machinery; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Primary Metals; Paper Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Chemical Products; Fabricated Metal Products; Computer & Electronic Products; and Petroleum & Coal Products. The only industry reporting contraction in April is Wood Products.

Finally the ever informative respondents:

  • "We expect our production levels to remain at the current level or increase over the next quarter." (Chemical Products)
  • "In general, demand remains strong for products, and we [are
    experiencing] more supply disruptions now than four to five months ago."
  • "The economy was off to a good start through the first quarter, but
    the European issues keep coming up as well as the recent disappointing
    jobs report. It appears that some of the early gains may be temporary."
    (Fabricated Metal Products)
  • "Warm weather in Midwest appears to have helped soft drink sales." (Food, Beverage & Tobacco Products)
  • "Positive increase in volume of sales and orders, and slight uptick
    in inventories, indicate the overall outlook remains robust through
    summer at least." (Miscellaneous Manufacturing)
  • "Sales are slowing." (Computer & Electronic Products)
  • "Business conditions on a national scale have a very positive
    outlook for the commercial metals we provide. At this point, we have
    outperformed each quarter's goal and anticipate a strong finish."
    (Primary Metals)
  • "Strong demand [compared to] previous year." (Plastics & Rubber Products)
  • "Business indicators suggest a stronger stability in overall
    environment. Production and orders are stable." (Transportation
  • "Business conditions continue to improve." (Furniture & Related Products)

In other words, everyone who was betting on QE yesterday will now have to unwind those trades.


Biggest beat in 7 months...

and biggest 2-month jump in 24 months...

and today's ISM print was a 4.5 sigma beat - entirely sustainable...

All makes perfect sense, right? And ES liquidity (the red line is today) disappeared into the print...


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Tue, 05/01/2012 - 10:14 | 2387983 firstdivision
firstdivision's picture

Now the only question one has to ask is this one more reliable than China's? 

Tue, 05/01/2012 - 10:21 | 2388009 slaughterer
slaughterer's picture

Epic short squeeze above SPX 1406 happening right now.  

Tue, 05/01/2012 - 10:23 | 2388020 Village Smithy
Village Smithy's picture

I definitely felt that. When will I ever learn.

Tue, 05/01/2012 - 10:27 | 2388037 lotsoffun
lotsoffun's picture

bernake and company have their backs to the walls.  they are r.ts.  you can't fight the fed.  they have nothing to lose except your money.  YOUR money.  they play with it and bathe in it.  it took decades to accomplish the power that they have, but they figured it out.


Tue, 05/01/2012 - 11:03 | 2388162 ihedgemyhedges
ihedgemyhedges's picture

Backlog of orders went below 50.................that is a leading indicator and confirms Chicago and Dallas................

Tue, 05/01/2012 - 11:33 | 2388295 HyperLazy
HyperLazy's picture

There you go folks, there is a fly in the soup after all.

Tue, 05/01/2012 - 11:11 | 2388194 Comay Mierda
Comay Mierda's picture

i hope your trading with stops, the PPT is taking advantage of this light volume day and ramping up the markets.  lets see if it holds tomorrow

Tue, 05/01/2012 - 11:57 | 2388386 Manthong
Manthong's picture

Gold slam, bogus ISM, melt-up short squeeze..

just another day at the office.

Tue, 05/01/2012 - 10:29 | 2388046 TradingJoe
TradingJoe's picture

Yep! That's how they do it, except..they are doing it to themselves!!!!!

Tue, 05/01/2012 - 10:42 | 2388099 crawl
crawl's picture

No doubting the short squeeze. It feels like the market is doing the ' heads I win, tails you lose' to the shorts.

If the data was less than expected, the market would still likely have rallied in hopes of QE.

Tue, 05/01/2012 - 10:46 | 2388110 SheepDog-One
SheepDog-One's picture

Let them lie to themselves, no one even cares anymore.

Tue, 05/01/2012 - 10:14 | 2387984 GeneMarchbanks
GeneMarchbanks's picture

EURUSD takes a tick down. That is about all.

Tue, 05/01/2012 - 10:23 | 2388021 slaughterer
slaughterer's picture

With ADP always systematically being upwardly calculated above reality and EZ PMIs consensus so low, it looks like first week of May will head-fake all bulls into thinking to "stay in May."

Tue, 05/01/2012 - 10:15 | 2387986 VonManstein
VonManstein's picture

silver hardly moved.. gold a little more.. lets see if it becomes tradition for PM market to defy the propagandists

Tue, 05/01/2012 - 10:23 | 2388022 edstar
edstar's picture

still holding pretty good. 

realise we are in an instant gratification high frequency world but the idea of gold being valued as a referendum on QE is BS

Tue, 05/01/2012 - 10:49 | 2388117 SHEEPFUKKER

I laugh out loud when the MSM portrays silver as an only an industrial metal and then you get a fake ISM beat and silver then drops.  

Tue, 05/01/2012 - 10:15 | 2387987 TradingJoe
TradingJoe's picture

Hah! "NO ONE" saw it coming! BUT ZH...Of Course! Hell we should ALL be filthy rich based on "Da Tyler's" genius! EH?!

Tue, 05/01/2012 - 10:36 | 2388072 homersimpson
homersimpson's picture

Then go start your own website and bitch to yourself with all of your 3 Chinese viewers. ZH posted the comment in advance of the announcement - so quit yer whinin'.

Tue, 05/01/2012 - 10:16 | 2387991 CrashisOptimistic
CrashisOptimistic's picture

Another step back for QE.

Tue, 05/01/2012 - 10:26 | 2388034 SheepDog-One
SheepDog-One's picture

Yes, almost as if theyre just using QE rumors as a carrot and stick, and never actually intend to do it. 


Tue, 05/01/2012 - 10:49 | 2388116 WonderDawg
WonderDawg's picture

Bingo. You know shit is fucked up when market makers hang breathlessly on every twitch and quiver of Bernanke's lips.

Tue, 05/01/2012 - 11:40 | 2388325 Winston Churchill
Winston Churchill's picture

The Fed and the ECB are in a box.

They can only hint,not do.

Expect the BRICS to unveil their own alternate SWIFT system after the

"special'meeting coming this month.

May is going to be a fun month for all.

Tue, 05/01/2012 - 10:17 | 2387992 youngman
youngman's picture

The comments were good....I trust those more...mixed signals today..but I still think the EU problem will hurt in the future..

Tue, 05/01/2012 - 10:17 | 2387994 DeadFred
DeadFred's picture

Gold was getting a bit unruly, they had to do something about that.

Tue, 05/01/2012 - 10:17 | 2387995 DeadFred
DeadFred's picture


Tue, 05/01/2012 - 10:18 | 2387997 CryingBear
CryingBear's picture

who is this guy joe?

Tue, 05/01/2012 - 10:46 | 2388108 Randall Cabot
Randall Cabot's picture




Managing Director
Chief US Economist
Deutsche Bank Securities, Inc.

Joseph A. LaVorgna is a managing director and serves as Chief US economist in charge of US macroeconomic research for Global Markets. He joined Deutsche Bank in 1997 from Lehman Brothers where he was a Vice President in the Fixed Income Division. Prior to joining Lehman, LaVorgna was an economist at UBS Securities and he started his professional career at the Federal Reserve Bank of New York in 1992, where he was an economist on the Monetary Analysis and Projections Staff. LaVorgna is a graduate of Vassar College and is a frequent commentator for CNBC as well as various other media outlets. LaVorgna and his colleagues were ranked #1 in Economics in the 2010 Institutional Investors’ All-Star Fixed Income Team

Tue, 05/01/2012 - 10:19 | 2387999 nobusiness
nobusiness's picture

expect QE market up, expect no QE market up.  Fuck it.  I give up.

Tue, 05/01/2012 - 10:26 | 2388029 CryingBear
CryingBear's picture

Well, you can still win if economic data is good and earnings are really bad.

Tue, 05/01/2012 - 10:19 | 2388001 Squid Vicious
Squid Vicious's picture

fade the Lasagna... brilliant!

Tue, 05/01/2012 - 10:19 | 2388002 hedgeless_horseman
hedgeless_horseman's picture



Sell the rip.


Tue, 05/01/2012 - 10:50 | 2388118 WonderDawg
WonderDawg's picture

Short that mutha...

Tue, 05/01/2012 - 10:21 | 2388003 carbonmutant
carbonmutant's picture

EURO/USD down to yesterday's lows and the DJI up 60 pts

What happened to the correlation....???

Tue, 05/01/2012 - 10:22 | 2388018 CryingBear
CryingBear's picture

fool, dollar will go up now on good news on US.

Tue, 05/01/2012 - 10:27 | 2388040 gjp
gjp's picture

Correlations only work if they point the market up.  If the indication is down, then decoupling.

There is only one correlation in Uncle Ben's world: if the sun rises in the east, the market rises too.

Tue, 05/01/2012 - 10:22 | 2388015 crawl
crawl's picture

Short annihilation underway. Melt up, up and away.
Hard to believe the data.

Tue, 05/01/2012 - 10:22 | 2388017 Kristian
Kristian's picture

"In other words, everyone who was betting on QE yesterday will now have to unwind those trades."

Tell that the robots.

Tue, 05/01/2012 - 10:24 | 2388023 SheepDog-One
SheepDog-One's picture

OK, so no QE.

Tue, 05/01/2012 - 10:26 | 2388030 gatorengineer
gatorengineer's picture

At least until a 90k jobs print on Friday.

Tue, 05/01/2012 - 10:30 | 2388052 Doubleguns
Doubleguns's picture

Or elections in EZ.

Tue, 05/01/2012 - 10:37 | 2388079 ejmoosa
ejmoosa's picture

More like 49k on Friday....

Tue, 05/01/2012 - 10:26 | 2388031 _ConanTheLibert...
_ConanTheLibertarian_'s picture

It's really time for some epic natural disaster to help the stock market in the right direction...

Tue, 05/01/2012 - 10:27 | 2388032 Bold Eagle
Bold Eagle's picture

Need to pump ES before dissapointing payroll report comes out

Tue, 05/01/2012 - 10:27 | 2388035 CryingBear
CryingBear's picture

Was this really that good of a number?

Tue, 05/01/2012 - 10:32 | 2388057 CrashisOptimistic
CrashisOptimistic's picture

It's a survey.

It's not a measure.

Tue, 05/01/2012 - 10:32 | 2388062 SheepDog-One
SheepDog-One's picture

Less than 1% number? Big deal. Just could call it 'static'.

But it shows 1 thing, theyre very stuck on more QE, it scares them.

Tue, 05/01/2012 - 10:37 | 2388081 ejmoosa
ejmoosa's picture

Well, it did beat expectations.  And that's all that counts these days.

Tue, 05/01/2012 - 10:52 | 2388126 WonderDawg
WonderDawg's picture

There ya go. Corporate earnings especially, doesn't matter if they suck, as long as they beat "expectations". What an easy way to game the suckers.

Tue, 05/01/2012 - 11:01 | 2388155 Chump
Chump's picture

Yep, I expect the shit to start hitting the fan almost every day, so in that sense every day is awesome!

Tue, 05/01/2012 - 11:24 | 2388229 DavidC
DavidC's picture

No, they were OK, they weren't that good. Spending was only up 0.1% despite forecasts of 0.5%. Prices paid haven't moved despite forecasts of going down. Manufacturing better than expected, well, yes, but we've had a mild winter/spring so far.
USD Construction Spending
Actual 0.1% Forecast 0.5% Previous -1.4% ISM

Actual 54.8 Forecast 53.0 Previous 53.4

ISM Prices Paid
Actual 61.0 Forecast 59.0 Previous 61.0

To warrant a 160 point turnaround on the Dow? No. They can do it today because it's a holiday in Europe, low volume and ramp. It's just broken.


Tue, 05/01/2012 - 10:29 | 2388048 nobusiness
nobusiness's picture

Expect a Breaking News Speech by Obama to take credit any moment.

Tue, 05/01/2012 - 10:29 | 2388049 CryingBear
CryingBear's picture

does zerohedge have facebook?

Tue, 05/01/2012 - 11:35 | 2388298 HD
HD's picture

No. Good bet they have an FBI/CIA/NSA file though... We probably all do by now.

Tue, 05/01/2012 - 10:30 | 2388051 Village Smithy
Village Smithy's picture

I would like to know if a lowly ISM print based on 300, probably handpicked truth be told, companies has ever caused such a large spike?

Tue, 05/01/2012 - 12:19 | 2388478 DavidC
DavidC's picture

I've commented elsewhere - I've been trying to make money in this market since 2007 - doing fine until 2009, now finding it almost impossible (bigger fool me?). I've never yet seen a figure like today's produce a spike like the one we've had today. Weird.


Tue, 05/01/2012 - 10:31 | 2388053 nobusiness
nobusiness's picture

Manufacturing beats but CAT down?

Tue, 05/01/2012 - 10:34 | 2388066 SheepDog-One
SheepDog-One's picture

Right, shows they cant do QE, theyre scared.

Tue, 05/01/2012 - 10:31 | 2388055 agNau
agNau's picture

Head fake.
Same game.
Continue to punish investment outside system and eventually, regardless of the position of $ on chart, the dog will salivate.
Conditioning of sheeple continues unabated.

Tue, 05/01/2012 - 10:35 | 2388068 razorthin
razorthin's picture

cough, cough, bullshit, cough, cough

Tue, 05/01/2012 - 10:35 | 2388074 Monedas
Monedas's picture

Socialist Central Banks keep buying Gold ! That's all ya need to know !   Monedas  1929   Comedy Jihad Criminals Buying Theft Insurance

Tue, 05/01/2012 - 12:21 | 2388482 DavidC
DavidC's picture

And the morons at JPMorgan et al keep pushing the paper price down allowing China et al to buy Gold and Silver at good low prices.


Tue, 05/01/2012 - 10:38 | 2388080 AccreditedEYE
AccreditedEYE's picture

This market action is what we get when we have Bot's reading headlines and allocating capital accordingly. Chart patterns today are outrageous.... All of these "liquidity-providing" programs are jacking intra-day volatility way up.

Tue, 05/01/2012 - 10:38 | 2388083 e92335i08
e92335i08's picture

It's gonna be a squeeze into Friday, and expect a very weak NFP number then it will be limit down.

Tue, 05/01/2012 - 10:46 | 2388111 nobusiness
nobusiness's picture

It won't go limit down.  It will be limit up because QE back on the table.

Tue, 05/01/2012 - 10:39 | 2388084 mirac
mirac's picture

They lie...Empire, Chicago, Philly and especially Dallas Fed surveys were down big time.  Richmond was up a little.  Todays ISM number does not wash. Oh and GM sales were down 8% (less calendar days in comparison)  sooooo, why not give the figures  of cars sales divided by the days in the counting period.  Whatever, GM results are still a negative, and the Euro divisions are doing horrendous.

Tue, 05/01/2012 - 10:41 | 2388090 nobusiness
nobusiness's picture

This system of occasional bullshit beats is just to crush anyone stupid enough to short this manipulated market (Me).  I don't know how people who read this board still have money because all reading has done for me is give me the confidence that my pesimistic views are correct just to get my head handed to me.  Good luck to all, but I'm sick of the BS.


Yea, I know should have bought gold and more gold and then some more gold.

Tue, 05/01/2012 - 10:54 | 2388131 Christoph830
Christoph830's picture

I'm with you man.  If you can't beat 'em, join 'em.  Just make sure not to get too greedy and take profits from time to time.

Tue, 05/01/2012 - 10:55 | 2388141 WonderDawg
WonderDawg's picture

I'm right there with you. I did great last summer but had my ass handed to me in Dec and Jan, at which time I took almost all bets off the table. I made some money with some NFLX puts, and lost some on some PCLN puts, but otherwise, just waiting, trying to be patient and lately glad I have.

Tue, 05/01/2012 - 10:58 | 2388147 sablya
sablya's picture

Yeah man, I know how you feel.  I'm short too.  The problem with trading using fundamentals is that the market can continue to be "wrong" for a long time.  You can buy a great stock that keeps going down even while its fundamentals are strong.  I know this is obvious but it bears repeating. You certainly can't use ZH for timing the markets.  Keep some powder dry and don't go all in based on a general story you read here.  

Tue, 05/01/2012 - 10:41 | 2388093 tok1
tok1's picture

 hasn't all the weak data been from the Fed for April ie Chicago PMI .. Dallas FED) ect.. yet the real data ie retail sales  now this is showing some strength..  ie even if data is skewed last year March 11 Japan earth quake caused big slowdown this time last year so theres no reason for such a big slow down this year and even coming off low base.. theres little reason for FED to do QE .. so its pretty obvious they want to to support Govt issuance ..but with oil jumping up to 105.50 after the number there finally stuck.. unless they can manipulate Fridays number (which they prob can since its a survey). 

Tue, 05/01/2012 - 10:44 | 2388105 SheepDog-One
SheepDog-One's picture

So basically they can BS and extend and pretend but for just 1 more day now...yea that plan should work real good.

Tue, 05/01/2012 - 10:44 | 2388104 Milton Waddams
Milton Waddams's picture

Unseasonably warm weather drives sales of soft drinks. And that Nanex chart is the bomb,

Tue, 05/01/2012 - 10:49 | 2388114 geewhiz190
geewhiz190's picture

How come when positive data is released it's called manipulated, but when negative data comes out  it's so readily accepted as truth?

Tue, 05/01/2012 - 10:54 | 2388134 SheepDog-One
SheepDog-One's picture

Who said its ' the truth' anywhere??

Tue, 05/01/2012 - 11:11 | 2388189 geewhiz190
geewhiz190's picture

ok ok how about this -bad data   yippee!!!   good data - lies all lies, soupy sales!!

Tue, 05/01/2012 - 11:41 | 2388330 HyperLazy
HyperLazy's picture

geewhiz190, don't mean to rain on your parade or nothing but its like this:

There is a bias inherent in the system.

"Bad news" causes global markets to dip 0.3% for twenty minutes.

"Good news" causes global markets to spike 1% or more for a couple days.

Whether or not the "news" is based on actual fact or truth.


Tue, 05/01/2012 - 10:57 | 2388143 Village Smithy
Village Smithy's picture

Because every branch of government, the media, sell side Wall St. etc. etc. want you to think that the economy is back on track so that you will go out and consume more and invest. They have everything to gain by manipulating data to the positive side. Who has anything to gain by manipulating data to the negative side? Relatively speaking, no one.

Tue, 05/01/2012 - 11:21 | 2388221 tok1
tok1's picture

Bernanke said last week if the data is weak they will do more qe
Next FED meeting is in June do they need weak april/may.
Currently twist takes up 90% of 7-30 y issuance when it ends
in June govt issuance will be on its own.. So FED wants
to be able to keep supporting the govt.. but the
rising oil is the sign of trouble to come if they do.

Tue, 05/01/2012 - 10:49 | 2388119 asteroids
asteroids's picture

Another low volume ramp hoping to sucker in retail. I'm not buying. I'm more than happy to wait a few days and let the computers jerk themselves off.

Tue, 05/01/2012 - 10:51 | 2388124 Frastric
Frastric's picture

Maybe the data has been manipulated upwards, or maybe whatever increased demand there is for manufactured goods is solely (and mysteriously) satisfied by US manufacturers? The last option could explain how the US decouples from the world.

Or maybe, and this is crazy talk, there are secret tariffs out there (in the trading world) imposed by the US government, so US companies get a preferred share of the market?

I'm gonna settle for it being election year, and key economic data points being levitated upwards to make Obama look good...

Tue, 05/01/2012 - 10:52 | 2388125 Benjamin Glutton
Benjamin Glutton's picture

May day, MAY DAY!!!!!!


expect anything less from those who revile labor on a day much of the World abandons the 'markets' to holiday reflecting upon and celebrating labor?

Tue, 05/01/2012 - 10:55 | 2388140 SheepDog-One
SheepDog-One's picture

Well, BS stock indexes are successfuly ramped up, but so is oil at $106 have fun with that.

Tue, 05/01/2012 - 11:03 | 2388165 Village Smithy
Village Smithy's picture

Therein lies the big problem. I better go out and fill up with "cheap" gas.

Tue, 05/01/2012 - 11:04 | 2388167 SmoothCoolSmoke
SmoothCoolSmoke's picture

Buck Fernankie..... and the horse he rode in on.

Tue, 05/01/2012 - 11:16 | 2388205 MFL8240
MFL8240's picture

More on the propoganda con game by the courrpt US finacial machine.

Tue, 05/01/2012 - 11:53 | 2388375 Temporalist
Temporalist's picture

Joe Lavorgna walks like he has a full diaper in his pants.  That is fact not speculation.

Tue, 05/01/2012 - 11:59 | 2388391 thefedisscam
thefedisscam's picture

Looks like MOST of these growth are FUELED by growth in Exports, up by 5.

Plus, Back log of orders is down by 3, meaning industries seeing the coming slow growth.



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