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ISM Misses Big

Tyler Durden's picture




 

Somehow or another, our earlier joke that the ISM should beat the highest Wall Street estimate quickly became the whisper number, which was to be expected in the aftermath of yesterday's comparable Chicago PMI action. Which is why when the final ISM came at a whopping miss of 52.5, on consensus of 54.5, and down from 54.1, the market was less than happy. It gets worse: while the bulk of major ISM index components dropped in February, with PMI, New Orders, Production, Employment and Deliveries all down (Inventories unch), it was the scariest component that posted a major jump as Prices soared +6 to 61.5, the highest since June. And with Exports and Imports both improving, this proves that already in February rising gasoline prices started impairing US manufacturing. But don't tell that to the cheerleaders: because who was in the top spot of Wall Street "forecasters" if not Joe LaVorgna with his estimate of 56.0 for the ISM. Regardless, expect market sentiment to immediately shift to one that despite what Bernanke said less than 24 hours ago, this miss is an immediate green light for QE3 and the market should close at or near 14,000. Unless, of course, the vacuum tubes realize the minor detail that when David Tepper went "Balls to the Wall" and both bad news and good news meant stock upside, WTI was $85. It is $108 and rising now.

ISM breakdown:

As usual, the heatmap following dunce brigade:

And the survey respondents:

  • "Business is holding steady. Concern over commodity prices ongoing." (Chemical Products)
  • "Still somewhat cautious about recovery. Expecting a good year, but not seeing orders yet." (Machinery)
  • "Demand remains consistent to strong on all levels." (Paper Products)
  • "Demand from auto makers is getting stronger." (Fabricated Metal Products)
  • "Manufacturing is busy. Spending money on new equipment to accommodate customer demands. Material prices are staying in check." (Food, Beverage & Tobacco Products)
  • "There seems to be a much more positive outlook for the economy. Customers are ordering material for stock rather than just working hand-to-mouth." (Fabricated Metal Products)
  • "Global GDP softening and beginning to impact the demand chain." (Computer & Electronic Products)
  • "Production is busy — several new large projects." (Primary Metals)
  • "Customers [are] lowering inventory levels, anticipating price decrease due to third-party published reports on materials." (Plastics & Metal Products)
  • "We are optimistic about the U.S. market this year, a little hesitant about what may happen in Europe and unsure about China." (Transportation Equipment)
  • "Shipments are increasing over last year. Waiting to see if the trend continues." (Wood Products)
 

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Thu, 03/01/2012 - 11:19 | 2212544 transaccountin
transaccountin's picture

 

How in the world is the /ES still green. My god I would throw myself out of the window if it was higher then 20 feet.

Thu, 03/01/2012 - 11:27 | 2212600 Cassandra Syndrome
Cassandra Syndrome's picture

jISM bitchez....

Thu, 03/01/2012 - 11:36 | 2212649 withnmeans
withnmeans's picture

Joe Lavorgna, what a arrogant jerk... Him and CNBC crony crew of lackys. I quit watching CNBC over a year ago, got tired of the day lies. This just adds to the daily "untruths" he puts out to make his stocks rise. You all know the gig, they get on TV to boost their stocks up and pad their pockets.

Thu, 03/01/2012 - 11:54 | 2212744 GovtMediaLiars
GovtMediaLiars's picture

Absolutely. I really wish I wasn't basically "required" to watch him and the rest of those clowns. 
Crap is playing all dang day on the tv at work. I should quit haha. 

Thu, 03/01/2012 - 11:37 | 2212657 ACP
ACP's picture

Not surprising.

Thu, 03/01/2012 - 11:44 | 2212690 Caviar Emptor
Caviar Emptor's picture

Market is a proxy for monetary expansion. Only. 

Thu, 03/01/2012 - 12:04 | 2212785 GovtMediaLiars
GovtMediaLiars's picture

I wouldn't say "only."
What I would say is that the monetary factor is now so large that it simply overwhelms any other factors. But it is possible for prices to rise as a function of an expanding Production Possibilities Frontier (PPF) in a healthy, sound money economy.
Given that we have niether a healthy economy or sound money, however...and then you're then dead on.

Cheers!
GML - Market Madness and Political Posturing 
http://financeandopportunity.blogspot.com/  

Thu, 03/01/2012 - 11:18 | 2212547 EscapeKey
EscapeKey's picture

I see the DJIA took a "massive" hit of about 30 points on this worse than expected news.

And now that this is fully priced in, we can go on to rally another hundred points or so.

Thu, 03/01/2012 - 11:28 | 2212608 masterinchancery
masterinchancery's picture

The government can just manufacture some more phoney statistics, that should be good for another 1000 points.

Thu, 03/01/2012 - 11:19 | 2212552 SilverRhino
SilverRhino's picture

FICTION BITCHEZ!!

Thu, 03/01/2012 - 11:20 | 2212554 Boilermaker
Boilermaker's picture

And look at that DOW hang right at the psychologically important 13,000 mark.

 

Thu, 03/01/2012 - 11:22 | 2212568 Cognitive Dissonance
Cognitive Dissonance's picture

Hang on Sloopy, Sloopy hang on.

http://www.youtube.com/watch?v=GG2qVcff04g

Thu, 03/01/2012 - 14:18 | 2213391 Nobody For President
Nobody For President's picture

We were so fucking young...

Thu, 03/01/2012 - 17:23 | 2214590 earleflorida
earleflorida's picture

it's a shame it's wasted on the youth

Thu, 03/01/2012 - 11:27 | 2212605 Cassandra Syndrome
Cassandra Syndrome's picture

Pathological more like...

Thu, 03/01/2012 - 11:32 | 2212629 Instant Wealth
Instant Wealth's picture

 

 

*Dow 13.000 hat on*

*Dow 13.000 hat off*

*Dow 13.000 hat on*

*Dow 13.000 hat off*

Thu, 03/01/2012 - 11:20 | 2212555 Moneyswirth
Moneyswirth's picture

Obamanomics on fire, boy!  Wheee!

Thu, 03/01/2012 - 11:20 | 2212556 Cognitive Dissonance
Cognitive Dissonance's picture

Rapidly moving from sublime to absurd.

Thu, 03/01/2012 - 11:28 | 2212610 WonderDawg
WonderDawg's picture

It hit absurd levels for me months ago, maybe years. Hell, I'm still slack-jawed that Corzine is a free man. Not much can surprise me after that.

Thu, 03/01/2012 - 11:33 | 2212627 Dr. Engali
Dr. Engali's picture

That and the fact that this market continous to climb with all this fraud being exposed on a daily basis. All that money raked in on CDS's just to find out they are worthless. You would think there would be a buyers strike

Thu, 03/01/2012 - 12:01 | 2212779 Cognitive Dissonance
Cognitive Dissonance's picture

If you just found out something you own is worthless, wouldn't having twice as many mean you have twice the amount of worthless...........wait a minute.

What's wrong with this picture? :)

Thu, 03/01/2012 - 14:20 | 2213408 Nobody For President
Nobody For President's picture

Stop worrying CD - we will make it up on volume!

Thu, 03/01/2012 - 11:20 | 2212557 Dick Darlington
Dick Darlington's picture

But but but

*FORD SAYS GAS PRICES RISE ON ECONOMIC GROWTH              :F US

Aahahahaa, priceless!

Thu, 03/01/2012 - 13:07 | 2213079 John Law Lives
John Law Lives's picture

Rising energy prices are bullish because energy prices should rise in the face of economic growth so rising energy prices are bullish...

Rising energy prices are also bullish because there might be a dip in energy prices along the way up and that dip would be bullish since relatively lower energy prices give consumers more disposable income, so the market is pricing in current bullishness and future bullishness and every stop in between...

Everything is bullish and the market will go up until it won't... and more lemmings who were late to the party get stomped into the ground... along with the middle class who don't own stocks and all those folks living on fixed income...

100% FUBAR.

Thu, 03/01/2012 - 11:20 | 2212558 YesWeKahn
YesWeKahn's picture

Good news are good, bad news are also good. Welcome to the new america.

Thu, 03/01/2012 - 11:24 | 2212581 Wm the Shrubber
Wm the Shrubber's picture

Actually, good news is good and bad news is better.  This is Oceania, and 2+2=5.

Thu, 03/01/2012 - 11:45 | 2212702 JPM Hater001
JPM Hater001's picture

I will be collecting you shortly.  Please do not attempt to leave the building.

Thu, 03/01/2012 - 11:22 | 2212560 The Swedish Chef
The Swedish Chef's picture

The ISM number prompted an instant 0,25% drop in the Stockholm OMX30 index, somewhat spoiling my party today. 

 

Gone long? You should have...

Thu, 03/01/2012 - 11:23 | 2212566 rescator
rescator's picture

this market is bullet proof...it will never tank...jeeeezzzzzz.!!!!!

Thu, 03/01/2012 - 11:28 | 2212609 Dr. Engali
Dr. Engali's picture

There is no way in hell this market is going down. They will have this thing pumped up to 14000 by election time.

Thu, 03/01/2012 - 11:32 | 2212628 youngman
youngman's picture

They have to keep it up and then some....the nations pensions rely on it......

Thu, 03/01/2012 - 11:36 | 2212651 scatterbrains
scatterbrains's picture

but oblahblah's base is the snap card crowd. 5 dollar gas and his ass finished.

Thu, 03/01/2012 - 11:42 | 2212684 adr
adr's picture

Nope Obama will just annouce STAP (Supplemental Transportation Assistance Program). Government gas cards for the welfare class. RE-ELECTION GUARANTEED!!!!

Thu, 03/01/2012 - 11:25 | 2212571 Shizzmoney
Shizzmoney's picture

But wait, the Bureau of Economic Analysis just told me Personal Income went up this year?

http://t.co/iz9spDRw

 Oh wait, that income I got went right to taxes, health insurance, and to pay down my debt.

At least I got this stinkin' T-Shirt!

Thu, 03/01/2012 - 18:22 | 2214834 Donnie Duvanie
Donnie Duvanie's picture

At least I got this Kool Halloween mask!

Thu, 03/01/2012 - 11:25 | 2212591 besodemuerte
besodemuerte's picture

This is bullish right?

Thu, 03/01/2012 - 11:27 | 2212602 lizzy36
lizzy36's picture

Absolutely.

$2T QE3 on deck.

It's raining money.....Hallelujah.

Thu, 03/01/2012 - 11:32 | 2212630 selectricity
selectricity's picture

Yep, lol, Credit Suisse has coordinated QE between Fed, ECB, BoE, BoJ, and SNB on deck: http://www.dailycollateral.com/2012/03/01/credit-suisse-are-big-fans-wha...

Thu, 03/01/2012 - 12:02 | 2212778 Schmuck Raker
Schmuck Raker's picture

This first quote (from that article)...

"The core are likely to be outvoted by the periphery. Currently 8 out of 23 votes on the ECB council are from the periphery. This rises to 10 if we include Malta and Cyrus. We think it is quite likely that the sovereign downgrade of France and Austria will lead a couple of the core countries to voting with the periphery for easier monetary policy."

...is exactly the kind of thing that could put Germany in the mood to leave the EZ.

Thanks for the link.

Thu, 03/01/2012 - 11:38 | 2212664 CynicLaureate
CynicLaureate's picture

The real question is, how will this affect the Top 12 Girls' chances of winning American Idol?

Thu, 03/01/2012 - 11:47 | 2212713 JPM Hater001
JPM Hater001's picture

I'm for the dude from Ellsworth...

I think I'll go have a cheese curd.

Thu, 03/01/2012 - 11:32 | 2212621 pupton
pupton's picture

Is this why silver just popped from $34.80 to $35.56 in a nanosecond?  AG in the basement, AGQ in the IRA...bitchez.

Thu, 03/01/2012 - 11:32 | 2212625 the not so migh...
the not so mighty maximiza's picture

dow will be 20,000 maybe 50,000 due to inflaton , it will start to be meaningless

Thu, 03/01/2012 - 11:33 | 2212640 pupton
pupton's picture

Dow will equal infinity (as will all "assets") when USD = 1/infinity.  Now we just need Graham Summers to tell us that will happen next week, again.

Thu, 03/01/2012 - 11:33 | 2212637 Gomie
Gomie's picture

Give her time, boys. She'll be very red by EOD. Just sucking in some more folks to get their heads ripped off.

Thu, 03/01/2012 - 11:39 | 2212671 adr
adr's picture

Only in this BS market can negative growth be called expansion. So is this index wrong, or were the regional surveys wrong?

I'll answer the question myself, THEY ARE ALL WRONG.

The ISM likes to cherry pick the best comments from the survey and apply those across the board. You could have a small manufacturer that does a couple million a year get a big order for one month and then go cold. During that month they look great and will say orders went up big, next month they are back down. You can bet that company's comment won't make it in the survey again.

I had a meeting with a manufacturer yesterday. He said his business took a nosedive in february. The only manufactuers doing well are those making pipes and rigs for Natgas drilling. Those guys are printing money, but it is a very small market overall. I'm sure the ISM knows that, but weighting those guys in the survey gives you the massive beats.

Thu, 03/01/2012 - 11:40 | 2212674 J 457
J 457's picture

Do you guys even read this stuff before spouting off?  The survey respondents are more bullish than bearish.  Maybe, just maybe, there is some sort of weak recovery taking place.  Bigger question is; once interest rates rise, which they will if this is a true recovery, will that choke off any economic expansion.  I think it will.  And the high oil price is also a nail in the coffin. 

And the survey respondents:

  • "Business is holding steady. Concern over commodity prices ongoing." (Chemical Products)
  • "Still somewhat cautious about recovery. Expecting a good year, but not seeing orders yet." (Machinery)
  • "Demand remains consistent to strong on all levels." (Paper Products)
  • "Demand from auto makers is getting stronger." (Fabricated Metal Products)
  • "Manufacturing is busy. Spending money on new equipment to accommodate customer demands. Material prices are staying in check." (Food, Beverage & Tobacco Products)
  • "There seems to be a much more positive outlook for the economy. Customers are ordering material for stock rather than just working hand-to-mouth." (Fabricated Metal Products)
  • "Global GDP softening and beginning to impact the demand chain." (Computer & Electronic Products)
  • "Production is busy — several new large projects." (Primary Metals)
  • "Customers [are] lowering inventory levels, anticipating price decrease due to third-party published reports on materials." (Plastics & Metal Products)
  • "We are optimistic about the U.S. market this year, a little hesitant about what may happen in Europe and unsure about China." (Transportation Equipment)
  • "Shipments are increasing over last year. Waiting to see if the trend continues." (Wood Products)

 

Thu, 03/01/2012 - 11:52 | 2212736 adr
adr's picture

WOW CHERRY PICKED COMMENTS FROM A BOARD WHSE JOB IT IS TO FIGURE OUT WAYS TO PUMP THE MARKET.

Or I bet you think the NAR has no reason to lie.

I can assure you, on the ground working in product development and maufacturing, and selling to retail. Things are not good at all. There is enough inventory being held by suppliers to last 5-6 months. Retail buyers aren't buying and stuff isn't selling.

Exports are up because many vendors are resorting to dumping millions of dollars worth of goods on international discount wholesalers for pennies on the dollar. There are a lot of Russian companies who will buy $20 million worth of full price inventory for $5 million and will sell the stuff off in Africa or the middle east.

Thu, 03/01/2012 - 12:14 | 2212845 J 457
J 457's picture

NAR data, is not accurate and not to be taking seriously.  I'm not saying the boards comments are not cherry picked, no doubt they are.  But I see a lot more retail activity in the last few months, many more trucks on the road.  Not saying all is good, and without any doubt eventually we will have this ugly day leading back to reality.  Can't have 16.2 trillion in debt, 1.6 trillion deficit, no savings, and 500 billion trade gap and still maintain growth without more debt.  More debt will ultimately casue global backlash against USD, much more than what you see today. 

Thu, 03/01/2012 - 12:33 | 2212936 Spigot
Spigot's picture

Hopium smoking jack asses. ISM shits on them and they thank god for the warmth...perfect.

Thu, 03/01/2012 - 11:46 | 2212705 firstdivision
firstdivision's picture

Honey WTI don't care!  Honey WTI does what it wants!  Watch as Honey WTI eats this economy.

Thu, 03/01/2012 - 11:46 | 2212707 Caviar Emptor
Caviar Emptor's picture

ISM Prices....UP

ISM PMI and Employment ... DOWN

 

Got it yet? 

Thu, 03/01/2012 - 11:47 | 2212716 Caviar Emptor
Caviar Emptor's picture

Construction spending -0.1%

Thu, 03/01/2012 - 12:08 | 2212817 MeetTozter
MeetTozter's picture

No money?  No credit?  Come on down!  I'll do whatever it takes to put you in a brand new car, today!

Thu, 03/01/2012 - 12:11 | 2212836 CvlDobd
CvlDobd's picture

Fucking hell? Again with the QE3 shit?

You won't get an announcement of this.

Thu, 03/01/2012 - 12:14 | 2212846 Snakeeyes
Snakeeyes's picture

The Godfather 3 economy: Just when I thought I was out... they pull me back in.

Personal Income Remains Anemic, Spending Flat, ISM Declines - Wait for Higher Gas Price Rises to Kick In!

http://confoundedinterest.wordpress.com/2012/03/01/personal-income-remai...

Thu, 03/01/2012 - 12:29 | 2212911 Spigot
Spigot's picture

Skittle-shitting Unicorn Invent-FUCKING-tory build is OVER!

Manufacturers and importers have been building inventory since last spring, started to stall out close to christmas, now in tail spin.

Enjoy eating that inventory, dopes.

Thu, 03/01/2012 - 12:34 | 2212940 Dermasolarapate...
Dermasolarapaterraphatrima's picture

I thought everything was fine...just fine.....

Thu, 03/01/2012 - 13:14 | 2213107 gigeze787
gigeze787's picture

ZH addicts:

The market is not permitted to decline on any date the Chairman testifies before the 535 corrupt representatives of Wall Street and the US banking kleptocracy.

Thu, 03/01/2012 - 13:23 | 2213140 Tsar Pointless
Tsar Pointless's picture

Come come, everybody.

One of the Tyler's assured me yesterday that the "market" would throw a tantrum without any pronouncement of further QE from our Central Bank.

So, really, as the Dow is not yet 14,000 today, you should look at today's "market" action as the beginning stages of said tantrum.

Never you mind that the ECB LTRO2 was brought to you by - well, you. And me. And your friends and family. Via the US Federal Reserve, that is.

As I type this, I am watching our local news. As it goes to commercial, a full-screen shot of the DJIA is being shown, with the number in the green and the average above 13,000. That's all you need to know, apparently.

Thu, 03/01/2012 - 15:38 | 2213809 slewie the pi-rat
slewie the pi-rat's picture

that looks like a 5-sigma downside PMI reading and another joeyLaVie 8-sigma prat-fall on the sell-sideComedyHour!

Thu, 03/01/2012 - 16:34 | 2214216 RossE9
RossE9's picture

my classmate's mother makes $84 an hour on the internet. She has been fired from work for nine months but last month her pay was $19551 just working on the internet for a few hours. Read more on this web site ..... http://goo.gl/skBIp

Fri, 03/02/2012 - 02:10 | 2215986 cnhedge
Do NOT follow this link or you will be banned from the site!