Bad news. The economy is starting to look very ugly...as I predicted. Both the Dallas and Chicago PMIs plunged to lows. The good news (from a stock market perspective for the top 1%) is that this makes QE more likely.
Dallas Fed Plunges Negative. Biggest Miss In 10 Months
Submitted by Tyler Durden on 04/30/2012 10:46 -0400
While the Dallas Fed Manufacturing Index tends to be a little less of a headline-maker than many of its macro-data peers, today's dismal report is worth paying attention to. The index turned negative for the first time this year, dropped to its lowest level in 7 months and missed expectations by the largest amount in 10 months. The drop from +10.8 to -3.4 is also the largest sequential drop in 11 months. Only the inventories sub-index rose (hardly a bright spot) as Production, Number of Employees, New Orders, and Capacity Utilization all plunged and theaverage workweek fell for the first time in months. The US decoupling myth continues to come apart at the seams and the likelihood of more easing (extreme or not) seems to be rising by the day - because that has worked so well in the past.
Chicago PMI Plunges To Lowest Since November 2009, Biggest Miss To Expectations Since September 2009
Submitted by Tyler Durden on 04/30/2012 09:57 -0400
... the only question is whether the number,which printed at 56.2, down from 62.2, and missing expectations of 60.0, is horrible enough to send stocks soaring. Based on some of the core numbers it may be: the headline nuimber was the worst since November 2009, the miss was the biggest since September 2009, Production of 57.1 was the lowest since September 2009, New Orders slide to 57.4 from 63.3, Supplier deliveries lowest since September 2011, and so on. The only good print was employment which mysteriously rose from 56.3 to 58.7, just in time for the NFP print to come really, really ugly. On, and Joe LaVorgna was at 61.0: way to earn that bonus Joe. ISM downward revisions to come. But not from Joe- look for upward revisions there. Finally, comment #6 from the PMI respondents says it all: "Despite all of the rhetoric to the contrary, it looks like the air got let out of the balloon."
Source:
The most interesting part from the release, the survey respondents. #4 FTMFW. #6 and #9 are pretty good too.
- Seems there is a calm out there.
- Extensive off-shoring of manufacturing not without unseen cost. Apron strings are much harder to
cut than originally anticipated. Improvements are often slow and painful. Yields far lower as a
result. Tight inventories at suppliers continue to constrain inventory turn improvements by
increasing risk of spike induced outages. - High oil cost is creating a cost burden for inbound freight & higher material conversion costs. A
sustained increase in the cost of oil (or staying high at the current cost) will have a negative
impact on our business and the economy in general because goods and services will cost more and
the population will have less to spend on those goods and services. Much of the oil rise seems to
be speculation and is rooted in the fear of lack of supply rather than true supply and demand. - Same, same.
- Generally seeing a positive trend in orders.
Some supplier lead times are decreasing. Their backlog is decreasing as is ours.
Automotive related orders have greatly increased from one year ago, but other areas of business
appear to be softening. - Despite all of the rhetoric to the contrary, it looks like the air got let out of the balloon.
- New orders down a little this month but testing & quoting is up. We are expecting a lot of orders
in the near future. - China inflation to hit in second Qtr.
- Lending is picking up but only to borrowers with stellar credit.
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