The Market Ticker
Commentary on The Capital Markets- Category [Macro Factors]
2015-01-30 13:52 by Karl Denninger
in Macro Factors , 183 references
 

Hmmm...

Real gross domestic product -- the value of the production of goods and services in the United States, adjusted for price changes -- increased at an annual rate of 2.6 percent in the fourth quarter of 2014, according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 5.0 percent.

Looks to me like a miss; the equity market was down a fair bit coming into the number and the bond market got bought a bit on the release.

The price index was -0.3%, but ex-food and energy it was +0.7%.

Here's reality -- if you feel like you're still falling behind -- you are.

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So about that victory lap Obama....

New orders for manufactured durable goods in December decreased $8.1 billion or 3.4 percent to $230.5 billion, the U.S. Census Bureau announced today. This decrease, down four of the last five months, followed a 2.1 percent November decrease. Excluding transportation, new orders decreased 0.8 percent. Excluding defense, new orders decreased 3.2 percent.

Transportation equipment, also down four of the last five months, led the decrease, $6.8 billion or 9.2 percent to $66.7 billion.

Oops.

Computer new orders have collapsed; we now have a three-month run-rate that's negative on new orders, with last month being negative 10.4%.  This is a strong indicator of future jobs, as I've pointed out since The Ticker began.  Communications gear had been the counterpoint, but this month it's negative too.

Further, machinery is now negative three months running on both new orders and shipments.

And the top-line, ex-defense, is not only negative three months running the rate of decline is accelerating.

What's that word starting with an "R" that nobody wants to use?  This is a terrible number and the revisions make it much worse.

PS: Business tends to run in a ~7 year cycle; how many years have passed since 2008 and do you think there are more policy weapons available to various "central banks"?

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Oh boy....

The index for all items less food and energy was unchanged in December, following a 0.2 percent increase in October and a 0.1 percent rise in November. This was only the second time since 2010 that it did not increase. The shelter index continued to rise, and the index for medical care posted its largest increase since August 2013. However, these increases were offset by declines in a broad array of indexes including apparel, airline fares, used cars and trucks, household furnishings and operations, and new vehicles.

Remember that the "shelter" index includes owner's equivalent rent, not house prices.  In other words it's suppressed by low borrowing costs (since that reduces the cap cost of a rental.)  This is one of the means by which the CPI has been "adjusted" to lie about the true expense consumers see (since if you own a house you don't pay OER, you pay an actual mortgage.)

But the ugliness in medical commodities is quite severe.  A 1% move in the last month (4.8% over the last year) coupled with a 4.9% increase in hospital services puts everything except actual physician billings grossly beyond the so-called "inflation rate."

Indeed, over 10 years this expansion rate results in the cost of medical care going up 60%.  In 20 years the rise in cost is 258%.

You won't be able to pay that, Obamacare or not.

And yet we continue to hear that medical costs have been "contained".

Uh, nope.

Again, I point out that the only way to avoid being utterly destroyed by this trend is to consume zero medical services.  Since the people of this nation will not rise and demand this crap stop that is the only means by which you can prevent your personal financial destruction.

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I told you this was Grinchmas....but no, it wasn't said the crooners on the Idiotbox.

Wrong.

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for December, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $442.9 billion, a decrease of 0.9 percent (±0.5%) from the previous month.

Worse...

Retail trade sales were down 1.1 percent (±0.5%) from November 2014

Ouch.

Now the unadjusted numbers were higher, of course -- but they damn well better be, given the holiday.  The only place that such sales are usually down is in building materials (it's this nasty stuff called snow, you see) and indeed they were.

Gas stations were also down a lot, but that's not a surprise since sales are in dollars, not gallons, and the price has gone down a lot along with oil.

The seasonally-adjusted figures, however, are ugly.  How ugly?  December was down both for pretty much everything that is Christmassy, including clothing, sporting goods, general merchandise (department stores), various miscellaneous retailers and online sales compared against November.

I'm not a fan of so-called "seasonal adjustments", as you know.  But if you live by the fudged numbers you wind up dying by them, and that's exactly what you're going to do today in terms of market reaction.

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