Chicago PMI: Hopium Or Reality?
The Market Ticker ® - Commentary on The Capital Markets
Posted 2010-12-30 10:20
by Karl Denninger
in Macro Factors
Ignore this thread
Chicago PMI: Hopium Or Reality?
 

That's a good number, right?

The Chicago Purchasing Managers reported the CHICAGO BUSINESS BAROMETER achieved its highest level since July 1988, expanding for the fifteenth consecutive month.

Well, it looks that way.  But let's look inside a bit.

What I like:

  • Employment.  Is it really this strong?  11th month of expansion in 2010?  Why isn't unemployment coming down in that area if so?

  • Production and New Orders.  Production is ahead of new orders - but just barely.  That's good.  But....inventories, after a big drawdown last month, spiked higher this month. That better not be a trend - if it's an aberration then we're ok, but if it's not we're in big trouble.  Building inventories are only good if you can sell all of them.

  • Prices paid.  That's scary.  Price inflation on materials in is the highest since July of 08 which was the peak in oil prices at near $150/bbl.  That we're trading $90 today in oil with the prices-paid index at 78.2 is a horrifyingly-worrisome fact, and again, goes to the point that it doesn't matter how much you sell at gross; only profits count! 

In short the report was good.  But I remain very, very concerned about an unbroken chain of information going back to the middle of the year showing severe margin pressures and this report not only fails to disabuse me of this notion, it dramatically strengthens the argument that severe margin pressures are building in the supply pipeline.

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User Info Chicago PMI: Hopium Or Reality? in forum [Market-Ticker]
Nevertoolate
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yep, earns on the s&p drop 50%, poof there goes your recovery (real or imagined)!

----------
"Socialist never mind stealing, as long as they are the ones doing the stealing. They never mind lying, as long as they are doing the lying."-Mannfm11

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Corn1945
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Highest since 1988? Really? Something very disturbing is going on here and I can't put my finger on it.
Altate
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Incept: 2010-12-27

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"In short the report was good. But I remain very, very concerned about an unbroken chain of information going back to the middle of the year showing severe margin pressures and this report not only fails to disabuse me of this notion, it dramatically strengthens the argument that severe margin pressures are building in the supply pipeline."

This is the best economic forecast for 2011. "Hope for the best" will be short-lived.

Lplate
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Australia
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from ZH
http://www.zerohedge.com/article/chicago....


Quote:
On the chart above please note the highest ever PMI print in 1974... followed propmtly by what can pass for the lowest ever, in the year following. This is what happens when future activity is forcefully brought forward courtesy of central planning.

Reason: format
End_the_bubbles
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Trillions in new debts, many markets up 100% or more in 2 years, massive fraud in embedded in the system, and this is all there is to show for it?

Forgive me if I don't consider this "good" - I think it's abysmal.

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In the long run even the most despotic governments with all their brutality and cruelty are no match for ideas. Eventually the ideology that has won the support of the majority will prevail and cut the ground from under the tyrant's feet and rise in rebellion to overthrow their masters.
Wonderdawg
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This is totally off topic but too good not to share. I'm a technical recruiter, currently searching for a UI/UX designer for a client in FL. I'm talking to a candidate whose current project is designing next generation web experience strategic vision for financial advisors. I said, "Do you have a graphic of a nuclear detonation you can put up there?"

He didn't get it. Oh well, some of my best one-liners are often unappreciated.
Mrobe10586
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"•Employment. Is it really this strong? 11th month of expansion in 2010? Why isn't unemployment coming down in that area if so?"

How many times do the statistical Houdinis have to tell you? When good paying jobs are plentiful, the slackers jump off the couch and run out to try to get them. Then they become unemployed again and you have to count them and so the unemployment rate goes UP and that's a GOOD thing and the stock market goes up and happy days are here again because a higher unemployment rate means there are more jobs.

Sheesh, it doesn't take a rocket scientist....

Hogman
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that must be some good **** they're smoking (best since JUL 1988)

not saying there can't be an improvement, but 1988

smiley
Karen1p
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Reformed Liberal - turned gun owner, Ticker Gal
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Karl,
This is the second time my sales manager has used your term "margin collapse." We had numbers come out for our 4th quarter and they are frightening to see how badly our margins are collapsing!!!

This cannot continue.....or can it?
Genesis
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Not for long...

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Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
Mannfm11
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An economy run by oligarchs can't go on long either. I just saw copper up on strong China growth. Growth over there is building excess capacity. They did that in Japan and it ran out.

The LEI is also at a record rate. I might add that after 1988, we fell into one of the biggest economic messes in a long time.

BTW, did you notice the seasonal adjustments? Also, unemployment was down to 388K. Many of the government offices here were closed all week last week.

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The only function of economic forecasting is to make astrology look respectable.---John Kenneth Galbraith

Nevertoolate
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Seasonal adjustment means "we work one day less that week, so there are 20% few unemployment claims processed." The economy has to be improving!

----------
"Socialist never mind stealing, as long as they are the ones doing the stealing. They never mind lying, as long as they are doing the lying."-Mannfm11

Before you attempt to beat the odds, be sure that you can survive the odds beating you.
Smacktle
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"Many of the government offices here were closed all week last week."

FINALLY! Some good news.

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