Sales, Manufacturing Reports: A Whiff of Inflation Expectations?

I don't see this being too good...

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for October, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $347.5 billion, an increase of 1.4 percent (±0.5%) from the previous month, but 1.7 percent (±0.5%) below October 2008.

That doesn't sound so awful, but...

The August to September 2009 percent change was revised from -1.5 percent (±0.5%) to -2.3 percent (±0.3%).

Oops.

building material and garden equipment and supplies dealers were down 15.0 percent (±1.8%) from last year.

Uh, I thought that construction had turned the corner? Uhhhhhh...

The internals are interesting. Cars rebounded from the cratering that occurred in September (expected), while there was a material weakness in Electronics (also expected; back-to-school is now over.) But building materials dropping significantly is a yellow-light warning on the claims that construction and housing have turned. Really? Hmmmm..... yes, I know, seasonality - but remember, permits/starts were claimed to be up. Where's the material coming from?

Food purchases were up, which leads one to question whether the so-called "inflation" numbers are real or not (grocery demand is typically stable - so dollar amount typically translates quite cleanly through to inflation in food prices.)

Ex-autos the gains were about half of what was anticipated. My read on the report is that it isn't a disaster, but the year/over/year comparisons are quite weak - more so than I expected, given that October of last year was well into the "shock collapse" period.

The Empire Index came in significantly under expectations, down to 23.5. Forward expectations, however, remain buoyant. We'll see. One troubling sign is that both prices paid and received are expected to move strongly higher - is that a whiff of "inflation expectations" I smell?

Comments

[conceptwizard:]

The volume of outstanding interest rate derivatives contracts – the largest segment of the derivatives market…rose 13 percent to $437,198bn concentrated in maturities greater than five years…

It’s clear to see the trigger for the next financial crisis. If CDS took the financial system to abyss and its notional value at its peak was estimated at about $38 trillion; what will occur if interest rates unexpectedly rise on $437 trillion of derivatives?

The US Treasury reports a $176.364N deficit for October FY 2010. Tax receipts are $135.328B vs. October FY2009’s $164.847B, a 17.97% decline y/y. The US is still in recession if income is down almost 18% y/y for the latest month.

Matthew Anderson, partner at research firm Foresight Analytics, estimates that about two-thirds of the $800 billion in commercial real-estate loans held by banks that will mature between now and 2014 are underwater, meaning the loan amount exceeds the value of the property. The flexibility extended by regulators will apply to $110 billion to $130 billion of these loans, he said.

Credit Writedowns: The coming collapse of the municipal bond market

And so on...

Nov 16 09:24 PM

[TeresaE:]

Inflation is real if all you are buying is necessities (except housing). Deflation is real if all you are buying is luxury items or locally produced food/goods.

American companies/ farmers/ manufacturers are slashing prices, and profits, to weather this storm.

Chinese importers (the meganationals like Kraft, Hanes, etc) are increasing prices, or worse shrinking contents while increasing costs, then they have big sales to sell them. And what do we do? Go to China and demand they increase costs when the administration has to know that there are thousands of everyday items that are 100% manufactured by China.

What is most interesting to me is that apparently no one that compiles these reports actually buy their own food or underwear.

And if they do, then they have to know that their reports are utter bs.

With everything coming out of WDC and headed straight for our wallets, these numbers will continue to be fudged as the average American is soon going to find out the true costs of revalued yuan, "free" health care and Cap 'n Tax.

Nov 17 10:23 AM

[artkarl:]

Construction turning the corner?
Who's buying those houses?
-Karl Krachenberg

Nov 17 07:59 PM