Seeking Alpha

Treasurys take Chicago PMI plunge in stride

  • The 10 point decline to 52.6 in July was led by a "collapse" in the production and ordering components, say the report authors, leaving the production gauge barely in expansion territory. New orders - the most highly weighted component of the headline index - saw its largest decline since November. Backlogs fell into contraction territory.
  • The surprise fall calls into question the sustainability of the recovery, says MNI Indicators' Philip Uglow.
  • Full report
  • The response of the Treasury market suggests it believes the slow report is a one-hit wonder. The 10-year yield remains higher by three basis points at 2.59%. TLT -0.6%, TBT +1.2%
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Comments (31)
  • al roman
    , contributor
    Comments (6800) | Send Message
     
    Guys where right 6 months ago the 2008 models.
    31 Jul, 10:17 AM Reply Like
  • capitolp
    , contributor
    Comments (678) | Send Message
     
    Did they not get the, "Make it Work " memo.
    31 Jul, 10:19 AM Reply Like
  • al roman
    , contributor
    Comments (6800) | Send Message
     
    ?
    31 Jul, 10:20 AM Reply Like
  • Guardian3981
    , contributor
    Comments (2078) | Send Message
     
    Maybe Chicago needs to raise their minimum wage to 15 to solve the problem! Wait, what?
    31 Jul, 10:25 AM Reply Like
  • Matthew Davis
    , contributor
    Comments (3903) | Send Message
     
    1Q put it in reverse, bad weather...2Q 4% wow, pedal to the metal! sshhhreik! Slam the brakes again, whoops did we over shoot 2Q?

     

    CNBC toady is clamoring for talking heads to talk up the economy like everything is peachy.
    31 Jul, 10:26 AM Reply Like
  • al roman
    , contributor
    Comments (6800) | Send Message
     
    Electric E's on the extreme dip's.
    31 Jul, 10:28 AM Reply Like
  • dweebster
    , contributor
    Comments (347) | Send Message
     
    We seem to be experiencing odd statistics these days. That negative GDP number for Q1 followed by 4% in Q2, now this. Can't see it on the streets or in the shops in any obvious way. Oh, well. Maybe next month all will be clear. Mr. Market's failure to overlook this bad number may reflect backstory concerns about the international situation? Or the current downbeat mood may be simply, as my sister says with a shrug of her shoulders, "The market goes UP. The market goes DOWN." Deal with it or go camping.
    31 Jul, 10:39 AM Reply Like
  • Michael Clark
    , contributor
    Comments (8861) | Send Message
     
    The 4% Q2 was apparently all inventory. All the shelves are now full. But no one is apparently buying, still.

     

    You can't recover with the biggest debt mountain in the history of the world on your back and getting bigger.
    31 Jul, 11:05 AM Reply Like
  • darkwright
    , contributor
    Comments (3) | Send Message
     
    I agree Michael. Just because we fill the shelves and build up inventory does not necessarily make the economy any stronger, especially if we have to discount the sale price on that large inventory just to get it off the shelves. It seems to me the better way to measure our production is dollars spent vs. dollars received on the macro level and at the corporate level the same, dollars spent vs dollars received which we hope is positive profit which creates jobs. Companies can only hire more workers when they have to produce more to keep up with demand both overseas and local. I remember back in the Reagan years when production was a major factor, a measure of so many goods in dollars produced per worker. The saying was if production per worker went up our overall economic wealth increased as a nation. We didn't have huge government deficits back then. You don't hear about production much anymore. I wonder why nobody talks about that anymore? Could it be because we don't produce more than we consume? Seems like all production comes from China!
    31 Jul, 02:21 PM Reply Like
  • Captain Pike
    , contributor
    Comments (787) | Send Message
     
    Darkwright says "We didn't have huge government deficits back then"

     

    LOL are you a youngster or were you not interested in current affairs in the 80's?

     

    SEE CHART- http://bit.ly/1s7xAS1

     

    Reagan had the biggest deficits going (until Obummer) back when Republicans believed in big deficits. Look up David Stockman! Now of course republicans hate deficits, supposedly. Then republicans believed in shipping production overseas with China MFN and Nafta, Dumocrats equally guilty.

     

    Thankfully with the huge energy resurgence and chinese standard of living rise, production is coming back to the US. No thanks to politicians!

     

    btw I am an independent who voted for gumby twice.
    31 Jul, 02:59 PM Reply Like
  • Lakeaffect
    , contributor
    Comments (1047) | Send Message
     
    Mike - Agreed. The inventory build in Q2 was based on hopes and dreams of a Q2 consumer snap back from Q1 which didn't happen. We'll be seeing another negative Q GDP soon enough. But the optimists can exhale now because it wasn't two in a row, which would have made the recession official.
    31 Jul, 03:51 PM Reply Like
  • yliu54
    , contributor
    Comments (170) | Send Message
     
    Dont worry, we have the best Fed in history.
    31 Jul, 10:42 AM Reply Like
  • bbro
    , contributor
    Comments (9845) | Send Message
     
    I'll take jobless claims and the July ADP report...you can have the July Chicago PMI
    31 Jul, 10:57 AM Reply Like
  • WisPokerGuy
    , contributor
    Comments (887) | Send Message
     
    Exactly. Is the economy great? No. Is it horrible? Absolutely not. Investors have been looking for a reason to sell and maybe this is it. However, that is why you keep some cash handy for days when the market is down and the reasons are just plain silly.

     

    The jobs report on Friday is significantly more important then Argentina or the PMI.
    31 Jul, 11:42 AM Reply Like
  • Captain Pike
    , contributor
    Comments (787) | Send Message
     
    I don't trust any of these "numbers" that we get fed monthly but the economy will trudge along slow and steady until we get better leadership that make the right moves, no bubbles, no slowdown.
    31 Jul, 10:59 AM Reply Like
  • John Grandits
    , contributor
    Comments (376) | Send Message
     
    what do you consider better leadership for fiscal and monetary policy?

     

    although the days of 3 - 4% GDP may be in the rear view, slow and steady wins the race. financial/monetary systems have been replete with bubbles for hundreds of years, if not longer, so attributing recent bubbles up to poor leadership is a fairly futile exercise. investors need to be vigilant about recognizing potential bubbles and not be overly exposed to one asset class.
    31 Jul, 11:28 AM Reply Like
  • Matthew Davis
    , contributor
    Comments (3903) | Send Message
     
    John

     

    How do you explain the bubbles become more frequent and instead of ever couple decades its every few years?

     

    Or as it seems now, at the end of every presidential cycle?
    31 Jul, 11:32 AM Reply Like
  • Captain Pike
    , contributor
    Comments (787) | Send Message
     
    @John --- slow and steady is nice, but it is the mix that would be improved with better leadership

     

    1- fiscal -The "Penny Plan" for the budget
    2- monetary - Phase out Mortgage bond purchases completely, but keep buying Treasuries as needed until Penny plan has effect.

     

    We don't need to prop up housing, we have to forget housing as a big industry and transition to tech and infrastructure. Some details in a budget under the Penny plan, bring foreign based forces home, put them on the border and instead spend money on highways and superchargers to speed up the transition to BEV car fleet. Modernize the country, public infrastructure, factories, schools, while cutting out the fat.
    31 Jul, 11:59 AM Reply Like
  • Jason Meissner
    , contributor
    Comments (31) | Send Message
     
    I've said in my last article that the overall PMI before Oct 2012 was over 50 for 39 months due to high levels of both production and new orders.

     

    In the last 4 months we've seen a trending amount of surveyed saying they're seeing worsening conditions in both of those categories. Soon we will see if that trend continues for the 5th straight month.
    31 Jul, 11:16 AM Reply Like
  • Matthew Davis
    , contributor
    Comments (3903) | Send Message
     
    Across the board all sectors down 1% or more, this is a BIG signal!

     

    Like everything came to a screeching halt, is this the big correction we've been waiting for?

     

    Which sector should I short?
    31 Jul, 11:21 AM Reply Like
  • Tomal
    , contributor
    Comments (993) | Send Message
     
    it is more about Argentina debt default. This will last for a few days at most.
    31 Jul, 12:09 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (3903) | Send Message
     
    It is not about Argentina at all. Its about Europe and the bad economic output indicators released today.
    31 Jul, 12:20 PM Reply Like
  • Tomal
    , contributor
    Comments (993) | Send Message
     
    I dont think you will win by going short right now. It is more about Argentina's debt default reaction which will be short lived. Hell Russia invaded a country and their weapons destroyed a commercial plane and yet the stock market went up. Economic news have always been mixed across the world anyways. Either way, I think I would wait for the QE to end around October. Then we might see the real correction.
    31 Jul, 01:16 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (3903) | Send Message
     
    I agree with the time frame. Also I have been hearing that a lot of the major banks will do a final write down of toxic assets in Q3 which will cause a huge downturn in the sector at least till the end of 2014.

     

    Anyone else hear of this?
    31 Jul, 02:27 PM Reply Like
  • TraderzOracle
    , contributor
    Comments (21) | Send Message
     
    Buy the dip!
    31 Jul, 12:09 PM Reply Like
  • TheLastSpartan
    , contributor
    Comments (121) | Send Message
     
    No, thank you. You buy it!
    31 Jul, 12:20 PM Reply Like
  • TraderzOracle
    , contributor
    Comments (21) | Send Message
     
    I did. Keep buying until the weekly trend is broken!
    31 Jul, 12:21 PM Reply Like
  • zagman
    , contributor
    Comments (41) | Send Message
     
    Change the leadership in Washington and get the government and the EPA off the backs of everyone especially business and you will see real growth.
    31 Jul, 01:14 PM Reply Like
  • 11146471
    , contributor
    Comments (841) | Send Message
     
    This is just technical. Don't be fooled by the big guys and loose your shirts on it!

     

    Long term investor should stay still. Some may buy on dips if they find the proper opportunity (for e.g. K or CL today).

     

    Do not consider selling if you are not a day trader.

     

    Just a humble opinion, from an ordinary private investor.

     

    As for the guy above that said about bad news from Europe, I believe he is totally off-topic.

     

    Europe is having debt problems all these years from 2009 until now, these were never solved, and can't be solved with the followed policy. But ECB now is more facilitating than ever and there is no reason for EU led sell-off.
    31 Jul, 01:28 PM Reply Like
  • 11146471
    , contributor
    Comments (841) | Send Message
     
    Plus: The Argentina insolvency problem is a joke. It is a legal matter that has nothing to do with the reality, and the reality is that Argentina can pay the 540 mil $ that are due.
    31 Jul, 03:04 PM Reply Like
  • James Bjorkman
    , contributor
    Comments (677) | Send Message
     
    This truly is the best of all possible worlds. Just keep repeating that.
    31 Jul, 02:05 PM Reply Like
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