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Mar. Richmond Fed Mfg. Survey: -13, to 7 (above 0 = growth). Shipments -23 to 2, new orders -10...

Mar. Richmond Fed Mfg. Survey: -13, to 7 (above 0 = growth). Shipments -23 to 2, new orders -10 to 11, jobs -7 to 6.
Comments (17)
  • Stoploss
    , contributor
    Comments (1727) | Send Message
     
    I love the smell of FED fear in the morn.
    27 Mar 2012, 10:15 AM Reply Like
  • jwbrewer
    , contributor
    Comments (317) | Send Message
     
    Dallas reported a similiar drop yesterday.
    27 Mar 2012, 10:16 AM Reply Like
  • Econdoc
    , contributor
    Comments (2944) | Send Message
     
    the news item above is misleading the and provides the wrong inference i.e. contraction - which is not the reality of what was found - here's some of actual text of the report below. It implies continuing growth but at a moderating paces relative to last month.

     

    Overview

     

    Manufacturing activity in the central Atlantic region expanded in March for the fourth straight month, but at a more temperate pace than a month ago, according to the Richmond Fed's latest survey. All broad indicators — including shipments, new orders, and employment — continued to grow but at a rate below February's pace. Most other indicators also suggested moderate activity. District contacts reported capacity utilization grew more slowly, while backlogs held steady. Likewise, delivery times and finished goods inventories grew at a modestly slower rate.

     

    Looking forward, assessments of business prospects for the next six months were generally in line with last month's readings. Contacts at more firms anticipated that shipments, new orders, backlogs, capacity utilization, and capital expenditures would continue to grow at a solid pace in the months ahead.

     

    Survey assessments of current prices revealed that both raw materials and finished goods prices grew at a somewhat quicker rate in March than a month ago. Over the next six months, respondents expected growth in both raw materials and finished goods prices to rise at a somewhat faster pace than they had anticipated last month.
    27 Mar 2012, 10:26 AM Reply Like
  • CerpherJoe
    , contributor
    Comments (32) | Send Message
     
    Econdoc: We can read.
    28 Mar 2012, 02:15 PM Reply Like
  • torahislife
    , contributor
    Comments (400) | Send Message
     
    Big drop - more like a reversal
    27 Mar 2012, 10:40 AM Reply Like
  • Billdo
    , contributor
    Comments (19) | Send Message
     
    Hey econdoc, you sound like a standard shill for the media....how does posting something directly from the richmond fed's website contribute to actual analysis? Yes the reading was at 7 which still implies growth but isn't it the rate of change that is important? Coming down from 20 to 7 is a fairly substantial drop...worse yet why don't we discuss how shipments plunged to 2 from 25 when expectations were for 30( no reason for alarm there!) Or how both average work week and number of employees declined as well. Your post is misleading too
    27 Mar 2012, 12:18 PM Reply Like
  • Econdoc
    , contributor
    Comments (2944) | Send Message
     
    Billdo,

     

    you seem more than a little challenged by data and analysis so I will try to explain this slowly and with small words and phrases only

     

    positive values imply growth...and growth is growth
    reductionin the values imply...a slowing in the rate of acceleration
    the subindices and the supposed "misses" are just noise
    these numbers bounce around a lot month to month
    hitting them is the equivalent of hitting a bullet with another bullet
    we need a few months of declines and negative values to worry

     

    as for posting the information - it is just the facts so if you have a problem with that - sorry but I guess people like you usually do when the facts don't fit the party narrative.

     

    the piece was misleading, as the juxtaposition (I know I promised only to use small words) of the negative value and the phrase "above zero = growth" can encourage a wrong inference in the weak minded and biased.

     

    E
    27 Mar 2012, 01:08 PM Reply Like
  • slard271
    , contributor
    Comments (63) | Send Message
     
    The comment does indeed sound awfully sensitive to even the slightest notion of a negative report. Makes one wonder if there could be a little concern about a central bank liquidity fueled market holding up.
    27 Mar 2012, 02:45 PM Reply Like
  • wagnem
    , contributor
    Comments (12) | Send Message
     
    Excellent points, Billdo. And if we were to review now the details in the reports issued last month, I am sure that they would project quite rosy results for March. What we have is a far underachievement of market expectations.
    27 Mar 2012, 01:39 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4050) | Send Message
     
    TY Econdoc, it is just pathetic how wrong these data are interpreted by many. I am with you; growth has slowed a bit but it is still growth, not contraction.
    27 Mar 2012, 02:10 PM Reply Like
  • jwbrewer
    , contributor
    Comments (317) | Send Message
     
    The slowing of the rate of growth usually appears before the begining of a contraction - much like a sine wave or prehaps a business cycle.
    27 Mar 2012, 02:26 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4050) | Send Message
     
    That is correct - but there is a trend then, not a single data point. A single data point makes nothing.
    27 Mar 2012, 03:20 PM Reply Like
  • jwbrewer
    , contributor
    Comments (317) | Send Message
     
    True, just as one type of report in and of itself means nothing. All econ data should be read in synergy. This report seems to confirm a not so good durable goods reports beginging a couple of months ago as well as explain a build up in the last inventory report.
    27 Mar 2012, 04:06 PM Reply Like
  • Mark Bruns
    , contributor
    Comments (38) | Send Message
     
    It is a complicated story. If your time horizon is on the order of decades, I think you have to look at trends that are decades long ... if you're time horizon is much shorter, then maybe there's no reason for you to invest in green bananas.

     

    If you horizon is a relatively long-term one, you have to factor in the unprecedented growth in the money supply ... every weapon in the monetary policy arsenal has been fired and the Chairman of the Federal Reserve has reiterated that the Fed will keep firing ... ordinarily, this kind of expansion should have been enough to produce hyper-inflation ... except that demand and growth are so anemic that the actual rates of inflation and nominal increase in asset values has been underwhelming, if not demoralizing. Monetary policy can be used to put a bandaid on a recession owie and the changes in levels of available cash/liquidity provide either an ice-pack / hot water bottle to an otherwise healthy economy -- monetary policy cannot fix things that are broken structurally.

     

    In order to examine what is broken structurally in terms of growth, innovation, drivers of productivity and new enterprise, you have to factor in the fact that government now represents 40% of GDP and you also have to factor in that there are those who think that the economy needs still more regulations, still more taxes, still bigger bets on stupid investments that have not worked such as housing, education, green energy, clean technology. The long term impact of growth in government is that more and more and more intellectual capital is dedicated to the deadweight loss of government -- it's not limited to bureaucrats; plenty of private sector tails wag in sympathy with the Big Government dog. There's no end to the list of people who spend at least part of their day optimizing something for Big Government consumption -- lobbying for advantages in regulations, contracts, subsidies, tax incentives, government loans; special interest groups and PR campaigns crafted for stakeholders and advantages in political campaigns; tax lawyers, tax accountants, tax advisers and even tax criminals working overtime to optimize tax treatment; ventures/investment companies created specifically for government loan/subsidy programs or for tax avoidance.

     

    In this environment, the intuition of the prudent business owner with a long-term investment horizon is to sit on cash, to resist placing too many new orders, to err on the side of caution in hiring, to avoid developing new enterprises or ventures ... it's a matter of keeping powder dry AND away from the $6T gorilla. The prudent business owner must continue to be abnormally stingy in deploying that cash because the $6T gorilla in loose in the room, has big appetite, believes everything in the room is fair game and has not been the least bit shy about wanting a bigger share of every possible place that cash could get deployed.

     

    Unless / until it looks like that $6T gorilla can control his appetites and behave himself, we are not going see much of an expansion ... for example, if that gorilla is chastised and humbled on Nov 6th, then it will be more likely that America is not going to start looking like Zimbabwe and we might be able to move forward. Unless a regime change in November becomes more likely, it's fair to predict that we can expect more of what we have seen in the last 3 1/2 years ... we are just one event away from the tension uncoiling and volatility breaking out again.

     

    The capitulation we have seen in the traded volatility funds is not necessarily a bullish signal ... it could be ... or it might be a signal of numbness from an overdose on cheap money and stress from being raped by the $6T gorilla. I am not at all sure about the best way to trade the "bubble" that has formed on faith in government ... there is no historical precedent for the failed academic theory that has been implemented in our monetary policy AND a government that is this badly out-of-control ... except maybe Zimbabwe ...
    27 Mar 2012, 07:05 PM Reply Like
  • Pater Tenebrarum
    , contributor
    Comments (416) | Send Message
     
    Excellent comment, you are hitting the nail on the head.
    27 Mar 2012, 09:15 PM Reply Like
  • Billdo
    , contributor
    Comments (19) | Send Message
     
    Econodoc I'd like to juxtapose your face for trying to insult my intelligence. I was merely postulating that there was a strong deceleration in many components of the survey and large derivations from the estimates. I know exactly what the numbers mean, you're not the only one that went to college you arrogant prick
    29 Mar 2012, 02:10 AM Reply Like
  • CerpherJoe
    , contributor
    Comments (32) | Send Message
     
    Billdo: You're absolutely right. Seems like Econodoc left with the wrong take-away. I wonder how much he paid for that education? Whatever it was, it was too much, LOL.
    29 Mar 2012, 08:57 AM Reply Like
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