Daily Archives: February 1, 2011 @ 12:23 pm (Tuesday)

ISM- Obama boom!

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Karim writes:

Across the board strength. More evidence that the inventory drag in Q4 was involuntary (demand running well ahead of production). While some of these figures may cool, the order backlog and supplier delivery indices (lead times) suggest very strong data for the next few quarters.

  • Overall index: Highest since May 2004
  • New orders: Highest since Dec 2003
  • Employment index highest since April 1973
  • Export orders: Highest since Dec 1988



ISM Jan Dec
Index 60.8 58.5
Prices paid 81.5 72.5
Production 63.5 63.0
New Orders 67.8 62.0
Backlog of orders 58.0 47.0
Supplier deliveries 58.6 56.7
Inventories 52.4 51.8
Customer inventories 45.5 40.0
Employment 61.7 58.9
Export Orders 62.0 54.5
Imports 55.0 50.5

Yes, manufacturing is being led by exports, which tells me to watch for a dollar rally.

The problem is crude is moving higher, but that may be temporary and fall back as the Egyptian crisis gets resolved, if the Saudis don’t support the higher prices. And the US cost advantage with the dollar at current levels could drive the dollar higher even with the higher crude prices.

The federal budget deficit remains plenty high to support the 3-5% reported real growth, which is enough to bring unemployment down some as well with productivity running maybe 2.5% or so, but unemployment probably won’t fall fast enough for the Fed to declare victory anytime soon. And with core inflation numbers still decelerating the Fed continues to see itself ‘failing’ on both mandates as Chairman Bernanke reported in his last address.

For the Fed, the GDP growth limit is as high as possible without jeopardizing price stability. While they have calculated that should be around the 3-4% real growth level, if the evidence supports higher rates of gdp growth with price stability they should in theory have no problem with higher levels of real growth.

Risks remain China, Europe, and US fiscal tightening, as well as a sharp spike in crude prices

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EU Daily | Europe Manufacturing Growth Quickens to 9-Month High

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As previously discussed, it doesn’t get any better than this from a German point of view.

And it could be several more months or quarters before the austerity hits them.

EU Headlines

Europe Manufacturing Growth Quickens to 9-Month High

Europe Unemployment Remains Near Highest in More Than 12 Years

ECB pauses bond purchases as crisis eases

German January Unemployment Falls to 18-Year Low

France Won’t Lift Sales Tax Rate Right Now, Lagarde Says

Spanish Bank Tackles Toxic Assets

Italian Unemployment Rate Holds Near 7-Year High in December

Central Bank cuts Ireland’s outlook over austerity

Greece confident over new rescue loan installment

Industry warns Europe on competitiveness

Spain’s Salgado Says EU Rescue Fund Should Be More Flexible

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Tevatron Is Shutting Down

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>   
>   (email exchange)
>   
>   On Tue, Feb 1, 2011 at 2:30 AM, Roger wrote:
>   
>   This is sad & pathetic
>   

Agreed.

It’s being shut down for the wrong reason.

Add all this to ever growing real cost of not understanding the monetary system.

The Tevatron Is Shutting Down And You Know What That Means

By Courtney Comstock

January 31 (Business Insider) — The Tevatron, the particle collider that has been smashing together subatomic particles in Illinois since 1983, will be shut down by late 2011.

The Large Hadron Collider in Geneva does the same thing, only 7 times faster, and so the Tevaton has lost funding ($50 million per year) from the Department of Energy, according to the New York Times.

It’s sad for everyone except Wall Street.

For everyone else it means:

  • We’re losing some of our science edge to Europe
  • 1,200 physicists are out of a job
  • Particle physics might not be advanced as soon as everyone hoped
  • We might be at least one step further away from understanding the big stuff, like how the world works

For Wall Street it means that 1,200 physicists, aka potential quant material, are available for hire.

And as someone pointed out in a letter to the editor, Wall Street loves hiring quants!

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China Central Bank says Fed easing ineffective, dangerous

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I suspect they know better but continue to play us for the fools we have proven to be.

Fortunately they want to net export…

China c.bank says Fed easing ineffective, dangerous

January 30 (IBTimes) — Quantitative easing by the Federal Reserve and other central banks cannot address fundamental economic problems but may lead to excessive global liquidity and competitive currency depreciation,China’s central bank said on Sunday.

In its monetary policy report for the final quarter of 2010, the People’s Bank of China (PBOC) also confirmed that it would target 16 percent growth of the broad M2 measure of money supply this year, down from the 19.9 pct growth recorded at the end of 2010.

The central bank said the Fed’s monetary easing was pushing up international commodity prices and asset prices in emerging markets, including China.

“Quantitative easing policy cannot fundamentally address economic problems, and it may cause excessive liquidity on a global scale as well as risks of competitive currency depreciation,” the Chinese central bank said in its 59-page report.

“It is creating imported inflation and short-term capital inflows, pressuring emerging markets,” it said.

As a result, China needed to work hard to soak up liquidity from foreign exchange inflows in order to minimize the impact on the domestic economy, it added.

The central bank reiterated that it would keep the yuan CNY=CFXS basically stable while making the exchange rate regime more flexible.

The central bank said it would continue to use different tools, including interest rates, bank reserve requirements and open-market operations, to rein in money supply and bank credit growth as a way of handling inflationary pressure.

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