Central Perk: 31 aug. 2015

luni, 31 august 2015

Mish's Global Economic Trend Analysis

Greece Loses 17,000 Jobs in July, Most Since 2001
Witch Hunt Victim "Confesses": Word Police in China vs. Word Police in US
Inventory Grows in Economic Liftoff Anticipation
Dallas Fed Region Activity Plunges Well Below Any Forecast

Greece Loses 17,000 Jobs in July, Most Since 2001

Posted: 31 Aug 2015 09:47 PM PDT

It's no wonder Greek prime minister Alexis Tsipras wanted elections now rather than later. He does not want the grim news of job losses and austerity to hit when he is more vulnerable.

Tsipras' problem may well be that he is too late.

Via translation from Libre Mercado, The Greek Economy Lost 17,000 Jobs in July, the Worst Result Since 2001.

Industrial production recorded a record drop in July, according to estimates by Markit.

In addition, capital controls, have resulted in record job losses according to data published on Monday the National Confederation of Commerce and Companies (ESEE ).

Consequently, economic sentiment has suffered an unprecedented collapse, returning to its lowest level since the start of the crisis.

According to the local press, Greece destroyed about 17,000 jobs in July, the worst result since 2001. In addition, another 40,000 people went to work part time from full time, with a consequent reduction in salary.

What a disaster.

Mike "Mish" Shedlock

Witch Hunt Victim "Confesses": Word Police in China vs. Word Police in US

Posted: 31 Aug 2015 02:00 PM PDT

Witch Hunt Review

As I noted earlier today China Starts Witch Hunt for Those Obstructing Government Efforts to Prop Up Stocks.

Public Confession

It took less than a day for a victim of the witch hunt to be rounded up for public display. The Financial Times reports China Reporter Confesses to Stoking Market 'Panic and Disorder'.

A leading journalist at one of China's top financial publications has admitted to causing "panic and disorder" in the stock market, in a public confession carried on state television.

The detention of Wang Xiaolu, a reporter for Caijing magazine, comes amid a broad crackdown on the role of the media in the slump in China's stock market, which is down about 40 per cent from its June 12 peak. Nearly 200 people have been punished for online rumour-mongering, state news agency Xinhua reported at the weekend.

"I shouldn't have released a report with a major negative impact on the market at such a sensitive time. I shouldn't do that just to catch attention which has caused the country and its investors such a big loss. I regret . . . [it and am] willing to confess my crime," [said Xiaolu]

When the market turmoil began in June, Beijing imposed restrictions on media reporting of the stock market. The independent China Digital Times, which monitors internet censorship in the country, said in June media were told to avoid stoking panic.

"Do not conduct in-depth analysis, and do not speculate on or assess the direction of the market," it reported an official directive as saying. "Do not exaggerate panic or sadness. Do not use emotionally charged words such as 'slump', 'spike' or 'collapse'."

Word Police US Style

With thanks to reader Mark for the link, Campus Reform reports that Professors Threaten Bad Grades for Saying Oppressive Words.

Multiple professors at Washington State University have explicitly told students their grades will suffer if they use terms such as "illegal alien," "male," and "female," or if they fail to "defer" to non-white students.

According to the syllabus for Selena Lester Breikss' "Women & Popular Culture" class, students risk a failing grade if they use any common descriptors that Breikss considers "oppressive and hateful language."

Much like in Selena Breikss's classroom, students taking Professor Rebecca Fowler's "Introduction to Comparative Ethnic Studies" course will see their grades suffer if they use the term "illegal alien" in their assigned writing.

According to her syllabus, students will lose one point every time they use the words "illegal alien" or "illegals" rather than the preferred terms of "'undocumented' migrants/immigrants/persons."

White students in Professor John Streamas's "Introduction to Multicultural Literature" class, are expected to "defer" to non-white students, among other community guidelines, if they want "to do well in this class."

Streamas previously generated controversy by calling a student a "white sh*tbag" and declared that WSU should stand for "White Supremacist University".

It is notable that one of the syllabus provisions warns: 'The subject material of this class is sensitive and controversial. Strive to keep an open mind.'

How are students supposed to approach these sensitive and controversial materials at all, let alone to keep an open mind, if they have to fear that a misconstrued statement, or one that unreasonably offends a classmate will lead to a grade reduction or even removal from class?

Banned Words and Phrases Comparison

Banned Words and Phrases
China	US
Slump	Illegal Alien
Spike	Male
Collapse	Female
Panic	Illegals
Overvalued
Down Big
High PE

Repercussions China vs. US

In China, use of banned words and phrases, or even an analytical report that says a company is struggling will land you in prison or worse.

It is illegal to speak the truth in China. Heck, it's even illegal to pursue the truth. China has banned in-depth analysis!

Chinese analysts are probably scrambling right now to make sure they do not hint that sales of a company are likely to decline, be worse than expected, less than last quarter, or anything similar.

Those who make a mistake will find themselves on public display with a forced confession. Failure to confess when asked is likely to mean a death sentence or prison for life.

At Washington State University, use of politically incorrect terms will simply affect your grade. Moreover, students have the upfront option to not take inane classes in the first place.

Rest assured, classes in "multicultural literature", and "Women & Popular Culture" are not a likely foundation for a well-paying job.

Mike "Mish" Shedlock

Inventory Grows in Economic Liftoff Anticipation

Posted: 31 Aug 2015 10:44 AM PDT

The Chicago PMI reading came in just shy of the Bloomberg Econoday Estimate of 54.9.

The headline for August looks solid, at 54.4 for the Chicago PMI, but the details look weak. New orders and production both slowed and order backlogs fell into deeper contraction. Employment contracted for a fourth straight month while prices paid fell back into contraction.

Lifting the composite index are delays in shipments which point to tight conditions in the supply chain. Inventories rose sharply in the month and the report hints that the build, despite the weakness in orders, was likely intentional. But strength is less than convincing and this report suggests that activity for the Chicago-area economy may be flat going into year end.

ISM Chicago

Let's dive into the Chicago PMI Report for further details.

While New Orders and Production softened in August, both remained above their 12-month averages and significantly up from the depressed levels seen between February and June. Part of that resilience in Production and New Orders was due to stock growth as companies built inventories at the fastest pace since November 2014. Feedback from companies was mixed although our assessment is that the overall positive tone of the survey is consistent with a deliberate stock-build in anticipation of stronger demand in Q4.

Despite the latest gain, the labour component remained in contraction for the fourth consecutive month and was still close to June's nearly 5-1/2 year low. The Employment component has been relatively weak in recent months and the survey suggests it's unlikely to see a strong pick-up in the short-term.

Responding to a special question asked in August, 63% of our panel said they didn't plan to expand
their workforce over the next three months.

Economic Liftoff Anticipation

Once again, everyone hopes for a "second half liftoff" that perennially struggles to arrive as strong as expected.

This year, I highly doubt 2% for the entire year. 1% growth might be an achievement. Nonetheless, businesses stockpile in anticipation liftoff.

Anticipation is the word (and song) of the day.

Link if video does not play Anticipation: Carly Simon

Mike "Mish" Shedlock

Dallas Fed Region Activity Plunges Well Below Any Forecast

Posted: 31 Aug 2015 09:48 AM PDT

Repeat after me "housing and cars and part time jobs, oh my". There's little else worth cheering about, not even the stock market lately. And housing is not all that strong either.

Today, the Dallas Fed reported that activity in its region plunged to a reading of -15.8, well below any economist's prediction. The Bloomberg Consensus range was -8.0 to +0.5.

Nowhere are the effects of the oil-patch rout more evident than in the Dallas Fed manufacturing report where the general activity index fell to minus 15.8 in August from July's already weak minus 4.6. New orders fell into deep contraction this month, down more than 13 points to minus 12.5 with employment, at minus 1.4, in contraction for a fourth straight month. Hours worked are at minus 6.3 while readings on the business outlook fell steeply though both remain in slightly positive ground. Less weak readings were posted by production, shipments and capacity utilization. But price readings are very weak, with raw materials at minus 8.0 and finished goods at minus 15.7. It really doesn't get any worse than this report which points to increasing drag from the energy sector.

Dallas Fed Business Indicators

Note that wages and benefits are up big, while prices received and new orders are in deep contraction.

The above table from the Dallas Fed Texas Manufacturing Outlook Survey.

Some of the comments are interesting.

Primary Metal Manufacturing

Overall business is slowing.
The strength of the dollar is impacting us through an inability to export and high volume of imports.
The price of finished product dropped dramatically.

Fabricated Metal Manufacturing

New orders have dropped to half of what they were last year. Capital project equipment continues to be sourced in China and Korea as the owners are chasing every dollar of savings possible. We had our first layoff in 15 years.
We are currently experiencing a large surge in the automotive industry due to our relationship and close proximity to an automotive plant during a new vehicle implementation period.
It seems like if you are in a position to take on work and able to turn it around quickly there seems to be plenty of small to medium-range quantity types knocking. We are hoping that as oil prices continue to fall, food and other commodities fall also.
A little more deflation could certainly help.
Our oil and gas business, historically 50 percent of our revenues, is still down. Inventories have been consumed fairly well, which now offsets the second drop of oil prices. The growth we expect is due to our efforts to grow our non-oil and gas business.
The continued decline in the West Texas Intermediate crude oil price is expected to soften the demand for our basic fabricated products.
The volatility in the stock market and decreased energy costs always have a negative impact on replacement windows orders.
Even though there is a substantial decrease in raw material prices, capacity levels in PVC and glass are extremely constrained.
The reason for the decreased capacity levels is that during the housing crisis no capital expenditures were made and now most vendors are at full capacity.

Mike "Mish" Shedlock