ISM Non-Manufacturing Index Plunges in November
Submitted by
CalculatedRisk on Wed, 12/03/2008 - 7:00am (81 comments)
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Nemo?
keeps getting better and better don't it..
yeah, I don't know if I like this new definition of "containment" or "strong fundamentals".
whoa, 13 week treasury just clicked .0050!
^IRX: Summary for 13-WEEK TREASURY BILL- Yahoo! Finance
13 week treasury NOW 0.00 !
Can't say I'm surprised. We're in good shape and likely to remain so unless things get to "fall of western civilization"-type levels, but we've also put off any major discretionary expenses and are squirrelling away our extra pennies until prices get lower. Just because one can afford a shiny new hdtv doesn't mean one should get one--but then again that concept is downright countercultural.
can the bond go below zero? are the charts capable of that? historic insanity...
It's a great time to buy or sell a facial / singing telegram / strip tease.
"whoa, 13 week treasury just clicked .0050!"
SPLORT
These things really should stop surprising me at some point. The only question remaining is when this roller coaster will crest the first big hill and start plummeting...
serf Alan Greenspend writes:
can the bond go below zero? are the charts capable of that? historic insanity...
serf Alan Greenspend | Homepage | 12.03.08 - 10:25 am |
This will be a good test of a lot of computer software - how many divide-by-zero errors will turn up.
As soon as I have to pay myself interest on the 13 week treasury, I'm in.
Not very good number ISM numbers. But why would we expect anything different.
I'm thinking it might be better to buy a giant 3 month old flatscreen on Craigslist or a pawn shop than to buy one on sale after Christmas. What to do?
It appears that we are now stuck in a deflationary blackhole, with almost all asset prices headed down. 10 year bond yields are screaming deflation. Clearly something other than fiscal stimulus is going to be required. Roosevelt devalued the dollar by about 40%. Is it possible for us to do the same even while China and others are trying to devalue their curriences?
Back to the Big 3 for minute . Look at this comparison of the Big3 with Honda and Toyota -
Big Three Auto - ProCon.org
If I had a recession choice of fast and painful or slow and aching, I think I would prefer fast and painful. I hope things get really bad really fast so we can begin to recover as soon as possible.
Chart idea; the NMI v the NAHB HMI. Offset 6 months?
Amazing how well the dow is doing (so far ) given the double wammy of bad news .
stockdog42 | Homepage | 12.03.08 - 10:29 am | #
we're locked into a death grip with all the world currencies, cusp of potential economic warfare. or like the final shootout in reservoir dogs, don't blink.
this is a good read on the Debt Deflation of great depressions by irving fisher. you can skip to page 7 for a peak at the future in stages. pdf -
404 Not Found fisdeb33.pdf
This is inflationary, right?
cusp of potential economic warfare
Economic? Why not real warfare?
Seriously. War is economics by other means. Don't you think the possibility of a world war in the next decade has somewhat increased?
dang haloscan, here is the link fixed.
The Debt Deflation Theory of Great Depressions
I wonder what time it is on Conjure's Global Depresssion clock now?
traditional trade.
fade bonds buy spoos
the final shootout in reservoir dogs
serf Alan Greenspend | Homepage | 12.03.08 - 10:34 am | #
ugh...too spot on...anyone remember how that one ends?
ANy bottom callers today ? It can't get much worse... Can it ?
With all this wonderful news, naturally Gold is down 2%.
I'll paint any car, any color for $29.95
If I had a nickel for every time I hear about inflation, I would still be broke.
Hey, If the 13 week treasury goes negative, can they start deducting
interest?
Go figure, bad news on top of bad news and we have a rally baby! These people defy all laws of stupidity...
mal, yep, that's historically likely. i'm staying in denial with options on a bailout plan of my own.
Domino effect
More tightening of foreign investment in western banksters cartel. It's that time of the month for Hanky to beg on bended knee to the chinese
Guardian.co.uk: Chinese wealth fund turns back on western banks China Investment
China Investment Corporation is to put the brakes on making investments in western banks until governments come up with coherent policies ( in other words, when Bush & Hank leave ofc) to cope with the global economic downturn.
Lou Jiwei, the chairman of the sovereign wealth fund, said today: "Right now, we do not have the courage to invest in financial institutions.(pretty much how alot of us feel) We have to wait for the time when there won't be massive collapses of financial institutions."(not too long of a wait, we'll sneak a peak in Papa's Hank & Ben Santa's bag of goodies or coal)
China had lost confidence in many financial institutions, Lou said, because foreign governments seemed to be changing their policies "every week" (ya think!).
The announcement by CIC... will come as a big blow to many American banks that had hoped CIC would help bail them out..........
Amazing how well the dow is doing (so far ) given the double wammy of bad news.
Not at all surprising.
Again this just illustrates that the source of our problems really isn't going away because we won't allow it to.
So long as deliberately divorcing markets from reality is viewed as "economic medicine" we will have an economy that is in a structural decline.
In as much as deception and bad debt are rationalized as being essential to economic recovery we have no future.
RPS,
The epitome of stupidity would be if China keeps buying treasuries so the U.S. government can turnaround and dump the money into banks.
ac,
Yep. There seems to be a widely held view on high that if only the readings on the dashboard can be set to "green," why then the real economy will get there...
It is incredible how difficult it is to determine where to put your money. Many of the folks on this blog are clearly focused on that same question. I am in SRS, again, but convinced that it is best to get out of the market entirely- and soon. Am also in treasuries and cash, with minor long market exposure. The GLOD bugs are close to convincing me, but I fear a short-term deflationary drop over the next 24 months before inflation inevitably kicks in.
The 1930's are somewhat of a guide, but surely the massive expenditures by the government in 2008/2009 will increase the likelihood of inflation (or hasten its arrival) and decrease the degree (or duration) of deflation, as compared to the 1930s? That may be an incorrect assumption.
I am increasingly uncertain of the best next steps- after having a relative degree of clarity from 2007-2008. With a very large mortgage at 5.5% (which I could barely pay off), there are good reasons to stay exposed to the dollar, while there are strong macro factors that seem to make a dollar collapse likely in the next 24 mos. Aaiiieeeee.......
Heard on the radio - because the recession started a year ago it's half over! Happy days are ahead!
Has the market priced in Panamax and Supramax action?
851
AC,
If I didn't know better, I'd think you questioned the notion that (all) debt is wealth.
Heard on the radio - because the recession started a year ago it's half over! Happy days are ahead!
Good point. And remember, the recession will end as soon as the depression begins.
More debt = more prosperity. Waaaaahoooo!
1134 writes:
Has the market priced in Panamax and Supramax action?
DryShips Inc.? get=report
All of the bad news is priced in. Didnt you hear? The bottom is in. Up, its the new down.
Looking at yentervention to abet short term asset inflation - though a near 1:1 correlation between the equity indices and USD/JPY does not describe a healthy market IMNSHO - YMMV.
AC,
If I didn't know better, I'd think you questioned the notion that (all) debt is wealth.
Angry Saver
Did you see the image Karl has on his site of the US debt ratio? (Scroll down in this article.)
I don't understand how people can claim that more debt is the solution.
Somebody needs to send a memo to the equity markets. WTF? Dumb money, or a pump job?
Has the market priced in Panamax and Supramax action?
The market probably thinks those are P&G products.
citizen energyecon writes:
ac,
Yep. There seems to be a widely held view on high that if only the readings on the dashboard can be set to "green," why then the real economy will get there...
You must be at B of A.... or affiliated. All they talk about is dashboards. Driving with these helps miss all the potholes of the last 18 months. LOL...
GH, dumb money. YOu wouldn't believe how many of my patrons at the bar believe the worst is over and it's time to get back in. I had one yesterday telling me what a great buy GE is right now...Just plain dumb.
GH,
Check USD/JPY...pump job to suck in the dumb money.
We won't hit bottom until all these Buy-and-hold brainwashed morons tire of "buying on the dips". My Wild guess is it will take a few more rounds of 1 step up, 2 steps down, plus the post-holiday layoff onslaught, before we see anything resembling capitulation. I lack the skill and intestinal fortitude for the kind of day-trading this bear market requires, so I'm just sitting on the 100% cash equivelants bench with a box of popcorn, and will stay there for the forseeable future, with a possible foray into physical gold.
The epitome of stupidity would be if China keeps buying treasuries so the U.S. government can turnaround and dump the money into banks.
Anonymous
Every day we should say Thank You to the Chinese for being even more MORONIC than us.
Can you please give us more money that you do not want, and don't intend to receive back in return?
The Chinese are a lot dumber than has been advertised.
USD/JPY = 92.97... wow
Bruce,
No in the energy industry - but talked to enough senior management & MBA consultants to know the lingo.
ac, yep, as bondgirl (where are the bond twins, bondguy's been awol too) once said, "you can't make something solvent by changing the definition."
it seems to me we are stuck in the methodology of trying to borrow our way out of debt.
Check USD/JPY...pump job to suck in the dumb money.
It looked to me like yesterday we started some really aggressive pumping.
No doubt the decline in bond yields and rise in mortgage apps is going to be used to sell the stock story.
Again, we've been building an economy on fictions for at least a decade now.
This is what people have been trained to do. This is what we know. This is what we want.
Don't expect it to suddenly just stop.
Mostly Lurker: The question is, if not the equities and bonds, then where put the money? I see these fat cats having not other option than to believe their own valuation models, which make absolutely no sense with the number we see in equities.
Comrade Kristina wrote:
Go figure, bad news on top of bad news and we have a rally baby! These people defy all laws of stupidity...
They are technical/chart folks reading goat entrails to decipher the bottom where they will all get RICH! There isn't one in a hundred that has a time horizon of longer than one day. Can you believe the talking heads...unbelievable hearing them call bottom and bottom and changing course again minute by minute. Drooling idiots!
The financial industry has, and will continue to be, necessary to streamline the depolyment and distribution of capital. It just so happens that a bunch of crooks in Washington have created insentives that encourage wreckless and dangerous behavior from this system which will ruin us all, all the way back to the creation of the Fed in 1913, which is no different that a racketeering operation.
This 600B per year was the price to pay relative to the creation of business, weath, technology and production financed by careful capital allocation. Don't forget that. We just need a sound framework in which it can operate without some mob boss running the show.
The Financial Industry Takes Too Much : Information Security Resources
ac,
Yep. Is it a Mellon quote about the games not stopping until they no longer have access to credit? Something like that...
the only thing on dashboards anymore are idiot lights. has senior management forgotten that? nah, silly question.
I don't understand how people can claim that more debt is the solution.
Mathematically, it IS the solution to keeping the debt based monetary system from collapsing. The current system cannot tolerate a smaller future.
Our eCONomy really has turned into a ponzi scheme.
even tho i'm taking it on the chin today with the mkt rally, i'm actually feeling good about adding to short positions, the econ news is bad and getting worse, mkt valuation is still at or close to historic median. c'mon, the water is fine, jump in.
ac,
Yep. Is it a Mellon quote about the games not stopping until they no longer have access to credit? Something like that...
I don't think we can ultimately solve this credit crisis until we lose complete control over the situation.
Until then our emotions and panic impulses will drive us to pile on debt ceaselessly making things worse and worse.
Only once we've been reduced to the point where we no longer believe that we can borrow and spend our way to prosperity will the opportunity for real prosperity be opened again.
I suspect that will only happen when we can no longer borrow.
Big 3: "Give us $34 Billion"
the man from nantucket, if this is how the market react to bad news. Imagine what would happen with one shred of good news. I am on the short side of things today as well and trying to figure out what the correct action is as well.
I've also been noticing a trend of rallies starting EXACTLY on the hour and continuing for a full hour. All it takes is some coordinated buying by some big players. Look at today 10AM, yesterday 10AM.
I'm not normally a conspiracy theorist, but I really do think that these rallies are very suspicious. Maybe the SEC should "investigate" (bwahahahahaha).
Anthony,
Bullshit. Finance does not create anything, it is manifestly not the engine of the real economy.
"Finance is the art of passing currency from hand to hand until it finally disappears."
The market obviously knows something.
I'm in ultrashorts because I don't want to miss being in the next leg down. I'm also in GLD and SLV and have some cash.
I know there are probably better ways of "not missing the next leg down" than being in ultrashorts, but I haven't gotten around to opening a margin/option account. Seems like there are a lot of folks willing to buy around 8100. I think we've seen capitulation by those who are 50 and older but it has yet to reach the younger generation who believe they are all going to be rich like Buffett.
Government intervention is being a pain in the wallet as well. I heard the NBER guy say, "Well the silver lining is we are almost halfway through"... looks like people believe that.
I think the market goes into the tank this afternoon... can't imagine job losses and manufacturing indexes dropping is "good news".
Airwolf Ben,
Right now our smallish (5 figures) nest egg is 90% in boring old FDIC insured money market accounts at 2 medium-sized regional banks. Dh and I are decidedly NOT investment wizards, nor do we think this is the best time to try to become that. We've also got youth on our side, with retirement a good 30+ years away. When inflation hits, we'll probably get back into the bond market and a few well-chosen stocks.
Money chasing the "possibility" of higher returns. I doubt those returns will be there. A lot of people including people on this board wondering where to put their funds.
Or perhaps it's about time for some other liquidity program to be announced.... maybe Paulsen has signalled he is going to spend the next $350B of TARP funds buying troubled equities.
Everyone's busy looking at the man behind the curtain to realize that the house is on fire....
...we're locked into a death grip with all the world currencies, cusp of potential economic warfare. or like the final shootout in reservoir dogs, don't blink.
ugh...too spot on...anyone remember how that one ends?
YouTube -
Not sure it will end like this, but my guess is that the SHIELDS will start coming up soon...
1134,
They know the JPY/USD went from ~92.5 to ~93.3 in just under an hour, and the borrowed yen purchased dollars that were levered up in a margin account...
@ac:
"Only once we've been reduced to the point where we no longer believe that we can borrow and spend our way to prosperity will the opportunity for real prosperity be opened again.
I suspect that will only happen when we can no longer borrow."
I fully agree.
Question is, since "we" now means the US Treasury - what will it take for our creditors to stop lending to us?
I'm not an economist, but the fact that our borrowing costs are falling through the floor while we are increasing our debt burden like drunken sailors seems a blaring signal that the system is not functioning at all right now.
Are we really approaching the end game? I've thought that for a long time, but it seems like the zombie economy just won't die. What's going to be the bullet thru the brain?
I suspect that will only happen when we can no longer borrow.
ac | 12.03.08 - 11:04 am |
It's gone beyond borrowing. Quantitative easing is printing. The system expands or it dies - no ifs, ands or buts.
One simple explanation for markets going UP.
Zero-percent T-bills.
With alternatives to stocks providing no incentive, there's no reason to take money out of the market, thus few sellers. Then, seeing the market rise even in the face of bad news validates that position.
But there will eventually be increasing selling pressure to take money out of the market for another reason -- living expenses to replace wages. Don't know how big it will be, but it will be incessantly climbing for the next year or two at least.
citizen energyecon:
The EconomicpicData chart presented in your homepage explains the current state of affairs. We are in the state of War and therefore should think in military terms.
picosec,
What you said. Eventually all the self-styled Future Gazillionaires will have to yank their money out of the market for luxuries like the light bill and credit card payments. For the next few months, until the situation becomes clearer, our one and only goal is preservation of capital. But of course, we both grew up in quaint backwards families where one earned a living, lived with little or no non-mortgage debt, and didn't expect the stock or housing market to magically provide us with millions.
A lot of people including people on this board (are) wondering where to put their funds.
Brown Brothers Harriman comes to mind. ...like hiding your loot with the treasure of pirates!
Ideas to people out of ideas.
Gold miners did very well during depression. Oil is going to 15.
Short XLE
Buy Gold Corp
Asian Corporate Bonds
Vietnam and India when it has fallen 90%. Wait 6 mths.
Others to buy?: tesco, debt collection agencies, ebay (skype will do well too), dish tv (people watch tv), ford (a gamble), sands (a gamble on macau), philip morris international, delta, cement companies, miami real estate in 12 mths, las vegas housing and turn it into bed & breakfast, potash in 6 mths. My 2 cents.
Question is, since "we" now means the US Treasury - what will it take for our creditors to stop lending to us?
Simple answer: Once they believe they can no longer sell stuff to us.
It is a big wheel of money... when we stop buying their stuff then they stop buying our debt then we stop buying their stuff then... like a Buddhist prayer wheel - round and round.
Test
Another test.