--but who cares if manufacturing is tanking when the unemployment rate's just 5% --right? Seriously, there really are some good things happening but we've still got a long road ahead of us.
Posted on 12/02/2015 4:12:39 AM PST by expat_panama
Manufacturing continues to be the weak spot in the U.S. economy, as the sector unexpectedly contracted during November when a key index fell to its lowest level since June 2009.
Despite encouraging signs from General Motors (NYSE:GM) and other domestic automakers, the Institute for Supply Management said its U.S. manufacturing activity index fell to 48.6 last month, nearly 2 points below the consensus estimate and more than 1 point below the consensus range. Any ISM index reading below 50 indicates contraction.
New orders fell 4 points to 48.9, their lowest reading since August 2012. Backlog orders had their 6th consecutive month of contraction, with a 43.0 reading.
[snip]
Overall Strength
The ISM index's dim reading belies overall strength in the U.S. economy.
Indeed, ISM's own employment index rose to 51.3 from October's 47.6, its highest reading since July, with job growth in nine of 18 industries.
That reading beat the consensus estimate of 48.4.
Plus...
[snip]
The current U.S. jobless rate is 5%, the lowest since the spring of 2008, when the recession's grip was beginning to tighten.
"The real swing factor is going to be Friday's (unemployment) figures" from the Labor Department, Englund said.
Though the weak ISM report surprised some, manufacturing has been weak for a while.
Its fall into contraction territory doesn't mean the U.S. economy will follow it.
(Excerpt) Read more at news.investors.com ...
--but who cares if manufacturing is tanking when the unemployment rate's just 5% --right? Seriously, there really are some good things happening but we've still got a long road ahead of us.
Looking at the chart you posted and the closest correlation I can draw is it nearly parallels oil prices. It’s certainly observable here in the middle of Oil Country how manufacturing of all kinds is tied to the activity level in every phase of the oil industry.
Top 'o the morning to all! Stocks jumped and are edging in on all time highs while metals hang on securely. Looking forward futures now put stocks up +0.86% and metals +0.60% -something for everyone!Busy day in the report dept.--
7:00 AM MBA Mortgage Index
8:15 AM ADP Employment Change
8:30 AM Productivity-Rev.
8:30 AM Unit Labor Costs-Rev
10:30 AM Crude Inventories
2:00 PM Fed's Beige Book
--and lots of new FR econ threads:
Just saying.
America has one candidate for the presidency, who is now regularly saying, America badly needs to bring jobs back to the States: Donald Trump.
I completely agree with that.
That's what we hear a lot, and as long as there are more and more folks in the U.S. who are unwilling to work at anything until some overseas worker decides to take up loafing, then we'll continue to swell the ranks of able bodied Americans w/o jobs.
I’ll strongly take issue with you on that.
I worked for a very large, very global IT company for twenty years.
Good company by the way. Right up until last week.
The thing is, the company has been sending jobs out of America now for more than ten years. The outsourcing started to impact me about a year ago, when my main job was offshored and half of our department was suddenly laid off. Including me and my boss (who was truly exceptional, and had been with the company even longer than I had been)
I landed another job with the company at another office, and had been quite happy until a few months ago for some reason, out manager appointed a “manager” for our group, who suddenly decided I wasn’t performing up to standard.
This was quite sudden, and I was quite surprized to hear this. There were duties I was responsible for which were not in our department’s ordinary command structure, but the manager was quite, critical.
I went along with it, and hit almost all of the goals set out for me (or missed them for the ones I didn’t hit, by mere inches) yet at the end of the process the manager continued to be the same critical person.
In the meantime I started looking for another position within the company. But what I found, was that most everything I was applying for, was being outsourced.
For several months I searched. But finally I gave notice. As I said, I left last week.
I’m close to retirement and I may just travel for a bit, but I assure you the environment at our company has changed greatly.
Again I am not critical of the company at all. I am slightly critical of my latest boss, who I believe was far, far too critical.
But mostly what I am saying is, the environment changed and the jobs (good jobs by the way) are all heading overseas.
It is a very large company, and it is changing.
I believe it is representative, of what is happening in many American companies.
American workers are not the problem.
It is the people outsourcing, which are the (big) problem.
Trump is saying it is time to bring jobs back to America.
I completely agree.
100%.
OVERNIGHT EVENTS:
* Euro-zone CPI Estimate YoY, Nov - lower-than-expected at +0.1% vs. +0.1% Oct and +0.2% consensus. Core-CPI YoY lower at +0.9% vs. +1.1% prior and +1.1% forecast.
* UK Construction PMI, Nov - weaker-than-expected at 55.3 vs. 58.8 Oct and 58.5 forecast.
* UK BRC Shop Price Index, Nov - declined to -2.1% YoY vs. -1.8% Oct.
* MBA Mortgage Applications, Nov - dropped -0.2% vs. -3.2% prior.
OVERNIGHT FLOWS: Treasuries were moderately lower overnight with little in terms of new information to drive trading direction. Volumes were mixed with cash trading at 112% of the 10-day moving-average while TY came in at 75% of the norm. 5s were the most active issue with a 35% marketshare while 10s managed 32%. 2s and 3s combined to take 19%, at 9% and 10%, respectively. 7s took 8% while the long-bond ended with an average 6%.
IMPENDING EVENTS:
* ADP Employment Change, Nov - expected 190k vs. 182k Oct.
* Nonfarm Productivity, Q3 Final - forecast +2.2% vs. +1.6% prior.
* Unlit Labor Costs, Q3 Final - anticipated +1.0% vs. +1.4% prior.
* Fed's Beige Book
* Yellen speaks on the economy to the Economic Club of Washington
* Fedspeak includes Lockhart (voter), Tarullo (voter), and Williams (voter)
TECHNICAL ANALYSIS:
* 2s - The price action in the front-end of the curve continues to diverge with longer-dated maturities as we march toward the Fed's looming liftoff rate-hike. 2-year yields are nearing the top of the range and the price action has been accompanied by a stochastics shift in favor of higher yields. For initial support we're looking at the 94.6 bp high opening level before the NFP-day yield peak at 95.0 bp. Break that and we see little before the Bollinger top at 98.1 bp and then the 1.00% handle-change. For resistance we have a series of moving-averages - the 9-day at 88.9 bp, 21-day at 83 bp and then the 40-day at 72.8 bp. The bottom of the recent range is also relevant at 81.9 bp.
* 5s - 5s are largely grinding sideways with a minor bullish edge which we'd push a bit if they managed to close under about 1.64+% and then we'd look to about 1.59%. That's a tough call. The range is 1.64-1.68% which contains all the volume from the last week with a concentration there at 1.66+%. Call it largely consolidation. Deeper support comes at 1.72% to 1.74%.
5s have done well vs. 2s/7s but momentum is more in consolidation mode. We'll peg resistance at 35.7 bp to37 bp and resistance at 43.7 bp.
* TY1 - TY is getting a bit tired in terms of the short momentum measures but is creeping along an upward sloping trendline with, at least not yet, a clear signal of a reversal. We'll peg support at 126-24/26 (the 9- and 21-day MAs) and then a recent low at 126-12. There is what probably is a minor trendline resistance at 127-07 which could turn out to be a bearish rising wedge and then little until a volume bulge and the 200-day MA between 127-21+/23.
We like 7s on the curve and see them outperforming 5s/10s and 2s/10s. They are right at the 200-day MA vs. 30s around 98 bp and so warrant watching for a possible steepening to, say 101.4 to 103 bp.
* 10s - 10s are in a downward-sloping channel where resistance at the 2.22% NFP-day low has pretty much held during the New York trading session. Momentum is getting rich but hasn't reversed and we think can extract a bit more. Next resistance is 2.15-17%. Support is at a high volume spot at 2.26% built up from Nov 12 and what helps us retain some bullish aspiration is volume building under that mark over the course of the last few trading days. The channel top comes in at 2.28% and we have recent highs, prior lows, around 2.32%. We don't see that until we get NFP under our belt.
10s are getting a bit rich on the curve vs. 2s and 3s but so far have not reversed compellingly and so we'll hold to a bit more flattening - 2s/10s to about 125 bp with a channel projection to 122.5 bp. They also are getting rich vs. 2s/30s but we'll hold for a move to 45-50 bp in the near term. 10s/30s looks rather neutral though a move under 75 bp would compel us to target 72.5 bp.
* 30s - The long-bond has performed well over the last couple weeks and we're starting to see the technicals get near over-extended levels - although the fundamentals continue to support a further outperformance of the sector. We see stochastics decidedly in favor of lower yields and still shy of overbought - but nearing the 20% mark. For initial resistance we have the 2.968% low yield print ahead of Thanksgiving and then the 40-day moving-average at 2.949%. We also have an upward-sloping trendline at 2.91% before the Bollinger bottom at 2.895%. For support we're watching the 9-day moving-average at 3.025% and then a volume bulge at 3.055%. Through there is the post-NFP yield peak at 3.138%, which is also the Bollinger top and the highest yields seen for the 30-year sector since mid-July.
ATTACHED:
* Refis as % of Mortgage Loans - index vs. YoY change
* Mortgage Rates - Freddie Mac 30-year Fixed-Rate
* ADP vs. NFP vs. ISM vs. ISM non-Manufacturing
* ADP by firm size with 6-mo average
* Nonfarm Productivity and Unit Labor Costs
* 2-year Yields Daily
* 3-year Yields Daily
* 30-year Yields Daily
* 7-year Yields Daily
* 3s/5s Curve Daily
READING: 1) WSJ: Morgan Stanley's decision to slash fixed-income jobs followed meetings with shareholders who pushed for cost-cutting, 2) WSJ: U.S. auto sales continued at a torrid pace in November, putting the industry on track to challenge the annual sales peak reached in 2000, 3) WSJ: The BOE declared an end to years of financial-crisis banking overhauls, saying U.K. banks are healthy, 4) WSJ: The ECB may have to rethink some of its self-imposed limits if the central bank wants to ramp up stimulus, 5) WSJ: Treasury Yields Fall as Investors See Slow Pace of Fed Rate Increases -- The Dow industrials rose 1% and U.S. government-bond yields tumbled, after a soft manufacturing report renewed questions about the likely pace of Federal Reserve interest-rate increases over the next year, 6) WSJ: What Happens to the Yuan Now? -- China's commitment to a freer yuan faces immediate tests, as slowing growth puts pressure on its central bank to weaken the currency, 7) WSJ: Why the Treasury Market Has Banks Spread Thin -- The spread between long- and short-term rates will likely renew pressure on bank-lending margins, 8) FT: Brazil's record fall in GDP puts it on track for worst recession since 1930s, 9) FT: ECB to confront 'seeping pessimism' -- Central bankers set to press case for more monetary easing amid sluggish recovery, 10) FT: central banks extend clout in the age of 'great divergence', and 11) BBG: Hedge funds brace for redemptions as losses engulf marquee firms.
take issue with you on that. I worked for a very large, very global IT company for twenty years. Good company by the way. Right up until last week.
What happened last week is important; changing jobs is a heck of a problem. I know as I got laid off a few years back (the entire workforce was replaced by foreigners) and my son-in-law was laid off when the IT work he was doing got xfered to someone in India. Right now both me and my son-in-law are fine and making more money than ever because we made sure our skills were marketable elsewhere. These days I sit at home and work on line and my son-in-law is a hot-shot experienced expert with a company that outsources IT work. Both of us are happy even while our taxes to the U.S. federal government soar.
Back to the topic; somehow you and I wandered off on a completely different subject. None of this layoff stuff changes the fact that working in the U.S. depends on someone overseas losing a job. Your quitting did not suddenly make this true because you were saying this was true before you had to quit. Sure, lots of folks say we need tax hikes to put folks back to work but imho they're very sadly mistaken.
Hunh? Who is saying that?
Dimocrats I guess and maybe some RINO conservatives. But no one that I actually talk with.
That is because car companies are selling cars with 5yr loans to people who can't afford them for sub prime interest rates.
The same thing like the subprime housing debacle back in 2008 EXCEPT there is a lot more money involved. Trillions of dollars and when most of these loans go bad it will get ugly.
tx fer the headsup! Seems that while all this is getting mixed results for the major indexes, my individual stocks sure like it a lot.
Hunh? Who is saying that?
Not sure where you've been but the arguing here goes along the line that there are fewer jobs in the U.S. (actually that's not true but one thing at a time) and the reason is that taxes on imports are too low so we need import tax hikes to put folks back to work. Yeah, I know it's crazy but lots of freepers swear by it. I just swear.
Targeted tariffs, etc., do have their place.
As to my question, the undefined phrase “tax hikes” most commonly means raising income taxes. Raising the rate of personal and business income tax cuts job creation.
That may be what you mean but when I say "tax hikes" I mean well, "tax hikes". We don't need more tax hikes and we already got too many and they're not creating jobs.
Y’all reckon Janet will raise into the teeth of a recession? I think she/they will mumble more meaningless meanderings and leave the Fed fund rate is.
Watch for U.S. recession, zero interest rates in China next year, Citi says
https://ca.news.yahoo.com/watch-u-recession-zero-interest-rates-china-next-123111939—sector.html
...leave the FF rate AS is.
What do those quasi-governmental entities have to do with the Main Street economy?
I'd guess that as the US economy is currently structured, for every domestic manufacturing job a tariff somehow managed to create at least three people in import-related businesses would be laid off.
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zerohedge â€@zerohedge · 30s 30 seconds ago
Goldman Sachs Cut to BBB+ From A- by S&P
Economy winding down?
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