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Notes to myself, possibly of interest to others.
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Tuesday, November 16, 2010

Rosenberg Daily - Bad News Bear

The New York Fed’s Empire index of manufacturing activity took a dive in the current reporting month — swinging from +15.73 in October to -11.14 in November, the largest swing ever recorded in a single month and the worst showing since the depths of recession in April 2009. The consensus was looking for +14. The question is why the pro-QE2 New York Fed would want to publish such an ugly statistic. Doesn’t it want to do everything it can to bolster confidence?

Meanwhile, the components were even worse than the headline. New orders were crushed, to -24.38 in November, which was the lowest since March 2009. This index is correlated to technology — the new darling sector of the investment community. But maybe there was more to Cisco’s recent disappointment than meets the eye. Everyone and their mother is awaiting a sustained turnaround in the jobs market but there was scant evidence of this in the Empire report — the employment component receded to 9.09 from 21.67 in October and hours worked came in negative for the second month in a row (-16.32 from -4.13), the first time this year this has happened.

Oh, and the inflation components, how could we forget ... so inflationary. Either manufacturers in the New York area are ignorant of what copper, crude, cotton and corn have been doing or maybe they are resisting the raw material cost increases just as they find it next to impossible to pass anything along to their customers because the prices-paid index slowed to 22.08 in November from 30.00 in October, while prices-received deflated outright to -2.60 from +8.33 in October. (source)

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