Monday Morning Economic Assessment

The US Industrial economy inched ahead again last week (if pipeline scheduling is correct), as consumption turned and added to its recent strength.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) rose for its third week in a row, rising to 122.6 (from last weeks revised 122.1). In its raw dailies (above) the week actually was quite soft throughout, with the "Official" index rising mainly due to a softer week dropping off the end of its moving average.

The Consumption Index broke its recent string of three consecutive down-weeks and advanced, edging up to 145.8 (from last weeks 145.5). In its dailies the measure appeared unusually steady and (overall) averaged about the same as the prior week.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index), continued its long-term decline.

Overall, however, the internals retain that "sickly" look that they have exhibited throughout 2012, and as we emerged from the Easter Holidays looked somewhat bland (neither good nor bad).

Very disappointing how that March consumer-surge was ignored by the industrial side of the flows... as if that consumer-optimism was wasted on the productive end of US society.

Did note a sharp weakening in refinery scheduling (more than seasonals would imply) over the week and (in the latest days preliminary flows) a bearish sharp tightening in food-group flows and sharp weakening in industrial flows, that (as I saw no news) I am hoping to be bad data that gets revised tomorrow.



-Robry825

Monday Morning Economic Assessment

The US Industrial economy pushed forward again last week (if pipeline scheduling is correct), while consumption continued to back away from its March surge.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) advanced for its second week in a row, rising to 122.0 (from last weeks 121.0). In its raw dailies (above) the week started firm on Sunday but quickly gave ground and finished off the week soft.

The Consumption Index declined (its third consecutive down-week) to 145.5 (from last weeks record 151.3). In its dailies the week started somewhat firm (to the previous week) but softened late.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index), continued its long-term decline.

The split between industrial bearishness and consumptive bullishness (that dominated 2012's first quarter) should be conducive to healthy (and growing) 1st quarter earnings, though the defensiveness (so evident in the industrial flows) looks to be trying to seep into equities.

A lot of uncertainty remains this week as we emerge from the cross-currents of the Easter-Holiday period to settle into trends as the workweek unfolds.




-Robry825

Monday Afternoon Economic Assessment

The US Industrial economy turned and advanced last week (if pipeline scheduling is correct), while consumption again backtracked off of its March surge.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) broke its string of four down-weeks in a row, rising to 121.0 (from last weeks 120.0). In its raw dailies (above) the week started strong (on the changeover to the 2nd quarter) and built on that strength as the week progressed.

The Consumption Index, conversely, declined (for its second week) to 151.3 (from last weeks record 155.6). In its dailies the week had a somewhat soft look but was much more stable than the prior weeks roller-coaster look.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index), continued its long-term decline.

A lot of uncertainty the next couple of weeks on the numbers in this report as we tread through the cross-currents of the Easter-Holiday period, as consumers jostle with seasonal norms and we just don't know what the consumers mood will be once the holiday is over and statistics can settle into trends.

Very much liked (however) the way the industrial gas-flows popped on the beginning of the second quarter (nice bounce in scheduling April first-on), and consumption and production are starting to (predictably) trend toward each-other.



-Robry825

Monday Morning Economic Assessment

The US Industrial economy declined again last week (if pipeline scheduling is correct), while consumption finally rolled over and joined in with the bearishness elsewhere.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) backtracked for its fourth week in a row, declining to 120.0 (vs last weeks 120.8), and is now at its lowest level since November 16rd (2011). In its raw dailies (above) the week started slightly firm early then softened midweek.

The Consumption Index also gave ground (breaking its prior string of four up-weeks in a row), declining to 155.6 (from last weeks record 160.3). In its dailies the week was dramatic, with the measure starting slightly soft (to the prior week) then plunging nearly 50% midweek.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index), continued its long-term decline. The chart (above) this week was redrawn to cut the sensitivity to changes within the inventories measure.

The previous alarming growth (that gap between consumer-bullishness and industrial bearishness... worried about in last weeks economic post) is trying to resolve itself for the moment on the bearish side, and the next week will be crucial... especially given that we are passing through the first-quarter's end... a period of time when industrial books are closed on the quarter, and managers can reassess and change production (and purchasing) scheduling according to the newly-known prior quarters results.

The negatives in place (negative-economic-phase of production leading consumption, bearish food-group scheduling, listless steel-group scheduling, etc) are a grave threat to the economy.

One possibility of additional worry... that spike in paperboard scheduling might be indicative not of consumption at all, but merely a "bet" by retailers on a strong Easter Holiday... which may or may not materialize... based upon prior media bullishness which (so far) in 2012 has not been well-supported within the gas-flows.

If that were to be the case... than retail inventories are bloated and (if the consumer does not come in as anticipated) could produce a vicious snap-back.

Overall, I am still very worried and out of the markets in my trading accounts (though that is nothing to crow about so far as I have been out since the beginning of January) and recently (for the first time in years) toyed with a small short-position.

Next three weeks (as we proceed through the cross-currents of quarters-end and the Easter-holiday swings) will be crucial.



-Robry825

Monday Morning Economic Assessment

The US Industrial economy extended its recent slump again last week (if pipeline scheduling is correct), even as consumption continued to gain momentum.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) retreated for its third week in a row, declining to 120.8 (vs last weeks 121.8), and is now at its lowest level since November 23rd (2011). In its raw dailies (above) the week was soft Sunday through Wednesday, firmed up (vs the prior week) Thursday & Friday, then softened slightly again on Saturday.

Conversely, the Consumption Index added to its recent surge (its fourth up-week in a row and second strait record high), climbing to 160.3 (from last weeks 157.6). In its dailies the measure started the week strong, softened Tuesday, then came back over the weekend.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index), continued its long-term decline. The chart (above) this week was redrawn to cut the sensitivity to changes within the inventories measure.

The rapidly growing gap between consumption and production is alarming, reflective to re-emerging bearishness within the business sector of the economy (even while consumers find their confidence). The rising gap is very conducive to a continuation and acceleration of healthy corporate profitability, although it also raises fears of renewed unemployment gains going forward, a further surge in imports, and an increased danger to acceleration in the core measures of inflation.

It may also signal that industry is starting to reassess the 2012 election returns as less likely to be bullish (White house not as likely to go Republican as thought before, therefore forget new hiring to go after new business... just in case), although investors (conservative, "Tea-Party" end of the Republican party) have not yet joined that bearishness in the realm of the equities markets.

I don't at all like the look of the industrial side stealing the initiative from the consumptive side of the economy (which it is trying to do right now). Should the investment side of the economy get spooked (and the stock market corrects), the economy looks dangerously vulnerable.

Food-group scheduling, while improving slightly with the consumptive surge, remains at strongly-bearish levels... implying little depth to the mile-wide width of that consumptive surge.

Still, I like that consumption surge (shallow as it is) and if the US government could get its act together and say the right things to that "other" half of the US economy (or if the industrial sector gets mesmerized by consumption before it collapses under its own weight) the economy could be built upon.



-Robry825

Monday Morning Economic Assessment

The US Industrial economy gave ground again last week (if pipeline scheduling is correct), as consumption continued its surging ways.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) dropped for its second week in a row, declining to 121.8 (vs last weeks 122.6). In its raw dailies (above) the week was overall flat the first four days of the week then softened sharply Thursday-on.

Conversely, the Consumption Index surged (its third up-week in a row), rising to a record 157.6 (from last weeks 149.2). In its dailies the measure was strong all week.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index), continued its long-term decline.

The record-breaking consumptive-surge looks very good in here... with retail sales likely surging... and corporate profits implied at very healthy levels, especially given the caution implied in the production-side of the economy.

The declines in industrial activity (especially given the bullishness in consumption) is disheartening.

I am somewhat doubtful of recent media reports that are giving credit to mild weather for recent economic strength. While a help, this surge in consumption appears much greater than that.

Unfortunately, the easing of the production index takes away from all that... blunting potential retailing employment-gains with industrial-employment stagnation. Probably the real gainer in all this is imports. We will see.

Still, I like the consumption surge, and hope to see some follow through on the industrial end (especially on the transition to the second quarter on April 1st). That is, if that consumption can hold. But we have got to get some follow-through somewhere in the industrial scheduling, where (at first glance) only the Mining / Minerals group is surging in tandem with the consumption (paperboard) indicator.



-Robry825

Monday Morning Economic Assessment

The US Industrial economy turned and retreated last week (if pipeline scheduling is correct), as consumption continued to rally.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) broke its string of three up-weeks, dropping to 122.6 (vs last weeks 123.2). In its raw dailies (above) the week was mildly soft throughout.

The Consumption Index surged (second gain in a row), rising to 149.2 (from last weeks revised 138.1). In its dailies the measure was soft early (over the weekend) then firmed Monday-on.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index), continued its long-term decline.

The split between the gaining ways of consumption (breaking above previous short-term highs) vs retreating industrial production reversed the "polarity" of that relationship to negative (consumption trends diverging from industrial production), another worry to add to the bearishness of the internals.

If we could only get the industrial numbers back in line with consumption, we would have something meaningfully bullish for the economy.

Overall, the economy still looks uncertain going forward, with possibilities of either rapid-strengthening or rapid-weakening well-evident in the split between industry and consumers.

Overall... back to a flip of a coin (or flip of a political poll, or flip in current events, or flip in news reporting, etc).



-Robry825