Monday, October 25, 2010

Sunday Night Economic Assessment

The US Industrial economy advanced again last week (if pipeline scheduling is correct), with solid gains implied in both US Industrial Production and Consumption.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) gained for its fourth week-in-a-row, rising to 118.3 (from last weeks 116.5). In its dailies (See the "Part 7" posts on the InvestorVillage site) the index started firm and remained robust through to the weeks close.

The paperboard-based Consumption Index added to its Fall-2010 surge, rising (for its second week in a row) to 143.8 (from last weeks 140.1). In its dailies the measure started firm though eased slightly through its close. The Consumption Index is nearing its Oct-2009 all-time high 146.5, suggesting perhaps we may be looking to a similarly-strong Christmas as we had in 2009.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) is continuing its pattern steep decline.

For the time being, the US industrial economy looks to remain strongly supported by an excess of consumption over production, a recent surge in consumption, and the ever-declining Inventories measure. And the recovery looks to remain a jobless recovery (given the large comparative weakness of the production index to the consumption index, and the implied inventory declines... and the negative sentiment all of that implies within the business and investment communities).

In fact (looking at the gas flows), it is very difficult to be able to tell that we are in a "recession" at all. If one were to ignore the abysmal employment data and focus solely on gas-flows, that hole-of-a-recession we dug ourselves into during 2008 has already been filled, and we look about to boom. So why the present-day dismal unemployment?

Within the gas flows, the large gap between implied consumption and industrial production, the duration of that gap (18 months), the seemingly never-ending decline in the inventories measure (especially against the slow build implied within Industrial Production), and the recent reluctance of the Production Index to "break out" to the upside as the Consumption Index has done, all suggest extreme negativism (and caution) within the business & investment end of the US economy.

With such negativism in business and investment, capitol formation (investment) and labor formation (hiring) is severely impaired. Contrast that with the robustness of consumer-spending implied by the Consumption Index, and a terribly unbalanced economy (crafted by a terribly unbalanced political "economy") is betrayed.

With Midterm US Elections now 8 days away (judging by the polls)... the US public is on to this at least to some extent. And given recent press, that unbalanced political "economy" is about to change.

One has to be thinking now of voter fallout after the elections pass. Polls and press seem to be suggesting the possibility of strong Republican gains come November, and allude to I think favor a slim Republican recapture of the House of Representatives with strong Republican gains and a chance of Senate control as well.

But what will that (potential) change of political balance bring about? Will investors & business leaders (seeing the political changes) take heart and invest & hire to chase new business, or sit back and wait to see what happens? Will consumers loose confidence on the political fallout? Will a rebalanced government work wisely, or fall into combative stalemate to the ruin of the economy? Or, will the polls be proved to be wrong? Time will tell.

One thing I know... we have a lot of very sharp business people in the US, very creative workers, very motivated consumers, and a whole lot of people that want to see is this economy work. Just give them the chance...




-Robry825

Monday, October 18, 2010

Sunday Night Economic Assessment


The US Industrial economy again gained ground last week (if pipeline scheduling is correct), while the ongoing recent surge in consumer-spending inched even further ahead.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) advanced for its third week-in-a-row, rising to 116.5 (from last weeks 115.7). In its dailies (See the "Part 7" posts on the InvestorVillage site) the index started the week softened early (following a strong end to the prior week) but sharply firmed as the week progressed.

The paperboard-based Consumption Index reversed its prior-week dip, rising to 140.1 (from last weeks 139.9). In its dailies the measure vacillated but overall was firm through Friday.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) is continuing its pattern steep decline.

For the time being, the US industrial economy looks to remain strongly supported by an excess of consumption over production, a recent surge in consumption, and the ever-declining Inventories measure. And the recovery looks to remain a jobless recovery (given the large comparative weakness of the production index to the consumption index, and the implied inventory declines... and the negative sentiment all of that implies within the business and investment communities).

With Midterm US Elections now 15 days away, one has to be thinking now of voter fallout after the elections pass. Polls and press seem to be suggesting the possibility of strong Republican gains come November, and allude to I think favor a slim Republican recapture of the House of Representatives with strong Republican gains and a chance of Senate control as well. Consumer spending appears robust the past few weeks, and equities are surging.

Now I can understand the equities rally (Republicans tend to champion the business & investment side of US society) but the strong consumption part is a mystery. As Democrats tend to champion consumers, and the press is so dismal for Democrats, are consumers somewhat unaware (with a big dip in consumption coming in late November/December once the surprise is out)?

Or... are consumers aware... and discouraged with their overall champions? These two possibilities both would have big implications.

If consumers are unaware, an economic reversal (and a big equities reversal within presently-rising stock markets) may be coming. If consumers are aware and discouraged... a Republican election rout throughout government... and whatever emotional shock waves follow that.

But beyond all that... what of the 2008 elections? Consumption fell off big time in the weeks proceeding the Democratic sweep of November 2008.

Consumption way down before the 2008 Democratic sweep... Consumption way up before a prospective 2010 Republican sweep. Are consumers Republicans? Am I misjudging something here? Or is the ever-emotional consumer voting out of emotion rather than conviction (or worse, out of emotion rather than knowledge)? Or... is the dog simply following it's tail!





-Robry825

Monday, October 11, 2010

Sunday Night Economic Assessment

The US Industrial economy pushed ahead last week (if pipeline scheduling is correct), while the ongoing recent surge in consumer-spending slipped back slightly.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) gained for its second week-in-a-row, rising to 115.7 (from last weeks 114.5). In its dailies (See the "Part 7" posts on the InvestorVillage site) the index started the week soft but gained as the week progressed.

The paperboard-based Consumption Index conversely declined (breaking its streak of three up weeks in a row), dipping to 139.9 (from last weeks 140.9). In its dailies the measure started the week strong and tailed off only slightly through Friday. Preliminary weekend scheduling (For Saturday and Sunday) looks very strong... if it holds up... and the Consumption Index maintains its huge gap to the Production Index.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) is continuing its pattern of re-accelerating decline.

Overall, the US industrial economy looks to continue to be strongly supported by an excess of consumption over production, a recent surge in consumption, and the ever-declining Inventories measure.

It does, however, appear likely to remain a jobless recovery (given the large comparative weakness of the production index to the consumption index, and the implied inventory declines... and the negative sentiment that implies within the business and investment communities). Negativism is unlikely to chase down new employees to chase after new-business when old-business is in doubt. Perhaps November will change all that. Perhaps not.

Sooner or later though, that negativism (if not reversed) is going to bite deep and hard. The US standard of living is supported by massive imports, which are in turn supported by massive foreign demand for dollars (Think about it... why would foreign parties "dump" goods into the US at a loss, if it weren't for the desire for dollars. The loss on "dumping" is the "commission" on the dollar transaction!). Like all things that vacillate, sooner or later that foreigner-driven dollar-bullishness will abate, as will the desire to "dump"... and the imports will end. When those massive imports do end, either US industry (and investment) will have to rapidly expand to pick up the slack, or the US standard of living contract sharply.



-Robry825

Monday, October 4, 2010

Sunday Night Economic Assessment

The US Industrial advanced last week (if pipeline scheduling is correct), while consumer-spending added to its recent surge.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) finally broke its string of four down-weeks in a row, and inched higher to 114.5 (from last weeks 114.2). In its dailies (See the "Part 7" posts on the InvestorVillage site) the index started the week a bit on the firm side, then sharpened nicely through Thursday (to close out the month of October) before softening on Friday.

The paperboard-based Consumption Index also inched ahead (third up week in a row), rising to 140.9 (from last weeks 139.5). In its dailies the measure started the week flat to slightly firm but accelerated nicely through to the end of the week.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) is continuing its pattern of re-accelerating decline.

Overall, the US industrial economy looks to continue to be firmly underpinned by an excess of consumption over production, a recent surge in consumption, and the ever-declining Inventories measure.

Continuing concerns continue to be the dismal mood of the business/Investment side of the US citizenry (and its whithering effect on capitol/formation and new business starts), massive monetary outflows from the US (believed driven by demand from foreign sources for US dollars), and poor US monetary, fiscal, and political posturing.




-Robry825