Factory Orders continues to slow after pandemic surge. Questions to ask: Is the slowing just reversion after a pandemic surge because of supply chain disruptions, onshoring, low interest rate, stimulus? Thus, will this be the soft landing everyone is hoping for? Does it matter as slowing activity is slowing activity and activity continues to slow? No one knows the answer [...]
The graph below shows where to, historically, find out-performance given our likely position in the economic cycle. Some caveats of note to the generalized history shown. One is wise to consider both interest rate manipulation and behavioral factors stemming from and contributing to the extreme markets of the last 2 decades before blindly accepting this style and size equation. These factors give us reason to [...]
For a simple frame of reference, the seasonally adjusted annual rate (SAAR) of increase in GDP in the first quarter of 2014 was $60 billion in nominal terms. The BEA calculates that nominally business inventories grew by $112 billion in the same period. On a back of the envelope basis, inventory growth was twice that of GDP and without it [...]
Gallup’s survey of consumer spending in February conformed largely to the orthodox script of weather-beaten households forgoing January purchases. The large drop in January was thus assumed a temporary condition that would simply spillover into February. And that was the sense gained by Gallup’s results, with a large increase in February over January. Americans' daily self-reports of spending averaged $87 [...]
Apropos of the GDP outlier, Jason Fraser of Ceredex Value Advisors forwarded an article from CNBC, of all places, on the impact of this inventory cycling on US trade. Specifically, container traffic in imports has turned lower in November when it normally would do otherwise – and had for the three previous years. Traffic had been slightly below 2012 levels [...]
The best ISM Manufacturing PMI since the middle of 2011 seems to indicate better economic conditions in the middle of 2013, particularly when compared to the first few months. However, the ISM has been in the up and down pattern since the middle of last year, notably rising to 54.2 in February 2013 before collapsing again. The February number caused [...]
After two successive months of contraction in retail sales (in real terms), April’s estimated balance was a bounce higher. Given the volatile nature of economic data, this upward move is not unexpected. Total retail sales (including food, autos and gasoline) grew 4.5% in April 2013 Y/Y, much better than the 0.98% and 1.95% in February and March, respectively. Despite that [...]
The ISM Manufacturing reports for January and February 2013 looked to be showing a noticeable rebound in manufacturing activity after some rather dicey months in the second half of 2012. I posited that this rebound was largely inconsistent with broader data (notably durable goods and factory orders) and explained them in the context of a potential inventory cycle heading into [...]
Economies travel in cycles. Some factors contributing to economic cycles are the following: Periods of great innovation and capital formation Fluctuations in fiscal policies Credit/Money creation War, disease, natural disaster At Alhambra, we often refer to Keynesian theory v Classical theory in reference to responses to the cyclical nature of an economy. The reality, economies inevitably have hiccups. In lay [...]
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