I announced on February 22 Goodbye Blogger, Hello WordPress: Mish's GlobalEconomicAnalysis has Moved to MishTalk.Com.
My needs outgrew blogger.
The top reason is that I wanted a multi-page layout, with a different home page than the detail pages. Most of the top financial sites are organized that way. It's impossible with Blogger.
My entire blog has moved over intact, from the beginning, except for comments.
I failed to point out that existing subscribers to my feed were not carried over. There is no way to move a blogger feed into WordPress.
If you were an existing subscriber, you need to sign up again!
You can do so in the Upper Left of MishTalk.Com
Thanks.
Mike "Mish" Shedlock
Sunday, 20 March 2016
Tuesday, 2 February 2016
Goodbye Blogger, Hello WordPress: Mish's GlobalEconomicAnalysis has Moved to MishTalk.Com
It's been a long run, but I am leaving Google Blogger for a new home on WordPress.
Please bookmark my new site: http://mishtalk.com/
Why Leave?
My needs outgrew blogger.
The top reason is that I wanted a multi-page layout, with a different home page than the detail pages. Most of the top financial sites are organized that way. It's impossible with Blogger.
In addition, WordPress offers additional features that Blogger doesn't.
My entire blog has moved over intact, from the beginning, except for comments. There are just a few more posts to pull over.
Daniel Robert and Michelle Langston at WordPress did a fantastic job with the move, converting all internal self-references to MishTalk from blogger.
Say goodbye to GlobaleconomicAnalysis.Blogspot.Com
Say hello to MishTalk.
Mike "Mish" Shedlock
Please bookmark my new site: http://mishtalk.com/
Why Leave?
My needs outgrew blogger.
The top reason is that I wanted a multi-page layout, with a different home page than the detail pages. Most of the top financial sites are organized that way. It's impossible with Blogger.
In addition, WordPress offers additional features that Blogger doesn't.
- Ability to write a post and release it at a scheduled time
- Better development tools
- Email notifications
- A point of contact
My entire blog has moved over intact, from the beginning, except for comments. There are just a few more posts to pull over.
Daniel Robert and Michelle Langston at WordPress did a fantastic job with the move, converting all internal self-references to MishTalk from blogger.
Say goodbye to GlobaleconomicAnalysis.Blogspot.Com
Say hello to MishTalk.
Mike "Mish" Shedlock
Monday, 1 February 2016
Iowa Caucuses: Cruz Edges Trump and Rubio; Clinton and Sanders in Dead Heat
Ted Cruz was the surprise winner in the Iowa Republican caucuses tonight edging out Donald Trump who in turn edged out Marco Rubio in a very strong voter turnout.
On the Democratic side, Hillary Clinton is just a handful of votes ahead of socialist Bernie Sanders in a vote still too close to call. Given that Clinton was ahead of Sanders by 40 percentage points a few weeks ago, this result may raise more eyebrows than Cruz did by winning the Republican side.
Via Real Clear Politics, the delegate totals look like this.
Mike Huckabee dropped out tonight. In speeches following the caucuses, both Trump and Rubio reached out to Huckabee.
New Hampshire
Trump and Sanders are both supposed to easily win new Hampshire.
Unless Trump puts in a poor New Hampshire showing, Iowa will soon be a meaningless result. Hillary's test comes after New Hampshire.
Mike "Mish" Shedlock
On the Democratic side, Hillary Clinton is just a handful of votes ahead of socialist Bernie Sanders in a vote still too close to call. Given that Clinton was ahead of Sanders by 40 percentage points a few weeks ago, this result may raise more eyebrows than Cruz did by winning the Republican side.
Via Real Clear Politics, the delegate totals look like this.
Mike Huckabee dropped out tonight. In speeches following the caucuses, both Trump and Rubio reached out to Huckabee.
New Hampshire
Trump and Sanders are both supposed to easily win new Hampshire.
Unless Trump puts in a poor New Hampshire showing, Iowa will soon be a meaningless result. Hillary's test comes after New Hampshire.
Mike "Mish" Shedlock
"Blue Chip" Optimism vs. GDPNow 1.2% 2016 Initial Q1 Forecast; Strengths and Weaknesses of GDPNow
"Blue Chip" Optimism
The Atlanta Fed initial GDPNow Forecast for first quarter 2016 starts off with an anemic 1.2% whimper.
"The initial GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2016 is 1.2 percent on February 1. "
First Quarter 2016 GDPNow Forecast
The Atlanta Fed "Final" GDPNow Estimate for the 4th Quarter was posted on January 28.
The 4th quarter "Blue Chip" consensus at that time was about 1.9%. The actual BEA release was 0.7%.
Strengths and Weaknesses of GDPNow
The strength of the Atlanta Fed GDPNow model is that it mimics BEA calculations, thus providing an advance look as to what the BEA will report.
The inherent and unavoidable weakness in the GDPNow model is BEA revisions. GDPNow mimics a model in which data is revised, revised, and revised again.
Late last year the BEA announced it made a major "processing error" in regards to construction spending. The error affects GDP all the way back to 2005.
We will not know the total effect until July 2016. We do know the biggest errors pertain to 2014 GDP which will rise, and 2015 which will fall.
I discussed the forthcoming construction revisions in depth in When are Construction Revisions Coming?
Moreover, GDP is notoriously wrong around economic turns, like now. It's highly likely the GDPNow model has mimicked bad data from the BEA that will be revised substantially lower in the future.
If so, the US is in recession now, with the vast majority of economists in Economic Fantasyland.
Mike "Mish" Shedlock
The Atlanta Fed initial GDPNow Forecast for first quarter 2016 starts off with an anemic 1.2% whimper.
"The initial GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2016 is 1.2 percent on February 1. "
First Quarter 2016 GDPNow Forecast
The Atlanta Fed "Final" GDPNow Estimate for the 4th Quarter was posted on January 28.
The 4th quarter "Blue Chip" consensus at that time was about 1.9%. The actual BEA release was 0.7%.
Strengths and Weaknesses of GDPNow
The strength of the Atlanta Fed GDPNow model is that it mimics BEA calculations, thus providing an advance look as to what the BEA will report.
The inherent and unavoidable weakness in the GDPNow model is BEA revisions. GDPNow mimics a model in which data is revised, revised, and revised again.
Late last year the BEA announced it made a major "processing error" in regards to construction spending. The error affects GDP all the way back to 2005.
We will not know the total effect until July 2016. We do know the biggest errors pertain to 2014 GDP which will rise, and 2015 which will fall.
I discussed the forthcoming construction revisions in depth in When are Construction Revisions Coming?
Moreover, GDP is notoriously wrong around economic turns, like now. It's highly likely the GDPNow model has mimicked bad data from the BEA that will be revised substantially lower in the future.
If so, the US is in recession now, with the vast majority of economists in Economic Fantasyland.
Mike "Mish" Shedlock
Construction Spending Anemic Despite Warm Weather; Where to From Here?
Economists expecting a huge surge in construction spending thanks to unusually warm December weather were no doubt shocked by today's anemic report.
The Econoday Consensus Estimate was for +0.6% in a range of 0.3% to 1.3%, but not a single economist came close.
Total Construction Spending Detail
Where to From Here?
Total construction spending has stalled since June 2015.
Bloomberg noted the "good news" in residential. Residential construction, especially single family homes, is more likely to be more opportunistic based on weather. New Wal-Mart superstores etc., are planned events.
It remains to be seen if "the housing sector is poised to be a leading driver for the 2016 economy".
I strongly suspect "not".
Mike "Mish" Shedlock
The Econoday Consensus Estimate was for +0.6% in a range of 0.3% to 1.3%, but not a single economist came close.
Held down by weakness in the nonresidential component, construction spending didn't get a lift at all from the mild weather late last year, rising only 0.1 percent in December following a downwardly revised 0.6 percent decline in November and a 0.1 percent contraction in October. Year-on-year, spending was up 8.2 percent, a respectable rate but still the slowest since March last year.Total Construction Spending
But there is very good news in the report and that's a very strong 0.9 percent rise in residential construction where the year-on-year rate came in at plus 8.1 percent. Spending on multi-family units continues to lead the residential component, up 2.7 percent in the month for a 12.0 percent year-on-year gain. Single-family homes rose 1.0 percent in the month for an 8.7 percent year-on-year gain.
Now the bad news. Non-residential spending fell 2.1 percent following a 0.2 percent decline in November. Steep declines hit manufacturing for a second month with the office and transportation components also showing weakness. Still year-on-year, non-residential construction rose 11.8 percent.
Rates of growth in the public readings are led by highway & streets, at a 9.4 percent surge for December and a year-on-year rate of plus 12.0 percent. Educational growth ended 2015 at 9.4 percent with state & local at plus 4.4 percent. The Federal subcomponent brings up the rear at minus 1.4.
Lack of business confidence and cutbacks for business spending are evident in this report but not troubles on the consumer side, where residential spending remains very solid and a reminder that the housing sector is poised to be a leading driver for the 2016 economy. Still, the weak December and revised November headlines are likely to pull down, at least slightly, estimates for revised fourth-quarter GDP which came in at plus 0.7 percent in last week's advance report.
Total Construction Spending Detail
Where to From Here?
Total construction spending has stalled since June 2015.
Bloomberg noted the "good news" in residential. Residential construction, especially single family homes, is more likely to be more opportunistic based on weather. New Wal-Mart superstores etc., are planned events.
It remains to be seen if "the housing sector is poised to be a leading driver for the 2016 economy".
I strongly suspect "not".
Mike "Mish" Shedlock
ISM Negative 4th Month, Employment Shows Significant Declines
Manufacturing in January continues its dismal track record with the latest ISM reading. Econoday reports ...
Let's further dive into the numbers straight from the ISM Report.
Key Points
In December I stated "There's nothing in the ISM report to make the Fed want to hike, but the Fed will do what they want.
The Fed did indeed hike. And economists still believe no recession is coming.
For my take, please see Economists in Fantasyland: Economists See 20% Chance of Recession That's at Least 20% Likely Already Here.
Mike "Mish" Shedlock
Employment sank the ISM index in January which could muster no better than a 48.2 for what, following annual revisions to 2015, is the fourth sub-50 reading in a row. This is by far the worst run for this closely watched indicator since the Great Recession days of 2009.ISM Manufacturing Index
Employment fell a very steep 2.1 points to 45.9 to signal significant contraction for manufacturing payrolls in Friday's employment report, which however would not be much of a surprise given the sector's prior payroll contraction. This is the third sub-50 reading for employment of the last four months and the lowest reading since, once again, 2009.
There is good news in the report and that's a snapback for new orders, to 51.5 for only the second plus 50 reading of the last five months and which points to overall improvement in the coming reports. But backlog orders, at only 43.0, remain in deep contraction, and what strength there is in orders isn't coming from exports which are in contraction for the seventh of the last eight months. Manufacturers have been working down backlogs to keep production up, which came in at 50.2 to signal fractional monthly growth. Inventories remain steady and low but the sample still say they are too high, sentiment that points to lack of confidence in the business outlook.
Confirming the weakness is breadth among industries with 10 reporting composite contraction against eight reporting monthly growth. If it wasn't for strength in new orders, January's data would be almost entirely negative. This report is a downbeat opening to 2016 which follows a definitively downbeat year for the factory sector in 2015.
Let's further dive into the numbers straight from the ISM Report.
| Index | Jan | Dec | PP Change | Direction | Rate of Change | Trend in Months |
|---|---|---|---|---|---|---|
| PMI® | 48.2 | 48.0 | 0.2 | Contracting | Slower | 4 |
| New Orders | 51.5 | 48.8 | 2.7 | Growing | From Contracting | 1 |
| Production | 50.2 | 49.9 | 0.3 | growing | From Contracting | 1 |
| Employment | 45.9 | 48.0 | -2.1 | Contracting | Faster | 2 |
| Supplier Deliveries | 50.0 | 49.8 | 0.2 | Unchanged | From Faster | 1 |
| Inventories | 43.5 | 43.5 | 0.0 | Contracting | Same | 7 |
| Customers' Inventories | 51.5 | 51.5 | 0.0 | Too High | Same | 6 |
| Prices | 33.5 | 33.5 | 0.0 | Decreasing | Same | 15 |
| Backlog of Orders | 43.0 | 41.0 | 2.0 | Contracting | Slower | 8 |
| Exports | 47.0 | 51.0 | -4.0 | Contracting | From Growing | 1 |
| Imports | 51.0 | 45.5 | 5.5 | Growing | From Contracting | 1 |
Key Points
- Backlog of orders in contraction 8 months
- Exports back in contraction
- Prices in contraction 15 months
In December I stated "There's nothing in the ISM report to make the Fed want to hike, but the Fed will do what they want.
The Fed did indeed hike. And economists still believe no recession is coming.
For my take, please see Economists in Fantasyland: Economists See 20% Chance of Recession That's at Least 20% Likely Already Here.
Mike "Mish" Shedlock
Sunday, 31 January 2016
China Manufacturing Prices Decline 18th Month; China Hoping to Avoid Hard Landing
China's manufacturing extended its long slump according to the Caixin China General Manufacturing PMI.
China Hoping to Avoid Hard Landing
Commenting on the China General Manufacturing PMI™ data, Dr. He Fan, Chief Economist at Caixin Insight Group said:
"The Caixin China General Manufacturing PMI for January is 48.4, up 0.2 points from December. Sub-indexes show a softer fall in new orders, which contributed the most to the improvement in the overall figure. Recent macroeconomic indicators show the economy is still in the process of bottoming out and efforts to trim excess capacity are just starting to show results. The pressure on economic growth remains intense in light of continued global volatility. The government needs to watch economic trends closely and proactively make fine adjustments to prevent a hard landing. It also needs to push ahead with existing reform measures to strengthen market confidence and to signal its intentions clearly.”
Hard Landing Definition
If China is beginning to "show results", those results aren't pretty.
Depending on how one defines "hard landing", China is doomed. A couple years ago a "hard landing" was believed to be 6% growth. By that definition, a hard landing is baked in the cake.
3% or 2% growth, or even lower is highly likely.
Perhaps a couple years from now, 3% won't seem any harder than 6% did two years ago.
Mike "Mish" Shedlock
Chinese manufacturers signaled a modest deterioration in operating conditions at the start of 2016, with both output and employment declining at slightly faster rates than in December. Total new business meanwhile fell at the weakest rate in seven months, and despite a faster decline in new export work. Nonetheless, lower production requirements led companies to cut back on their purchasing activity and inventories of inputs. On the prices front, both input costs and output charges fell again in January, though at the weakest rates in seven months.China PMI
Weaker client demand led manufacturers to discount their prices charged again in January, thereby extending the current sequence of deflation to 18 months (although the rate of reduction was the slowest seen since June 2015). Lower selling prices were supported by a further fall in average input costs at the start of the year. In line with the trend for charges, the rate of decline eased to the weakest in seven months. Lower cost burdens were generally linked to reduced raw material prices.
China Hoping to Avoid Hard Landing
Commenting on the China General Manufacturing PMI™ data, Dr. He Fan, Chief Economist at Caixin Insight Group said:
"The Caixin China General Manufacturing PMI for January is 48.4, up 0.2 points from December. Sub-indexes show a softer fall in new orders, which contributed the most to the improvement in the overall figure. Recent macroeconomic indicators show the economy is still in the process of bottoming out and efforts to trim excess capacity are just starting to show results. The pressure on economic growth remains intense in light of continued global volatility. The government needs to watch economic trends closely and proactively make fine adjustments to prevent a hard landing. It also needs to push ahead with existing reform measures to strengthen market confidence and to signal its intentions clearly.”
Hard Landing Definition
If China is beginning to "show results", those results aren't pretty.
Depending on how one defines "hard landing", China is doomed. A couple years ago a "hard landing" was believed to be 6% growth. By that definition, a hard landing is baked in the cake.
3% or 2% growth, or even lower is highly likely.
Perhaps a couple years from now, 3% won't seem any harder than 6% did two years ago.
Mike "Mish" Shedlock
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