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Something curious happened earlier today when the DOL revealed its latest initial claims number: while the seasonally adjusted print declined by 10,000 to an expectations beating 316K (a change that identically matched what happened to the Seasonally Adjusted print a year ago), the unadjusted number rose by 37,229 to 363K. That’s ok: after all that’s what “seasonal adjustments” are for – to take a volatile number which historically posts an abnormal jump or drop in any given week and smooth it out, right? Wrong. Because as the DOL also reported a year ago, the supposedly same “seasonal adjustment” applied to the same week in 2012, when the claims number was 390K adjusted and 359K unadjusted, should have been adjusted in the same direction. And while the 390K claims print in 2012 was indeed a 10,000 drop from the prior week’s 400K, the unadjusted number instead of being an increase, was actually a drop, one of 44,768 jobs. How does this same “recurring” seasonal adjustment look further back – after all it is seasonal, so there should be some recurring logic for a specific time of the year? The answer is shown on the chart below.

In other words, the “same” adjustment that in the past was applied to an NSA weekly change that was a greater drop than the seasonally adjusted print, somehow in 2013 ended up having its sign flipped, and made the weekly spike in claims look much better than it actually was. For the exactly same week.

One wonders just what other goalseeking intentions (and directive) the BLS had when it ordered the Arima “adjustment” software to make such a radical departure in this specific week?

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Unlike every other measure of consumer confidence, sentiment, or comfort, the ‘final’ UMich Consumer Confidence print recovered its “flash” collapse and managed to beat expectations. However, before the party streamers are broken out, this uptick leaves the confidence data the 2nd lowest since Jan 2013 – led by – drum roll please – the expectations for the future (which rose from a preliminary 62.3 to final 66.8). Perhaps troubling is the drop in inflation expectations – down to 2.9% year ahead, the lowest since Oct 2010. So unlike the rest of the surveys, UMich finds consumers more confident about the future but in the baffle-em-with-bullshit category, expecting disinflationary pressures to grow. Of course, there are seasonality factors – its the holidays nearly – and we note that the 75.1 print is lower than any Nov print from 2004-2008.

 

 

 

But this is a lot lower than confidence for this time of year compared to pre-crisis…

 

 

Charts: Bloomberg

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Unlike every other measure of consumer confidence, sentiment, or comfort, the ‘final’ UMich Consumer Confidence print recovered its “flash” collapse and managed to beat expectations. However, before the party streamers are broken out, this uptick leaves the confidence data the 2nd lowest since Jan 2013 – led by – drum roll please – the expectations for the future (which rose from a preliminary 62.3 to final 66.8). Perhaps troubling is the drop in inflation expectations – down to 2.9% year ahead, the lowest since Oct 2010. So unlike the rest of the surveys, UMich finds consumers more confident about the future but in the baffle-em-with-bullshit category, expecting disinflationary pressures to grow. Of course, there are seasonality factors – its the holidays nearly – and we note that the 75.1 print is lower than any Nov print from 2004-2008.

 

 

 

But this is a lot lower than confidence for this time of year compared to pre-crisis…

 

 

Charts: Bloomberg

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Well that escalated quickly. Having broken above $900 yesterday to new record highs (and a 100% gain in a week), the crypto currency is not looking back now. On what is higher than average volume this morning, Bitcoin just broke above the magic $1000 level for the first time (at $1025). Meanwhile, the BTC China “arb’d” rate is around $950 for those playing at home; and Litecoin has just topped $26 (from $4 a week ago!).

 

Bitcoin…

 

 

Litecoin…

 

 

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Those who were looking at the JPY monkeyhammering at 9:42 spotted the exact moment the November Chicago PMI number was released early to MarketNews subscribers, and also knew precisely that the number would be a beat. Sure enough, at 9:45 when the number was released for broad distribution, this was confirmed because while the headline number dropped from last month’s epic 65.9 to 63.0, it was still a sizable beat of expectations of 63.0, with the Employment number rising from 57.7 to 60.9 the highest since October 2011. However, one look at the internals shows that not all was well. In fact, with New Orders dropping from 74.3 to 68.8, production sliding from 71 to 64.3 and backlogs down from 61.0 to 59.8, the forward looking metrics all dipped so it was all up to that old faithful channel stuffer – Inventories – to fill the gap. And fill the gap it did, by soaring from 48.0 to a whopping 61.1, the highest number since September 2006!

Just as the Durable Goods goods number suggested, the inventory buildup is the only thing that is keeping manufacturers busy. Selling said inventory at a profit (especially with Prices Paid surging from 56.7 to 63.7), or investing in future production capacity, not so much.

 

And the disconnect between forward indicators and the inventory surge:

The full report:

The November Chicago Business Barometer softened to 63.0 after October’s sharp rise to a 31-month high of 65.9. November’s slight correction came amid mild declines in New Orders, Production and Order Backlogs after double digit gains in the prior month.

 

Despite November’s weakening, the Barometer remained well above 60 for the second month, pushing the three month moving average to the highest level since November 2011.

 

Chicago area purchasers continued to report healthy expansion in New Orders and Order Backlogs, albeit at a slower rate, as well as a lengthening in Supplier Delivery Times.

 

Employment was up for the second consecutive month, reaching the highest level since October 2011, and the first time above 60 since February 2012.

 

Inventories exploded 13.1 points to 61.1, moving out of contraction for the first time since February and posting the highest reading since September 2006. With expectations for higher demand, firms underwent a major stock rebuild.

 

Commenting on the MNI Chicago Report, Philip Uglow, Chief Economist at MNI Indicators said, “The Barometer might be down in November, but this was another impressive month with companies reporting firm growth”.

 

“Having kept inventories lean for so long, a pick-up in demand has led to a sharp rise in stock building among the companies in our panel. And to handle the latest production and new orders boost, companies are hiring at the fastest pace for two years,” he added.

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While shoppers will perceive the discounts on Black Friday as ‘saving’ them fortunes, the cost of the 2013 Thanksgiving Day dinner may be the most expensive ever. As the gorging commences, despite an entirely benign inflation in the eyes of the Federal Reserve, the prices of everything from chocolate chip cookies to ice cream are on the rise. But it is the centerpiece of the meal that is weighing on pocket-books. As Bloomberg’s Michael McDonough notes, Americans are paying the most for whole frozen turkeys since the Bureau of Labor Statistics began publishing data on the series in 1980.

 

 

The U.S. city average price per pound for frozen turkeys climbed to $1.819 in September, up from $1.433 at the end of last year and $1.621 a year prior. September’s price implies an average 15 pound Thanksgiving turkey will cost Americans $27.29 this year, compared to less than $25 dollars last year.

Frozen turkey prices have risen substantially during the past decade, probably due to rising input costs. Turkey prices averaged just $1.071 per pound between 2000 and 2004, compared to $1.579 per pound since 2010. This price increase is nearly double the rise in overall inflation during the same period. Corn prices, a major source of turkey feed, rose by nearly 200 percent during the same period helping boost the cost of the final product.

There is a silver linig though – potentially…

It may come as some relief for turkey farmers that as prices continue rising, corn prices have plummeted about 50 percent since September 2012.

Source: Bloomberg’s Michael McDonough (@MMcDonough)

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