One wonders how high the propaganda flag pole the objecting parties had to run, make that sprint, to get this “revised wording” blasted out, and just how many AP pink slips will appear in next week’s not seasonally adjusted initial jobless claims print?
We warned last month that under the covers Chicago PMI looked a lot weaker than the headlines and this morning’s collapse confirms that. Against expectations of a small rise to 63.0, Chicago PMI plunged from 62.6 to 52.6 (13-month lows) for the biggest miss on record. According to the release itself, “A monthly fall of this magnitude has not been seen since October 2008 .” The was an 8 standard-deviation miss from analyst expectations (Joe Lavorgna was on the high side at 63.0). New orders, inventory, production, order backlogs, and prices paid all dropped (but employment rose?). This is the biggest 2-month drop since Lehman (and 2nd biggest since 1980). We await the seasonal adjustment “correction” as MNI get the call from Yellen.
This is the biggest 2-month drop since Lehman (and 2nd biggest since 1980).
The breakdown:
Forecast range 60 – 65 from 47 economists surveyed
Prices Paid fell compared to last month
New Orders fell compared to last month
Employment rose compared to last month
Inventory fell compared to last month
Supplier Deliveries rose compared to last month
Production fell compared to last month
Order Backlogs fell compared to last month
Of course, very quick damage control was needed and sure enough:
In spite of the sharp decline this month, feedback from purchasing managers was that they saw the downturn as a lull rather than the start of a new downward trend. This was especially so given the recent strong performance and the fact that Employment managed to increase further in July.
Cognitive dissonance much? Because at the same time:
Nonetheless, following a strong Q2, this was clearly a poor start to Q3 and as such tempers some of the increased optimism in recent months. Production’s large decline in July left the indicator barely in expansionary territory and at a two year low, although this followed a very strong run with output above 70 in June. New Orders, the most heavily weighted component of the barometer, saw its biggest monthly set back since November 2013. Order Backlogs, which have expanded in every month since last October, fell into contraction in July.
Also, kiss the inventory-driven GDP expansion goodbye:
Growth in inventories eased in July from a seven month high in June, while Prices Paid fell for the second consecutive month but remained well above 50.
In conclusion:
Commenting on the MNI Chicago Report, Philip Uglow, Chief Economist at MNI Indicators said, “The surprise fall in the Chicago Business Barometer in July, following a strong second quarter, naturally raises questions about the sustainability of the recovery. Some feedback from panellists points to this being a temporary setback, although we’ll need to see the August data to judge to what extent this is a blip“.
No, none of the Senate’s
6,000-page report on torture and brutal interrogation techniques
performed by the CIA during the War on Terror has been
declassified yet. But we know how the White House is going to
respond and what kind of questions they think the media is going to
ask because somebody accidentally (or perhaps “accidentally”)
leaked a four-page memo to an Associated Press reporter.
Because the memo is designed to help the White House prepare for
what it sees as the likely big questions, it essentially allows the
reader to extrapolate the major points that are going to be coming
out of the report, and that’s exactly what the
Associated Press did. At this point, much of the most important
findings of the full report barely counts as a secret. Anybody who
has read any stories about the Senate’s preparation of this report
(and their
fight with the CIA over it) knows that the Senate has concluded
that torture (regardless of whether the exact word is used) of
detainees took place and that it didn’t help the United States
fight terrorism.
But what is new is that apparently then-Secretary of State Colin
Powell and some U.S. ambassadors were kept in the dark about the
CIA’s actions, and some ambassadors who knew about the
interrogations at overseas black sites were told not to inform
their superiors at the State Department.
The memo is just one page of talking points and three pages of
predictions on the type of questions they think media will ask. The
White House seems to think the media is going to ask a lot of
questions about why the release of the report is even happening:
“Isn’t the release of this report endangering American citizens
overseas?”; “Did the White House ask Chairman Feinstein to delay
release of the report? Why not?”; “Is the Administration further
undermining our moral authority?”; “Isn’t the release of this
report going to destroy our intelligence relationships?” (Answer: Too late); and the
hilarious “Isn’t this the worst possible time to release this
report in terms of unrest in the Middle East and other places where
our people are at risk?” Yes, let’s fix all that first! To be fair,
though, they do also predict questions about whether the government
is admitting that torture actually happened and whether the
Department of Justice revisit the decision not to prosecute
anybody.
The talking points themselves are of the predictable “Mistakes
were made” and “We don’t do this anymore” variety. Possibly the
most amusingly cynical talking point, which the Associated Press
noticed and decided to include in their story, is this one:
“This report tells a story of which no American is proud. But it
is also part of another story of which we can be proud. America’s
democratic system worked just as it was designed to work in
bringing an end to actions inconsistent with our democratic
values.”
Yeah, our treatment of prisoners was terrible, absolutely
reprehensible. But the outrage helped certain people get elected!
To be fair, it probably helped save us from a President Rudy
Giuliani.
The Dow and S&P 500 are now in the red for July as stocks are opening weak this morning. Of course, the month’s big loser is the Russell 2000 which is down 5.3% – its worst month in over 2 years.
It would appear “Russia” is the new “weather” when it comes to missed earnings expectations. As Bloomberg reports, Adidas shares fell by a record after the world’s second-largest sporting-goods maker slashed its full-year profit forecast, bursting euphoria around the German company less than a month after its national team’s victory in the World Cup. The reason, aside from golf, “turmoil in Russia,” which just happens to be its most profitable region. But Jack Lew promised that there would be no impact?
Adidas said profit this year will miss its forecast by at least 180 million euros ($241 million). The shoemaker and apparel maker scrapped a long-standing growth target for next year, citing a slump in demand for golf supplies in North America combined with turmoil in Russia. The shares tumbled as much as 16 percent in Frankfurt trading, the biggest intraday drop since the company’s 1995 initial public offering.
“You could argue they’ve been a victim of their own success,” said John Guy, an analyst at Berenberg Bank in London who recommends buying the shares. “Russia is one of their most profitable regions,” and now a dispute with Ukraine and economic sanctions against Russia are weighing on the outlook.
…
Net income this year will be about 650 million euros, Herzogenaurach, Germany-based Adidas said in a statement, down from the earnings of 830 million euros to 930 million euros the company had previously anticipated.
…
Adidas said it plans to close stores and delay openings in Russia, a market where 2013 sales exceeded 1 billion euros. Adidas had previously planned to end this year with more than 100 net new stores, spokeswoman Katja Schreiber said.
The company had named Russia and the former Soviet countries one of its three “attack markets,” which were supposed to contribute about half of the company’s sales growth.
* * * Who could have seen this coming in what Putin called the ‘interconnected world’? It would seem the Europeans will soon be asking Washington to stop with the “costs”…
It would appear “Russia” is the new “weather” when it comes to missed earnings expectations. As Bloomberg reports, Adidas shares fell by a record after the world’s second-largest sporting-goods maker slashed its full-year profit forecast, bursting euphoria around the German company less than a month after its national team’s victory in the World Cup. The reason, aside from golf, “turmoil in Russia,” which just happens to be its most profitable region. But Jack Lew promised that there would be no impact?
Adidas said profit this year will miss its forecast by at least 180 million euros ($241 million). The shoemaker and apparel maker scrapped a long-standing growth target for next year, citing a slump in demand for golf supplies in North America combined with turmoil in Russia. The shares tumbled as much as 16 percent in Frankfurt trading, the biggest intraday drop since the company’s 1995 initial public offering.
“You could argue they’ve been a victim of their own success,” said John Guy, an analyst at Berenberg Bank in London who recommends buying the shares. “Russia is one of their most profitable regions,” and now a dispute with Ukraine and economic sanctions against Russia are weighing on the outlook.
…
Net income this year will be about 650 million euros, Herzogenaurach, Germany-based Adidas said in a statement, down from the earnings of 830 million euros to 930 million euros the company had previously anticipated.
…
Adidas said it plans to close stores and delay openings in Russia, a market where 2013 sales exceeded 1 billion euros. Adidas had previously planned to end this year with more than 100 net new stores, spokeswoman Katja Schreiber said.
The company had named Russia and the former Soviet countries one of its three “attack markets,” which were supposed to contribute about half of the company’s sales growth.
* * * Who could have seen this coming in what Putin called the ‘interconnected world’? It would seem the Europeans will soon be asking Washington to stop with the “costs”…
Since the early days of the telegraph, North
America has seen titanic struggles to define the government’s role
in telecommunications. The major players in these battles have been
policy makers, progressives, and corporations, and the results, for
the most part, have been a sort of mutually beneficial collusion.
Progressives got universal service and regulation, corporations got
government-backed monopolies and other privileges, and policy
makers got another lever of power to pull. From Reason’s
August/September issue, Jon Henke reveals the secret history of the
telephone.
While earlier today initial claims disappointed modestly to the upside, the economic print the market has been fascinated by is the otherwise C-grade economic indicator released by the BLS, the Employment Cost Index, which is quite a backward looking (today’s release looked at Q2) at wages, salaries and benefits. The reason it is fascinated by it is that, supposedly, total employment costs rose the most in 6 years, with wages rising the most since Q3 2008 and benefits: the most since Q2 2011. And the reason why the risk switch has been pushed into the Off position is because this alleges that wages are finally rising, something which the Fed did not know yesterday, and which will make the hawkish case that much stronger.
So where did the wages and benefits rise the most? Here is the full breakdown by industry:
And by occupation.
Of course, the paradox is that while BLS is reporting surging labor costs (with a quarter lag), it is also reporting concurrent real hourly wages which continue to decline.
Luckily, we will know the full story tomorrow when the BLS releases the far more important jobs data for July, which will have updated average hourly and weekly earnings data. Don’t be surprised if it rejects everything that the BLS just reported today.
The recent water crisis in Detroit
has brought renewed attention to the plight of the city, where many
residents have not
paid their water bills and are in danger of having their pipes
shut off. It’s just one symptom of the disease that’s all but
killed the now bankrupt Motor City.
Republican Gov. Rick Snyder has prescribed a cure: the
installation of emergency city manager Kevyn Orr. Orr has broad
authority under state law to change city policy, cancel contracts,
slash spending, and privatize services.
That solution has rankled some on the left, who seem to have
rediscovered the concept of federalism now that they have an
instance of a Republican-controlled government taking over a
smaller municipality. Sally Kohn wrote in
The Daily Beast that the state takeover of Detroit amounts
to white Republicans stripping black people of their autonomy:
So in the fall of 2013, Detroit voters went to the polls to
elect a new mayor and City Council, but it didn’t matter. The
powers of the mayor and City Council have effectively been
suspended. Detroit’s emergency manager, Kevyn Orr, appointed by
Snyder, has all the power and then some. A Democratic city that
elected Democratic leaders is now controlled by the appointee of a
Republican governor.
Or, to put it differently, Detroit—a majority
African-American city—is now controlled by a governor
elected by a majority of
white voters in the state. It really doesn’t matter that
Kevyn Orr, the state-appointed emergency manager, is black, nor
that Mike Duggan, Detroit’s mayor, is white. What matters is that
half of the state’s black population lives in Detroit. So through
the state takeover, “half of black Michiganders have essentially
lost the right to vote,” says Ife Kilimanjaro, co-director of the
East Michigan Environmental Action Council.
I’m sympathetic to this argument. Local actors are typically
better positioned to address their community’s needs, and mandates
handed down from on high by distant government bodies are often
ill-advised. By the same logic, Kohn must surely oppose the
Affordable Care Act as an unjust usurpation of states’ sovereign
right to set their own healthcare policies? Alas, no: Kohn
found 317 million reasons to support the law.
Writing in
The New York Times, Yale University philosophy professor
Jason Stanley bemoans that the imposition of an emergency manager
has stripped Detroit residents of their “freedom and equality.” Woe
to our democracy:
The Nazi political theorist Carl Schmitt was a fierce critic of
liberal democracy. He argued that liberal democracy was incoherent
because of what he called the problem of the exception. In
emergency situations, there is not enough time to act
democratically. In an emergency, someone would have to declare an
exception to suspend the normal democratic process and handle the
emergency. Schmitt argued that whoever had the power to declare an
emergency situation and override the democratic process would be
tempted to overuse that power, and declare nonemergency situations
to be states of exception. This person would be in effect the
sovereign.
The language of the emergency manager laws is that of exception.
Calling the situation an “emergency,” and the undemocratically
selected financial manager an “emergency manager” is nothing other
than a declaration of the anti-democratic nature of what has
occurred. Detroit does not face an immediate threat from a hostile
invading army. To suppose that financial exigency or advancing an
agenda of privatization for corporate gain are reasons to suspend
democracy is to capitulate to its worst enemies.
Okay, democracy has been suspended. Meh?
I will note that prior to state intervention, Detroit languished
for decades under
extremely corrupt but technically democratic (and also Democratic)
management. Its city officials—from the lowest public employee
to the mayor—were not merely criminally negligent but also
negligent criminals. Evil bureaucrats bribed, stole, and swindled
Detroit into utter ruin. It seems inhumane to me that anyone could
think this result was what city residents deserved as long as some
chunk of them cast ballots authorizing it on behalf of everyone
else. What about all the people who didn’t approve of their city
government’s criminal dealings?
Now, if people like Kohn and Stanley are actually suggesting
that Detroit suffers from too much big government
planning, I could work with that. Indeed, there’s a great
case to be made that large swaths of the city should be turned
over to private individuals with better ideas and management
skills. Privatization of city services is actually one of Orr’s
goals, and I look forward to the day when neither the state nor the
local government has much say over how city affairs are
conducted.
That’s not what these left-leaning critics of the
emergency financial manager law are suggesting, of course. It seems
they aren’t too concerned leaving Detroit to rot under the corrupt
tutelage of Kwame
Kilpatrick, Monica Conyers, or some other crime lord, as long
as precious democracy is maintained (in this case, at least).