US Manufacturing Surveys Bounce Despite The Biggest Industry Job Losses In 7 Years

Following China's miraculous PMI jump back into expansion, Markit reports US Manufacturing also rose to 51.5 in March (despite the biggest drop in manufacturing jobs since 2009). As Markit details, output growth is unchanged from February’s 28-month low, and prices charged decline amid further drop in input costs. ISM Manufacturing also jumpedfrom 49.5 to 51.8 – the first 'expansion' in 7 months. Finally, we note that ISM Prices Paid exploded higher (from 38.5 to 51.5) – the biggest jump since Aug 2012.

"V"-shaped recovery in ISM Manufacturing

 

ISM Prices Paid saw the biggest 2 month spike since June 2009….

 

All of which occurred as the manufacturing sector lost more jobs in March than at any time since 2009…

Every ISM Respondent thinks everything is awesome…

  • "Unemployment rate is low in our county, making it hard to find workers. We are understaffed and running lots of overtime." (Plastics & Rubber Products)
  • "Business in telecom is booming. Fiber plant is at capacity." (Chemical Products)
  • "Current trends remain steady. No issues with delivery or costs." (Computer & Electronic Products)
    "Capital equipment sales are steady." (Fabricated Metal Products)
  • "Requests for proposals for new equipment [are] very strong." (Machinery)
  • "Government is spending again. Have received delivery orders." (Transportation Equipment)
  • "Things are starting to pick up. Our business is seasonal and it is that time of year." (Printing & Related Support Activities)
  • "Business conditions are stable, little change from last month." (Miscellaneous Manufacturing)
  • "Incoming sales are improving." (Furniture & Related Products)
  • "Our business is still going strong." (Primary Metals)

Full ISM Breakdown..

 

But as Markit details, output growth is unchanged from February’s 28-month low, and prices charged decline amid further drop in input costs:

“March’s survey highlights sustained weakness across the US manufacturing sector, meaning that overall growth through the first quarter slowed to its lowest since late-2012. Subdued client spending  patterns within the energy sector, ongoing pressure from the strong dollar, and general uncertainty about the business outlook were cited as factors weighing on new order flows in March.

 

“Meanwhile, price discounting strategies resulted in the first back-to-back drop in factory gate charges for around three-and-a-half years, suggesting another squeeze on margins despite lower materials costs across the manufacturing sector."

So – to summarize, US manufacturing sector lost mopre jobs in March than at any time since 2009 BUT the managers that were surveyed by ISM and Markit proclaimed expansion is back and this puts all the pressure back on The Fed once again as more excuses are lost for hiking rates.


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NYPD Cop Who Supervised Arrest of Postal Worker in Road Rage Incident Placed on ‘Modified Duty’

The lieutenant in charge when he and three other plainclothes New York City cops stopped to intimidate and arrest a postal worker who yelled at them for almost hitting his truck has had his badge and gun taken from him and place on “modified duty,” according to the New York Daily News.

Lt. Luis Machado and three other cops were speeding through Brooklyn when they almost hit a postal truck. The driver, Glen Grays, shouted at the cops, who backed their car up to confront him after he yelled at them.

Video of the incident went viral, embarrassing the department, so the NYPD launched an internal affairs investigation:

The postal truck was left in the middle of the road.

Lt. Machado was placed on “modified duty,” meaning he continues to be paid while stripped of his gun and badge and unable to do pretty much any police work.

The incident illustrates how important police reform is and why merely focusing on individual cops won’t do much to deal with systemic police violence.

Law enforcement officials talk a lot about their “professionalism.” The NYPD and police departments around the country ought to have “zero tolerance” for behavior that could indicate bigger problems, to get disturbed officers off the force before they kill. Cops who display an inability to control their emotions, a propensity to abuse their power, or a lack of situational awareness about the way their actions create risk (from unnecessary confrontations to leaving unnecessary hazards like a postal truck in the road), ought to lose their jobs.

Police unions and the contracts they have been able to negotiate with local governments thanks to privileges granted on the state and federal level make dealing with police violence in a proactive and effective way far more difficult. Police unions, by nature, produce rules that will help bad cops. Black Lives Matters’ Campaign Zero identified “fair police union contracts” as one policy reform that could reduce police violence, and targeted particularly egregious provisions in police contracts with a separate website and data collection project, Checkthepolice.org.

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In 24 Hours Gartman Flips From “Don’t Fight The Fed” To “A Major Downside Turning Point Is Upon Us”

When documenting Gartman’s latest flip-flop yesterday just after 12 pm, in which the “world renowned” CNBC contributor and newsletter writer finally threw in the bearish towel, a position he had stuck with since March 16. This is what he said:

We may not agree with what Dr. Yellen is proposing… and what she will pursue… or why she is proposing and pursuing it… but it is not our duty to argue and then to take positions openly at odds with her, for as the great, departed and greatly missed Mr. Marty Zweig always said, “Don’t fight the Fed.”  We have no actual net long or short position in equities, however.”

We then warned that “the rally may be on its last legs“, and at that exact moment, the S&P topticked its intraday high of the day.

Fast forward to today, when – with condolences to the bears – it appears the downside following today’s “good news is bad news” report may be limited because Gartman has, once again flipped. To wit:

The fact that all ten markets comprising our International Index have fallen is of interest for it is exceedingly rare when such unanimity of direction takes place. However, when it does and especially when it does after sustained moves previously it is usually all the more consequential. The few times that we’ve seen all ten markets move lower have almost always been followed by further and material weakness. Coupling that history with the fact that the CNN Fear & Greed Index had reached 78 at one point late last week and has turned  lower, and further given that a goodly portion of the buying this week has been of the short-covering kind following Dr. Yellen’s speech to the Economics Club of New York, and coupling those notions with the fact that the margin levels on the NYSE have turned lower, we arrive at the possibility that a major turning point to the downside is hard upon us.

So… fight the Fed after all? Under other conditions we would speculate that this is just another April fools joke report, but then again, this is Gartman.

Joking aside, we may be in for a range-bound market once again, at least until Dennis goes bullish again, and we would not be at all surprised to see the market levitate (on no volume of course) back to green by the end of the day.


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DARPA Unveils Latest Military Tech Weapon: New at Reason

The Defense Advanced Research Projects Agency (DARPA) announces the latest in cutting-edge military technology in this promotional video released exclusively through Reason TV.

The new Cranial Response Online Weapons Network will allow instant executive branch-level command of U.S. military resources, without the need for congressional authority, debate, or national unity.

Approximately 1:55 minutes.

View this article.

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Waiters And Bartenders Rise To Record, As Manufacturing Workers Drop Most Since 2009

On the surface, the March jobs reported was better than expected… except for manufacturing workers. As shown in the chart below, in the past month, a disturbing 29,000 manufacturing jobs were lost. This was the single biggest monthly drop in the series going back to December 2009.

 

But not all is lost: as has been the case for virtually every month during the “recovery”, virtually every laid off manufacturing worker could find a job as a waiter: in March, the workers in the “Food services and drinking places” category, aka waiters, bartenders and minimum wage line cooks, rose again to a new record high of 11,307,000 workers, an increase of 25K in the month, offsetting virtually all lost manufacturing jobs.

This is how the two job series have looked since the start of 2015: 24k manufacturing jobs have been lost in the past 14 months compared to an increas of 365K food service workers.

 

And here is the longer-term, going back to the start of the crisis in December 2007: please do not “peddle fiction” upon seeing this chart.


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“Good” News Is Bad Again? Commodity Carnage Continues Post-Payrolls

It appears Goldman clients are once again taking a bath. Having proposed that with monetary concerns temporarily sidelined, "good news should be good news for risky assets," today's better-than-expected jobs print (following China's better than expected PMIs) has sent stocks lower, bonds higher, and crack gold and oil… 

Stronger USD has sent commodities reeling…

 

Extending overnight losses from China's "Good" news…

 

But bonds are bid as stocks slip lower…

 

As we pointed out just yesterday, Goldman suggested a "test" forits own progonostication:

…sensing the muppets' rage if they are all piledriven once more, Goldman provides a useful test to determine if at least this time it will right: that test will be the market's reaction to tomorrow's payrolls. Goldman says that as of this moment "good news should be good news for risky assets" – well, tomorrow's NFP will demonstrate that: if payrolls come in above the 210K consensus, then stocks should surge… assuming Goldman is right.

 

Put differently, with monetary concerns temporarily sidelined, good news should be good news for risky assets. Tomorrow’s economic calendar will provide an interesting test. We expect US data to be moderately stronger than expected. Consensus forecasts expect nonfarm payrolls to rise 210k vs. 220k for GS (from 242k last month) and ISM manufacturing to rise to 50.5 vs 51.0 for GS (from 49.5 last month).

 

Alternatively, if payrolls miss big, then the market should tumble. We'll know if Goldman, which two months ago said to short gold, will finally have at least one correct call.

It appears, once again, the Goldman clients have been Gartman'd…

 

The bottom line is simple – with China's recovery back on, and Chinese FX and equity market volatilitry "under control", The Fed is leftg with little excuse for "international developments" and is thuis forced to focus on domestic data – which, through various smoke and mirrors, is strong… therefore, for the free-money addicts "good" news is terrible news – especially at a 23x GAAP P/E.


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If You Think Life Was Better 50 Years Ago, You’re Voting Republican. Or Democratic.

New York Times staffer and author of The True American: Murder and Mercy in Texas Anand Giridharadas posted the above to Twitter this morning.

You never want to ascribe too much meaning to a single point, especially one made on Morning Joe, but the implications here are not only pretty clear, but pretty striking, particularly on the Republican side. Of course conservatives think things were better 50 years (or 100 years ago, or 25 years ago, depending on the personality and age of the person in question). That’s pretty much the definition of conservatism, isn’t it? That it “stands athwart history, yelling Stop,” or at least begging, Slow Down.

So it’s not surprising that supporters of the two candidates who inveigh against political correctness, want to make the country more homogenous by kicking out (mostly Mexican) illegals and stop immigration more broadly, and invoke American Greatness like they’re being paid by the mention are fonder of the past than the present.

More interesting to me are the barely optimistic responses by supporters of Sanders and Clinton. Even they cannot muster much fun feelings about the present. Are they too young to remember 50 years ago or too senile not to remember? Either way, there is simply no reason to believe that life was better in 1966, despite an absolutely killer year in music (more on this in a moment).

To be fair, the presumption that those good old days were a) much better than today and b) gone for good is such a feature of the American psyche that it predates the founding of the country. The settlers in New England were convinced that things were going to shit about 15 minutes after docking at Plymouth Rock. By the late 1600s, pastors were already proposing “half-way covenants” to second-generation puritans who were drifting into secularism and a generation before the American Revolution we were already “sinners in the hands of an angry God.”

Throughout the 1990s—those glorious, go-go years when even those of us who didn’t become tech gazillionaires saw our wallets fatten up and our life possibilities expand geometrically!—Reason published a never-ending stream of rebuttals (like this and that) to people proclaiming the death of the American Dream and invoking that old, horseshit-covered chestnut that “this next generation may be the first to have a lower standard of living than its parents…”

So to me, what’s most striking to the chart above isn’t the spread between Trumpists and Clintonistas (though it is stunning, to be sure), it’s that only a bare majority of the latter feel things are better now than they were 50 years ago.

In such a tepid response to the present, you see the failure not of America to deliver on the promise of a better, richer, freer life for those of us lucky enough to wash up on these shores before they are barricaded against foreign people and foreign goods (all the remaining Dem and GOP candidates are to varying degrees protectionist against both), but the failure of politics and the two major parties.

I don’t mean to scant the authenticity of respondents and their feeling of despair, but c’mon already and get a grip. By orders of magnitude, we are all richer, smarter, and better off. We are more educated, we live longer, we smell better, we DIE LESS. In terms of lifestyle and speech, we are freer to express ourselves; we are objectively less racist, homophobic, sexist, and generally uptight. There are many serious problems in today’s world and this country: We document those several times an hour at Reason.com, in fact, and offer ways to remedy many of them.

As Matt Welch and I argued in The Declaration of Independents, in most aspects of our lives—our personal lives, cultural lives, work lives—things are in fact improving. It’s in the areas of our lives governed by politics that things are stagnant, declining, or barely improving. The only large parts of our lives that haven’t gotten obviously better over the past 50 years include areas like K-12 education (where we spend about 2.5 times as much money to achieve exactly the same results), government spending (the government spends vastly more money per person and is succeeding mostly only in bankrupting future generations via old-age entitlements and dampened economic growth), and foreign policy (in 1966, we were in Vietnam; in 2016, we’re everywhere but Vietnam).

You leave the hothouse sphere of politics—harder and harder to do, for all sorts of reasons—and most people suffer not from too few choices and opportunities but too many. That’s where our lives should be lived, far away from the madding crowd filled Team Blue and Team Red tribalists who vote on what kind of food we can eat, dope we can smoke, sex we can have. Party identification is “at or near historic lows” not because America has failed but because politics and politicians and partisanship have failed. Once we fully understand, accept, and act on this and create a government that is smaller, more effective, and less intrusive, who knows? We might actually start realizing that the present beats the past but pales in comparison to our future.

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It’s the Worst Day on the Internet, Reddit Removes ‘Warrant Canary’ From Transparency Report, Milo Yiannopoulos ‘Does Not Exist’: A.M. Links

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The Chalking Continues: U. Mich Students Call Police Over ‘Trump 2016’ and ‘Stop Islam’ Messages

TrumpStudents at another university are furious about a spate of chalk scribblings that appeared on campus this week. “Trump 2016,” “Build the Wall,” and “Stop Islam” were among the messages that made some members of University of Michigan community feel unsafe enough to actually call the police.

UM is a public university, unlike Emory University and Scripps College, and its students enjoy broader free speech protections under the First Amendment. The chalkings, which appeared on the Diag—a public square frequently inhabited by activists of various causes—seem even less out of place here than at Emory. As a graduate of UM, I can testify to the fact that the campus is highly politically active and frequently inhabited by demonstrators, littered with flyers, and yes, even covered in chalk.

And yet you would think—based on this story in The Michigan Dailythat UM students are so sheltered they have never encountered an opinion that offends them. How else can anyone explain why a group of student-activists were so spooked by obvious political speech that they overcame their natural aversion to the police and actually called for help?

“I’ve been getting bounced around from one person to another, and I understand it’s after hours, but there should be some kind of emergency number besides the police because a lot of students of color don’t feel comfortable calling the police,” one irate student, Banen Al-Sheemary, told The Daily. “They’re our only resource and that I think is ridiculous.”

What’s ridiculous is that the students wasted the authorities’ time at all. The chalkings weren’t an emergency: they were protected expression, and neither the police nor the university is under any obligation to remove them.

Chalk messages are easily erased, of course, and the students were able to cleans the Diag easily enough with a few buckets of water. Al-Sheemary described this as “a really difficult process” and lamented that the administration’s inaction “perpetuates these really racist and hateful stereotypes that turn into violence and turn into students of color feeling unsafe on campus.”

UM did release a statement. “Attacks directed toward any member or group within the University of Michigan community, based on a belief or characteristic, are inconsistent with our values of respect, civility and equality,” said UM spokesperson Rick Fitzgerald, referencing the “Stop Islam” message.

I understand the sentiment being expressed here, but is it really the case that “attacks”—if that is indeed what these messages are—directed toward adherents of certain religions are off limits? Islam is an ideology, not a race. It seems like a university is fine place to speak out against systems of belief that one thinks are harmful, including various religions.

Imagine if right-leaning students had taken offense at a message that read “Stop Conservatives” or “Stop Republicans.” Should the cops do something about pro-Bernie Sanders students if they chalk “Stop Hillary”?

Criticism is not an act of violence, no matter how fervently the campus left insists that it is.

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Payrolls Rise 215K In March, Above Expectations; Average Hourly Earnings Rise

And so the confusion remains: why did Yellen go uber dove three days ahead of a day in which the BLS reported that in March not only were 215K jobs created, more than the consensus 205K, if below last month’s 245K, but in which average hourly earnings rebounded a solid 0.3%, above the 0.2% expected, and well above last month’s -0.1% decline.

 

Wages rose:

 

However, the fly in the the ointment was that the unemployment rate picked up modestly from 4.9% to an above expectations 5.0%, while manufacturing payrolls dropped 29K, far below the 2K increase expected, and below last month’s -18K. Additionally, the energy recession is finally trickling down with oil and gas extraction payrolls falling 19,200 from a year earlier.

And the last notable point: average hourly hours worked were flat at 2 year lows, which bodes poorfly for both productivity growth and for GDP.

 


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