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Tag Archives: Inventory

The Inventory Context For Rate Cuts and Their Real Nature/Purpose

What typically distinguishes recessions from downturns is the inventory cycle. Even in 2008, that was the basis for the Great “Recession.” It was distinguished most prominently by the financial conditions and global-reaching panic, true, but the effects of the monetary crash registered heaviest in the various parts of that inventory process. An economy for whatever reasons slows down. That leads to inventory piling up across the various levels of the supply chain. Most businesses will remain...

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The Inventory Context For Rate Cuts And Their Real Nature/Purpose

What typically distinguishes recessions from downturns is the inventory cycle. Even in 2008, that was the basis for the Great “Recession.” It was distinguished most prominently by the financial conditions and global-reaching panic, true, but the effects of the monetary crash registered heaviest in the various parts of that inventory process. An economy for whatever reasons slows down. That leads to inventory piling up across the various levels of the supply chain. Most businesses will remain...

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US Industrial Downturn: What If Oil and Inventory Join It?

Revised estimates from the Federal Reserve are beginning to suggest another area for concern in the US economy. There hadn’t really been all that much supply side capex activity taking place to begin with. Despite the idea of an economic boom in 2017, businesses across the whole economy just hadn’t been building like there was one nor in anticipation of one. The only place where there was a truly robust trend was the oil patch. Since the last crash a few years ago, Euro$ #3, the oil sector...

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COT Black: Not Transitory, The Landmine In Crude Means A Lot More Than Crude

Supply glut or demand disappearing? We are back to asking that question again after four years. In late 2014 and early 2015, the conventional answer was shale. The US had begun producing so much oil there was a glut of supply. Without an outlet for it, all the crude began building up primarily in Cushing, OK. All that was true but also never came close to explaining the oil crash. What changed wasn’t supply it was demand. The oil futures market had known about the onrush of additional crude...

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Real Estate Perfectly Sums Up The Rate Cuts

It’s only a confusing when you just accept the booming economy of the unemployment rate. From this perspective, 2018 was, and more so 2019 is, a downright conundrum. By all mainstream accounts, this just shouldn’t be happening. Home sales are running at a pace similar to 2015 levels – even with exceptionally low mortgage rates, a record number of jobs and a record high net worth in the country. Not only that, 2015 levels were substantially less than 2005 levels despite more than 30 million...

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Durably Sideways

Next month, in the durable goods series, the Census Bureau will release the results of its annual benchmark changes. In May 2019, the agency will revise the seasonal adjustments going back to January 2002. Unadjusted data will not be, well, further adjusted. None of this, apparently, will include any information gleaned from the comprehensive 2017 Economic Census. I haven’t closely followed the progress of the latter, though it does seem to me to be taking longer to wind its way into the...

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US Factory Orders Lower, Inventories Higher

It’s the forward-looking indicators right now that look the worst. This is why we think Euro$ #4 is still closer to its beginning than its end. Even though it may be entering its fifth quarter of existence here in Q2 2019, these things are long processes that take a lot of time to fully play out. Euro$ #3, for example, you can date its opening to at least the start of 2014 (CNY) if not the middle of 2013. It didn’t fully complete the (mini) cycle until early 2016, the middle of that year at...

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COT Black Is Partially Back With A Lot of Towels

The Commodity Futures Trading Commission (CFTC) is in a bit of a tough spot. Being subject to the federal government shutdown meant shutting down the various Commitment of Traders (COT) reports for all the products listed on the exchange. There are a lot of them. Though the government and therefore the CFTC has reopened, it is going to be some time before they catch up (assuming they can before the next shutdown). The plan is for two releases per week in chronological order until that gets...

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Hitting the Low Ceiling

We will hear all day and for the next month (at least) about the two best quarters of GDP growth in four years. Somehow this will be used to justify calling this an economic boom, even though those two quarters in 2014 supposedly didn’t qualify. And they were better quarters, at least so far as real GDP goes. Knee-jerk reactions are always tricky, but it’s safe to write that the bond market is thoroughly unimpressed. Treasury yields are falling despite the headline 3.5%. Struggling to...

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Housing Slump Continues

The National Association of Realtors (NAR) today picks right up where we left off yesterday. The Census Bureau had reported another month suggesting a rough spot in real estate. More recent housing data isn’t encouraging, either. The lower the unemployment rate goes, the main emphasis of this “boom”, the worse the housing market becomes; not because one follows inversely the other, rather because the unemployment doesn’t reflect on-the-ground reality of the full economy… Now in 2018, there...

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