What a bummer. Services are two-thirds of the economy; as long as they’re firm, the economy will plug along just fine, even as manufacturing stalled.
By Wolf Richter for WOLF STREET.
US service sector activity, driven by new orders and rising employment, expanded strongly in July, according to two measures of the service sector released today: The ISM Services PMI and S&P’s US Services PMI (formerly the Markit Services PMI).
The way these Purchasing Manager Indexes (PMIs) are structured, a value of 50 means no change, a value higher than 50 means growth, and a value below 50 means decline. The higher the value above 50, the faster the growth. The measurement is month-to-month.
S&P’s services PMI for July came in a 55.0, meaning strong growth, and roughly the same pace of growth as in June (55.3), the “best growth spell” in two years, driven by “solid new order growth,” which “encouraged companies to take on additional staff,” with employment at these companies increasing for the second month in a row, the report said.
The increase in employment was not enough “to fully keep up with new order growth in July, resulting in a second consecutive monthly rise in backlogs of work,” the report said.
“The reading signaled a marked monthly expansion in services activity, extending the current sequence of growth to 18 months,” the report said.
Services providers continued to benefit from consumers switching spending from manufactured goods to services, “such as travel and recreation.” Healthcare and financial services also reported “buoyant growth.” The report pointed at the “wide divergence between the manufacturing and service economies.” This process of consumers shifting their spending back to services, from goods, has been going on for two years.
Input cost inflation “experienced a further sharp rise, with the rate of inflation quickening to a four-month high,” the report said. “Respondents indicated that higher wage and transportation costs had been the main factors pushing up input prices.”
Output inflation decelerated. “While a number of companies responded to higher input costs by increasing their selling prices accordingly, there were other reports that competitive pressures led some firms to lower their charges. The rate of output price inflation was solid, but eased for the second month running to the slowest since January,” the report said.
“Thanks to the relatively larger size of the service sector, the July PMI surveys are indicative of the economy continuing to grow at the start of the third quarter at a rate comparable to GDP rising at a solid annualized 2.2% pace,” the report said.
“The surveys saw some upward pressures on costs, especially in the service sector, which policymakers [the Fed] will likely be eager to see soften before being confident of inflation falling sustainably to target,” the report said.
The ISM Services PMI jumped to 51.4% in July. Business activity and new orders increased strongly, employment increased, and prices jumped. Backlog increased slightly. Export orders jumped – a factor also mentioned in the S&P Services PMI above. And imports also rose.
This July reading (51.4%) was a bounce from the reading of 48.8% in June, the lowest reading in four years that had contradicted by a lot, and unusually, the S&P Global reading for June of 55.3. But the weak (freak?) June was, as we now know, sandwiched between the good July (51.4) and the strong May (53.8%), the best growth in the services sector since August 2023.
Manufacturing growth has been in the doldrums after the huge surge during the pandemic, as we have pointed out here for about a year and a half. This includes manufacturing employment, which has roughly plateaued at high levels after the huge pandemic surge. And prices of manufactured goods have been falling since mid-2022, now at the fastest rate in two decades, coming off their spike during the era of the shortages.
But services are about two-thirds of the economy, services are also where about two-thirds of consumer spending goes, and businesses spend a lot on services too, and services are now driving the economy after the collapse during the pandemic. And as long as growth in services is firm, the economy will be plugging along just fine, even as manufacturing growth stalled.
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Buy the dip tomorrow folks!
Too late. There will be a big gap up. Sell the rips
Put it all on Red
Ohh… this will be interesting if this data continues into Sept. Not that it matters to shills like Siegel or Krugman… if it’s up to then… all 6 rate cuts by year end and we need ZIRP by tomorrow..
As insane as our financial world is, it’s a little cold comfort to know at least these shills aren’t in charge of a position that can actually do something
The funny thing is some “analysts” I follow on Twitter and get newsletters from are already drawing star patterns on unemployment charts to predict we are “already headed for recession” and that FED is “behind the curve” with rate cuts because it’s using “lagging data” etc. I suppose they could be right, recessions do happen but for now I wait to see and this from Wolf doesn’t seem to point in that direction.
What happened to everyone’s enthusiasm?
Over the pandemic I was like “these prices are ridiculous!”
And people were just “I want it!”
I guess they ran out of money and are declaring a recession.
If only they had demanded better prices back then.
One report comes out a little lower than expected, but still positive, and it’s already a trend for them. Last month’s report surprised to the upside. These people are clinically insane IMO with their obsession. They need to do something constructive with their time or get on some meds.
Unpopular opinion: I have faith Powell will do the right thing and resist calls for rate cuts.
They usually cut fast anyhow. He’ll stop at 3% probably, knowing him.
That’s just it, Powell can move the needle but a few points…that’s it.
Its nothing. Seems funny such a narrow window of movement can send the flock flapping and squawking with glee or agony.
Now if it was 10 or 12% then drop it down to 5 or 6. But this historic drop from 5 to 4 or 3.
After today’s rally, 50 bp emergency rate cut is totally out of the window now. Actually, it was never inside.
Fairly certain he’s trying to get wallstreet and silicon valley to be rational with their money. Companies that aren’t profitable need to be held accountable (see Uber, Tesla, X not turning profit but thriving off of cash infusions). Once that happens, he’ll cut rates.
Maybe so, but do you recall the wild mal-investment of just a few years ago? It was on Powell’s watch, and it persisted beyond a time when lots of untrained folks could obviously see writing on the wall. I don;t think Powell sees the Fed’s mission as micromanaging investment and management choices. I think (hopefully) he is focused on the aggregates that are his direct job.
Rate cuts won’t come because of recession. It’s the stress on the banks
Dude they always cut when $hit hits the fan.
It’s the economy eject button, if you will.
That’s what the FDIC is for.
The Fed does “macro-prudential” regulation of the overall banking system, for times when the dominos start failing across the system. The FDIC manages individual bank failures.
You mean like the rate cuts the Fed did due to the Silicon Valley Bank emergency? Oh wait, that’s right, they didn’t use rate cuts to solve that issue, mostly because rate cuts won’t solve for that type of immediate liquidity need.
Those problems were caused by stupid low rates in the first place; lowering rates every time the market falls or a pundit sees a recession in the clouds won’t solve for stress on the banking system.
What does solve for it? Stable rates for as long as possible so that banks can make better decisions due to easier forecasting.
There is no need for the Fed to do a rate cut just to keep Wall Street happy… some more happy talk about rate cuts (or a split vote on the FOMC at the September meeting) will do much the same.
But there most definitely IS a reason to delay any rate cuts until their November 6th meeting… as an institution the Fed tries to avoid getting involved in election year politics because rate cuts and hikes can earn outsized criticism for the Fed. And that criticism lasts a LONG time because politicians have memories like elephants. Even the sainted Paul Volcker held off on his big rate adjustments (hikes) until after the 1980 election was concluded.
So once the election is over on November 5th, look for them to do whatever it is that they want to. But until then (absent a 9/11-type event) the FOMC is just going to lay low.
I suppose you haven’t take a look to news lately.
Don’t wanna put unrelated stuff here but there is a big chance for a new disaster.
Let’s hope it does not scalate, for the sake of many people.
If each war finished tomorrow, the recession will end , Bitcoin will surpass 100k and everyone will start having childs.
Inflation will kaboom but at least no one will be dying for a line in a map.
Many services are about 50% more expensive than 2020. Last quarter GDP is rock solid. Every growth indicator ia robust. No recession indicator except a moderate unemploymeny rate, which is actually perfectly normal with prepandemic standards.
Media is pressing an emergency 50 bp cut in August, but what they will get is 25 bp at most in September.
If you talk to people, they are spending more but buying the same amount of stuff or services. The lawn care company that mows my yard has increased their services from $32 a mow $45 a mow over the past 3 years. They just increased from $40 to $45 this year. That is a 11% increase but I am not buying any extra services but I have increased my service expenditures?
You could eliminate 100% of this cost by mowing your own lawn.
ru82,
You didn’t increase anything on a price-adjusted basis — inflation adjustments take care of that. In “real” terms (inflation-adjusted), your spending growth on lawncare services = 0%. That’s why we look at consumer spending, GDP, etc. on an inflation-adjusted basis.
shorttlt, a lot of people are working a ton to make the money needed to pay for the services they can’t do themselves.
your answer is glib and flippant.
On my regular 5 mile jaunt through my neighborhood, I see two guys who mow their own lawns. I always stop to shake their hands and commend them as fine examples of humanity.
Econ 101: there is a point past which making enough income doing whatever, it makes a lot of sense to use one’s time for the more productive and profitable activity, and pay somebody to take the time and effort to mow the lawn. Unless one enjoys doing it. I don;t think there is any ethical preference at all unless you are striving for lower environmental impact. Then again, having the lawn-cutter unemployed might have a higher impact there.
I cut my own lawn.
I am retired and physically able to do it. Plus, it’s good exercise for this old Fart. When I was working nutty hours and travelling all over God’s creation in the oil business, I had a service cut my lawn.
But now it’s on me and I actually enjoy talking to the grass, the shrubs, my mower and the birds and bees. Beats watching the news or some other aggravating loudmouth.
Gardening services are discretionary spending. Not sure how it’s glib or flippant to suggest mowing one’s own lawn.
I also stopped paying for haircuts and oil changes and do those myself now. I consider paying someone to do something I could do myself to be a luxury.
@shortTLT,
I find your comments extremely narrow-minded, in the sense that you appear to assume everyone else manages their life in the same way you do, and your implication that your way is the better choice is arrogant.
Not everyone is physically able to mow their own lawn. Others may have allergies. Others may be so busy in other areas of their lives that they don’t have time. Don’t assume you know what is going on with other people, or why they do what they do. You have absolutely no insight on their choices.
The same applies to your comments about haircuts and oil changes being luxuries if you could “do them yourself.” My local barber has a great sign in his window: “We repair home-made haircuts”.
Good for you, changing your oil and cutting your hair. But don’t assume it’s a good suggestion for everyone else.
The bottom 80% is in pain and scraping by. Cutting interest rates a point isn’t going to make their lives any easier.
The bottom 8% is in pain and scraping by. Percents 9-80 are complaining out loud, but richer than they’ve ever been. The top 20% have enough money to spend to hold the entire economy over for years to come (assuming they continue to spend it).
your numbers are off. percentile 9-50 are not doing all that well. 51-80 might be.
the top 20% don’t have enough money to spend to hold the economy over, they have inflated assets leading to wealth effect spending. a drop in stocks or housing will drop that spending very quick.
Franz….you voice of logic today. LOL
Inflationary bear market on the way?
Correctomundo. Bearflation as far as the eye can see.
Andy,
Thanks for the book recommendations– ordered them on Amazon.
Did you check out the discrepancies between defense stocks, mining stocks and XLE? All 3 holding up much better than SPY, even with VIX on fire.
Seems to me that the market is starting to figure out that commodities prices and defense spending are likely to go up, which is exactly the move that happened in the early 70s. That along with hot services inflation is a bad setup for inflation.
Do you have any thoughts about this?
Not that much of a difference between XLE (-2.2%) and SPY (-2.9%)
Even my microcap oil producer (stock) and credit income funds are all down 1-4%. Seems like a very broad selloff.
Big difference in the energy situation vs the 70s: today we are awash in cheap hydrocarbons. I don’t forsee any sort of energy crisis or commodity price spike.
I think the prevailing theme of the next +/- several years is high inflation, high interest rates, and all the effects of those (eventual asset repricing etc.).
I will have to check out these 3 categories. I do not have any stocks as of now, so wasn”t paying attention. Whatever I had in 401k in stocks moved to cash/bonds last month. Totally net short. Was up huge early this morning when VIX hit 60. Could not beleive it.
Andy,
Well done. Are you planning on counterbalancing the shorts with any longs?
I like to try to get solid dividend payers (XLU, JNJ, etc.) to get defensive equity exposure, compounding cash flow and balance portfolio volatility.
I am thinking we are oversold enough to probably get a short term bounce in QQQs– maybe if we get to 50 day moving average and vol crush to VIX sub 20 setup 20% OTM puts through next March. Your AAPL idea is also very interesting.
Probably get a chance prior to a real September-October drawdown.
How are you thinking about adding short exposure from here?
ShortTLT,
We had a bit of shift after I logged off– thanks for noticing.
The big diversified miners (RIO, BHP, VALE) have dropped, but look like they are setting a floor. All pay high dividends, so have to factor in ex div drops (VALE ex div today, so even though stock dropped less than div amount).
Not sure what’s up– either inflation concerns setting a floor, or else geopolitical concerns (hoarding resources in anticipation of something).
Most defense stocks not wanting to go down even with VIX at high levels. Either speculation on a possible political outcome, or something else.
Market is sending a signal, not sure how to interpret.
Any ideas?
TulipMania,
I think you’re right about a bounce. In the last “bear market” in ’22 there were several fast counter rallies each lasting from few days to couple of weeks. Those can be fun.
Probably too late to buy puts here with vix north of 30. Maybe on really good bounce.
Good idea about dividend payers. I’m surprised VZ is not going anywhere with good dividend. Ford is on sale. Walgreens trades like it’s about to go bankrupt. I have not actually looked at its financials, buy bought one testing call today.
Andy gonna be the little fishy swimming behind all the other fishies who stayed with the school.
No one can time the bounce back.
sufferinsucatash,
Ok, sit down, Karen.
Some energy commodities prices have seen little inflation. Nat has is still at 1998 prices yet the US is consuming record amounts of nat gas. Just think if nat gas rose with inflation. Instead of $2 it would be at least $5. Energy cannot drop much more in price of the producers will lose money. Energy probably cannot drop much more unless there is a recession.
The price of oil is really the same as it was 10 years ago.
Food commodities have risen less than inflation rates over the past 15 years.
So I think it is funny when people complain about the cost of energy and food. We are lucky commodities have not experienced the appreciation that housing and the stock market has seen. Sure those are just inputs into a final product but they are still inputs.
TulipMania,
I think defense companies are benefiting from the spectre of conflict on the horizon, for better or worse.
Collecting dividends has been my whole strategy. I added to my microcap oil & gas position this morning. At the current share price their annual dividend is nearly 15%.
Ru82,
Sure we’re consuming record amounts of natty gas, but we’re also *producing* record amounts too. Additionally, the low price of gas relative to oil means there’s an arbitrage of sorts, as hydrocarbons are fungible to a point.
With natty gas priced like $10/bbl oil, I’d expect more investment in gas-fired combustion and less investment in other hydrocarbons.
Andy and ShortTLT,
This reflexive bounce we are seeing is likely to be relatively short lived, but could last a few days (RSI was so low almost certain to get a bounce).
Thinking we have a rotation between stocks which would benefit based on outcome of election– health care (due to Medicare expansion) with one party, defense stocks with other. Both categories healthy dividend payers, so makes even more attractive.
Polling appears close (I am checking Nate Silver since he seems most accurate). This means these categories likely to be volatile, which means opportunity to add on dips if you are really underweight equity.
In going over charts and seasonality, seems like we have a good setup for a decent drop in late August/through Sept, especially if Fed doesn’t get cute. In spite of my personal feelings about valuations, wondering about adding semis and/or tech if big drop because bulls will likely stage a last stand in November December prior to the bear making a full comeback.
What do you guys think about this? Anything else you guys are seeing that looks interesting?
TulipMania,
Deff agree this is a short-lived, reflexive bounce.
I’m always skeptical of claims about stocks doing this or that because of a potential election outcome. I think such claims are impossible to not be biased. Respectfully, not touching that with a 10 foot pole.
A rate cut before the election would definitely be interpreted as political by some. I think Powell knows this and it’s all the more reason for him to resist calls for cuts.
The rotation I’m seeing right now is just a classic flight to safety – stock prices down, bond prices up (yields down). I continue to be amazed at how robust the demand is for long treasuries. I did not think the 10-year would go <4% but I'll admit I was wrong here,
I don't have much of an opinion on equity sectors or equities in general as I mainly invest in bonds, credit, and special strategies. The one company I own equity in I continue to be bullish on primarily because they keep paying such awesome dividends.
With income investing, I don't mind price drops as much because the yield per share goes UP, so I can add to my position at a lower cost. If the price doesn't go back up, that's ok – the dividends will keep rolling in.
CPI July 2008 = 5.6%
CPI December 2008 = 0.1%
Didn’t WR mention that the impact of long term bond coupon rate changes sort of behaves like an EFFR rate change? Such that the .5 or .6 of 1-10 year UST decreases over the past month are equivalent to a similar rate cut? If that’s the case, I sure hope Powell takes that into account in (hopefully) September.
Someone else said that. But longer-term interest rates are what matters to the economy, not the overnight rates that the Fed controls.
Until gold really soars, sit back and relax. The Fed has your back. Whenever have they let us down? Bankers will not allow a bust unless it’s to their advantage.
Gold is up 50% in a year, what more do you want?
It’s like the crypto bros, Bitcoin hits 70k and they’re talking 100, 200k on up to a million. Greed much?
It’s not up 50%. At present the dollar is still king. Print and enjoy. Yeah, Bitcoin is looking strong at the moment. NOT.
Buffet is pouring into the dollar. Do likewise.
Gold is fascinating. Similar to Bitcoin, my auto mechanic will not accept it as payment.
The cost to mine and manufacture is only $1400/oz on average.
No one will accept gold as payment, or normal daily purchases.
How do you buy a loaf of bread, then pay with 1 oz of gold?
Are there enough suckers to buy gold at ever increasing costs?
Yet, the USA is said to hold 8000 tons of gold, by far more than any other country. Gold has a 4000 year history as a “Store of Wealth.”
Central Banks are buying gold. Yes, two sides to every coin.
I think of gold as a CDS on my Treasuries.
I’m 99% sure the USG won’t default in my lifetime, but I keep some gold (and silver) in my safe juuuuust in case I’m wrong.
We get this all the time: you can’t buy a coffee with gold so it’s not money. Don’t know about US but in Canada you can’t pay with a thousand dollar bill. It’s no longer legal tender. You can still cash into legal, its still good, but you have to present it at a bank, which will send it to BoC and in a few days you will get yr thou in smaller bills.
Holland was first with this btw: retired the hundred guilder note. Same reason: too much use in criminal or black market deals.
All over the world, even off the beaten track, you won’t be far from a gold buyer who will charge a smaller commission to change yr gold into the local paper, than you could get with most foreign currencies. Many travelers have noted that even in rural Africa, the gold guy will know yesterday’s London fix.
Yes it’s a little more work and it’s not for small deals. But government to government, for big deals, gold is always acceptable. With the intro of the euro now quite a while ago, it’s easy to forget how many junk currencies there were in Europe. Towards the end of the Ital lira, there was a 500 K lira note! But RE and even cars were priced in S$. But you could buy a coffee with lira. Even at that it was a better money than a lot of junk paper out there right now. I guess we have to put the ruble ahead of a lot of African scrip but its easier to do a big deal with gold than any of them.
And it’s up about 13% in last year.
My mechanic won’t accept land, US treasuries, or Microsoft stock as payment either. Does that mean they’re worthless?
Gold has outlasted all fiat currencies
I as a carpenter will accept gold/silver/cash/uranium/chickens/goats/shrooms/chickens and or goats on shrooms,pretty open really.
Well MrMagoo. That might be changing. My state is in the process of making Gold and Silver legal tender and my mechanic will have to take it as payment. There is a movement in the states to allow this and more than 12 have either passed bills making Gold legal tender or are in the process.
Better yet. No capital gains like there is when you sell bitcoin.
MrMagoo,
With a gold coin I bet I could get room and board for a month in any part of the world, an exotic woman, and a loaf of bread as change.
How is the auto mechanic (or motel, or lady of the lane, or bread shop) going to verify some tiny sliver of “gold” tendered to them? Silly.
phleep,
You bite it. Next question.
Howdy Folks. 2024 CPI 3.1 3.2 3.5 3.4 3.3 3.0
Next Week should tell the tale????? If there is a 2. something in the number, rates cuts are a commin…….?????……..POW POW could easily transform into Greenspan……
First let’s see about your bold stock market prediction….see if the squirrel will loose a few nuts.
More likely Powell has already transformed….but into a flounder.
Howdy toad. You must have missed it??? There is a shipping and handling charge on my stock market prediction. Squirrels don t lose .
Nikkei up almost 10%.
I was amazed at the Aug Sixth, their date, recovery in the Nikkei, almost 10 % and wondered at the guts of so many Japanese dip buyers, especially after decades of deflation. Then during a walk a nasty doubt loomed: surely this can’t be a BOJ operation, maybe just BOJ or more likely perhaps BOJ orchestrated with itself as lead?
BOJ openly buys Japanese index ETF’s
Use the suckers rally to liquidate
That would have been a hoot. Too bad it didn’t do that.
In my article about Japanese stocks on Aug 5, I said that the Nikkei would bounce because a bounce was super obvious. Everyone saw this coming, even me. This is what I said right above the chart, no BOJ required:
Nevertheless, this kind of plunge, amid a whiff of panic, is usually followed by a bounce, on the WOLF STREET dictum: “Nothing goes to heck in a straight line”
The rally may not last long, but just about everyone saw it coming, which is one reason why the rally happened.
I get selling after a big move up and buying after a big move down. But the size of the Nikkei rally is bigger than a normal bounce I believe. It’s up over 10 %. The Dow 10 minutes ago is up 1% and the Nasdaq is up 1.5%.
Maybe I misunderstood the nature of their deflation. Maybe it’s just consumer deflation and stock buyers retain optimism. I assume they aren’t expecting lower Japanese interest rates, the way out guys are expecting lower US rates, righty or wrongly.
Nick Kelly,
The Nikkei 225:
Day 1: Fell from 35,910 to 31,458 … -12.4%
Day 2: Rose from 31,458 to 34,675 … +10.2%
Is still down 3.4% from 35,910. That’s a big decline for a 2-day period.
During the March 2020 crash, in the US, there were similar days, double-digit down one day, huge up the next day but not quite back, and then another huge down day, with the net effect of large overall drops. I posted charts of that back then because it was so wild. Here is the one from March 20, 2020:
nick, but the down and nasdaq didn’t drop by 10% yesterday. they dropped by 2-3%.
Emergency rate cut would’ve made a mockery of the Fed… Maybe another 1000 spx pts and they’d consider it.
Manufacturing was weak on Friday but the prices reading for it wasn’t.
Inflation probably still an uneven problem.
Services are doing great, and should continue to do great.
I do NOT have the time nor ability to fix my computer controlled car.
Nor can do surgery or dentistry, plumbing and so on.
Come September, the Fed will cut 1/4 percent. Not a big cut, but should shoot stocks higher. Maybe not to an all time high, but wet the appetite for the retail investor.
Margins are starting to get squeezed on services. I work for a large regional CPA firm and the new clients we are getting are due to underbidding their current big 4 and national CPA firms. I’m also having clients start complaining about fees.
In insurance. Clients are tapped out. The cost conscious are on a perpetual merry go round of agents as they seek shelter that will not come.
Being counter cyclical insurance has been in recession for about a year and some change now. We call it “a generationally hard market”.
I was in Montana last year for a state conference and the state insurance commissioner said he hadn’t seen anything like it since the 1970s.
I don’t see it letting up, it just decelerated and is more or less is a holding pattern right now.
I think insurers can’t charge enough to make money right now, especially property & casualty. Big problem because if regulators do not permit price hikes, the only solution is to not write policies. I’m assuming this is the services component in all the inputs (including materials, car components, etc.)
Whitebob
Fire those lozers
I’d reckon if goods crash services will soon follow. A lot of the service economy centers around advertising for goods. Services and goods are intertwined at the roots.
We don’t have time for your data, there are billionaires who need bailouts! The market is ONLY up 9% YTD for goodness sake! /s
I don’t know why but I get the sense that this rout ain’t it, and that there’s at least another leg up higher before things really get going. Once the 10Y/3mo un-inverts, plus lag time, and then we get to recession. And that’s still like six rate cuts away at the moment. There’s still time to reel in more deadwood into this fire.
– Mr. Market has become MORE adament. The FED is getting MORE close to cutting rates. Rate cuts are coming. And the charts will tell me WHEN.
– The yield curve is very close to steepening (again) after a few years of being inverted.
You should start your post with ‘listen you mugs’ so everyone knows it’s sarcasm.
Wolf, the leveling off of manufacturing employment and manufacturing growth being in the doldrums, as you put it, are hard to reconcile with the factory construction boom, which you did an article on just a few days ago.
Is this a case of manufacturers being too late to the party and building manufacturing capacity that they needed two years ago? Or is there a different dynamic at work?
Maybe to clarify, since it did RTGDFA (both): if reshoring is taking place, and production of high end goods is being brought back to the US, but employment and output have plateaued, capacity utilization must have decreased.
Either manufacturers are too late and missed the boat, or they’re willing to live with lower capacity utilization just to have that extra capacity in the US rather than in China. Or maybe it’s something else….
It’s something else IMO BB, it’s the newly much more efficient use of robotics in manufacturing.
Worked on the cost analysis of the hUGe new Stainless Steel processing plant near Mobile 15 or so years ago, and that facility was already planning to use so much new robotic technology that state of AL paid for a training facility for the local folx to be able to get the high paying new jobs…
Gonna be tons fewer actual human worker hours per widget, but those hours much better paying and much safer.
BigBird
“…are hard to reconcile with the factory construction boom,…”
Nah…
1. building factories is a long-term investment that takes years from planning to production. These month-to-month swings in demand for goods have no impact on long-term planning.
2. Building production capacity in the US is not to meet new demand, it’s to reduce imports. So you’re just shifting production of those goods from overseas to the US. Reducing reliance on imports is what the factory construction boom is all about, not meeting new demand.
IDK. From what I have seen, services, at the small business level, are getting killed by increased overhead costs – taxes, licenses, utilities, supplies, maintenance, qualified labor.
I went to a restaurant supplier the other day and was shocked by the price increases from a year ago. And the real shortage in seafood selection and very high prices. Beware the increases in fake and mislabeled food like fish and olive oil.
I was on a Bali tour 2 months ago. The tour cut out out most side trips and made them “additional fee”. I had to rent a car and driver by myself to see Tanah Lot.
Maybe Wolf is looking at very personal service providers who have very low overhead except for makeup.
Watch with your eyes or watch government goal-seeked numbers.
Market re-bounced nicely as expected…oh the sky is still falling….we need an emergency rate cut now cause our rebound didn’t recapture all the pts lost yesterday…
Where are these MS clowns now? I am sure they will continue with their pressure campaign to have Pow Pow cut deep and more by Sept…
Nassim Taleb captured it so well: beware the “advice” of anyone who does not have “skin in the game”: who will, if wrong, not take any losses. In this he includes many media types, politicians, consultants, and academics. Also, look closely for what the speaker’s skin the game might be: for example, look who sponsors their messaging.
On the other hand, some may demonstrate integrity over time by giving carefully crafted and sound information, that holds up well under the test of the subsequent events. I count Wolf among those few.
I find it interesting in the brokered CD space – almost all 9month and 1 yr call protected rates went down to 4.25 percent with some issues only paying 3.95 percent interest from major banks this week.
This is a significant drop from just last week’s offerings.
Treasury yields jumped today for the second day in a row. In two days, the 6-month yield jumped by 12 basis points to 5.0%, the 1-year by 13 basis points to 4.46%. So CD rates might go up again.
Banks are always quick to drop CD rates when they think other rates are falling. I imagine this is (partly) why CDs tend to underperform treasuries of equivalent duration.
Our advertising culture has normalized an expectation of immediate gratification. Consequently we demand that our market “crashes” only last a day or 2 and end quickly. Today matters, perhaps tomorrow. Beyond that who cares. I’m content to just observe.
With the DOW at 39k, a thousand point drop in a day is all noise and no signal.