Thursday, January 17, 2008

Philly Fed Ugly

Short post today. The Philadelphia Fed just released its monthly survey of business conditions for manufacturing in its area (see chart below). The current activity diffusion index was expected at -1.5 and instead came in at -20.9. Ugly.

Philadelphia Fed Business Outlook Survey Indices

New orders and shipments swung sharply from positive to negative and so did employment prospects. Details are in the table below (click to enlarge).

Then again, prospects for the US manufacturing sector can best be described as follows: Boeing. If you don't believe me, look at the next chart, also from the Fed, that shows new orders and backlogs for capital goods. Excluding aircraft, new and unfilled orders are at 1999-2000 levels..


  1. Hi Hellasious

    your comment about unfilled orders excluding aircraft industry are interesting, given that civil aircraft industry is very cyclical and has already boomed.

    Best rgards


  2. Thanks Hellasious - very interesting.

  3. As market volatility picks up, the world's capital market begin to look less like investing and more like a casino. If you want to survive the markets ahead, I strongly encourage you to seek those sources that have a keen grasp of history, math, and crowd and individual psychology. Then, make sure that they have experience trading the short side of markets and can give you very well thought out plans about how they are going to deal with the real world that is unfolding in front of us.

  4. Doug:

    As market volatility picks up, the world's capital market begin to look less like investing and more like a casino.

    Speaking of casinos:

    New Casino Economy

    and the limited choices that drives them to it.

  5. H and anonymous:

    Isn't it true that the falling dollar helps exporting companies like Boeing? If so, isn't it true that more companies like this will continue to benefit as the dollar slides?

  6. Interesting, under the "Prices Paid" tab it's split through the middle with 50% reporting higher prices and 49.8% reporting no change. Stagflation anyone ?

  7. Hi Hellasious

    Your blog is highly informative although given the current situation (for the last few months at least) the take has been rather pessimistic.

    But then you have injected the Boeing charts showing the flip side of the market negativity.

    Methinks all the economic suffering caused by stock market turbulence that the general public and not just stock market investors have been experiencing over the decades can in large part be explained by too much belief in "free market forces" by governments everywhere.

    What I mean is that there should be more governmental control and intervention for ensuring lasting economic stability for society and less trust in "free market forces" to eventually work out the market weaknesses e.g. subprime issues.

    What your take on commodities funds for now and near future?

  8. from

    "For example, you could buy securitized mortgage bonds priced to yield 8 percent over the next three years -- even if every home in the bundle gets foreclosed and is eventually auctioned at 1970s prices."

    Is this true, and would I want to invest a nickel in any of those bonds?

  9. "It's not a return on my capital I want, it is a return of my capital." - Will Rogers

    "Go for the returns and forget the capital"

    - ADIA, Singapore et al.

  10. Sorry but i dun really understand your post...

    Are you trying to say that although the biz sentiment seems to be bad but the no. of unfilled orders for capital goods are actually increasing?

  11. Unfilled orders for cap. goods are rising because of Boeing ONLY (aircraft)... and that's a very bad sign. Cyclical industry, overcapacity potential, etc etc.