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I'm not trying to be a cheerleader for the economy, since I'm very much aware of all the headwinds out there. But I can't help posting this chart and commenting on the strength of factory orders, especially now that the world has adopted a very gloomy view of the outlook for the U.S. economy (as embodied in record-low 0.9% 5-yr Treasury yields). New orders received by U.S. manufacturers rose 2.4% in July, more than the consensus expected. Orders are up 13.9% over the past year, and they are up at a very strong 15.5% annualized rate year to date. To be sure, orders are still below their pre-recession highs, but at this rate we'll see new highs before the year is out. There is no denying the manufacturing sector has experienced a V-shaped recovery, even though there is still plenty of idle capacity remaining to be utilized. It's been a slow recovery overall, but it remains a recovery nonetheless.
And for good measure, I'll add this chart of commodity prices (a diversified basket of 27 commodities including energy, industrial metals, precious metals, agriculture and livestock), which shows a pretty decent 8% rebound from the recent (August 9th) lows, and prices which are only 5% off their all-time highs. Together, these charts strongly suggest that the pessimism has been overdone, and the talk of a double-dip recession is misplaced.
9 comments:
Amazing order books indeed, the amazing thing is that American companies seem to be doing as well as they did prior to the recession, but with 10% less labor.
The question is how much of this manufacturing is actually done in the U.S.? There's something missing here,f or the number are excellent, as are profits, and yet everybody (ISMs) is gloomy.
you are a relentless chearleader. problem is, you only see wall st. thus, you are blinkered.
Now who is against the "cheap" dollar? This is export-driven.
I prefer to use the words, "trade-enhancing dollar."
Also, looks like commodities have had their run. New supplies coming on line, and substitution underway.
Lot of room for the Fed to get aggressive.
Septizoniom,
I think we can all stipulate that you think this blog sucks. Beyond that, your comments add nothing to the discussion.
Commodity chart looks like if things hold, we will see another lower high followed by a lower low. Not a very bullish indicator...
Scott, I hope you are correct. I have stayed fully invested, and buying more.
Best place to manufacture is where the cost(s) are lowest at a given level of quality. The U.S. is still a top manufacturer, and as it continues to move from closed-shop states to open-shop states, this will continue to be the case.
The current political situation is simply moving the economic improvement and stock price gains off into the future ("deferred recovery"). So continue to acquire.
The American economy stands no chance in the current political policy environment. All non pro-business leadership should be shown the door. America was at her best when it was ALL about business. China figured that out decades ago!
bill: Felix, qui potuit rerum cognoscere causas.
does that suck enough for you?
factory?
What factory? I do not know what the US is making now except cars, weapons and planes.
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