tag:blogger.com,1999:blog-6616959642391988608.post4376046238717689633..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: ISM indices continue to point to moderate growthScott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger18125tag:blogger.com,1999:blog-6616959642391988608.post-40428811148955065962010-10-01T16:43:24.954-07:002010-10-01T16:43:24.954-07:00Good catch, brodero. It is always instructive to l...Good catch, brodero. It is always instructive to look under the hood.<br /><br />This Danske Bank <a href="http://www.actionforex.com/images/stories/contributors/danske/2010100122.gif" rel="nofollow">chart</a> paints a troubling picture of the order-inventory ratio. After all, it states it right in the <a href="http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942" rel="nofollow">ISM Report<marmicohttps://www.blogger.com/profile/08277071086056574486noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-86307469307536074292010-10-01T14:48:50.334-07:002010-10-01T14:48:50.334-07:00Bill: you are indeed correct. According to my eyeb...Bill: you are indeed correct. According to my eyeball, the ISM index can fall to 46 without signaling a recession or even a quarter's worth of negative growth. And it can be very volatile even during sustained expansions. For example, it fell from a peak of 70 in Dec. '83 to 47 in May '85, yet real growth was never below 3.3% during that time, and averaged about 5.5%.<br /><br />As Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-58959148145975222502010-10-01T14:35:53.279-07:002010-10-01T14:35:53.279-07:00Scott,
Am I reading the historical ISM index to s...Scott,<br /><br />Am I reading the historical ISM index to show that it can go down just below 47 before a recession takes hold? It also looks like it has gone up and down quite a bit even in the expansionary periods of the '80s and '90s. Am I missing something?Billhttps://www.blogger.com/profile/06910619601367464068noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-52203495520148551332010-10-01T13:33:56.906-07:002010-10-01T13:33:56.906-07:00Oops, the previous comment was directed to BillOops, the previous comment was directed to BillScott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-21472521196112904882010-10-01T13:33:27.150-07:002010-10-01T13:33:27.150-07:00randy: Re Japan. If I had to name the one thing th...randy: Re Japan. If I had to name the one thing that would make me bullish on Japan it would be this: the day they forsake the use of government spending to stimulate the economy, and instead vow to resort to tax cuts. <br /><br />I do think that "stimulus" spending is futile at best, and most likely it only serves to de-stimulate an economy.Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-62203582113221867712010-10-01T13:30:28.230-07:002010-10-01T13:30:28.230-07:00randy: To begin with, I think the ability of major...randy: To begin with, I think the ability of major countries to devalue their currency as a matter of policy is vastly overrated. There is such confusion over this issue however. For example, Treasury is considered to be the custodian of the dollar. But ultimately the Fed is the only institution that can control the dollar's value (though they have never tried).<br /><br />But if all major Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-64857980727750491542010-10-01T13:06:32.251-07:002010-10-01T13:06:32.251-07:00Randy-
I will read the report when I have time......Randy-<br /><br />I will read the report when I have time...the short answer is, they were timid, and no inflation resulted.<br /><br />Listen, forever we have been told that central bankers not only can cause inflation, they usually do and have to be constantly on the lookout to not cause inflation.<br /><br />Japan has had 20 years of deflation and zero inflation. You mean to tell me Japan'Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-12878543701906219422010-10-01T12:53:13.314-07:002010-10-01T12:53:13.314-07:00Scott,
Can you comment on what happens if the US,...Scott,<br /><br />Can you comment on what happens if the US, Japan, and Britain all attempt to devalue at the same time? It seems to me that competitive / retaliatory devaluation has similarities to the infamous Smoot Hawley tarriffs. Someones currency has to go up but no one can afford it.<br /><br />Randyrandyhttps://www.blogger.com/profile/16368254229927808998noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-9654826316278745242010-10-01T12:45:05.632-07:002010-10-01T12:45:05.632-07:00Benjamin,
I'm trying to understand why you sa...Benjamin,<br /><br />I'm trying to understand why you say Japan did not try quantitative easing. Many other commentaries say otherwise. For instance, this from the Cleveland Fed:<br /><br />http://www.clevelandfed.org/research/trends/2008/1208/01intmar.cfm<br /><br />After a series of fairly ineffectual policy actions, the Bank of Japan undertook its famous quantitative easing policy from randyhttps://www.blogger.com/profile/16368254229927808998noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-53578694466487546422010-10-01T12:23:58.887-07:002010-10-01T12:23:58.887-07:00Scott:
Okay, so it is possible--in fact we have a...Scott:<br /><br />Okay, so it is possible--in fact we have a real world major industrialized nation experiencing deflation in the face of global commodities rallies (and collapses).<br /><br />Japan's money policy is too tight. They have deflation and hit the zero bound. The tried fiscal stimulus, it didn't work. So they have done nothing, and that hasn't worked for 20 years. The Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-14776133042707468832010-10-01T12:22:11.250-07:002010-10-01T12:22:11.250-07:00Scott,
I'd be interested in your reaction to ...Scott,<br /><br />I'd be interested in your reaction to the article in the WSJ which quotes an investor who's building his position in Japan, thinking that it will outperform in the coming years. Seems contrarian to the view that Japan's economy is dead.Billhttps://www.blogger.com/profile/06910619601367464068noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-45388470527278112432010-10-01T11:56:41.588-07:002010-10-01T11:56:41.588-07:00Re: Japan, deflation and commodity prices. The BIG...Re: Japan, deflation and commodity prices. The BIG difference between Japan and the U.S. is the behavior of the two currencies. If you measure commodity prices in dollars and yen, you find this: over the past 5 years, commodity prices are up over 60% in dollar terms, but up hardly at all in yen terms. The yen has appreciated by enough to essentially eliminate the inflation signal of commodity Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-18527852047276092802010-10-01T11:49:37.689-07:002010-10-01T11:49:37.689-07:00Buddy: Thank you.
brodero: Interesting point you m...Buddy: Thank you.<br />brodero: Interesting point you make; I think this is just one more sign that we had a bit of a slowdown in recent months, but nothing serious. Confidence fell in line with stocks, but now things are coming back. <br />Mark: I would agree that the market appears to have priced in QE2. But if the data continue to reflect a growing economy, and if that gives the Fed a reason Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-14872589943765475352010-10-01T11:43:29.821-07:002010-10-01T11:43:29.821-07:00Okay, then, explain Japan in its 17th straight mon...Okay, then, explain Japan in its 17th straight month of deflation. <br /><br />How does that fit with the "commodities are signaling inflation" thesis?<br /><br />Japan has been in near zero inflation or deflation for 20 years. How does that correlate with commodities prices?Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-7645458910192244672010-10-01T10:53:51.692-07:002010-10-01T10:53:51.692-07:00Scott,
70% of investment managers already believe ...Scott,<br />70% of investment managers already believe QE2 is a done deal (according to CNBC/Steve Leisman's survey). As a result, it looks like the markets have begun to price this in already (stocks, commodities and gold up). When the fed looks through their economic hall of mirrors to make the final decision, they will conclude they now risk tirggering a stock market correction if they Mark Gerberhttps://www.blogger.com/profile/07980096984624964261noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-53623231265872219352010-10-01T10:40:16.818-07:002010-10-01T10:40:16.818-07:00I will confess i am troubled by
a couple of compon...I will confess i am troubled by<br />a couple of components....new orders and inventories...I track the 12 month moving average of the <br />differential between new orders and<br />inventories...This average is now 11.7 and falling rapidly..A very<br />early warning sign is when this<br />average hits 7.5...now we have hit<br />7.5 and not had a recession but we have never had a recession unlessbroderohttps://www.blogger.com/profile/12296214283216386700noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-27419442617429987032010-10-01T09:07:44.904-07:002010-10-01T09:07:44.904-07:00BTW, Scott your posts this week were at an all-tim...BTW, Scott your posts this week were at an all-time high for myself, since I started following.<br />Thank you.Buddy R Pacificohttps://www.blogger.com/profile/12737107556268024013noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-3524823700775894242010-10-01T09:03:23.969-07:002010-10-01T09:03:23.969-07:00The growth of the ISM and commodities at an all ti...The growth of the ISM and <a href="http://scottgrannis.blogspot.com/2010/09/commodities-reach-new-all-time-highs.html" rel="nofollow">commodities at an all time high</a> should put deflation worries at ease. The Fed is too occupied with the lack of wage pressure but other factors are much too strong for deflation.Buddy R Pacificohttps://www.blogger.com/profile/12737107556268024013noreply@blogger.com