We got the latest numbers from the Dallas Fed. The numbers were not good.
Here is the information used in the video:
https://tradingeconomics.com/united-states/dallas-fed-manufacturing-index
The Dallas Fed covers the oil market which, if there is an industry on fire, it is energy, yet the numbers are down. For two months, the manufacturing metrics are negtaive.
This is something we discussed back in the 4th quarter. While everyone was focusing upon inflation, a trailing indicator, we were looking ahead. The inventory story is hard to miss when you understand how it echoes throughout the economy.
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BEERKING.A FED that covers the entire oil market must generate a lot of economic resources, so let's hope that this entire set can be fully recovered.
The strangle of the energy industry is an asinine situation for sure. We’ve steadily increased fuel economy and cleaning up cars but just like always, the industry is passing the costs associated with them destroying the planet into the customers. Incredibly foolish to destroy things but then again, the people in power are looking to concentrate and increase as usual. Annoying!
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Summary:
In this video, the speaker discusses the recent Dallas Fed State of Manufacturing Survey, highlighting the declining indicators in manufacturing in Texas and what this could mean for the broader economy. He emphasizes the importance of inventory levels as a forward-looking indicator and links it to potential economic challenges like layoffs and increased unemployment. The speaker also touches on the impact of these trends on inflation, prices, and supply chains, while cautioning about the shaky ground of the economy outside of food and energy sectors.
Detailed Article:
The video begins with the speaker referencing the recent Dallas Fed State of Manufacturing Survey. He connects this survey to previous discussions he had about inventory levels, noting the sharp increases in inventories during the fourth quarter of the previous year as a warning sign for the economy. The speaker mentions that large retailers like Target and Walmart have reported significant inventory issues, indicating possible demand problems, which are now reflecting in manufacturing indicators.
The video delves into specific numbers from the Dallas Fed survey, including the decline in the General Business Activity Index for Manufacturing in Texas, the fall in the production index, and the drop in new orders index, all pointing towards a challenging manufacturing environment in the state. The speaker underscores the importance of Texas in the oil industry and expresses concern over the manufacturing and production numbers being down despite the robust oil prices.
Furthermore, the speaker discusses the ripple effects of these manufacturing trends, touching upon potential layoffs, rising unemployment, and its impact on consumer spending. He explains how the increase in inventories can lead to retailers and wholesalers offering discounts to move products, ultimately affecting inflation and prices. The speaker also touches on the recent trends in raw materials like copper, steel, and iron ore, indicating a reversal in their prices due to the changing manufacturing landscape.
Additionally, the speaker addresses the disruptions in the supply chain, mentioning the drop in shipping container rates despite expectations of increased shipments from China. He attributes this to the current inventory levels and the cascading effect it has on the entire supply chain, leading to a slowdown in manufacturing activity. The speaker contrasts the price movements in products versus services, highlighting a shift in consumer spending patterns during the pandemic.
In conclusion, the speaker reiterates the importance of monitoring economic indicators to gauge the evolving situation, speculating on potential shifts in the Consumer Price Index due to the recent energy price drops. He emphasizes the fragility of the economy outside of the food and energy sectors, hinting at a challenging road ahead. The video ends with the speaker encouraging viewers to stay informed and prepared for possible economic uncertainties.
CPI is consumer price index
PPI - producers price index
A simple way to think about it is the PPI is what it costs manufacturers pay for the materials going in. The CPI is the prices coming out.
I do not know about the Farmer's Almanac for Germany.
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