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Just Before The Great Recession, Mountains Of Unsold Goods Piled Up In U.S. Warehouses – And Now It Is Happening Again
Just Before The Great Recession, Mountains Of Unsold Goods Piled Up In U.S. Warehouses – And Now It Is Happening Again
When economic conditions initially begin to slow down, businesses continue to order goods like they normally would but those goods don’t sell as quickly as they previously did. As a result, inventory levels begin to rise, and that is precisely what is happening right now. In fact, the U.S. inventory to sales ratio has risen sharply for five months in a row. This is mirroring the pattern that we witnessed just prior to the financial crisis of 2008, and it is exactly what we would expect to see if a new recession was now beginning. In recent weeks, I have been sharing number after number that indicates that a serious economic slowdown is upon us, and many believe that what is coming will eventually be even worse than what we experienced in 2008.
And even though I write about this stuff every day, I was stunned by how rapidly inventory levels have been rising recently. The following numbers come from Peter Schiff’s website…
This comes on the heels of the largest gain in wholesale inventories in more than five years in December.
Inventories rose 7.7% from a year ago in January. Meanwhile, sales only rose by 2.7%. Overall, total inventories were $669.9 billion at the end of January, up 1.2% from the revised December level.
The increase in durable goods inventories at the wholesale level was even starker. These inventories were up 11.7% from January a year ago, and are up 17% from January two years ago, hitting $415 billion, the highest ever.
Businesses don’t like to have excess inventory, because carrying excess inventory is expensive and cuts into profits. So they try very hard to manage their inventories efficiently, but if the economy slows down unexpectedly that can catch them off guard…
…click on the above link to read the rest of the article…
Inventory your stored food
Inventory your stored food
One of the chores you can do in the winter season is to inventory your stored food. Whether it’s dehydrated, canned or frozen, it all has an expiration date.
I always start my inventory with frozen things, since they have the shortest shelf life. I don’t have a lot of this sort of storage, since I like to keep the amount of frozen things below what I can can immediately if there is an extended power outage – for whatever reason. You’ve been labeling everything so you know how old it is, right?
Individual portions of chopped bell peppers from 2017’s garden, and ground beef, labeled for the freezer.
Clean out the entire freezer and change the box of baking soda that pulls odors from the freezer. Set the items you need to use up right away into the refrigerator, and plan your next few meals around them. IMPORTANT. When in doubt about freezer burn, cook the ingredients separately and see how it tastes before adding it to any other ingredients. That way, if it tastes “off ” you only throw away that one item.
Next are the home-canned goods. I keep mine in the dining room, under a side table. It’s cooler near the floor and that means they keep longer in my hot climate than in the pantry.
The clipboard at the start of this post is several pages long, and when I use something up, I note it on the clipboard. When I do my inventory, I put anything that needs to be used up soon on the kitchen counter and use those until they’re gone. NOTE: If you still have a lot of something, then don’t plant as much the next year. If you ran out, plant and can more of it. IMPORTANT: bulged and leaking home-canned goods can kill you.
…click on the above link to read the rest of the article…
Forget Draghi, Crude Matters
Forget Draghi, Crude Matters
Despite Mario Draghi’s supposedly misinterpreted comments earlier this week, there are global indications that the best of this round has already been reached. Policymakers are always going to claim things are improving, that much is given. But there is tremendous difference between that and what has occurred, especially if it is indeed rolling over worldwide.
The earliest indicators for China’s economy in June signal that the manufacturing sector may be poised to decelerate, while other challenges loom in the second half of this year.
Small- and medium-sized enterprises showed the lowest level of confidence in 16 months, a gauge of manufacturing drawn from satellite imagery slumped, and conditions in the steel business remained lackluster.
At the center of the story is as always crude oil. There are, of course, direct effects of the ups and downs (more down than up) in the energy market. As the price of it rises there will be more exploration, drilling, production, and transportation required. Some of that has already happened, and accounts for some part of this economic recuperation.
The larger effects are in sentiment, or at least the kind they might measure in PMI’s or surveys. It bears repeating that when the global downturn arrived in early 2015, economists worldwide assured everyone not to worry. They had several plausible reasons for taking that position, flawed as they were. Overall, however, especially from a US perspective the big contrary indicator was WTI.
Dismissing it as a mere “supply glut”, actual economic agents especially in industry would have known better. Even if these important marginal changes weren’t completely understood, it didn’t take any special knowledge or complex series of regressions to link the crash in oil to reduced demand for goods globally. In that way, oil became the best real-time indicator for economic demand and its overall direction no matter what Janet Yellen would say.
…click on the above link to read the rest of the article…
(Re-)Covering Oil and War
(Re-)Covering Oil and War
The first thing that popped into our minds on Tuesday when WTI oil briefly broached $30 for its first $20 handle in many years, was that this should be triggering a Gawdawful amount of bets, $30 being such an obvious number. Which in turn would of necessity lead to a -brief- rise in prices.
Apparently even that is not so easy to see, since when prices did indeed go up after, some 3% at the ‘top’, ‘analysts’ fell over each other talking up ‘bottom’, ‘rebound’ and even ‘recovery’. We’re really addicted to that recovery idea, aren’t we? Well, sorry, but this is not about recovering, it’s about covering (wagers).
Same thing happened on Thursday after Brent hit that $20 handle, with prices up 2.5% at noon. That too, predictably, shall pass. Covering. On this early Friday morning, both WTI and Brent have resumed their fall, threatening $30 again. And those are just ‘official’ numbers, spot prices.
If as a producer you’re really squeezed by your overproduction and your credit lines and your overflowing storage, you’ll have to settle for less. And you will. Which is going to put downward pressure on oil prices for a while to come. Inventories are more than full all over the world. With oil that was largely purchased, somewhat ironically, because prices were perceived as being low.
Interestingly, people are finally waking up to the reality that this is a development that first started with falling demand. China. Told ya. And only afterwards did it turn into a supply issue as well, when every producer began pumping for their lives because demand was shrinking.
All the talk about Saudi Arabia’s ‘tactics’ being aimed at strangling US frackers never sounded very bright. By November 2014, the notorious OPEC meeting, the Saudi’s, well before most others including ‘analysts’, knew to what extent demand was plunging. They had first-hand knowledge. And they had ideas, too, about where that could lead prices. Alarm bells in the desert.
…click on the above link to read the rest of the article…
WTI Plunges To $42 Handle On Massive API Inventory Build
WTI Plunges To $42 Handle On Massive API Inventory Build
For what appears to be the 10th week in a row, API reports amassive 10.5 million barrels (far bigger than the 3.1 million barrel expectation) and a 3 million barrel build at Cushing. If this holds for DOE data tomorrow (and worryingly API has tended to underestimate the build in recent weeks) it will be the biggest weekly build since 2001. WTI has plunged on this news hitting$42.60 on the April contract.
If API data is accurate (and it has tended to underestimate the inventory build in recent weeks) then this will be the biggest build since 2001…
