The census bureau Advance International Trade reports shows the wholesale and retail exports each declined 0.4% from September to October.
Wholesale inventories are down 0.5% year-over-year, but retail inventories are up 3.2% on the strength of a huge jump in automobiles and auto parts.
Advance Wholesale Inventories
Wholesale inventories for October, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $586.9 billion, down 0.4 percent (±0.4 percent)* from September 2016, and were down 0.5 percent (±1.4 percent)* from October 2015. The August 2016 to September 2016 percentage change was revised from up 0.1 percent (±0.2 percent)* to down 0.1 percent (±0.2 percent)*.
Advance Retail Inventories
Retail inventories for October, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $603.3 billion, down 0.4 percent (±0.2 percent) from September 2016, and were up 3.2 percent (±0.5 percent) from October 2015. The August 2016 to September 2016 percentage change was revised from up 0.2 percent (±0.1 percent) to virtually unchanged (±0.2 percent)*.
Inventories
Automotive Picture
- Autos are having a good year, but sales are not expected to beat last year
- Year-over-year, retail inventories are up 3.2%
- Automobiles inventories are up a whopping 7.8%
- Automobiles account for nearly all of the increase in retail trade inventories.
- Excluding autos, retail trade inventories are up only 0.8%.
- Interest rates are rising
- Auto sales are increasingly subprime
- Trade-ins are increasingly underwater
What can possibly go wrong?
Inquiring minds may also wish to consider …
- October 7: Inventory Crisis: Can Parrots Read Charts?
- November 18: Inventory to Sales Ratios: What’s Really Going On?
Mike “Mish” Shedlock
Just got back from Black Friday Shopping Mish (stop laughing at me). Went with the wife to Waterford Lakes in Orlando. The place was insane. Figured I should do it once in my life. Waited for 55 minutes in a 300 yard line just to check out of Kohls. Still a little shaken. I’m expecting good numbers for Christmas retail.
Possibly. But the trend the past few years has been big crowds on Thanksgiving and Friday … then ghost town come weekend.
If sales are good the media will be singing it come Monday morning … if not, they’ll go to Plan B … sales not bad, but consumer waiting for better sales in December.
Hope Will Be In The Air no matter what.
Kohls isn’t a high end retailer. Long lines there is no different than job creation being up due to people working two entry level jobs part time.
lines at kohls are long and slow during the regular year- takes forever to get thru without crowds.
FWIW my wife went to DSW yesterday and her report is long lines at entrance to shopping center and no lines at checkout.
North Suburban Chicago
Possible – but be careful of translating local results nationally
Not laughing at all – I used to go on on Friday just to witness the traffic, not to buy anything
Mish
Treasury yield curve is already flattening – anticipating a VERY short-lived Fed tightening “cycle” and the inevitable recession – likely in first half of 2017.
Just wait until December 14th, and you will see some REAL curve flattening.
Flattening? What part of the curve are you looking at? 1yr-10yr is steepening significantly.
Curve has actually flattened a bit last 10 days or so. The 1 to 10 year has risen but 20+ year about the same.
Treasury Department has a tool to compare. Plug in November 14th for comparison to current.
https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/Historic-Yield-Data-Visualization.aspx
A normal futures market -spot lower than future- is considered to be ‘in contango’.
An inverted curve – where the front flips over the back – would be ‘in backwardation’.
The point where the curve flips would be ‘flat’. There the 3mo-1yr-5yr-10yr-30yr would all be very close to the same number. You can not get from contango to backwardation , and therefore pass “flat”, with the front end of the curve becoming steeper into a contango. That is what is happening now.
So best would be to say, “the front is steepening and the back is flattening”, because if a trader were to say to their boss, who was relying on their traders knowledge of a market for their eyes and ears, that “the curve is flattening” while the front is becoming more contango, that would very highly likely get them thrown off their desk.
Mish, do you have the break down in domestic and imports by any chance?
Yesterday, a German headline read that “refugees” saved the country’s GDP growth. OTOH, Germany’s leading economist, Professor Sinn, calculated something approaching 500 bn Euros as price tag for Merkel’s coup d’ etat (the German constitution forbids allowing asylum seekers from EU countries like Austria. Article 16 a).
We live in interesting times!
Refugees adding to GDP = Bastiat’s “Broken Window Fallacy” on steroids.
Guaranteed to create a boom.
Just occured to me that in five to ten years you will have a million ex-migrants with European passports, and hence with entry access to the US.
???
Unless the immigrants contribute nothing but net wealth destruction, they will add to even a meaningfully measured GDP.
Europe’s main problem is aging. Immigration is, even if currently much hyped, a sideshow. Getting younger people in, is highly likely to be an economic (not necessarily cultural/social) benefit over time. After all, even the most destitute third world backwater, has an economy bigger than a that of a graveyard.
Germany has a huge industry, that requires massive numbers of younger hires, as the boomers retire in increasing numbers. The jobs that need filling, are complex as heck, requiring a decade or more of on the job specialized training, often not available anywhere but on those specific jobs. So the country has no choice but to hire fresh, relatively poorly educated young men from problematic places abroad. After all, that’s where footloose young people are. That this demographic may also happen to be prime candidates for antisocial behavior, is simply a risk Germany has no choice to accept. For German industry, hence Germany, it’s Integrate refugees, or disintegrate as an industrial powerhouse.
Japanese industry, faced with a similar dilemma a few decades ago, did not go the refugee route. But is instead flagging out wholesale. Creating “Japanlets” all across Asia. Shaping host cultures to be more like Japan, by creating a new upper middle class who reach that status by adopting traditionally Japanese values wrt economic behavior. If you’re a sharp, young Thai these days, you don’t go into tourism, textiles or “internetty” stuff. But instead focus on reliably building some component for supply chains that require very tight control of specs, quality, repeatability and costs. And after striving for that, uber alles, for awhile, you become culturally more Japanese (Or German.) And so does the host nation’s culture.
Germany is essentially attempting the same thing, but by bringing the Syrians to Germany, instead of Germany to Syria. But the goal, and end result, is (at least intended to be) the same, as there really aren’t any other way of operating a world class industrial economy. As long as the Germans and Japanese insist on not reproducing, they really have no choice but to pick one or the other.
Mish – need to include something on the lease phenomena. Lease component of sales has grown from 21% in 2012 to 31% this year (the chart is for first 9 months data).
From Edmund’s Q3 used car report:
“the recent level of lease volumes sets the stage for vast amounts of near-new inventory dominate the used car market for years to come.”
http://static.ed.edmunds-media.com/unversioned/img/car-news/data-center/2016/nov/used-car-report/used-car-report-q3.pdf
the tsunami of newish vehicles hitting the market for YEARS to come doesn’t sound too good for new vehicle sales.
Mish. to get a good eye on what the auto industry is really doing keep a aye on the following. auto parts and shipments by rail. they have been falling the past few weeks about avg 2 pct. TRW is closing a plant in MI and laying off a shift that makes parts. also a seat maker for them is doing the same thing on OH come January . This is having ripple effects nobody is paying attention to.
ONLY 40 to 50 GRAND for a new SUV that runs maybe 4 weeks before electronic issues develop! All that WIZ BANG technology that nobody needs…… I for one will PASS on purchasing a new car EVER again! Buy a low mileage vehicle around the 2008 era!
Only 40 to 50 GRAND for a new suv…..And after maybe 4 weeks electronic issues develop from all the WIZ BANG technology that nobody needs!!!??? NO THANKS! I for one will NOT be buying a new car EVER AGAIN! PRICES are ABSURD, durability SUCKS! Buy a low mileage vehicle from the 2004-2008 era!!!!!!!!