Morning Report: ISM report says the economy is slowing dramatically

Posted on December 1, 2023 by Brent Nyitray

Vital statistics:

Stocks are lower this morning as we await two speeches from Jerome Powell. Bonds and MBS are down.

Nick Timaros of the WSJ (one of the journalists most plugged in to what the Fed is thinking) says that the hiking cycle is probably over, however the Fed is reluctant to say so. They are even more reluctant to discuss any sort of rate cuts. The fear is that declaring victory too early while the economy is growing and the labor market is tight risks a credibility issue if inflation resurges.

That said, Fed Governor Waller discussed how the Fed could start cutting rates yesterday, saying that as inflation falls, the real rate of interest increases even if the Fed Funds rate stays the same. You can see that in the chart below, which subtracts the annual CPI from the Fed Funds rate.

Right now, the real Fed Funds rate is the highest it has been since 2007, which means monetary policy is pretty restrictive. In March of 2022, the real rate of interest was -8.3%, which is a record. Prior negative rate lows were -4.8% in 1980 and -5% in 1975.

The December Fed Funds futures are pricing in a 0% chance for a rate hike. The March Fed Funds futures are now close to a 50-50 chance for a 25 basis point rate cut.

The US manufacturing sector contracted again in November, according to the ISM Manufacturing Index. “The U.S. manufacturing sector continued to contract at the same rate in November as compared to October, again posting a reading of 46.7 percent. Companies are still managing outputs appropriately as order softness continues.”

“Demand remains soft, and production execution is slightly down compared to October as panelists’ companies continue to manage outputs, material inputs and — more aggressively — labor costs. Suppliers continue to have capacity. Sixty-five percent of manufacturing gross domestic product (GDP) contracted in November, down from 75 percent in October. More importantly, the share of sector GDP registering a composite PMI® calculation at or below 45 percent — a good barometer of overall manufacturing weakness — was 54 percent in November, compared to 35 percent in October and 6 percent in September. Three of the top six industries by contribution to manufacturing GDP were at or below 45 percent, same as the previous month,” says Fiore.

One of the respondents said the economy is “slowing dramatically.”

Filed under: Economy |

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43 Responses

  1. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on December 1, 2023 at 10:47 am said:

    George Santos’s last words as a Congressmen was “Jamaal Bowman survives”

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    • Brent Nyitray's avatar
      Brent Nyitray, on December 1, 2023 at 1:29 pm said:

      Swalwell slept with a Chinese spy. Chappaquiddick. Schiff ran the Russian Collusion Hoax.

      Republicans hate their voters.

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      • Let the mutherfuker burn!'s avatar
        Let the mutherfuker burn!, on December 1, 2023 at 1:37 pm said:

        Republicans hate their voters.

        Absolutely they do.

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        • Brent Nyitray's avatar
          Brent Nyitray, on December 1, 2023 at 4:38 pm said:

          At this point, they seem to be throwing the 2024 election.

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        • Let the mutherfuker burn!'s avatar
          Let the mutherfuker burn!, on December 1, 2023 at 5:44 pm said:

          Well, considering how Milley et al lied to him, desperate to keep us in Afghanistan, and considering that he’s campaigning on ending the war in Ukraine, or at least no longer funding it, is it any surprise that establishment R’s would through the race? They are much more aligned idea logically with Biden and the D’s versus their own base.

          If you throw in his desire to tariff the shit out of China, it’s a slam dunk that Trump will not be allowed to win.

          Also, incumbents don’t lose so…

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        • Brent Nyitray's avatar
          Brent Nyitray, on December 1, 2023 at 6:38 pm said:

          I think we are witnessing a split into three parties. The Populists, the Uniparty and the Left.

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    • jnc4p's avatar
      jnc4p, on December 1, 2023 at 7:25 pm said:

      Here you go:

      “Good Night, Sweet Princess
      George Santos was too flamboyantly criminal for Congress
      Josh Barro
      Dec 1, 2023

      Dear readers,

      George Santos was not the worst criminal ever to serve in Congress. At the time of his expulsion earlier today, he was not even the member of Congress currently under federal indictment for the most serious crimes — no, that’s Sen. Robert Menendez, who stands accused of selling his office to the Egyptians. No other member of Congress has ever been expelled over a mere criminal indictment; Menendez hasn’t even had to give up his committee assignments. So why was an exception made for Rep. Santos and his (as-yet still alleged!) campaign-funded shopping sprees at Hermès and OnlyFans?

      The answer is obvious: anti-gay bigotry.”

      https://www.joshbarro.com/p/good-night-sweet-princess

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    • jnc4p's avatar
      jnc4p, on December 2, 2023 at 1:27 pm said:

      As usual, the Bee nails it:

      “Santos Expelled By Congress For Doing Terrible Job Covering Up Ethics Violations

      U.S. · Dec 1, 2023 · BabylonBee.com

      WASHINGTON, D.C. — A notable page was written in the history books today, as New York Representative George Santos was expelled from Congress for doing a lackluster job of covering up his ethics violations.

      “In Congress, there’s nothing we value more deeply than the appearance of ethical behavior,” said House Speaker Mike Johnson. “If a rookie Congressman thinks he can come waltzing in here committing ethics violations without hiding them from public view, he’s got another thing coming.”

      “He’s been a total disgrace,” said Congressman Eric Swalwell. “Anyone who can’t properly cover their tracks has no business being in the United States Congress. It’s one of the most basic, fundamental characteristics of serving as an elected official. You do all kinds of shady, unethical, often illegal things, but you have to be savvy enough to keep everything hidden. Santos clearly couldn’t do that. Shameful!””

      https://babylonbee.com/news/santos-expelled-by-congress-for-doing-terrible-job-covering-up-his-ethics-violations

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  2. Brent Nyitray's avatar
    Brent Nyitray, on December 1, 2023 at 7:23 pm said:

    Is anyone else noticing that a lot of liberals are now using the term “leftist?”

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  3. jnc4p's avatar
    jnc4p, on December 1, 2023 at 7:46 pm said:

    Interesting:

    “GENERAL TO GENERAL
    A potential peace is being negotiated in Ukraine by military leaders
    Seymour Hersh
    Dec 1, 2023”

    https://seymourhersh.substack.com/p/general-to-general

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  4. jnc4p's avatar
    jnc4p, on December 1, 2023 at 7:56 pm said:

    Good read:

    “The current Democrats are no longer milquetoast militarists salivating for Lockheed and Carlyle Group donations who’ll tolerate the occasional Kucinich or Paul Wellstone to attract civil libertarians like me. That iteration is gone.

    This party has one public message (“But Trump!”, which they’ll repeat absolutely without limit, just as certain totalitarian movements kept pulling triggers without ever hitting a shame moment at the end of the tunnel). Behind that, they’re not just morally absent cynics, as I always used to imagine, they’re the bad guys, and America This Week co-host Walter Kirn is right: stopping them electorally is probably the only way forward.”

    https://www.racket.news/p/dan-goldman-democrats-make-a-clown

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  6. jnc4p's avatar
    jnc4p, on December 1, 2023 at 8:26 pm said:

    The new progressive messaging on inflation:

    “Inflation Is Your Fault

    If people are so mad about high prices, why do they keep buying so many expensive things?
    By Annie Lowrey”

    https://www.theatlantic.com/ideas/archive/2023/12/inflation-prices-buying-habits/676191/

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  7. jnc4p's avatar
    jnc4p, on December 1, 2023 at 10:17 pm said:

    The resistance fantasies about Trump are becoming ever more elaborate.

    “A Trump dictatorship is increasingly inevitable. We should stop pretending.
    By Robert Kagan
    Editor at large
    November 30, 2023 at 8:00 a.m. EST”

    https://www.washingtonpost.com/opinions/2023/11/30/trump-dictator-2024-election-robert-kagan/

    One gets the impression that they secretly want Trump to do all these things that they claim to be appalled by so they can then present themselves as the heroes in their elaborate mental exercise.

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    • ScottC's avatar
      ScottC, on December 2, 2023 at 9:06 am said:

      jnc:

      One gets the impression that they secretly want Trump to do all these things that they claim to be appalled by so they can then present themselves as the heroes in their elaborate mental exercise.

      I think that, as usual, they are simply projecting their own desires/sins onto their opponents. They call Trump a dictator in order to justify their own dictatorial impulses.

      Like

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    • Let the mutherfuker burn!'s avatar
      Let the mutherfuker burn!, on December 2, 2023 at 10:13 am said:

      I am always fascinated by the level of authoritarianism they assign to Trump, it allows them to become heroes merely by continuing to exist.

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    • jnc4p's avatar
      jnc4p, on December 3, 2023 at 4:55 pm said:

      This was a funny comment about the piece on Substack:

      “I only skimmed the article, but apparently once Trump acquires all of the Infinity Stones he’s going to become worthy and take over Wakanda.”

      https://substack.com/@librarianofcelaeno/note/c-44713627

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  8. jnc4p's avatar
    jnc4p, on December 2, 2023 at 8:02 am said:

    This is good. If there was any integrity in the process, Taibbi and his fellow collaborators on the Twitter Files would receive the Pulitzer Prize.

    “Not a Nothingburger: My Statement to Congress on Censorship

    The key question in censorship is always the same. Who’s doing it?

    Matt Taibbi
    Dec 2, 2023”

    https://www.racket.news/p/not-a-nothingburger-my-statement

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    • ScottC's avatar
      ScottC, on December 2, 2023 at 9:02 am said:

      jnc:

      If there was any integrity in the process, Taibbi and his fellow collaborators on the Twitter Files would receive the Pulitzer Prize.

      He was on Laura Ingraham’s show the other day and she said exactly the same thing. Given the process, unfortunately, winning the Pulitzer is more a mark of shame than achievement.

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    • Let the mutherfuker burn!'s avatar
      Let the mutherfuker burn!, on December 3, 2023 at 10:07 am said:

      I am still confused as to what election results were alleged to have been changed. Both stories are bizarrely cryptic is what happened, so I assume it was some action that would be unflattering for Democrats. I have to believe that all involved are Democrats since I don’t think Prince George County is MAGA country.

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      • jnc4p's avatar
        jnc4p, on December 3, 2023 at 10:54 am said:

        The Post is desperately attempting to avoid providing any support for the Republican narrative of possible election fraud. This of course prevents them from actually informing their readers about the facts of the situation.

        Having said that, the court filings are pretty vague too.

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  11. jnc4p's avatar
    jnc4p, on December 3, 2023 at 8:29 am said:

    FYI Brent:

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  12. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on December 3, 2023 at 6:30 pm said:

    Won’t someone spare a thought for the poor, bedraggled oligarchs?

    https://x.com/afreedma/status/1731217064210333934?s=46&t=vSGsUlnc4rLxcUf7zfUiHg

    Do you expect them to fly commercial?!?!?

    Oh, the humanity!

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  13. jnc4p's avatar
    jnc4p, on December 4, 2023 at 11:24 am said:

    Every story on the Atlantic home page today is “Orange Man Bad”.

    https://www.theatlantic.com/

    Edit: Ahh, it’s intentional. It’s a special “Orange Man Bad” issue.

    “In The Atlantic’s January/February 2024 issue, 24 writers imagine what a second Trump term would look like.”

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  14. Brent Nyitray's avatar
    Brent Nyitray, on December 4, 2023 at 4:28 pm said:

    Christian Nationalism In Action

    https://www.bbc.com/news/science-environment-67599985

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  15. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on December 4, 2023 at 5:43 pm said:

    There is value, and more importantly, personal dignity in being ungovernable. Whether the recipients of the ticket actually believe in the concept of Sovereign Citizen or not, they are making the State prove their case and expend resources to do so.

    https://www.abc.net.au/news/2023-11-30/sovereign-citizen-websites-traffic-fines-former-magistrate/103165906

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Be kind, show respect, and all will be right with the world.