Tuesday, October 28, 2014

Terminator QE: Rise of the Machinery

The following chart shows the quarterly average of real monthly manufacturers' new orders for machinery per capita (September 2014 dollars).

Click to enlarge.

I have added a linear trend channel in red. As seen in the chart, we seem to be exploring new territory. I think everyone can agree that this is a really great development! We're finally permanently free of the downward long-term trend! Woohoo!

Now let's take a look at construction machinery in particular. The next chart shows the quarterly average of real monthly manufacturers' new orders for construction machinery per capita (September 2014 dollars).

Click to enlarge.

I have added a "klaxon" trend channel in red. Please ignore that commentary in blue (within the chart). It seems a bit alarmist (pun intended). I certainly don't want to pop anyone's optimism bubble. In fact, you should probably just stop reading here. There's no point continuing.

Unlike the machinery data in the previous chart, the construction machinery data for the third quarter of this year has not been released yet. I can say this though. July and August averaged just $15.69 (as seen here). Unless September is a blowout month, the next data point on this chart won't be hugging the top of the red "klaxon" trend channel any longer.

But have no fear! Klaxon trend channels are known for their stability! Nothing to worry about! As time passes, the channel will continue to grow (both to the upside *and* the downside)! Therefore, the odds are high that we actually can stay within the channel over the long-term! Isn't that wonderful? There's very low risk of ever experiencing a klaxon trend failure in this data! That's true even if new orders for construction machinery eventually fall all the way to zero! Woohoo!

The future's so bright, I gotta hear the klaxon!

If Albert Einstein's definition of insanity is doing the same thing over and over again and expecting different results, then we certainly can't accuse the Fed of insanity. They aren't doing exactly the same thing. Based on the increasing volatility in the construction machinery chart, I'd say they are amplifying the "thing" each time! Bigger and badder! That's what I say! Insane? Like a runaway train! Woohoo!

Oh, what the hell. Clown horn time!

See Also:
Sarcasm Disclaimer

Source Data:
St. Louis Fed: Custom Chart (Machinery)
St. Louis Fed: Custom Chart (Construction Machinery)


dd said...

The Fed will do it again but bigger and brighter after the next meltdown in 1916 when in a very innovative round of QE it buys all construction manufacturer bonds, housing bonds, bond bonds, pension bonds and anything that looks like a bond and related derivatives to save the system once again! It really is genius. If buying bonds and bondshit worked this time why not just entire bondshit the next
go round. Who needs an economy when there's bondshit?

dd said...

Oh my god I'm old: 2016

Stagflationary Mark said...


1916 trivia!

1. The Fed was created to put an end to financial panics, 1913.
2. World War I starts, 1914.
3. Crater of a Zeppelin bomb in Paris, 1916

Coincidence? ;)