Up Jack Welch’s Filthy Creek Without a Paddle

The Empire Manufacturing Index revealed a dire economic outlook. [The Rude Awakening] October 18, 2022 [WEBSITE]( | [UNSUBSCRIBE]( Up Jack Welch’s Filthy Creek Without a Paddle - The Empire Manufacturing Index came in - and the results were ugly. - Business conditions and expectations were down by a great deal. - Economists now agree a recession will ensue by year-end. [Trump’s Secret Legacy]( [James Altucher]( In late July, the Trump administration oversaw a RADICAL change to the tech world… one that could unleash a huge wave of disruption… prosperity… and wealth creation in the near future. Chances are, you haven’t heard about it until today. But according to one of America’s most respected tech forecasters, it’s set to create small fortunes right here in this country. He recently went on camera to explain why – [check the footage out here while it’s still available.]( [Click Here To Learn More]( [Sean Ring] SEAN RING Dear Reader, Greetings on this fine, sunny Tuesday from Asti. It’s Indian Summer here in the Piedmont, and I’m back in t-shirts and jeans. But I’ll tell you what’s not hot: The Empire Manufacturing Index. Yes, business conditions up [Jack Welch’s filthy creek]( - the Hudson River - and the rest of the Federal Reserve System’s Second District aren’t good. [SJN] Credit: [The Federal Reserve Bank of New York]( In this edition of the Rude, we’ll look at the Empire’s alarming numbers and how the market reacted to it. What’s the Empire Manufacturing Index and How Is It Calculated? From [Investopedia]( The term NY Empire State Index refers to the result of a monthly survey of manufacturers in New York state. The Federal Reserve Bank of New York conducts the survey. The bank sends out the survey every month to business leaders who represent a wide swath of the manufacturing sector. The headline number for the index refers to the main index of the survey, which summarizes general business conditions in New York state. The index is widely watched for insights into the state and direction of manufacturing in New York state. Here’s a quick review of [how the index is calculated]( The general business conditions index and the indexes for the other 11 indicators are calculated by adding the percentage of "increase" responses and then subtracting the percentage of "decrease" responses. If 30% of survey respondents marked "increase," 50% chose "no change," and 20% picked "decrease," then the index would show a reading of 10. Index readings are released as absolute numbers to one place after the decimal point. That’s the background on the widely watched index. So, what happened this month? What Did October’s Index Look Like? The October Empire Manufacturing index fell well below consensus estimates and accelerated lower versus September. The Empire State data shows how Friday’s weak consumer numbers are hitting the manufacturing side. Likely, it will deteriorate as we head into year-end. To summarize, October’s general business conditions fell to -9.1 versus estimates of -4.3, while September’s was -1.5. Prices paid reversed higher as costs remained elevated for companies, but the prices received (what the company sells into the market) moved a bit lower. This tightens margins and will pressure companies to push their prices higher. Prices paid acts as another leading indicator for inflation via the Consumer Price Index (CPI). The employment side softened but remains in expansion territory. Between pricing and employment, there remains a lot of support for the Fed to keep hiking; [SJN] Source: [Federal Reserve Bank of New York]( [SJN] Source: [Federal Reserve Bank of New York]( New orders slowed but still squeezed out an expansionary number. But the pace has been slowing, weakening expectations. The chart below looks at general business conditions expected six months from now. It indicates a severe problem when evaluating future hiring, CAPEX, and general business expansion. [SJN] Source:[Federal Reserve Bank of New York]( The data shows an economy contracting at a faster rate. Unfilled orders collapsed as inventories expanded, showing business activity losing steam. [SJN] Source: [Federal Reserve Bank of New York]( These essential leading indicators show some of the worst conditions since 2002. The data supports increasing inflation while the economy in the Empire region slows further. The Empire region is technically called The Second Federal Reserve District. It includes New York State, Northern New Jersey, Southwestern Connecticut, Puerto Rico, and the U.S. Virgin Islands. However, this survey only covers New York State manufacturers. With that said, if NY State is slowing, so is Joisey and western Connecticut. Even as the economy signals problems, the inflation/job backdrop will keep the Fed focused on raising rates to address its dual mandate. Those two key mandates are price stability and full employment. [Biden Just TORPEDOED the U.S. Dollar]( [James Altucher]( This is the scenario we’ve been fearing… Instead of President Trump… We’ve got “Sleepy Joe” Biden behind the wheel. And now, a [sinister move that Biden just made]( could TORPEDO the U.S. dollar once and for all. In fact, thanks to this one move… Your dollars could be made worthless, or even CONFISCATED. Do NOT get caught off guard. [Click here to discover 4 EASY STEPS you can take to protect your wealth NOW](. [Click Here To Learn More]( What Did the Market Do? As you know, we reside in Clown World. It’s a place where up is down, left is right, and the truth lies. So, when crappy economic numbers come out, the stock market doesn’t react negatively. The markets leap for joy as it thinks the Fed will go in and rescue it! See for yourself: [SJN] The markets were enthusiastically up! Ok, it wasn’t a crazy historical rally. But it was an enjoyable way to spend a Monday (if you’re still long). The SPX was up nearly 100 points. It was a good day. But again, let’s look at the context. Here’s the daily chart. The last white candlestick represents today’s move. [SJN] There seems to be some overhead supply between 3,700 and 3,800. Also, the SPX price is still well below the 50-day moving average. And the 50-day MA is well below the 200-day MA. In short, we’re still in a bear market. But that doesn’t stop Mr. Market from smoking the hopium. In fact, I think Mr. Market is smoking a [Camberwell Carrot]( full of the stuff. [SJN] By the way, if you haven’t seen Withnail… and I, you should make some time. It’s a British cult classic and got Richard E. Grant’s acting career off to a flying start. I remember watching it the first time with my old roommate and LBS classmate Aussie Trav and not getting the jokes. I had only been in the UK for three years at the time. But a few years later, I was watching it and crying with laughter. It’s worth a shot. Anyway, the market is just amid its ups and downs before it begins its next descent. Wrap-Up - and a Bit of Housecleaning The macro picture continues to deteriorate, and yet the stock market rallies. Fine, let it. It’s a further opportunity to short the market, in my estimation. Before I sign off, I want to let you know my good friend and colleague Dustin Weisbecker, Paradigm Press’s Director of Custom Experience, has set up a brand-new mailbag for Rude readers. It’s [feedback@rudeawakening.info.](mailto:feedback@rudeawakening.info) It seemed that the old mailbag’s email had 10th-generation encryption, so I just stopped looking into it. I asked Dustin to set up a new one for our old subscribers and many new ones. I can’t encourage you enough to write in. Notice it’s called “feedback.” That means you can feel free to tell me what you like, what you don’t like, and how you think I can improve The Rude. I can’t promise we’ll implement every idea submitted, but I can promise we’ll have a look at them. And I’m always happy to address topics that interest you, especially if it’s important and you don’t think I’ve covered it enough. I hope to hear from you soon. With that said, I wish you a wonderful day! All the best, [Sean Ring] Sean Ring Editor, Rude Awakening [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( Rude Awakening is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from Rude Awakening, feel free to [click here.]( Please read our [Privacy Statement](. 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