More Bullsh*t Fake News from Washington Post

I was laughing the moment I saw the Washington Post headline story Russian hackers penetrated U.S.electricity grid through a utility in Vermont.

I did not touch the story because I thought it was BS. And it was.

Glen Greenwald at the Intercept has the details in Russia Hysteria Infects WashPost Again: False Story About Hacking U.S. Electric Grid.

The Washington Post on Friday reported a genuinely alarming event: Russian hackers have penetrated the U.S. power system through an electrical grid in Vermont. The Post headline conveyed the seriousness of the threat.

The Post article contained grave statements from Vermont officials of the type politicians love to issue after a terrorist attack to show they are tough and in control.

Vermont Senator Patrick Leahy issued a statement warning: “This is beyond hackers having electronic joy rides – this is now about trying to access utilities to potentially manipulate the grid and shut it down in the middle of winter. That is a direct threat to Vermont and we do not take it lightly.”

The media reactions, as Alex Pfeiffer documents, were exactly what one would expect: hysterical, alarmist proclamations of Putin’s menacing evil.

The Post’s story also predictably and very rapidly infected other large media outlets. Reuters thus told its readers around the world: “A malware code associated with Russian hackers has reportedly been detected within the system of a Vermont electric utility.”

What’s the problem here? It did not happen.

There was no “penetration of the U.S. electricity grid.” The truth was undramatic and banal. Burlington Electric, after receiving a Homeland Security notice sent to all U.S. utility companies about the malware code found in the DNC system, searched all their computers and found the code in a single laptop that was not connected to the electric grid.

Apparently, the Post did not even bother to contact the company before running its wildly sensationalistic claims, so they had to issue their own statement to the Burlington Free Press which debunked the Post’s central claim.

So the key scary claim of the Post story – that Russian hackers had penetrated the U.S. electric grid – was false. All the alarmist tough-guy statements issued by political officials who believed the Post’s claim were based on fiction.

Even worse, there is zero evidence that Russian hackers were responsible even for the implanting of this malware on this single laptop. The fact that malware is “Russian-made” does not mean that only Russians can use it; indeed, like a lot of malware, it can purchased (as Jeffrey Carr has pointed out in the DNC hacking context, assuming that Russian-made malware must have been used by Russians is as irrational as finding a Russian-made Kalishnikov AKM rifle at a crime scene and assuming the killer must be Russian).

Stunning Stupidity

Glen Greenwald has a series of links and tweets proving the stunning stupidity of the Washington Post. Here are a couple of them.

This matters not only because one of the nation’s major newspaper once again published a wildly misleading, fear-mongering story about Russia. It matters even more because it reflects the deeply irrational and ever-spiraling fever that is being cultivated in U.S. political discourse and culture about the threat posed by Moscow.

The Post has many excellent reporters and smart editors. They have produced many great stories this year. But this kind of blatantly irresponsible and sensationalist tabloid behavior – which tracks what they did when promoting that grotesque PropOrNot blacklist of U.S. news outlets accused of being Kremlin tools – is a by-product of the Anything Goes mentality that now shapes mainstream discussion of Russia.

The level of group-think, fear-mongering, coercive peer-pressure, and über-nationalism has not been seen since the halcyon days of 2002 and 2003. Indeed, the very same people who back then smeared anyone questioning official claims as Saddam sympathizers or stooges and left-wing un-American loons are back for their sequel, accusing anyone who expresses any skepticism toward claims about Russia of being Putin sympathizers and Kremlin operatives and stooges.

Those interested in a sober and rational discussion of the Russia hacking issue should read the following:

  1. Three posts by cyber-security expert Jeffery Carr: first, on the difficulty of proving attribution for any hacks; second, on the irrational claims on which the “Russia-hacked-the-DNC” case is predicated; and third, on the woefully inadequate, evidence-free report issued by the Department of Homeland Security and FBI this week to justify sanctions against Russia.
  2. Yesterday’s Rolling Stone article by Matt Taibbi, who lived and worked for more than a decade in Russia, entitled: “Something About this Russia Story Stinks.”
  3. An Atlantic article by David A. Graham on the politics and strategies of the sanctions imposed this week on Russia by Obama; I disagree with several of his claims but the article is a rarity: a calm, sober, rational assessment of this debate.

Fake News Irony

Mike “Mish” Shedlock

Criminal Witch Hunt in Dallas Pension Fiasco

In the wake of the near collapse of the Dallas police and fire pension fund, a Dallas News editorial says Former Police, Fire Pension Managers Should Face Criminal Investigation.

dallas-pension6

Mayor Mike Rawlings is right to ask for a state criminal investigation into shady practices by the Dallas Police and Fire Pension System’s prior management.

The fund is on the verge of a potentially catastrophic collapse that could leave public safety workers, taxpayers and the City of Dallas on the hook for billions of dollars. And the reason stems from abuses under the former administrator Richard Tettamant, who was ousted in 2014.

The fund’s former managers bet heavily on risky investments such as luxury homes in Hawaii, a resort and vineyard in California and Dallas’ Museum Tower itself, and promised its hardworking police and fire employees unrealistic returns while enjoying lavish perks.

Those returns didn’t materialize, saddling the retirement fund’s new managers with $2 billion to $5 billion in unfunded liabilities. Frightened police officers and firefighters began a run on the fund, pulling more than $500 million out of it in recent weeks at a pace that would have drained the fund’s cash to dangerous levels.

The city of Dallas contends it is not legally responsible for the actions of the pension fund’s former managers, in part, because the city doesn’t control the fund, which was set up decades ago by the Texas Legislature. But the city is on the hook nonetheless; a failure of the fund would betray promises made to current and retired public safety workers and would make it much more difficult for the city to recruit new police officers and firefighters.

Too many people are at risk and those who put them there need to be called to account for their actions.

Criminal Witch Hunt

I am not here to defend the investment schemes of the fund managers. And I certainly take exception to alleged lavish perks. But this case is going nowhere.

If one wants to place blame, then blame rests squarely on the shoulders of the legislature that authorized the plan and established the absurd pension assumptions.

Perks did not cause the pension plan to be ridiculously underfunded. Rather, ridiculous plan assumptions steered the managers into risky assets.

In hindsight, it’s easy to say the fund should have thrown it all at Google, Apple, etc. Care to make the same case going forward?

Taxpayers on the Hook?

Taxpayers should not be on the hook for this mess. The promises were bound to fail from the get go.

The fault for this mess is squarely in the hands of politicians, not those running the fund.

Nearly every public pension plan in the nation is severely underfunded. There is nothing special about Dallas.

However, politicians will never point the finger at themselves. So the witch hunt is on.

Related Articles

  1. Dallas Police Retiring in Droves, Taking Lump Sum Pensions, Fearing the Money Isn’t There (And It Isn’t)
  2. Dallas Pension Showdown: Mayor Seeks to “Target Those Who Got Rich From System”
  3. Not Just Dallas: Fort Worth Employees’ Pension Plan in Deep Trouble

The only realistic solution to this mess is massive haircuts on pension assumptions, one of two ways: Voluntary or in bankruptcy court.

Mike “Mish” Shedlock

Robots Replace Robots



Existing robots are just not good enough. If we replace robots with better robots, we can reduce the number of robots and get rid of more humans as well.

Please consider Foxconn Boosting Automated Production in China.

Foxconn Electronics is automating production at its factories in China in three phases, aiming to fully automate entire factories eventually, according to general manager Dai Jia-peng for Foxconn’s Automation Technology Development Committee.

In the first phase, Foxconn aims to set up individual automated work stations for work that workers are unwilling to do or is dangerous, Dai said.

Entire production lines will be automated to decrease the number of robots used during the second phase, Dai noted.

In the third phase, entire factories will be automated with only a minimal number of workers assigned for production, logistics, testing and inspection processes, Dai indicated.

Foxconn has deployed more than 40,000 Foxbots, industrial robots developed and produced in house, at factories in China, Dai said. Foxconn can produce about 10,000 Foxbots a year. In addition to industrial robots, Foxconn is developing robots for use in medical care, Dai said. Although robotic technology keeps improving, industrial robots will not be able to completely replace workers because humans have the flexibility to quickly switch from one task to another, Dai noted.

Manufacturing will return to the US, minus the workers.

Mike “Mish” Shedlock



BitGold: Open Your Account Today!

Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of sponsors or firms affiliated with the author(s). The author may or may not have a position in any company or advertiser referenced above. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

1 thought on “Robots Replace Robots”

  1. It is what it is.

    No matter what used to be.

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Like Iraq WMD Fiasco, Russia Story Doesn’t Add Up

Yesterday, President Obama expelled 35 Russian “Operatives” from the Russian Embassy.

Is there any evidence those expelled are “intelligence operatives”? Any hard evidence Russia was behind the Hilary hacks? Any credible evidence that Putin himself is to blame?

The answers are No, No, and No. Yet, once again the American press is again asked to co-sign a dubious intelligence assessment.

Rush to Judgment

rush-to-judgment

Something Stinks

The Rolling Stone comments Something About This Russia Story Stinks

In an extraordinary development Thursday, the Obama administration announced a series of sanctions against Russia. Thirty-five Russian nationals will be expelled from the country. President Obama issued a terse statement seeming to blame Russia for the hack of the Democratic National Committee emails.

“These data theft and disclosure activities could only have been directed by the highest levels of the Russian government,” he wrote.

The problem with this story is that, like the Iraq-WMD mess, it takes place in the middle of a highly politicized environment during which the motives of all the relevant actors are suspect. Nothing quite adds up.

If the American security agencies had smoking-gun evidence that the Russians had an organized campaign to derail the U.S. presidential election and deliver the White House to Trump, then expelling a few dozen diplomats after the election seems like an oddly weak and ill-timed response. Voices in both parties are saying this now.

Republican Sens. John McCain and Lindsey Graham noted the “small price” Russia paid for its “brazen attack.” The Democratic National Committee, meanwhile, said Thursday that taken alone, the Obama response is “insufficient” as a response to “attacks on the United States by a foreign power.”

The “small price” is an eyebrow-raiser.

Adding to the problem is that in the last months of the campaign, and also in the time since the election, we’ve seen an epidemic of factually loose, clearly politically motivated reporting about Russia. Democrat-leaning pundits have been unnervingly quick to use phrases like “Russia hacked the election.”

This has led to widespread confusion among news audiences over whether the Russians hacked the DNC emails (a story that has at least been backed by some evidence, even if it hasn’t always been great evidence), or whether Russians hacked vote tallies in critical states (a far more outlandish tale backed by no credible evidence).

As noted in The Intercept and other outlets, an Economist/YouGov poll conducted this month shows that 50 percent of all Clinton voters believe the Russians hacked vote tallies.

And reports by some Democrat-friendly reporters – like Kurt Eichenwald, who has birthed some real head-scratchers this year, including what he admitted was a baseless claim that Trump spent time in an institution in 1990 – have attempted to argue that Trump surrogates may have been liaising with the Russians because they either visited Russia or appeared on the RT network. Similar reporting about Russian scheming has been based entirely on unnamed security sources.

Now we have this sanctions story, which presents a new conundrum. It appears that a large segment of the press is biting hard on the core allegations of electoral interference emanating from the Obama administration.

Did the Russians do it? Very possibly, in which case it should be reported to the max. But the press right now is flying blind.

Maybe the Russians did hack the DNC, but the WikiLeaks material actually came from someone else? There is even a published report to that effect, with a former British ambassador as a source, not that it’s any more believable than anything else here.

We just don’t know, which is the problem.

We ought to have learned from the Judith Miller episode. Not only do governments lie, they won’t hesitate to burn news agencies. In a desperate moment, they’ll use any sucker they can find to get a point across.

Where the Hell is the Evidence?

‘I Can Guarantee You, It Was Not the Russians’

John McAfee, founder of the security firm McAfee Associates, says ‘I Can Guarantee You, It Was Not the Russians’.

The Joint Analysis Report from the FBI contains an appendix that lists hundreds of IP addresses that were supposedly “used by Russian civilian and military intelligence services.” While some of those IP addresses are from Russia, the majority are from all over the world, which means that the hackers constantly faked their location.

McAfee argues that the report is a “fallacy,” explaining that hackers can fake their location, their language, and any markers that could lead back to them. Any hacker who had the skills to hack into the DNC would also be able to hide their tracks, he said

“If I was the Chinese and I wanted to make it look like the Russians did it, I would use Russian language within the code, I would use Russian techniques of breaking into the organization,” McAfee said, adding that, in the end, “there simply is no way to assign a source for any attack.”

Question of Patriotism

It’s not patriotic to accept accusations as facts, given US history of lies, deceit, meddling, and wars.

OT: If you have not checked out my photography website please do so: Mish Moments

Mike “Mish” Shedlock

Nowcast 4th Quarter 2016 and 1st Quarter 2017 Forecasts Dip Slightly: Three Hikes in 2017?

The FRBNY Nowcast for 4th quarter GDP dipped slightly today on account of the wholesale inventory report earlier this week.

Nowcast Highlights: December 30, 2016

  • The FRBNY Staff Nowcast stands at 1.8% for 2016:Q4 and 1.7% for 2017:Q1.
  • This week’s only news was from wholesale inventories, which had a small negative impact on both the Q4 and Q1 Nowcast.

Nowcast 4th Quarter 2016

nowcast-2016-12-30a

Nowcast 4th Quarter 2016 Detail

nowcast-2016-12-30b

Note that wholesale inventories rose nearly a full percentage point.

Econoday commented …

Wholesale inventories jumped a preliminary 0.9 percent in November following an upward revised 0.1 percent decline in October. Retail inventories also jumped, up 1.0 percent in November following an unrevised 0.4 percent decline in October. The build in wholesale inventories is split evenly between durable and nondurable goods with the build on the retail side concentrated in vehicles. The increases in this report are a surprise and, though a positive for the fourth-quarter GDP calculation and an offset to this morning’s widening in the goods trade gap, will revive talk of unwanted inventories.

That would have been my expectation as well. However, wholesale inventories have a negative contribution to the Nowcast model.

With the Nowcast of 1.8% for 2016 Q4 and 1.7% for 2017 Q1, expectations of three rate hikes in 2017 looks dubious at best.

Related Article: Wholesale and Retail Inventories Rise.

Mike “Mish” Shedlock

Time to Buy US Treasury Bonds? Gold? Equities?

As we head into 2017, how should one be positioned? Let’s explore that idea with a trio of contrarian indicators.

US Treasuries?

The one idea most widely agreed upon is that Trump will spur inflation and treasuries are the last place to be.

This headline says it all.

US Equities?

The nearly always wrong Harry Dent threw in the towel on his stock market crash prediction on December 19.

Please consider Economist who Predicted a 17,000-Point Stock-Market Crash Just 10 Days Ago is Suddenly Bullish.

Harry Dent is bullish.

Dent, an economist and one of the biggest doubters of the stock market’s rise since the end of the recession, said he no longer believes a crash is imminent for the market after persistently calling for a massive drop over the past seven years.

What changed the mind of the man who said that the market would be “cut in half” in 2011, called for a “year and a half” long crash in 2013, and said the Dow could fall 17,000 points as recently as December 10?

The markets ability to withstand the election of Donald Trump.

“All of my research pointed to signs that the end was near,” wrote Dent in a blog post last week. “The Dow was set to shed thousands of points in short order. How much has changed since November 8.”

“No matter how irrational this market is, I admit I’ve gotten the timing wrong,” said Dent.

Gold?

I discussed gold on December 27 in Financial Times, Barron’s Tout Death of Gold.

Here are the pertinent headlines.

End of a Golden Era

barrons-gold

For Whom the Bell Tolls

gold-bell

Synopsis

  1. Gold is despised
  2. Treasuries are despised
  3. Harry “wrong way” Dent is suddenly bullish

Magazine Curse

Finally, please consider Dow 20,000: Another Magazine Curse? Amusing Cover Flashbacks From Economist, Newsweek, Others.

Mike “Mish” Shedlock

US Expels 35 Russian Intelligence Operatives from Russian Embassy

In yet another hypocritical salvo, President Obama Hits Russia with Tough Sanctions Over Election Hacking.

Specifically, Obama expelled 35 Russian diplomats, giving them 72 hours to leave. Obama also imposed sanctions against six individuals.

Bear in mind, these actions come from a nation that tapped Merkel’s phone.

obama-sanctions-russia

The US has announced sweeping new sanctions against Russia in retaliation for cyber attacks against the Democratic National Committee and the emails of a key Hillary Clinton adviser that it claims were orchestrated by the Kremlin.

President Barack Obama said that he had issued sanctions against Russia’s two main intelligence services — the FSB and the GRU — along with sanctions against six individuals: four of them high-ranking GRU members and two of them individual Russian hackers.

Separately, the state department also expelled 35 Russian intelligence operatives stationed in the Russian embassy in Washington and the Russian consulate in San Francisco for activity that the US said was “inconsistent with their diplomatic status”. This, it said, was in response to alleged harassment of US diplomats by Russia. The Russian officials have been given 72 hours to leave the country.

“All Americans should be alarmed by Russia’s actions,” Mr Obama said in a statement. “In addition to holding Russia accountable for what it has done, the United States and friends and allies around the world must work together to oppose Russia’s efforts to undermine established international norms of behaviour, and interfere with democratic governance.”

Alarming Actions

All US citizens should be alarmed by US actions. US meddling destroyed Libya, Iraq, Vietnam, and countless other places. The US killed native American Indians, overthrew the Shah of Iran with disastrous consequences, and spied on our allies.

So let’s target Russia, Edward Snowden, and Wikileaks for exposing the truth.

Mike “Mish” Shedlock

Beyond Brexit: Case Against the EU



The UK made the right move in deciding to dump the EU. Other countries would be wise to do the same.

Gatestone Institute writer George Igler makes a compelling case in The EU vs. the Nation State?

  • The question remains, however, why any nation would want to throw out its sovereignty to institutions that are fundamentally unaccountable, that provide no mechanism for reversing direction, and whose only “solution” to problems involves arrogating to itself ever more authoritarian, rather than democratically legitimate, power.
  • Previous worries over unemployment and the economy have been side-lined: the issues now vexing European voters the most, according to the EU’s own figures, are mass immigration (45%) and terrorism (32%).
  • The Netherlands’ Partij Voor de Vrijheid, France’s Front National and Germany’s Alternativ für Deutschland are each pushing for a referendum on EU membership in their respective nations.
  • Given that the EU’s institutions have been so instrumental as a causal factor in the mass migration and terrorism that are now dominating the minds of national electorates, some might argue that the sooner Europeans get rid of the EU, which is now doing more harm than good, the better.

Mike “Mish” Shedlock



BitGold: Open Your Account Today!

Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of sponsors or firms affiliated with the author(s). The author may or may not have a position in any company or advertiser referenced above. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

4 thoughts on “Beyond Brexit: Case Against the EU”

  1. The UK needs another country on side but, irrespective of what you read, no others will not move before Brexit.

    I have been in Europe recently and the attitude is no one will move until the “British Disaster” has unfolded and there is a true opinion that the UK will hit the buffers without the EU.

    Brussels won’t adapt. There are too many vested interests, over 10,000 in the organisation (as one example) earn more than the British Prime Minister. There is a “Jesuit” hard-core.

    A period of unpleasantness is about to unfold.

    The EU elite want to humiliate the UK, again, this is real. Research and you will find it. Hollande statement of wanting to punish the UK wasn’t his idea. He has no ideas. Malta Presidency has had same attitude. EU centre the same, Schauble the same.

    A fight is about to start. Trade will suffer. Global flat-lined trade is likely to go into reverse, down.

    Ireland had better be careful. They are very UK dependent and it will be targeted if there are barriers raised on either side.

    UK is a massive Agri-food customer of the EU. Enough said, it will get less business. Ireland, Spain will feel it just for starters.

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  2. Product substitution will be order of the day for a while.

    Paperwork to export to EU will be painful and French already shot across bows last summer with port slowdown leading to major disruption – as a ‘lesson’.

    Expect it to get nasty, very nasty.

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  3. I have to agree. The unified Europe concept was a worthy one in principle, which is why giving up sovereignty was accepted, but badly mangled in operation. The neo-liberal ethos, rampant up until today is the major source of the dysfunction. This has to be uprooted and a new system set up although the damage already done might preclude any good now.

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  4. When Ireland get hit with tax harmonisation, become a net contributor and see their UK business turn down massively the Irish might just wake-up. Without the UK as a customer Ireland has a problem.

    Don’t bet on it though. The EU won’t take any notice anyway.

    Only when there is a real uprising, violent, revolutionary, is change likely.
    It will happen in time.

    Just as the Basques vs Spain and the IRA vs Britain some group will get really pissed with high unemployment and being ignored and will see no way out except by force.

    All Empires end the same way. This will be no different.

    Study it’s set-up and philosophy to understand how nefarious it really is.

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Navarro Nonsense and the Folly of Trump’s Proposed Tariffs

Trump’s proposed tariffs will not create or save any jobs. All it will do is drive up prices. Wages are unlikely to follow. It’s a lose-lose proposition for all involved.

Asia Times writer, George Koo, is among the few who understand the folly of Trump’s proposed plan. Koo asks Is Trump’s appointment of Peter Navarro some kind of a joke?

Navarro is the China-bashing author of the book Death by China’.

The simple but erroneous idea is that import tariff will protect jobs in the domestic market. It simply doesn’t work that way. It’s unbecoming for a Harvard PhD economist, like Navarro, to say so.

Ronald Reagan tried to protect America’s auto industry

A fairly recent example that comes to mind was when Reagan wanted to protect the American auto industry by imposing an import duty on cars made in Japan. The idea was to give the US carmakers breathing space to become more competitive.

Instead of taking advantage of the import barrier to work on their competitiveness, the US car companies simply took advantage of the new prices for imported Japanese cars by raising their own sticker price.

Imposing import duty across the board on goods made in China would be wrong-headed and even more disastrous than asking the American consumer to pay more for their cars.

Most of the consumer goods made in China such as apparel, shoes, toys, and hardware haven’t been made in America in decades. There are no domestic industries to protect and the import tax would just add the daily cost of living for every American.

Trump has to understand that America is losing jobs to automation and technological advances and not to China. Someday, for example, Uber is going to rely of self-drive cars and all the drivers will have to find another job. Amazon will use drones to deliver their packages and UPS will have to either operate the drones or else find some other line of work.

America’s future lies in generating highly qualified and skilled workers and not in bringing back low paying jobs from overseas.

Thus, we hope that Trump will have the wisdom to look for the win-win approach with China. To promote Navarro’s line of military confrontation and restart the nuclear race can only lead to a lose-lose outcome and such outcomes would be devastating beyond imagination.

Negotiation Ploy or the Real Deal?

I still wonder if Trump is engaging in over-the-top rhetoric as some sort of negotiation ploy or if he really believes what he says.

Either way, Navarro is a clear loser who cannot possibly benefit the Trump team.

Related Articles

  1. “Death by China”: Beijing Fires “Trade Cooperation Warning” at Trump
  2. Will Globalization Survive Trump?
  3. Reflections and Reader Comments on Free Trade: “China Doesn’t Play Fair!”

Mike “Mish” Shedlock

Wholesale and Retail Inventories Rise

Census bureau reports show wholesale and retail inventories jumped in November.

Advance Wholesale Inventories

wholesale-inventories-2016-12-29

Wholesale inventories for November, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $594.5 billion, up 0.9 percent from October 2016, and were up 1.2 percent from November 2015. The September 2016 to October 2016 percentage change was revised from down 0.4 percent to down 0.1 percent.

Advance Retail Inventories

retail-inventories-2016-12-29

Retail inventories for November, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $609.6 billion, up 1.0 percent from October 2016, and were up 4.1 percent from November 2015. The September 2016 to October 2016 percentage change was unrevised at down 0.4 percent.

Inventory-to-Sales

inventories-to-sales-2016-12b

This report will add a few ticks to 4th quarter GDP estimates. However, inventory-to-sales ratios are already way too high in my estimation.

Mike “Mish” Shedlock