Chicago PMI / Goldman Opens Their Mouth

Chicago PMI came in at 9:45, remember, as far as retail is concerned, "Bad news is good news" with regard to the QE Taper / Future; I suspect at the F_E_D level and the Wall Street level things are a bit more complicated than that considering bank's unrealized gains, oops, I meant losses because of treasuries, the lack of good collateral for banks to pick up as the F_E_D's QE has been sucking it all up and the Treasury's estimate that they'll need 30% less funding (Treasury Issuance) next year which exacerbates the entire situation as the F_E_D would be sucking up a bigger percentage of the already scarce high quality bank collateral, the point being is it's more complicated than "Bad news=good news " for QE.

That said, Chicago PMI missed...

Prior	Consensus	Consensus Range	Actual
Business Barometer Index - Level	51.6	54.0	52.0  to 56.0	52.3

However as always, the devil is in the details and they weren't pretty here. Prices paid vs prices received in the last PMI was showing margin contraction, in other words the raw materials to produce goods were costing more while the net prices the goods were selling for were declining, that's a margin (profit margin) squeeze, that continued at Prices Paid up from 59.9 to 63.3 .

To make matters worse... New Orders  fell from 54.6 to 53.9, Production fell from 57.0 to 53.6 and Employment fell from 57.8 to 56.6! Not a good report at all, but I doubt retail realizes how bad it was beyond the headline print.

Yesterday I said, "If I had some idea of what the F_O_M_C was going to do and it wasn't market positive, I'd run prices up as fast as I could before the policy statement" and the key part was the F_E_D emailing some 150+ hedge funds and private equity firms the minutes from one of the F_O_M_C meetings a full day before their official release. I DON'T KNOW WHAT WAS MORE TROUBLING, THE FACT THEY SENT THEM OUT TO WALL ST. A DAY EARLY OR THE FACT THAT THEY CATER TO WALL ST. WITH AN EMAIL SERVICE FOR DATA THAT IS SUPPOSED TO BE RELEASED TO THE MARKET ALL AT THE SAME TIME. WHY WOULD WALL ST. NEED AN EMAIL IF THEY ALREADY HAVE THE FASTEST NEWS CONNECTIONS?

This partly explains the recent run up in the market this morning pictured here...

But that move up started at 10:25, quite a bit after the Chicago PMI.

However Goldman was out with this just a few minutes before the run up,

"We Expect A Downward Revision To The Fed's 2013 Growth Forecast"

Never trust GS, no Wall St. firm gives out their edge for free to the public, especially GS.

Of course there is the revised Q1 GDP data that makes the F_E_D's 2013 full year forecast impossible to meet.

Bravo Goldman!