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More Bad News?

May 15, 2009 – 12:18 pm

Industrial Production for April fell .5%. That is six straight months of weakening numbers. Capacity fell to a record low of 69.1% from 69.4%. That was bad news but it was better than expected with the experts expecting a .6% fall. That certainly is not much better than expected. Consumer Goods were flat for the month and the only gain was in utilities. Auto Production increased for the third month in a row, and finally business equipment fell .6%, much better than the 2.75% average drop for the first quarter of this year.

Those numbers are all backward looking but after studying them you can’t help but notice that while still showing shrinkage the free fall of U.S. output over the last 6 months is stopping. Before a turn happens you have to stop falling and it appears that is what is happening.

It is still bad news, just not as bad as everyone has feared. By the time we see good news the stock market will have rallied another 25% or more. That good news will be a flat economy and maybe by the end of the year or next we will see small growth. That will be a welcome change.

Good Trading
Steve Peasley

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