This morning’s Industrial Production data is yet another macro series that escapes “analyzing” in the conventional sense due to “collapse” being an inherent byproduct of a mandated cessation in business activity.
Allow me, however, to quickly indulge both your inner Panglossian and your inner macro sadist. After all, our capacity for eternal optimism and our proclivity for rubber necking tragedy is a duality that defines us all.
Anyway, Industrial Production fell -11.25% sequentially and -15% Y/Y. Manufacturing Production, meanwhile, fell -13.7% M/M and -18.0% Y/Y.
As can be seen below, that represents the worst sequential print since 1919. That is 101 years ago, at least, and only because that’s where the data trail terminates.
Again, we will see some measure of a mechanical bounce as re-openings proliferate but that’s about where the sanguinity ends.
Consumer and Corporate retrenchment promises a protracted run of suppressed demand and global Quad 4 conditions, a strong $USD, re-percolating U.S.-China Trade tensions and the (secular) de-globalization push will remain across-duration constraints on external demand.
And for your rose-colored Friday take ….. Next month should be ‘less bad’ and unless your risk management career spans well into the 2120’s, you will never again have to endure a collapse of the ‘worst in 101 years’ variety.
