Friday, May 01, 2009
inventories can't be cut enough
I watched with some amusement as analysts decided that reduced Inventories in the GDP data boded well for future GDP figures. While, all else equal, certainly lower would be better, the fact is we are slashing inventories (and trying to do so even more) because there are no orders. None. We do take "orders" (non-binding, no cash down payment) which are what is optimistically shared with the Street but binding orders with cash down payments do not exist today, haven't for over 8 months now. When one lands it is company news and because a government entity somewhere backed it. And trust me, if we aren't getting orders neither are the next 5 guys.
I suppose either the analysts - and the market, which has been juicing our stock (thanks for that) - are correct and the orders are about to start rolling in, or they are going to be somewhat disappointed later this year when our backlog starts to run dry. I hope they're right. But I assure you the absolute last thing that's going to happen is for us to start *growing* inventories without the orders - that strategy can only possibly be conceived in a cubicle somewhere, occupied by someone that never worked in a real job.
this unfortunately corroborates pretty well with what i'm hearing anecdotally. companies needs orders to return to inventory building, much less capital expenditure. hopefully, the blip in consumer confidence will translate into something like a spending pickup down the line. but for now, for many companies, inventories simply can't be cut enough -- which is why last quarter was one of record inventory cutting and production shutdowns.
UPDATE: zero hedge with more from david rosenberg.
We at Seeking Alpha absolutely love your blog and would be very interested in having you join our team. Please contact me at firstname.lastname@example.org and I'd be happy to discuss this with you further. Thank you.
Seeking Alpha (www.seekingalpha.com) is the premier financial website for actionable stock market opinion and analysis. Handpicked from the world's top blogs, money managers, financial experts and investment newsletters, Seeking Alpha publishes more than 200 articles daily. Seeking Alpha gives a voice to over 2500 contributors, providing access to the nation's most savvy and inquisitive investors. The award-winning site is the only free, online source for over 3,000 companies' quarterly earnings call transcripts including all of the Russell 3000 Index. Seeking Alpha has 40 million page views each month and combined with their distribution partners (Yahoo Finance, Google Finance, Reuters, Bnet, Etrade and others) has a total reach of 50 million unique monthly readers. Seeking Alpha was named the Most Informative Website by Kiplinger's Magazine and received Forbes Magazine's 'Best of the Web' Award.
------ ------- ------
Post a Comment