Mayoreo Blog

Submitted by Robert Oak
The Montly Wholesale Trade: Sales & Inventories, June 2009 was released today. Folks, while productivity shows very bad news for workers to obtain new jobs, wholesale inventories is also showing that production is not expecting an increase in demand. Wholesale inventories were slashed and burned for the 10th month in a row. (you might note Ritholtz is pointing out these numbers will revise Q2 2009 GDP down.)

Wholesale inventories are about 25% of the total business inventories.

That said, sales rose slightly, 0.4%, and looks like a potential trend on a two month increase (see graph below, although not adjusted for prices).

So why people are crying about a double drop in inventories or the 10th straight month when sales are up? I get that wholesalers do not see pick up in demand ahead as being one reason as well as the pull down on U.S. GDP. That said, it appears sales are now divergent in trend from inventory drop. So why did stocks tumble on this news…sales are up, hey everybody, yeah, rah! Recovery is here!

Oops, unless perhaps some of the price increases are within the margin of error and the strongest increase in sales is due to gas prices! I’m crying now too….gee wiz, I’m just so negative. See graphs and maths below.

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