I see a lot of stories like these; nobody ever really seems to try to tie them together, except a few economic bloggers, of which I am not.
Bit when I come across two back-to-back, well....the JerseyNut does not believe in coincidences. Via Forbes:
Here’s why Cisco Systems’ bad financial news last week should (maybe) scare the hell out of you.
First, in case you missed it, here are the details of the announcement. On Thursday, Cisco stunned both the tech world and the stock market when it cut its sales forecast for the second quarter in a row. Worse, chairman and CEO John Chambers said that the company’s current situation is the result of outside forces beyond the company’s control – in particular, declining orders from cable companies and government agencies.
Anyone who knows the history of tech – especially if they were journalists in early 2001 – must have shuddered with a sense of déjà vu....
And flying well under the radar is this little report from the Federal Reserve Bank of New York:
New York state manufacturing unexpectedly plunged in November, the first contraction since July 2009 when the US economy exited recession, official data showed Monday.
The Federal Reserve Bank of New York reported its manufacturing activity index dropped to minus 11.1 points in November, from a positive 15.7 points in the previous month.
The Empire State Manufacturing Survey index is considered a bellwether of the manufacturing sector which has been a key strength in the economic recovery.
The sharp 27-point decline surprised analysts, who had forecast on average a slip to a positive 11.7-point reading.
The new orders index plummeted to minus 24.4 points, from positive 12.9 points in October.
Well, at least AFP used the right terminology - these figures are not a "decline", they are a "plunge" and/or a "plummet". Familiar terms to the folks who lost part of the $24 billion in Cisco's market value that vanished overnight after they cut their forecast...
So a tech giant is crashing. Manufacturing activity is grinding to a virtual halt. And the government is printing hundreds of billions of dollars in an attempt to spur inflation!
No, that's not your imagination, that is in fact the ground shaking under your feet. Again - I'm not an economist, and I'm not trying to be a prophet of doom, either, but you don't have to be a weatherman (or a Cassandra) to see the perfect storm coming over the horizon...