Mish's Global Economic Trend Analysis

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• Tesla Offers Hands-Free Pedal-Free High-Speed Driving Now
• Mid-Atlantic Manufacturing Contraction Sets In; Philadelphia Region Contracts Second Month
• Minus Signs Sweep Empire State Manufacturing Region, Index Contracts Third Month

Tesla Offers Hands-Free Pedal-Free High-Speed Driving Now Posted: 15 Oct 2015 03:57 PM PDT My estimate of 2020 for fully autonomous cars on the roads, that most laughed at a few years ago when I made the prediction, is starting to look laughable in the other direction. Please consider Tesla Adds High-Speed Autonomous Driving to Its Bag of Tricks. On Thursday morning, Tesla owners woke up to discover that their vehicles can wirelessly download the new autopilot feature as a software update. That means the next time you see a Model S cruising next to you on the interstate, look closely: It may be driving itself. Autopilot is not free (the download costs $2,500), and it is not yet perfected (clear lane markings are needed, and bad weather can affect its abilities), but it works remarkably well under normal circumstances. The updated Tesla, an already high-tech electric car that starts at about $75,000, was equipped with what the company calls Autopilot — a semiautonomous feature that allows hands-free, pedal-free driving on the highway under certain conditions. The car will even change lanes autonomously at the driver's request (by hitting the turn signal) and uses sensors to scan the road in all directions and adjust the throttle, steering and brakes. It is the first time that a production vehicle available to consumers will have such advanced self-driving capabilities. Or more to the point, the first time they will be unleashed for driving 70 miles per hour along twisty, though clearly marked highways for long stretches. (Other manufacturers like Volvo and Mercedes-Benz recently introduced their own semiautonomous features, but limit the functions to lower speeds or require the driver to constantly touch the wheel). And it's perfectly legal. No state, except for New York, has any law prohibiting hands-free driving. That does not mean, of course, that drivers can simply relax and let their minds wander. The car is skilled at keeping its lane, but when lane markings disappear or are significantly faded, you have to take over. Shortcomings and Anecdotes Shortcomings like those listed in the previous paragraph will vanish within five years, if not two. Here's my question: can you get these autonomous cars to drive at 9 miles over the highway speed limit? I suggest 9 because most police will give you that. Heck, in Chicago people routine drive 80 in 55 zones, and the cops can only catch a few cars as other speed right on by. I tend to drive as fast as the fastest person in front of me, or 9 MPH over, whichever is faster. But why shouldn't speed limits increase on most interstate and state highways. 55 MPH on state highways is ridiculous. In Illinois, the speed limit used to be 70 on state roads, but when everything changed to 55, those limits never changed back as happened on highways. Mike "Mish" Shedlock Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Mid-Atlantic Manufacturing Contraction Sets In; Philadelphia Region Contracts Second Month Posted: 15 Oct 2015 09:20 AM PDT As with the Empire State manufacturing region earlier this morning, economists got the negative sign correct, but missed on the magnitude. The Bloomberg Econoday Consensus estimate was -1.0 in a range of -4.0 to +3.0, but the headline number came in at -4.5 slightly below any economist's prediction. Contraction is seeping into the Mid-Atlantic manufacturing sector. The Philly Fed's index for October, at minus 4.5, came in just below Econoday's low-end estimate. This is the second drop in a row but, more importantly, contraction is now appearing in many of the report's specific indexes including new orders which, at minus 10.6, fell 20.0 points from September. Unfilled orders, at minus 11.7, are extending their long contraction while shipments, at minus 6.1, are down 19.9 points from September. Employment, at minus 1.7, is now in contraction and down 11.9 points in the month. This report confirms the Empire State report released earlier this morning and points to accelerating declines for manufacturing, a sector that appears to be getting hit harder and harder by weak foreign markets. Philadelphia Fed Report Diving into the Philadelphia Fed Report we see ... The indexes for current new orders and shipments showed notable deterioration this month, with both indexes falling below zero, marking the first negative reading for the new orders index since May 2013. Indicators for delivery times and unfilled orders were also negative. Thirty percent of the firms reported a decline in inventories this month, and the current inventories index declined 15 points. The survey's indicators for labor market conditions suggest slightly weaker employment. The percentage of firms reporting declines in employment (15 percent) was slightly greater than the percentage reporting increases (13 percent). The employment index declined nearly 12 points, from 10.2 to -1.7. Firms also reported overall declines in average work hours in October, and the workweek index was negative for the first time since May. Philadelphia Fed Index Thus, two more weak reports today follow the two weak reports from yesterday. The Fed is not hiking this year. Recent Economic Reports Empire State Report: Minus Signs Sweep Empire State Manufacturing Region, Index Contracts Third Month Business Sales: Business Sales Fall Sizable 0.6%; Inventories Weak with Last Month Revised Lower Retail Sales: Autos and Restaurants Positive in Overall Weak Retail Sales Report; Last Month's Sales Revised Lower Rate Hike Odds: Rate Hike Odds For March 2016, Fall Below 50%; GDP Forecast Slips to 0.9% Mike "Mish" Shedlock Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Minus Signs Sweep Empire State Manufacturing Region, Index Contracts Third Month Posted: 15 Oct 2015 08:53 AM PDT Empire State Manufacturing Index Contracts Third Month A pair of Fed regional manufacturing reports came out this morning. Both show contraction. The Empire State Index came in at -11.36, worse than any economist's estimate. The Econoday Consensus Estimate was -7 and the range was -5 to -10. Minus signs sweep the Empire State report with the headline at minus 11.36 which is more than 1 point below Econoday's low end estimate. Looking at individual readings, new orders are in very deep trouble at minus 18.92 for a fifth straight month of contraction. And manufacturers in the region are not going to be able to turn to unfilled orders to keep busy with this reading extending a long string of contraction at minus 15.09 in September. Lack of orders is showing up in shipments, which are at minus 13.61 for a third straight contraction, and in employment which is in a second month of contraction at minus 8.49. The workweek is down and delivery times are shortening, both consistent with weakening conditions. Price data show a second month of contraction for finished goods, which is another negative signal, and a narrowing and only marginal rise for prices of raw materials. Empire State Manufacturing Report Diving into Empire State Manufacturing Report details we see "new orders, shipments, and unfilled orders all declined at a steeper pace than last month. Price indexes suggested that input prices held steady, while selling prices declined at the fastest pace since 2009. Labor market indicators pointed to a continued decline in employment levels and hours worked." Empire State Conditions Contractions Business Conditions: 3 Months New Orders: 5 Months Shipments: 3 Months Unfilled Orders: Over 1 Year  At least the economists got the negative sign correct. Up Next: Philadelphia Fed Region Mike "Mish" Shedlock Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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