“Analyst objectivity and accuracy is an issue that is frequently debated. Much of the criticism appears to focus on the business relationships between analysts and the technology providers that are the subjects of their research. In short, analyst firms often rely heavily on revenues from the technology providers they cover.”*
In yesterday’s post, I revealed the source of my revenue, including the fact that it is mostly derived from clients who are not in the procurement industry.
Based on the example of the reader comments that follow, while this disclosure was welcomed, it also raised an issue that has plagued our industry for some time. Specifically, and under the present revenue model, do analyst and blogger insights provide the complete picture?
“Nice article. I like that you expanded a little on your role and your revenue stream, as I feel there is a tendency for people to be cynical and complacent when they read genuine investigative journalism.”
Even though it is an important question, it is the answer which comes in the form of successful implementations that ultimately matters.
Given the high rate of eProcurement initiative failures, the answer would appear to be no.
There are many reasons for the high rate of failure, not all of which should be born by those covering the industry. Let’s face it, end-user clients must also own up to the role they played, in terms of the initiatives that ended up on the rocks.
This being said, would these set-backs have been avoided – or at least minimized, if the end-user market were more aware of the potential conflict of interests referenced in my opening paragraph excerpt?
Think of it in this way, you go into a restaurant and you are given a menu from which to order. Based upon what is put in front of you, you make your selection.
Even though you may have enjoyed what you had selected, how would you feel if after the meal, you found out that the menu you received listed only 10 to 20 % of the available items? What if you noticed that there was something on the expanded list that you would have preferred?
Now imagine if you didn’t enjoy your meal and discovered the same thing . . . but couldn’t get your money back?
In many instances, this latter example represents the end-user market’s experience in terms of their past eProcurement solution choices. In short, they trusted the analysts and bloggers menu list, and walked away disappointed.
Even when the analysts and bloggers provide coverage of a vendor, there is still a tendency to potentially omit important information. This was demonstrated by my coverage of SciQuest and Bravo Solutions. The paucity of electronic ink that was dedicated to the NIGP #CodeGate story should also be noted here, since many vendors use association events to connect with potential customers. Of course there are considerable benefits for me personally in terms the above situation, as my readership has almost tripled over the last few months.
I am however not certain that the greater good of the industry is being fully served, given that multiple sources of reliable information, creates and maintains the necessary checks and balances that ensure the ongoing vitality of coverage.
“This post fits right in with the questions you raised about why other media outlets did not pick up the NIGP story. Fear of ‘biting the hand that feeds you’. It’s also why Procurement Insights continues to grow in popularity…. open, unbiased assessments and willing to ask the hard questions and do the right research.”
At this point, some of my fellow analysts and bloggers may acknowledge (okay maybe not), that while their general admission coverage may be left wanting in terms of providing a complete picture, their premium pay-to-access commentaries will deliver all that you will need to make the right decisions. Without tangible proof, should you take their word at face value, and pony up the bucks?
Let’s say you do, how do you know that you are getting the complete story? Once again, I am not just talking about their actual list of companies being covered, but the extent of the information being provided.
Using our menu analogy once again, what if the item you selected had some form of peanuts in it, but it wasn’t listed? What if you were allergic to peanuts?
Like the old saying, what you don’t know can definitely hurt you.
So where do you go from here?
While a full disclosure of revenue source will not provide an end all, be all solution, it will at least help in that you will be able to have additional information through which to filter the analysts and bloggers research and related commentary.
“The thrust of my comment was more aimed at organisations that charge users for access to their content but don’t provide objective value as they also charge the providers so the commentary may be biased. I encountered this first when selling casting software and dealing with the organisation responsible for casting in the UK. They would not review our product as the only main competing product was a sponsor. Hence they provided little real benefit to the members.”
All this being said, as an end-user client, you need to adopt a buyer beware mindset. This means that you take ownership for scrutinizing all sources of information – this blog included, so that you are always in control of your own destiny.
* multiple sources spanning many years including the InformationWeek 2006 article Credibility Of Analysts
30
The May S&P/Case-Shiller (SPCS) data published today showed home prices continuing to rise at an annual rate of five percent for the 20-city composite and 4.7 percent for the 10-city composite (seasonally adjusted). The national index has risen 4.4 percent since May 2014.This suggests the year-over-year change for the June Case-Shiller National index will be about the same as in the May report.
The non-seasonally adjusted (NSA) 10-City Index was up one percent month-over-month, while the 20-City index rose 0.8 percent (NSA) from April to May. We expect the change from May to June to show increases of 1 percent (NSA) for the 10-city index and 0.8 percent for both the 20-city and national indices.
All Case-Shiller forecasts are shown in the table below. These forecasts are based on today’s May SPCS data release and the June 2015 Zillow Home Value Index (ZHVI).The SPCS Composite Home Price Indices for June will not be officially released until Tuesday, August 25.
| Zillow Case-Shiller Forecast | ||||||
|---|---|---|---|---|---|---|
| Case-Shiller Composite 10 |
Case-Shiller Composite 20 |
Case-Shiller National |
||||
| NSA | SA | NSA | SA | NSA | SA | |
| May Actual YoY |
4.7% | 4.7% | 4.9% | 4.9% | 4.4% | 4.4% |
| June Forecast YoY |
4.6% | 4.6% | 4.7% | 4.7% | 4.3% | 4.3% |
| June Forecast MoM |
1.0% | 0.1% | 0.8% | -0.1% | 0.8% | 0.0% |
Real gross domestic product -- the value of the production of goods and services in the United States, adjusted for price changes -- increased at an annual rate of 2.3 percent in the second quarter of 2015, according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.6 percent (revised).The advance Q2 GDP report, with 2.3% annualized growth, was below expectations of a 2.9% increase, however Q1 was revised up to 0.6% annualized growth (from a 0.2% decline).
...
The increase in real GDP in the second quarter reflected positive contributions from personal consumption expenditures (PCE), exports, state and local government spending, and residential fixed investment that were partly offset by negative contributions from federal government spending, private inventory investment, and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
...
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 1.4 percent in the second quarter, in contrast to a decrease of 1.6 percent in the first. Excluding food and energy prices, the price index for gross domestic purchases increased 1.1 percent, compared with an increase of 0.2 percent.
Real personal consumption expenditures increased 2.9 percent in the second quarter, compared with an increase of 1.8 percent in the first.
The moment of truthAnd on Q2:
• The annual revision to GDP growth on July 30th will adjust estimates of growth over the past few years. If growth is indeed revised higher it would help solve the puzzle of low productivity growth.
• This will also be the first release of the new GDP and GDI composite. This will show a stronger trend of growth given that GDI has outpaced GDP recently.
• Taking a step back and examining a range of indicators reveals an economy expanding at a mid-2% pace, largely consistent with the Fed’s forecasts.
...
On July 30th, along with the first release of 2Q GDP, the Bureau of Economic Analysis (BEA) will release the 2015 annual NIPA revision. We will be looking for the following:
1. Will GDP growth be revised higher over the past few years? If so, this would imply faster productivity growth, which has been puzzlingly slow.
2. How will the revision to seasonal factors adjust the “residual seasonality” issue to 1Q GDP growth over the years?
3. Will the new aggregated GDP and GDI figure take the spotlight away from GDP?
Although it is hard to say with any certainty, we believe GDP growth is likely to be revised up modestly. This will likely leave the Fed comfortable arguing that the economy is making progress closing the output gap, allowing a gradual hiking cycle to commence.
The first estimate of 2Q GDP is likely to show growth of 3.0%, which would be a bounce from the contraction of 0.2% in 1Q. However, it is important to remember that the history will be revised along with this report.A few excerpts from a research note by economists at Nomura:
Q2 GDP, first estimate (Thursday): Economic activity in Q2 bounced back after slowing in Q1. However, some factors such as low energy prices and the strong dollar likely continued to weigh on business activity. We expect the BEA to report that the rebound in activity was concentrated in the consumer, housing and government sectors. As such we forecast a 2.8% increase in Q2 GDP, with real final sales growing by 3.1% as we expect inventory investment to subtract 0.3pp from GDP growth.Thursday:
The annual revisions to GDP will also be released. Revisions will be mostly applied to data between 2012 and Q1 2015. The most notable features the annual revisions will introduce are 1) the average of GDP, gross domestic income and final sales, 2) an upgrade to its presentation of exports and imports, and 3) improvements to seasonal adjustment of certain GDP components. Furthermore, our work suggests that there is material residual seasonality in top-line GDP in Q1, as it tends to be below trend due to strong seasonal patterns in defense spending. Therefore, we might see some revision to the distribution of GDP growth in the first part of this year. As such, there is more uncertainty around the Q2 GDP estimate than usual.
Information received since the Federal Open Market Committee met in June indicates that economic activity has been expanding moderately in recent months. Growth in household spending has been moderate and the housing sector has shown additional improvement; however, business fixed investment and net exports stayed soft. The labor market continued to improve, with solid job gains and declining unemployment. On balance, a range of labor market indicators suggests that underutilization of labor resources has diminished since early this year. Inflation continued to run below the Committee's longer-run objective, partly reflecting earlier declines in energy prices and decreasing prices of non-energy imports. Market-based measures of inflation compensation remain low; survey‑based measures of longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate. The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced. Inflation is anticipated to remain near its recent low level in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of earlier declines in energy and import prices dissipate. The Committee continues to monitor inflation developments closely.
To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.
The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.
When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.
Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Jeffrey M. Lacker; Dennis P. Lockhart; Jerome H. Powell; Daniel K. Tarullo; and John C. Williams.
The July 28-29 FOMC meeting is shaping up to be the calm before the storm. Short-term interest rate markets imply a zero probability that the committee will raise policy rates next week, but show a high likelihood of at least one hike before the end of the year. Thus, although changes to the stance of policy look very unlikely, the upcoming statement will be closely watched for any clues on the precise timing of liftoff (we continue to see December as most likely). We will be focused on three main items:Wednesday:
...
• First, the description of economic conditions will likely acknowledge the decline in the unemployment rate. We expect the statement to drop its prior reference to stable oil prices, but to leave other comments about inflation unchanged.
• Second, we do not expect additional language intended to prepare for rate hikes in the statement. In 2004 the FOMC used the “measured” phrase for this purpose, but Fed Chair Yellen downplayed the need for new guidance at the June press conference. A change along these lines is a risk for next week, however.
• Third, we do not expect dissents, but see them as a risk from President Evans (dovish) and President Lacker (hawkish).
I have received numerous comments regarding my last couple of posts, particularly as it relates to a free press and the prevalence of native advertising or content. You should check out the John Oliver commentary on native advertising through the following link; https://www.youtube.com/watch?v=E_F5GxCwizc
In the meantime, the reference in yesterday’s post to the falling knife analogy got me to thinking. Specifically, is there a common characteristic relative to vendors like SciQuest, who are experiencing, or have experienced, significant market challenges?
Ariba almost immediately came to mind.
Here are the reasons why:
Now you might be thinking “sure, there are obvious similarities, but why should I care?”
Fair question.
Here is the answer . . . what the above shows us is that the real game being played out has little, if anything to do with producing positive customer outcomes, and more to do with maximizing share value – especially for the executives of the company holding the shares. The April 13th, 2000 article by Adam Lashinsky in TheStreet titled SciQuest’s Misadventure Is a Sign of the Times makes for interesting reading regarding this latter point.
Now one might reasonably think that customer success is a key factor in terms of increasing share price. One would think.
At the end of the day, while customer successes are nice, they are not as necessary as you hope. It is the new customer wins – or the potential for new customer wins leading to increased market share, that is most important. This is the real engine of perception that drives the solution provider community (and share price) – including it’s potential appeal as a possible acquisition target.
It is also the reason why native advertising or content is becoming increasingly important to solution providers such as SciQuest, in that analysts, journalists and bloggers covering the procurement industry are, as New York Times Executive VP Meredith Levien put it in the above referenced Oliver video, “sharing their story telling tools with the marketer.”
The fallout from this symbiotic relationship between those in the media and the companies they are covering, is that the end user ultimately foots the bill as a result of failed initiatives or problematic implementations.
This is why, in my response to one executive who had written me to let me know how much they liked my recent post, I wrote the following:
Far too many organizations equate a technical analysis or seek a Magic Quadrant-type endorsement as being the starting point for selecting a “solution,” when they should instead be seeking a partner. With the former, you rarely if ever, find a true partner because such analyses rarely if ever look at the people behind the company, or for that matter the company itself – such as if the executives are selling their stocks.
This of course requires a greater investment that goes beyond a features, functions and benefits analysis or, the hollow endorsements from existing clients. You will have to remind me one day to tell you the story about Multnomah County and SAP, in which the latter used Kings County as a key reference that did not turn out as expected.
The good news is that you ultimately have to be your own best filter. As I tell my readers, while I will strive to always provide thorough and insightful coverage of the industry, you should still challenge me as you should any source of information. If what I am saying is on the mark, it can and will ultimately stand up to scrutiny.
30
The National Association of Realtors‘ monthly home sales report made a big splash last week with news that median home prices in June had broken the record set in 2006 at the peak of the housing bubble, reaching a nominal high of $236,400.The price-to-rent does seem a little high (last graph below), but the speculation associated with a bubble isn't present. No worries.
Does this mean we have another problem on our hands? Not really.
...[see data and graphs]
...
There may be other reasons to worry about housing affordability by comparing prices with incomes or prices with rents for a given market. But crude comparisons of nominal home prices with their 2006 and 2007 levels shouldn’t be used to make cavalier claims about a new bubble.
| Month | YoY Change |
|---|---|
| May-14 | 7.1% |
| Jun-14 | 6.3% |
| Jul-14 | 5.6% |
| Aug-14 | 5.1% |
| Sep-14 | 4.8% |
| Oct-14 | 4.7% |
| Nov-14 | 4.6% |
| Dec-14 | 4.6% |
| Jan-15 | 4.4% |
| Feb-15 | 4.3% |
| Mar-15 | 4.2% |
| Apr-15 | 4.3% |
| May-15 | 4.4% |
The first graph shows the monthly Case-Shiller National Index SA, the monthly Case-Shiller Composite 20 SA, and the CoreLogic House Price Indexes (through March) in nominal terms as reported.
The second graph shows the same three indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices.
Here is a similar graph using the Case-Shiller National, Composite 20 and CoreLogic House Price Indexes.
The 10-City Composite and National indices showed slightly higher year-over-year gains while the 20-City Composite had marginally lower year-over-year gains when compared to last month. The 10-City Composite gained 4.7% year-over-year, while the 20-City Composite gained 4.9% year-over-year. The S&P/Case-Shiller U.S. National Home Price Index, covering all nine U.S. census divisions, recorded a 4.4% annual increase in May 2015 versus a 4.3% increase in April 2015.
...
Before seasonal adjustment, in May the National index, 10-City Composite and 20-City Composite all posted a gain of 1.1% month-over-month. After seasonal adjustment, the National index was unchanged; the 10-City and 20-City Composites were both down 0.2% month-over-month. All 20 cities reported increases in May before seasonal adjustment; after seasonal adjustment, 10 were down, eight were up, and two were unchanged.
...
“As home prices continue rising, they are sending more upbeat signals than other housing market indicators,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Nationally, single family home price increases have settled into a steady 4%-5% annual pace following the double-digit bubbly pattern of 2013. Over the next two years or so, the rate of home price increases is more likely to slow than to accelerate."
emphasis added
Click on graph for larger image.
The second graph shows the Year over year change in all three indices.
The last graph shows the bubble peak, the post bubble minimum, and current nominal prices relative to January 2000 prices for all the Case-Shiller cities in nominal terms.
Texas factory activity declined slightly in July, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, remained negative but rose for a second month in a row to -1.9, suggesting further moderation in the decline in manufacturing output.The Dallas region has been especially hard hit by the decline in oil prices. This survey might be more negative in August since oil prices have declined again.
...
Perceptions of broader business conditions were mixed. The general business activity index remained negative, but it rose for a second month in a row and reached -4.6 in July. Manufacturers expect improved conditions ahead. The company outlook index surged nearly nine points and posted its first positive reading in seven months, coming in at 1.2.
Labor market indicators reflected slight employment declines and shorter workweeks. The July employment index was negative for a third month in a row and edged down to -3.3.
emphasis added
Today, the Data and Analytics division of Black Knight Financial Services, Inc. (NYSE: BKFS) released its latest Home Price Index (HPI) report, based on May 2015 residential real estate transactions. The Black Knight HPI combines the company’s extensive property and loan-level databases to produce a repeat sales analysis of home prices as of their transaction dates every month for each of more than 18,500 U.S. ZIP codes. The Black Knight HPI represents the price of non-distressed sales by taking into account price discounts for REO and short sales.The Black Knight HPI increased 1.1% percent in May, and is off 6.5% from the peak in June 2006 (not adjusted for inflation).
For a more in-depth review of this month’s home price trends, including detailed looks at the 20 largest states and 40 largest metros, please download the full Black Knight HPI Report.
Federal Reserve officials are likely to emerge from their policy meeting Wednesday with short-term interest rates still pinned near zero, though they could send fresh hints that they’re getting closer to raising rates. ...CR Note: I don't expect an explicit signal at the FOMC meeting this week, instead I expect the FOMC to emphasize that they are data dependent - and that they would like to see further improvement in the labor market, and further evidence of inflation moving back towards 2%.
This leaves the Fed with a slight signaling challenge at the meeting this week. How aggressively should officials tip their hands about the timing of a rate increase later this year? Fed officials don’t want to take financial markets by surprise by raising the benchmark federal-funds rate for the first time since 2006 with no forewarning. At the same time, they want to keep their options open so they can adjust their stance as the economy evolves.
U.S. energy companies are planning more layoffs, asset sales and financial maneuvers to deal with a recent, sudden drop in U.S. crude-oil prices to under $50 a barrel, the lowest level in four months.
...
Nearly 50,000 energy jobs have been lost in the past three months on top of 100,000 employees laid off since oil prices started to tumble last fall, according to Graves & Co., a Houston energy consultancy.
Click on graph for larger image
Some producers stopped cutting when prices started to rebound, but now prices are declining again - and there will probably be more layoffs in the oil sector.
The other day I received an e-mail from Fast Market Research under the heading “New Market Research Report: SciQuest, Inc. (SQI) – Financial and Strategic SWOT Analysis Review.”
When I clicked on the link – which I have included for you above, I was taken to a press release. You already know how I feel about press releases – in part due to the shenanigans of companies such as SciQuest – so I won’t expend any further cycles on the subject.
As I read through the text I came to the “Full Report Details” link and clicked on it.
I was then taken to another page, in which I was informed that I could order the full report for $300 U.S.
It was at this point that I asked myself the question . . . is this the reason why procurement industry coverage is so poor?
First of all, I have never heard of Fast Market Research. But even if I had, why would I pay for their report? Shouldn’t market intelligence be more readily available without cost? Especially when you consider that under this pay-to-see model, expert advice in the past delivered very poor results.
The fact is, industry coverage – true industry coverage – has to be freely and readily available, without influence, and subject to sound journalistic practices.
While I cannot comment on the SWOT analysis being offered by this particular source, because I haven’t read it, even if the information within its pages has value, it is diminished by the fact that you have to pay to get to it. It is no different than with blogs offering premium access, or for that matter a Gartner – and we all know how well that model has worked out for everyone.
Let’s face it, by and large, the absence of a free press has reduced industry coverage to just slightly above infomercial status. This is because what is and is not reported is subjective, and often times influenced by the all too chummy relationship between analysts and journalists, and the very vendors they are supposed to cover.
You simply have to compare Procurement Insights’ coverage of SciQuest, compared to those of other industry “pundits”, to see that there is something seriously amiss.
So what is the answer?
To begin, stop paying for reports such as the one offered by Fast Market Research, as well as premium access programs. Instead seek out those resources that provide free and open access to real industry news. When I say real industry news, I am talking about insights that will ultimately inform and empower you beyond the tired and familiar formats, with which we are all too familiar.
30
9:00 AM: S&P/Case-Shiller House Price Index for May. Although this is the May report, it is really a 3 month average of March, April and May prices.
The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for June 2015. In the past month, the indexes increased in 40 states, decreased in seven, and remained stable in three, for a one-month diffusion index of 66. Over the past three months, the indexes increased in 42 states, decreased in six, and remained stable in two, for a three-month diffusion index of 72.Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:
The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.
Click on graph for larger image.
Here is a map of the three month change in the Philly Fed state coincident indicators. This map was all red during the worst of the recession, and is almost all green again.
Q2 GDP, first estimate (Thursday): Economic activity in Q2 bounced back after slowing in Q1. However, some factors such as low energy prices and the strong dollar likely continued to weigh on business activity. We expect the BEA to report that the rebound in activity was concentrated in the consumer, housing and government sectors. As such we forecast a 2.8% increase in Q2 GDP, with real final sales growing by 3.1% as we expect inventory investment to subtract 0.3pp from GDP growth.Earlier on GDP: Merrill on the Annual GDP Revision and Q2 GDP
The annual revisions to GDP will also be released. Revisions will be mostly applied to data between 2012 and Q1 2015. The most notable features the annual revisions will introduce are 1) the average of GDP, gross domestic income and final sales, 2) an upgrade to its presentation of exports and imports, and 3) improvements to seasonal adjustment of certain GDP components. Furthermore, our work suggests that there is material residual seasonality in top-line GDP in Q1, as it tends to be below trend due to strong seasonal patterns in defense spending. Therefore, we might see some revision to the distribution of GDP growth in the first part of this year. As such, there is more uncertainty around the Q2 GDP estimate than usual.
The July 28-29 FOMC meeting is shaping up to be the calm before the storm. Short-term interest rate markets imply a zero probability that the committee will raise policy rates next week, but show a high likelihood of at least one hike before the end of the year. Thus, although changes to the stance of policy look very unlikely, the upcoming statement will be closely watched for any clues on the precise timing of liftoff (we continue to see December as most likely). We will be focused on three main items:
...
• First, the description of economic conditions will likely acknowledge the decline in the unemployment rate. We expect the statement to drop its prior reference to stable oil prices, but to leave other comments about inflation unchanged.
• Second, we do not expect additional language intended to prepare for rate hikes in the statement. In 2004 the FOMC used the “measured” phrase for this purpose, but Fed Chair Yellen downplayed the need for new guidance at the June press conference. A change along these lines is a risk for next week, however.
• Third, we do not expect dissents, but see them as a risk from President Evans (dovish) and President Lacker (hawkish).
The Federal Reserve Bank of Kansas City released the July Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity declined again in July but less so than in previous months.Some of this recent decline in the Kansas City region has been due to lower oil prices.
“Our headline index was closer to zero than in May or June but was still negative, indicating further contraction in regional factory activity. However, firms expect a modest pickup in activity in coming months.”
...
Tenth District manufacturing activity declined again in July, but less so than in previous months. Producers’ remained slightly optimistic about future activity, although the majority of contacts indicated difficulties finding qualified labor. Most price indexes indicated continued rising prices, but the rate of increase slowed a bit for raw materials.
The month-over-month composite index was -7 in July, up from -9 in June and -13 in May ... the new orders index eased from -3 to -6, and the employment index dropped to its lowest level since April 2009, with many firms noting difficulties finding qualified workers.
emphasis added
Distressed sales — foreclosures and short sales — fell to 8 percent in June (matching an August 2014 low) from 10 percent in May, and are below the 11 percent share a year ago. Six percent of June sales were foreclosures and 2 percent were short sales.Last year in June the NAR reported that 11% of sales were distressed sales.
Click on graph for larger image.
Existing-home sales increased in June to their highest pace in over eight years, while the cumulative effect of rising demand and limited supply helped push the national median sales price to an all-time high, according to the National Association of Realtors®. ...
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 3.2 percent to a seasonally adjusted annual rate of 5.49 million in June from a downwardly revised 5.32 million in May. Sales are now at their highest pace since February 2007 (5.79 million), have increased year-over-year for nine consecutive months and are 9.6 percent above a year ago (5.01 million). ...
Total housing inventory at the end of June inched 0.9 percent to 2.30 million existing homes available for sale, and is 0.4 percent higher than a year ago (2.29 million). Unsold inventory is at a 5.0-month supply at the current sales pace, down from 5.1 months in May.
Click on graph for larger image.
According to the NAR, inventory increased to 2.30 million in June from 2.28 million in May. Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer.
Inventory increased 0.4% year-over-year in June compared to June 2014. 
“We are not here to pass judgement – the suppliers can speak for themselves . . . it is up to them to decide” – Tom Greco, VP of Publishing Operations at ThomasNet.Com
It is rare that one receives the answer to a question in such a direct and concise manner, so as to remove any doubt in terms of discerning from where the other party is coming.
This is one of the many aspects of my discussion with ThomasNet.com VP Tom Greco that stood out when I talked with him about his company’s recent deal with Walmart. The conversation took place as a result of the concerns I had raised in my July 9th, 2015 post, in which I pointed to the fact that the majority of suppliers that deal with Walmart, likely come to regret it. It is also perhaps the reason why Walmart’s vendors were encountering problems in finding U.S. sources of supply, possibly leading them to seek the relationship with ThomasNet in the first place.
Like Tesco, who it should be noted was the subject of a July 20th LinkedIn article by Gerard Chick that zeroed on their reported mistreatment of suppliers, Walmart’s track record is equally unenviable when it comes to their relationship with their supply base.
However, and against the backdrop of the launch of the new ThomasNet.com Corporate Edition – the details of which I will cover in a future post – Greco made it clear that the company’s vast supply base that has been cultivated over the past 100 years, can stand on their own two feet. As a result stressed the VP, the company’s primary focus is on “bringing as many opportunities to our supplier network” as is possible.
But at what price opportunity?
While I understand Greco’s position, I am not sure that a disclaimer will prove sufficient if and when Walmart reverts to its old ways of dealing with suppliers after the honeymoon period is over. Let’s face it, ThomasNet is a rarity in the realm of supplier networks. Although concerns regarding the cost to suppliers in terms of listing on ThomasNet have been raised in some circles, suggestions that their suppliers are getting stiffed by high fees, or an inability to justify the return on their investment that is all to common with other supplier networks such as Ariba’s, is not as frequent.
Of course, the origins of the ThomasNet.com supplier network is quite different in that it goes back to the company’s founding in 1898. Back then (and up until 2006, when the switch was made to the present day online format), it was known as the Thomas Register of American Manufacturers, or “Thomas Registry.”
So while some may question the ThomasNet.com pricing model, there are few, if any, who have questioned the fact that “ThomasNet is a trusted resource for buyers looking for manufacturers and suppliers.” That trust however was not gained at the expense of its suppliers. This brings us back to my original concern regarding the Walmart deal.
While I am certain that not every single relationship that was brokered through ThomasNet has had a happy ending, you do not endure for more than century without having considerably more successes than failures. In this context, providing Walmart with access to a supply base of such pedigree could come back to haunt the company, especially if things go south. If they do, I doubt that ThomasNet suppliers will find comfort in the company’s disclaimer.
The only question I have is what took Walmart so long to discover ThomasNet and, why now? Perhaps it is in the answer to these questions that we will ultimately come to understand what the future is likely to hold for all concerned.
In the meantime, and as demonstrated by the following Twitter exchange with Procurement Ombudsman, not everyone agrees with my assessment of the deal;
So what do you think? Is the deal with Walmart good or bad for ThomasNet.com suppliers?
30
