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The warning first appeared in the latest Beige Book of all places.
Readers will recall that three weeks ago, when parsing the Boston Fed section of the Fed report, we found two very troubling references to the current state of semiconductor industry. The first one, while not critical was more of an amusing anecdote why the US labor market has been persistently "strong" as most high frequency indicators have been rolling over. This is what the Beige Book said about the labor market in the context of the semi sector:
Semiconductor - Manufacturer - Declines - Demand - China
A semiconductor manufacturer facing big declines in demand from China put a hiring freeze in place, but they were reluctant to institute layoffs since it takes three to six months to train new workers.
It was the second Boston Fed reference to the semi sector that was far more critical: this is what the Boston Fed said regarding anecdotal reference to manufacturing and related services.
Firms - Drops - Sales - Weakness - Firms
Two [firms] reported substantial drops in sales and two reported significant weakness. The two firms that reported serious issues were a semiconductor manufacturer and a furniture builder.... The semiconductor firm sells mostly to the auto industry and said that a 40 percent drop in new orders from China was the biggest fall in sales since the collapse of Lehman in 2008. Two other firms, both with heavy exposure to semiconductors, said that the market had slowed significantly since earlier in 2018 - Link.
Since then one semiconductor company after another has issued warnings about the state of the industry, even as the Philadelphia Semiconductor Index has, paradoxically, hit all time highs as traders bets on imminent sector recovery sparked by China's latest kitchen-sinking of various stimulus measures.
Company - Moment - Moments
But for at least one company, that "imminent" moment can not come soon enough, because moments ago,...
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