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Wholesale: Not the Whole Picture


Low demand, I/S ratio are the parts not revealed.

Editor's Note: Jack Lavery, former Chief Economist for Merrill Lynch, is now offering up his expert analysis in a newsletter on Minyanville. Learn more or sign up for a FREE 14 day trial of The Lavery Insight

The Commerce Department reported seemingly very good news yesterday morning on wholesale inventories in February, which were down 1.5% from January - more than expected, and off 1.7% from February 2008.

Two problems: The strength of sales (demand) going forward is debatable, and while wholesale inventories fell more than expected, the all-important inventory/sales ratio (I/S) was at 1.31 in February 2009. A year earlier, in February 2008, the I/S ratio was better, at 1.14.

The Business Roundtable quarterly CEO Economic Outlook is at an all-time low in its admittedly short 6-year history. But business sentiment overall is far from healthy, small business confidence is very weak, and consumer confidence is constrained by the household sector's erosion in net worth, from declining equity prices and faltering housing valuations.

In memory of our fallen friend and trusted colleague, Bennet Sedacca, 100% of the donations made to the RP Foundation through April will be channeled to philanthropic endeavors consistent with the RP mission, working closely with the Sedacca clan in the distribution of those funds. We thank you kindly for your support as we strive to effect positive change in the lives of children.
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