Morning Update/ Market Thread 2/28

Good Morning,

Equities are shooting higher overnight as the dollar plummets down and has landed directly upon long term support. Bonds are roughly flat, oil rose to the $100 mark and has since fallen back, gold is slightly higher, and most food commodities are slightly lower.

Below is a 60 minute chart showing how the dollar plummeted down to exactly touch long term support, bounced, and then collapsed again. This is a critical juncture for the dollar. Should it break this level, then massive pressure will mount on the “Fed” and our politicians to act. Should it fall rapidly we may see a melt-up of commodities which would further pressure those on the margins:



Personal Income and Outlays were reported for January. According to Bloomberg, “Purchases increased 0.2 percent, the smallest gain since June and half the median forecast of economists surveyed… Incomes climbed more than projected, reflecting the tax-cut compromise reached by President Barack Obama and Congressional Republicans in December, and inflation remained below the Federal Reserve’s long-term forecast.”

Although spending is not accelerating as expected, according to this report, “real” wages increased a whopping 1.0% in January, and are now up 4.6% year over year. That is simply astonishing and complete, dare I say, bullshit. Just like GDP and many other statistics, they take a dollar figure and adjust it for inflation (calculated their way) to make it “real.”

This report claims that the “core” price index rose by only .1% in January, .8% year over year, which of course is complete fantasy. To say that the data is disconnecting from reality is quite the understatement. And speaking of disconnected from reality, here’s Econoday parroting the consumer centric spin:

Highlights
Income growth jumped in January but spending slowed considerably. Inflation remains on two tracks with headline numbers outpacing the core. Personal income in January increased 1.0 percent, following a 0.4 percent gain the month before. The latest figure came in higher than the consensus estimate of 0.4 percent. Wages & salaries, however, grew a moderate 0.3 percent after gaining at the same pace in December.

As in December, consumer spending for the latest month was led by auto sales and higher gasoline prices. Personal consumption expenditures increased a modest 0.2 percent, following a 0.5 percent advance in December.

For January, strength was led by nondurables, up 0.9 percent (including gasoline), with durables advancing 0.4 percent. Services spending was flat for the latest month. Notably, inflation eroded the gain in overall spending as chained dollar purchases fell 0.1 percent in January after a 0.3 percent boost the month before.

On the inflation front, the PCE price index posted a 0.3 percent rise, matching the gain in December. The core rate was not as strong but still warmed up a bit with a 0.1 percent rise, compared to no change in December. On a year-ago basis, headline PCE prices are up 1.2 percent in January-the same rate as in December. Core inflation held steady at 0.8 percent year-on-year versus in December.

Year on year, personal income for January was up 4.6 percent, compared to 3.8 percent in December. PCEs growth improved to 4.0 percent from 3.9 percent in December.

Income is up, which is good, but spending has slowed. To date, the easing in spending growth is not worrisome given that it is coming off strong months. However, moving forward, healthier gains in wages & salaries are going to be needed to keep spending ahead of what appears to be building headline inflation.

Again, bad data leads to massive misallocations, and this report is a giant pool of disinformation.

And speaking of disinformation, the Chicago “Fed” releases the PMI Index at 9:45 Eastern this morning.

While the data is disconnected from reality our “Fed” continues to buy up debt – print money from nothing. Doing so lessens the burden placed on the member banks, and thus frees them up to leverage up. And leverage up they have, to new Mark-to-Fantasy wild extremes. Indeed, their hot money rotation has run up food and energy like there is no tomorrow, and this has set off riots and revolutions around the globe. Historic and quite the sight to see. What is most amazing is our failure as a nation to accept our role in creating the havoc, and in starving those whose incomes go substantially to obtaining food.

This violence has now spread to Oman where oil refineries are under pressure. Of course Saudi Arabia jumps forth once again and claims that they can make up for their oil production too, no problem. This is yet another outright lie and more disinformation.

In Ireland Fine Gael toppled decades of central banker controlled politicians. Enda Kenny, the newly elected Prime Minister, is already calling on the central banks to renegotiate the terms of recent central banker money from nothing never ending enslavement rob the people blind loans.

Mr. Kenny, with all due respect, this is the wrong approach. There should be no negotiating and there should simply be no loans. Tell the central bankers to pound sand, leave the Euro, and produce your own sovereign money! You will never be a free nation until you do so. No, holding elections does not make you free.

The end of month and beginning of month is a time that typically sees buying in equities that produces an upwards bias. This is more true with the daily billions being pumped into the system. But we’re at an inflection point in the markets with the dollar at long term support. Continued pumping may cause the dollar to break down further – the fallout will get even more dangerous if it does.

The math is impossible and it is now pressuring all levels of government in the U.S., and despot regimes the world over. The correlation between the money pumping and mispriced markets is clear and can be seen in the chart below comparing the size of the "Fed's" balance sheet to the S&P:



Welcome to the modern "fundamental" condition of the market. It's a fairly heavy week for economic disinformation reports, the Employment Situation comes this Friday.

Weekend Open Thread...

Morning Update/ Market Thread 2/25

Good Morning,

I’ll have today’s update posted in just a few minutes. In the mean time, here is a word from our sponsors ;-)

Morning Update/ Market Thread 2/25 - Psyops Edition

Good Morning,

Equity futures are bouncing higher this morning. The dollar is higher after getting very close to long term support and note the usual correlation of dollar up/ stocks down is not happening so far. Bonds are higher too, oil and gold are up slightly, and most food commodities are higher following losses yesterday.

The first revision for Q4 GDP came out much weaker, falling from the previously contrived number of 3.2% to the still ridiculous 2.8% “growth.” This comes on expectations that it would be revised upwards to 3.4%. The weakness is in exactly the areas I pointed to when this report first came out – but let’s face it, this report is overstated by huge amounts – I’m guessing our actual GDP is 40% (or more) less than what we spin to the world. Keep in mind that as the quantity of money grows, the GDP APPEARS to grow, but that does not mean that we are actually producing more goods and services. Here’s Econoday spinning the party line:

Highlights
The fourth quarter turned out to be not as strong as initially estimated. Fourth quarter GDP growth was revised down to 2.8 percent annualized growth from the advance estimate of 3.2 percent. The new figure fell short of analysts' forecast for 3.4 percent. However, the fourth quarter was still marginally healthier than the third quarter pace of 2.6 percent.

The downward revision to the percent change in real GDP primarily reflected an upward revision to imports (less negative) and downward revisions to state and local government spending and to personal consumption expenditures that were partly offset by an upward revision to exports.

Notably, demand numbers were revised down somewhat. Final sales of domestic product were bumped down to 6.7 percent from the initial estimate of 7.1 percent. Final sales to domestic purchasers (takes out net exports) were nudged down to 3.1 percent from the original estimate of 3.4 percent for the fourth quarter.

Separate from the direction of revisions, some components in absolute strength are relatively healthy. PCEs came in at an annualized 4.1 percent, compared to 2.4 percent in the third quarter. Nonresidential fixed investment gained 5.3 percent in the latest period, residential investment rose modestly, and net exports improved sharply. In contrast, inventory investment slowed significantly, slicing off 3.7 percentage points from GDP growth. And government purchases declined slightly.

Year-on-year, real GDP in the fourth quarter is up 2.7 percent, compared 3.2 percent in the third quarter.

On the inflation front, the GDP price index was little revised, coming in at 0.4 percent, compared to the initial estimate of 0.3 percent. The market median forecast was for 0.3 percent. However, the recent spike in oil prices makes the fourth quarter numbers basically irrelevant.

Today's report is a disappointment as equity futures eased a bit on the news though remained notably positive. The still moderate growth in the economy certainly explains currently sluggish growth in employment. But more recent monthly data show the recovery continuing, albeit at a moderate pace.

To me this report is just a flat out lie. It is disinformation on behalf of private banks. The disinformation in economics has become so extreme that it’s just embarrassing – fraud is everywhere you look. In the case of GDP, we let financial engineers create phony paper and debt, and we count that as today’s production. But the truth is that debt should be subtracted from GDP because it is an obligation, and “production” based upon it is borrowed from the future. Also, the GDP deflator vastly understates inflation which overstates productivity. And so the spin by manipulating this number leads people to believe that we are far more productive than we actually are.

And that makes the disinformation nothing more than a marketing tool to convince people to borrow and spend even more. The result is massive misallocation of resources. Phony GDP reporting is just one level of disinformation, it permeates all of our economy.

And we’ve become a terrific society at marketing – that is our real strength. Almost all new technology feeds marketing and visa versa – just look at Google, the world’s largest advertising company. That’s exactly what they are, they are not a technology company, all their revenues come from advertising.

But where, exactly, does marketing cross the line? I mean at some point marketing crosses over to influence people’s minds in ways that are not healthy for society, much less the individual being influenced. Every aspect of our society is now permeated with this false façade of marketing, even our social experiences.

The influence of greed and the pursuit of money has distorted our reality. My eye opening experience to the way the world really works was when I was in the Air Force. As a pilot I was ordered to take a series of six Anthrax vaccines. The story line was filled with blatant disinformation – “If you knew what we knew you’d willingly take it!” “Veterinarians have taken it for years.” “It’s safe, has limited side effects, and is FDA approved.” All lies. All marketing. But it was far worse than that in the real world, it definitely crossed the line into what the military calls “psyops.” That’s influencing the way people think by planting thoughts and ideas into their heads that are not true.

In the case of the Anthrax vaccine, it was all about the money too. A member of the Bin Laden family who lived in Europe bought the only manufacturer of Anthrax vaccine, Bioport, Inc. of Lansing, Michigan, and then gave former Chairman of the Joint Chiefsof Staff, Admiral Crowe, 11% of Bioport stock if he would go to the Pentagon and lobby to have the vaccine made mandatory for all military personnel, even the 90 pound pregnant female working the desk at McChord AFB.

This despite the fact that no person in any military in the history of the planet had ever been exposed to anthrax – ever. And much less in a weaponized form. The end result is that many people were injured from the shot. Many refused and legal battles ensued. I resigned over the issue without taking a single shot, thus forfeiting any retirement benefits, as did approximately 25% of my then reserve unit who could afford to. I felt very sorry for those who could not exit and were forced to take it against their will. And I felt very sorry for the collapse of morals and ethics of those who were dispensing the “Kool-Aid” like the military medical profession who should have known better yet went against their own Hippocratic Oath of doing no harm.

Then, once the program was challenged and it was learned that their propaganda was all lies, suddenly real anthrax began to circulate in the mail, killing several people, and even winding up on Senator’s desks. We still do not know who did this, but recently a lab worker “committed suicide” and the FBI is trying to pin it on him. I pin it on greed. This was a blatant attempt to legitimize the threat of anthrax so that Bioport would profit. That’s why the Senators were targeted. It is blatant, and it’s a for real conspiracy that’s still ongoing. It was psyops that turned onto outright terrorism.

That is my Air Force example of psyops, the spinning of reality to achieve a money related goal.

And that’s why I’m not surprised to learn this:

Another Runaway General: Army Deploys Psy-Ops on U.S. Senators

The U.S. Army illegally ordered a team of soldiers specializing in "psychological operations" to manipulate visiting American senators into providing more troops and funding for the war, Rolling Stone has learned – and when an officer tried to stop the operation, he was railroaded by military investigators.

Psyops used against politicians to get money? Taxpayer paid employees using psyops to get more money, more employees. Think about that.

And I think back to my young days as a new pilot knowing how illogical "use it or lose it" budgeting was. Ordered to do so despite objections, I flew hours and hours in empty airplanes using it, all quit unnecessarily.

And we wonder why we spend more on defense than the rest of the entire world combined. And we wonder how it is that we are a bankrupt nation.

We are a broken nation. We have crossed the line between marketing and psyops – way crossed the line. The GDP report is the same exact thing. As are most of the economic reports I see day in and day out. They are not real. They are designed to separate you from your money.

And the psyops has an impact. “Consumer” Sentiment just came out higher to go along with the inflated supply of money – 77.5, up from 75.1. Still depression era levels, but come on… come join the party everything is “growing!”

Well, except for things that exist in reality, like new homes. Where just yesterday it was reported that New Home Sales fell to only 284,000, one of the lowest numbers in modern history, and well below the previous month and expectations as well. That’s because expectations are based on psyops, homes exist in reality.

Morning Update/ Market Thread 2/24

Good Morning,

Equity futures fell sharply overnight, but are almost back to even just prior to the open. The dollar is down and is nearing major support, bonds are higher, oil shot considerably higher but has pulled back as reports come in that the people are taking control of several key areas in Libya. Gold and silver are flat to down slightly, as are most food commodities.

Of course starvation and revolution are crowns to be worn for the elite who now sing the praises of little lying Timmy Geithner:

Geithner Butt of Jokes No More as Obama’s Money Man Now on Top

Feb. 24 (Bloomberg) -- Treasury Secretary Timothy Geithner says the U.S. economy is in a “much stronger position” than it was two years ago.

The same could be said of him.

Once the focal point for criticism of the administration’s struggle to resolve the financial crisis, opposed by almost all Senate Republicans for confirmation, and the butt of jokes by late-night comedians, Geithner has emerged as President Barack Obama’s most powerful economic policy maker. His influence on everything from overhauling housing finance to remaking the corporate tax code is reminiscent of the clout that Robert Rubin and James Baker enjoyed when they ran Treasury.

“Many would have faltered during those tough days at the beginning, but he didn’t,” said Roger Altman, founder of the investment bank Evercore Partners Inc. and a former deputy Treasury secretary under President Bill Clinton. “And, between the success of the TARP investments, the auto rescues, and the overall recovery in the banking system, he’s now on top.”

That type of obviously planted story would be funny if it weren’t so sick, and Geithner wasn’t such a tragedy for the globe.

The Chicago “Fed” released their National Activity Index which fell in January from a very small rise in December:

Highlights
The Chicago Fed national activity index fell to minus 0.16 in January from December's plus 0.18 (revised from plus 0.03). The three-month average, however, improved to minus 0.10 from minus 0.14 (revised from minus 0.22). Negative readings suggest that U.S. growth is slightly below historical trend and that inflation pressures one year out will be subdued. Details show a smaller contribution from production and employment, a larger contribution in orders, and less though still substantial drag from consumption and housing.

Oh yeah, inflation is subdued and “growth” (measured in dollars) is slightly below historical trend. Riiiggghhht. More disinformation/ mind control for the masses whose food bills are skyrocketing and gasoline price has already landed on the moon.

But Durable Goods Orders (as measured in dollars) did rise in the month of January, but only due to a large month of aircraft orders (the only thing we really make besides military hardware and hamburgers anymore) – without those, this report is very weak, falling 3.6% in the month. Here’s Econoday:

Highlights
Durables orders made a nice comeback in January but there is a lot in the detail. Durables orders in January rebounded 2.7 percent, following a revised -0.4 percent dip in December (previously estimated at down 2.3 percent). Excluding transportation, new orders for durable goods fell back, declining 3.6 percent after a 3.0 percent rise in December and 4.6 percent boost in November. The headline number looks very good for January but a key question is whether ex-transportation offsets that. Basically, the ex-transportation decrease followed two strong months, meaning the decline is not so disconcerting. Durables manufacturing continues on a moderate uptrend.

Transportation led January's overall gain, spiking a monthly 27.6 percent after an 11.9 percent decrease in December. The latest increase was primarily due to a massive 4,900.0 percent (not a typo) monthly surge in nondefense aircraft orders. Yes, the base for the percentage gain was miniscule in December. Also, within transportation, motor vehicles actually advanced 0.4 percent while defense aircraft & parts increased 20.6 percent.

Outside of transportation, gains were seen in primary metals, up 1.1 percent; fabricated metals, up 0.8 percent; and "other," up 1.7 percent. Ex-transportation was led down by a 13.0 percent drop in machinery orders. Also retreating were computers & electronic parts, down 6.8 percent, and electrical equipment, down 4.9 percent.

Business investment in equipment declined after two notable gains. Nondefense capital goods orders excluding aircraft in January fell 6.9 percent, following a 4.3 percent increase in December and a 3.3 percent rise in November. Shipments for this series slipped 2.0 percent, following a 2.5 percent increase in December.

Overall, the headline number for durables orders likely overstates current strength while the ex-transportation number for January probably overstates current month weakness. Durables orders are extremely volatile and the underlying trend is moderately positive.

The reason this index is so volatile is that we don’t make anything anymore, and aircraft orders can swing the entire report by huge amounts. Imagine a strong industrial base, an airplane or two would not have such an effect. And in fact, this report did not used to be so volatile - what's that say?

Weekly Jobless Claims dipped back below 400,000, coming in at 391k. This was lower than last week’s 410k, and better than the 405k guess by the “experts.”

Highlights
Jobless claims data are indicating meaningful improvement for the labor market. Initial claims for the February 19 week fell 22,000 to 391,000 (prior week revised 3,000 higher to 413,000). The four-week average confirms the improvement, falling a sizable 16,500 to 402,000 for a nearly 30,000 decline from the month-ago level. A break below 400,000 in future weeks would begin to raise expectations for sizable payroll gains and extending declines for the unemployment rate. The Labor Department isn't citing any special factors in the data though California was partially estimated in the week while three other states were fully estimated.

Continuing claims also fell substantially, down 145,000 in data for the February 12 week to 3.790 million. The four-week average is down 55,000 to 3.893 million for an 87,000 month-to-month improvement. The unemployment rate for insured workers fell one tenth to 3.0 percent. In other data, total unadjusted emergency claims, in data for the February 5 week, rose nearly 56,000 to 3.685 million. Total unadjusted unemployment claims fell nearly 90,000 to 9.159 million, also data for the February 5 week.

The jobs market, based on initial claims, looks to be finding traction, right at the time that oil prices are spiking. Markets are showing little reaction to this very positive report.

Sure, when you can’t manage the real data, just guess and make it look good. The unadjusted guess at data did fall below 400k, but the number of people claiming Emergency Benefits rose by 55K. Again, the economy is still losing jobs as this number needs to be below 350k to show evidence of that. The trend is down which is good, but after years of job shedding one has to wonder how many more can be shed.

The speculation and hot money that poured into food commodities is now obviously leaving, at least somewhat. Bloomberg is pinning the decline on speculators spooked by all the unrest around the world. But to me that just sounds contrived as heck, as unrest should lead to an even more negative spiral as production depends on stable governments. So, I’m left to feel manipulated by those who produce the money once again. Did they wreak the havoc they desired and now are going to pull back the speculation in food, or is this just a natural wave reversal? I’m mentioning this only because it doesn’t feel natural to me, nor did the run up. But then again the markets are no longer real in general, having been subverted by the constant addition of hot money that’s controlled by HFT computers.

The VIX remained above the upper Bollinger yesterday. When we get a bounce, this will close back inside the range and will produce a buy signal, but not yet:



Yesterday’s decline took the Transports below its 50dma, but the NDX and RUT bounced off it. The DOW and S&P are still well above it and thus it is looking to offer support, at least temporarily, to the selling. In the chart of the SPX below, you can see that the bottom boundary of the rising wedge I pointed out yesterday did, in fact, provide support to the market:



With the Transports making a lower low, they are now established in a downtrend along with the Emerging Markets. Note the much higher volume on the selling days of the Transports:



Note that the point & figure chart generated a new bearish target for the Transports, reflecting the broken support and lower low:



The dollar, as seen on the weekly chart below, is just barely above major long term support.



The Yen is gaining a large amount today, this is the resumption of the risk on trade in its present form. What occurs at support here for the dollar is critically important. Should it continue down, below support, then it is signaling that the hot money is going to continue to pour in and high inflation will rule. However, should it bounce off support, then it’s possible that another leg of deflation could strike. So, it will be important to watch this level, however, I don’t really put that much credence in this index as I know it is simply a relative indicator. I know that all the currencies in “the basket,” like the Yen and Euro, are also massively printing and thus we are all going down in real terms together – thus higher food, oil, gold, and silver prices (really anything measured in dollars, including GDP and most other economic reports).

Watch today’s candle on NYMEX crude oil. It spiked well over $100 a barrel but has since returned. If it closes below $100, then this candle could look toppy as it does in its present form. However, should it rise above $100, then more may be in store. Of course much will depend on the situation in the Middle East in this regard:

Morning Update/ Market Thread 2/23

Good Morning,

Equities are flat just prior to the open after being higher in after hours trading. The dollar is down, bonds are higher, oil is adding onto huge gains, gold is pushing higher above the $1,4000 mark, while food commodities are being slammed backwards.

Yesterday’s rout was obviously the large move called for by the prior small movement in the McClelland Oscillator. The McClellan moved to firmly negative territory yesterday, meaning that most stocks are just like that established in downtrends. As a reminder, don’t forget that the market is still under the auspices of a valid Hindenburg Omen.

Most short term up trends are clearly broken, however, the longer term ones are not yet. In the 9 month daily chart below you can see the rising wedge and that its lower boundary is right in the 1300 area:



Classic chart, historic divergences built upon historic money creation.

In yesterday’s daily thread we discussed the fact that the National Association of Realtors (NAR) is being outed for overstating home sales for the past decade – by as much as 15%. No surprise to us, this is exactly what I’ve been harping about in regards to the bad data and disinformation. It is a product of a serious conflict of interest. Organizations who have a vested interest in the outcome should NEVER be allowed to compile and report data on their own industry. Misinformation such as that causes misallocation of resources within an economy.

And I’ve been harping on the Mortgage Banker’s Association (MBA) for producing what I believe is completely bogus data – as in not even close to reality. They are not only conflicted, but they are a hypocritical narcissistic organization that continues to damage our economy with their business practices and false reporting of loan conditions within the mortgage industry. Their latest rendition is that, get this, in the past one week alone, mortgage applications supposedly rose by 5.1% with Refinancings rising by a completely unbelievable 17.8%! In just one week!

If you believe that, then I’ve got some swamp land in Florida to sell you, just ignore that oil sheen on the water next to those dead dolphins. Here’s Econoday biting on the MBA’s snake oil:

Highlights
Borrowers are locking in lower interest rates, making for a burst in both refinancing and purchase applications. Refinancing applications jumped 17.8 percent in the February 18 week with purchase applications up 5.1 percent, pulling levels back up from two weeks of declines. The average 30-year mortgage rate, reflecting demand for Treasuries tied to Middle East unrest, fell 12 basis points in the week to an average 5.00 percent.

Riiiight. “Whatever” is what goes through my mind when I see reports like this – completely disconnected from reality. So much so that even ordinary people are finding it difficult to believe the constant flow of disinformation. And gee, what are we seeing as a response to the despots around the world?

And that same response is happening right here in the good ol’ U.S. of A. And it’s spreading as the impossible math of central banker debt pressures more states. I just read that Detroit, after closing 54 schools last year is now slating another 70 for closure – HALF of all their schools! And the result is that classroom size is going to double with each teacher working with 60 (!) children. I can tell you from my wife’s experience that even managing 30 kids is too much. Many children are coming to school not only unprepared to learn, but they are coming from families so under pressure that they act out in negative manners due to their surroundings. And, YES, I blame the central bankers for creating that environment. Never ending debt means never ending price inflation. Wages fail to keep up, and now both parents are required to work just to afford overinflated home values, overinflated auto values, overinflated everything. In other words, inflation pressures the family core – the more on the margin they are, they worse they are affected.

Let me share a story my wife brought home last night (she’s a principal in a Middle-School)…

Boy is brought to her office who is acting out in class and being disruptive to the other students, refusing to follow directions from the teacher. Minor stuff, not like gang activity, guns, and drugs she deals with on a daily basis (we’re talking south of Seattle here, not East LA). She sits the normally well behaved boy down and asks if there’s something outside of class that’s bothering him? Turns out that three of his siblings were just taken to child protective services, his father was arrested, and neither of his parents have a job.

That boy absolutely is not ready to learn – normally a good boy, he has become a management problem. This is repeated over and over and over. Some of the stories she brings home are outright scary. Sixty Detroit kids per class? Oh yeah, no child left behind there.

And thus the riots in the streets by frustrated teachers who mostly don’t draw the same connection I do between the breakdown of the family, to the breakdown of the REAL economy, and that lands right at the feet of the narcissistic central bankers who worry far more about global overpopulation than they worry about the kids, parents, and teachers of Detroit or Seattle, or anywhere other than the private schools they send their own kids to.

But at least I get a good laugh out of reading stuff like this:

Essex South Register of Deeds John O’Brien announced today that he will be seeking over $22 million dollars from the Mortgage Electronic Registration System, “MERS” which represents several major banking conglomerates. O’Brien bases the $22M number on the fact that the Salem registry has recorded over 148,663 MERS mortgages since 1998. After a careful review of a number of these mortgages O’Brien said it became very clear to him that MERS had assigned mortgages to other entities at least twice without paying a recording fee. Based on this information the taxpayers have been defrauded out of $22,299,450 in Southern Essex County alone. It is quite possible that in some cases they may have assigned the notes more than twice resulting in even greater loss of revenue. O’Brien called MERS “one of the greediest schemes ever perpetrated on the American people. They have compromised the integrity of the public land recordation system and in doing so, have wreaked havoc on our economy”.

ABSOLUTELY! MERS is a completely illegal entity whose business model is stealing from every county in the nation. MERS is toast, and the mess created by them is unbelievably huge. Yet another central banker scheme that is completely outside of the rule of law and now collapsing on their heads. Still, the collapse of MERS is evidently a good thing to the markets as it is just another central banker justification to print more money for their HFT computers to feed their ever expanding Ferrari collections.

But while I can laugh at MER’S demise, I weep when I read about GM receiving more than $14 billion (!) in tax cuts from the Federal Government because they are waiving taxes post bankruptcy just for them, allowing pre bankruptcy losses to carry over. Again, this is completely outside of the rule of law. Bankruptcy law is clear in this regard, and those prior losses are not allowed to be deducted past bankruptcy. And so, this is just another $14 billion bailout of GM who gets to report profits to pay their central banker owners while the kids of Detroit are squeezed 60 to a classroom. Get it? Get the teachers marching on the state Capitals?

If you don’t get it yet, you will. Let me explain…

The people of the world are currently at war against the central banks. Most don’t recognize this war yet, but those are the two sides, just take a look around the globe. On one side is the people, and on the other is those WHO control the production of their money.

This is nothing short of a war to determine whether the people of the earth advance humanity, or it becomes ruled by the evil forces of central bankers. I know that sounds like a bad movie plot, but sometimes reality is stranger than fiction. What I expect is that the bankers will create false flag terrorist acts and more false flag wars, all while letting you change their left/right puppets out at the ballot box – thus letting you feel some sense of false control. The only way to stop it is to cure the bad math – and trust me, taking away teachers right to collectively bargain won’t do it, not even close. So get ready, those “other events” I’ve been talking about for years are steaming ahead in fast forward motion.

Morning Update/ Market Thread 2/22

Good Morning,

Equity futures are down significantly this morning. The dollar is only slightly higher after being up considerably over the weekend. It appears that bond futures did a contract roll-over this weekend causing them to appear as if they fell, but they are actually up slightly. That was a strange roll-over with a large price difference from one contract to the next. Oil, of course, did a moonshot on the Libya situation, rising more than $7 a barrel yesterday and in holding onto those gains. That puts NYMEX crude just under $100 a barrel, and Brent significantly higher. Food commodities are mostly lower, however corn rose significantly higher in concert with oil, but has since fallen back – such is the new connectedness with ridiculous policies like subsidizing worse than worthless ethanol.

Of course the civil war that has broken out in Libya is just another product of central banker mis-policy that starves those around the world who are living on the margins. But with the impossible math so firmly in control, it is finally becoming so blatantly obvious that no one is even disputing just how bad the math is any longer. The bad math is pressuring food prices, it’s pressuring states, like Wisconsin, to get tough with their budgets.

While they are finally getting tough, they are getting tough in a misdirected way. Yes, they need to shrink government so that they live within their means, but the math is so impossible that doing so is impossible at this juncture without creating civil unrest. The right solution is to clear out the central bankers and then to discharge the debt via some sort of reorganization that causes investors who took mindless risk to eat their losses. That is the way of the world.

And debt investors are going to eat losses soon, one way or the other. As it is now completely obvious, so obvious that even a blind European Central Banker can see it, that central banking money pumping is responsible for creating unconscionable inflation, that, choke, they are even talking – just talk mind you – about raising interest rates:

Feb. 22 (Bloomberg) -- European Central Bank council member Yves Mersch said officials may toughen their language on inflation next week, indicating a readiness to raise interest rates in coming months.

“I would not be surprised at most colleagues concluding that we have upside risks to price stability,” Mersch said in an interview in Luxembourg yesterday. With the economy strengthening and inflation in breach of the ECB’s 2 percent limit, policy makers will “inevitably” have to “rebalance our monetary policy stance,” Mersch said, without giving a timeframe.

Ahhhhh! The horror of it all! Rates higher than zero? Could it be? Nawww, they can’t. At least they can’t without skyrocketing the interest that’s spent on the national debt and all the debt saturated citizens of the planet. Home sales? Home prices? Forgetaboutit.

Speaking of home prices, Case-Shiller 10-city index fell .9% in December, this price decline is up from .8% reported in November. For the fourth quarter, the National Index of Home Prices was down 3.9% from the same quarter a year prior. Here’s Econoday:

Highlights
The rate of home-price contraction held steady in December, according to Case-Shiller data which shows a 0.4 percent month-on-month adjusted decline for the composite-10 index which is unchanged from November. The rate of year-on-year decline, however, deepened significantly to 1.2 percent from November's year-on-year decline of 0.5 percent (revised from minus 0.4 percent). Declines for the unadjusted data show deepening rates consistent with heavier weather in December vs November. The unadjusted month-to-month decline is 0.9 percent vs November's decline of 0.8 percent. Year-on-year, the unadjusted contraction for the composite-10 deepened to 1.2 percent vs November's 0.5 percent while the composite-20 contraction deepened to 2.4 percent vs November's 1.6 percent.

On the positive side, city by city data shows the isolated appearance of strength though declines continue for most. Quarter-to-quarter adjusted data show easing in year-on-year contraction, to 2.1 percent in the fourth quarter vs the third quarter's contraction of 3.3 percent.

Heavy supply including price competition from foreclosures continues to depress the housing sector. But the economy as a whole, unlike the prior recovery, is moving forward without the housing sector. Price data for January will be posted with tomorrow's existing home sales report and Thursday's new home sales report.

Once again Econospin tries to find positive aspects to the data, but the actual report has many negatives they fail to mention. There is no doubt that a reacceleration of home prices in the downward direction has begun, and we are just now entering the ramp period for Option-Arm resets, just as interest rates are rising.

“Consumer” Confidence is released at 10 Eastern.

Cut Benefits to Bankers, Not Public Services…

What follows is a very on point 3 minute explanation of the current world malaise and how to stop it. Made in the U.K., this message cuts through all of the current B.S. that is warping people’s perceptions about schools, teachers, unions, and the like.

The impossible math is getting worse, it is creating pressures that are destroying the family unit, our schools, our governments. There is but one root cause, and it lies with WHO produces our money. If enough people get focused on that root cause, then we CAN FIX the impossible math and get on with advancing humanity. Make this video go viral please, it is on point…

Weekend Open Thread...

Morning Update/ Market Thread 2/18

Good Morning,

Stock futures are close to even this morning with the dollar down sharply, bonds lower, oil is sharply higher, gold is rising, and most food commodities are slightly lower. Note how there always seem to be some commodity that is being ratcheted up, even if others are correcting. A Forbes article this morning is again warning of $4 gasoline coming soon.

Stocks in Europe are lower with the financials under pressure as it appears that the flow of interbank funds could be drying up again. Hard to trust one another when you know how insolvent each really is. Stress tests my rear – might as well let the marketing professionals run the world. Oh wait, they do.

There is no economic data today, just Bernanke telling more lies as he flaps his destructive lips:

Bernanke worries about cash bubble

NEW YORK (CNNMoney) -- Federal Reserve Chairman Ben Bernanke said Friday that unbalanced flows of money between nations is again posing a risk to the global economy and financial stability.

Speaking in Paris to a Bank of France conference, the Fed chairman said the uneven flow of funds into the United States from 2003 to 2007 was one of the key factors that led to the meltdown in financial markets in 2008.

He did not say the current flow of capital poses a threat of that magnitude. But he warned that while the global financial crisis is receding, "capital flows are once again posing some notable challenges for international macroeconomic and financial stability."

Bernanke did defend the Fed's controversial program to buy $600 billion in U.S. bonds, known as quantitative easing. Some argue that the purchases, dubbed QE2 since it is the second round since the onset of the financial crisis, is feeding rising global inflation.

Bernanke argued that the U.S. economy still needed more support and that the inflation pressure was coming from countries that are keeping their currencies undervalued rather than from the Fed's efforts.

"Resurgent demand in the emerging markets has contributed significantly to the sharp recent run-up in global commodity prices," he said. "More generally, the maintenance of undervalued currencies by some countries has contributed to a pattern of global spending that is unbalanced and unsustainable."

Oh please. Now he sees trouble? But of course none of it is his fault. And rising dollar quantity around the world equals “growth” in his warped mind.

And speaking of warped, that is exactly what his policies do to economic data. A good example of that can be found in yesterday’s late morning report of “Leading Indicators:”

Highlights
A month-to-month swing in building permits made for sharp volatility in the index of leading economic indicators where growth slowed to 0.1 percent in January vs 0.8 percent in December (revised down from 1.0 percent). Building permits were the leading contributor to December's index but subtracted the most in January. Permit volume was affected by changes in laws in some localities. In a more telling sign of trouble, the second most negative component was initial jobless claims which, based on the weekly report posted earlier this morning, don't look to be of much help for the February LEI.

January's biggest contributor is the yield spread reflecting low front rates and what have been rising long rates. A slowing in deliveries was the second biggest indication of future economic strength followed by the stock market and by consumer expectations, the latter having shown tangible improvement so far this year.

Other data include a marginal 0.1 percent gain for the coincident index which unfortunately points to a slow start for the first quarter. Likewise, the leading index also points to a slowing, not contraction just to slower growth which would not be a positive for the still modest outlook on the jobs market.

So, the LEI (which is not really leading at all) fell all the way to barely positive. And note the “biggest contributor is the yield spread reflecting low front rates and what have been rising long rates.”

This is a great example of how the actions of the “Fed” distorts economic data. While the “Fed” bankrupts our country with debt that is completely unnecessary, they are now forced to buy up bonds to keep their game going. They are buying the short end most heavily, thus artificially driving down short term rates. Meanwhile their reckless actions are causing rates to rise on the long end. And the LEI sees this differential as a positive to the economy as banks can arbitrage the difference. But in fact, it is a most unhealthy condition and bogus indicators like the LEI is leading dumb investors right over the proverbial cliff.

Central bankers will do anything to keep their game afloat – that game, by the way, is all about robbing the people’s productive efforts for their gains. This is the root of ALL the current global malaise. Boxed in by skyrocketing commodity prices, desperate central bankers talk like this:

Feb. 18 (Bloomberg) -- European Central Bank Executive Board member Lorenzo Bini Smaghi said the bank may need to raise interest rates as global inflation pressures mount.

“As the economy gradually recovers and global inflationary pressures arise, the degree of accommodation of monetary policy has to be monitored and, if needed, corrected,” Bini Smaghi said in an interview with daily newsletter Bloomberg Brief: Economics. Commodity-price increases will “have an unavoidable impact” and “it is a key challenge for monetary policy to avoid spillovers and maintain inflation expectations in check,” he said. “This requires the ability to take pre-emptive actions if needed.”

Bini Smaghi’s comments suggest officials are becoming more concerned about inflation, which has already breached the ECB’s 2 percent limit and is running at the fastest pace in more than two years. Companies are facing stronger input-price pressures, and forecasters in an ECB survey this month raised their longer- term inflation expectations to 2 percent.

“The continued firm anchoring of inflation expectations is essential,” Bini Smaghi said in the interview, which was conducted by e-mail on Feb. 16.

Uh huh. And yet countries around the world continue to print money like it can be created on a computer printer. Oh yeah, that’s exactly how it’s done. Berspankme blames China and “Emerging Markets.” China blames America. Europe blames global inflation pressures. Yet no one will stop printing. And thus the outcome is pretty much settled.

Meanwhile “other events” continue to get nasty. Bahrain is a potential disaster in the making. The power between the Shiites and the Sunnis hangs in the balance, as does America’s position in the Middle East.

The world will be overcome with “other events.”

Like Mexico turning into a bad scene from the movie “Mad Max,” thirteen more were killed in separate shootings in Juarez. Violence in Guadalajara has become so bad that Alaska Airlines will no longer overnight an airplane and crew there – they will “turn” instead. They have also been shifting flights out of Mexico. Is Mexican violence the doing of central bankers? You bet it is – they continue to support the drug trade, launder their money and sell weapons to them. Their inflationary policies create havoc on the poor and leave them little alternatives but to participate in the drug trade. The government is powerless in the face of such pressures, these are the same pressures leading to revolution in the Middle East and in Africa.

And they are the same pressures that is causing states to be bankrupt and forcing Governors into boxes in which they very inappropriately blame teacher unions and attempt to pass legislation banning collective bargaining. In Wisconsin, Governor Scott Walker is getting a lesson in NATURE. You see, “collective bargaining” is a natural trait of intelligent and social animals. You can no more ban it than you can hold the people down in repression forever. Look at Egypt, collective bargaining at its finest.

Not once have I heard Governor Walker or Governor Christie talk about how much money their states spend on interest each year by using PRIVATE BANKER BONDS to finance the state’s needs – debt? The interest expense enriches the private bankers, but yet the states could absolutely eliminate this expense by creating their own state chartered banks. Crickets. This is because politicians on that level or higher can only be elected by taking money from the banks. Thus they are entangled in huge conflicts of interest. That goes for nearly all politicians on the federal level.

No, such efforts to place blame on unions is completely misguided – just as blaming the union for GM or Chrysler’s woes was completely misleading. The blame lies squarely on the inflationary money system foisted on the people. The bankers have saturated the globe with debt and now that debt is leaching out into all sorts of places, especially food and energy.

The “other events” occurring throughout the globe, and here in the United States are simply a part of the cascade of failures that will continue to plague the globe until the people change WHO controls the production of money. That change just occurred in Egypt, didn’t it? The people in Egypt didn’t shout out “change control of WHO controls the production of our money!” But yet that’s exactly what they did and are in the process of doing. While we’ll have to wait to see how it shakes out, 30,000 teachers taking to the streets in Wisconsin is a good start. Yes, it would be nice to see them targeted on the bankers, but that seems to not be the way it works. If I could have my way, we’d have a Tahrir Square event occurring on the steps of the “Fed.”

Markets are closed on Monday, ahhh shucks, there goes another opportunity for a perfect JPM HFT POMO fueled rob the middle class and screw those on the margins narcissistic trading day.

Morning Update/ Market Thread 2/17

Good Morning,

Equity futures are lower this morning, moving lower on the release of Weekly Jobless Claims and Inflation data. The dollar is slightly lower, bonds solidly higher, oil and gold are up, and most food commodities are higher.

Weekly Jobless claims jumped back up above the psychological 400k level, coming in on consensus at 410k, up from last week’s 383k. Again, any number above 350k shows that jobs are contracting as they have been for years now. Here’s Econoday:

Highlights
Jobless claims are not pointing to underlying payroll growth. Initial claims rose a steep 25,000 in the February 12 week to 410,000. The prior week was revised 2,000 higher to 385,000, one of only two weeks this recovery that claims have been under 400,000. The four-week average rose 1,750 in the latest week to 417,750 to show no significant change from mid-January in a comparison that doesn't point to improvement for the February employment report.

Continuing claims have been coming down but only slightly and not in the latest data, up 1,000 to 3.911 in the February 5 week. The four-week average of 3.942 million is down 73,000 from the month earlier. The unemployment rate for insured workers is unchanged at 3.1 percent. In data for the January 29 week, an unadjusted total of 9.25 million Americans were claiming benefits, down about 108,500 from the prior week.

Weather may be blamed for the failure of initial claims to show improvement so far this year, which does hold out hope for the weeks ahead. Otherwise, the jobs market remains a central risk to the economic recovery.

Oh yeah, it’s the weather – weather never happens in January. The swings in these numbers are caused not by the weather, but by the seriously flawed seasonal adjustments made by the Department of Labor. Unadjusted claims were actually down from last week, but are at a horrendous level for an economy that has a “Fed” throwing trillions at its banking members. When will Americans learn that banks don’t create jobs? We need to throw the “Fed” out the window (many members belong in prison) and take back the power to create money. That is the only way true employment is ever going to increase.

Below is a chart showing an increasing population against a declining number of people who actually have jobs.



This chart covers the past decade – not one new net job for all the trillions of debt, that’s called Debt Saturation, or as some people are calling it now “the Keynesian End Point.” No matter what you call it, it’s the point where there is so much debt (profiting the bankers) that incomes can no longer support the debt. Thus we have zero interest rates and money creation now billions every single day. But no new jobs…

…Just inflation – that profits you know WHO.

Surprise! The CPI comes in “hotter than expected.” By who? The truth is that inflation is many times, as in multiples, higher than data released by the “Fed.” Still, headline CPI came in at .4% for the month of January, that is an annualized rate of 4.8%. And that’s less than the .5% reported for December, but is more than the .3% expected. “Core,” less food and energy, came in at .2%, and the “Fed” reports that because it removes the volatility, lol, as if people don’t need food or energy. And the insidious truth is that as food and energy increase in price while wages stagnate, they consume a greater percentage of one’s income over time, and thus should be weighted MORE, not less. C’est la vie… revolution is in the air. Here’s Econoday:

Highlights
Headline CPI inflation continues its trend of outpacing core inflation-largely on strong gains in energy costs but with food price hikes also contributing. The CPI in January increased 0.4 percent, following a 0.4 percent jump in December. The consensus had called for a 0.3 percent gain in January. Excluding food and energy, CPI inflation in January posted at a 0.2 percent rise, compared December's increase of 0.1 percent and exceeding expectations for a 0.1 percent gain.

By major components, energy increased 2.1 percent after jumping 4.0 percent in December. Gasoline rose 3.5 percent, after spiking 6.7 percent the previous month. Food price inflation picked up the pace to 0.5 percent from 0.1 percent in December. Hikes in energy commodities and food accounted for over two thirds of the all items increase.

The firming in the core rate was led by a 1.0 percent jump in apparel and 2.2 percent boost in airline fares. Medical care commodities gained 0.5 percent. On the more moderate side, the shelter index rose 0.1 percent in January, with the rent index increasing 0.2 percent and the index for owners' equivalent rent rising 0.1 percent. Tugging down were declines in new vehicles, down 0.1 percent, used cars and trucks, down 0.3 percent, and medical care services, down 0.1 percent.

Year-on-year, overall CPI inflation increased to 1.7 (seasonally adjusted) from 1.4 percent in December. The core rate rose to 0.9 percent from 0.6 percent on a year-ago basis. On an unadjusted year-ago basis, the headline number was up 1.6 percent in January while the core was up 1.0 percent.

Overall, today's report shows a firming in inflation pressures and points to upward pressure on interest rates.

No, interest rates can’t rise. That is not unless you wish to crash the entire debt saturated planet. Welcome to the impossible math created the day the “Fed” stole the people’s rightful ability to control the production of money. Interest expense, from that day forward, went to benefit a few individuals instead of the general good of the people. Thus our money system is not ours. Note the word “Note” printed on every bill inside of your wallet. That term denotes a LOAN, it is not money, the “Federal Reserve Bank” is not Federal, they possess no reserves when marked to reality, and they are not even a bank. And then we wonder why we have no jobs, we’re losing our homes, and what jobs we have are all menial.

We have the “freedom” to pursue happiness, yet we wonder through life producing nothing of meaning, not really happy, failing to advance humanity, while we await the next shoe to be dropped – American spectator style. Quite the reality show, at least we have stolen from the Asians the technology to observe the disintegration in real time. Perhaps we can all stage a virtual sit in – somewhat Egyptian style? Of course if we all stopped our current “productive efforts” I wonder if anyone would even notice?
But since inflation is so “low” then the “Fed” can justify their continued printing of trillions, right? But what if we simply measured inflation like we did in the year 1980, before the several administrations tinkered with it? Well, that’s how John Williams at ShadowStats tracks inflation, and he says inflation tracked that way is pushing 10%:



I think that even that is understated, as food and energy have not been rebalanced appropriately to incomes.

Food commodities have doubled in the past six months, the run up began not when winter weather struck, but the ramp began in earnest at the same time as QE2. The banks can manipulate gold and silver, but at the same they are pumping money and playing games with the markets and precious metals, some of their hot money began to leak into food. Now they are really boxed in. If the economy is improving, can interest rates rise? Before they rise, the assumption would be that they would stop monetizing. Yet they can’t do that or the markets they are propping up, along with the entire financial industry, will crumble. Yet if they continue to monetize at ZIRP, then food and energy do a moonshot. This is the situation THE CENTRAL BANKERS created, and I say let them eat it, as they most certainly will in the end.

The "markets?" Oh yeah, the VIX rose against rising prices yesterday. Wake me when POMO is over...

Morning Update/ Market Thread 2/16

Good Morning,

Stock futures are higher, keep in mind Monday’s small movement of the McClellan Oscillator. The trend here seems to be that we have a small reading, a day of consolidation and then ramp. Despite that, the dollar is spiking higher, bonds lower, oil & gold slightly higher, while food commodities are in correction mode with rice gapping down a significant amount. Funny this is occurring just as the “World Bank” issues a report stating that rising food prices have sent 44 million into extreme poverty. Naturally no mention of their role in producing hot money, it’s all about population growth and the weather. Not to mention that figure is extremely low, I’m thinking the number of people sent into extreme hardship is probably well above a billion.

Equities immediately began ramping after yesterday’s close as the HFT computers and hot money combined to send prices higher in a no volume environment. Yet I read this morning in the mainstream how economic data is the cause – yeah, if you say so. Here’s yesterday’s late day ticker:

JPMORGAN RACKS UP THREE PERFECT TRADING QUARTERS IN 2010
JPMORGAN TRADERS HAD PERFECT SECOND HALF, BANK SAYS
JPMORGAN TRADERS LOST MONEY 8 DAYS IN 2010, DOWN FROM 42 IN '09

This is called Market capture. They ARE the market. A fact of which I’m sure the narcissists like Jamie Dimon are proud of. Yet to me this is grotesque that we have allowed this firm to become so dominate, as they use their capital and super computers to rob the real people of the world. The markets are NOT REAL. They are 100% controlled and contrived by just a few firms, JPM is the largest by far.

And now since the trillions in bailout hot money began flooding the banks and markets in March of 2009, the S&P 500 index has doubled. That’s a 50% gain for two years in a row, and yet it’s still 16% below its peak in 2007, and is still below where the market was one decade ago:



Extreme volatility for sure, the correlation between Mark-to-Market accounting rules and the supply of POMO are the most significant correlations in the marketplace today. Should either of those change, we would absolutely see the volatility on the downside again. And this market capture has made the markets extremely vulnerable to JPMorgan’s whim. As they have grown bigger and more dominant, should any lawmaker or event threaten them, they are now carrying a bigger market stick. Sick how the people of the planet let them create money from nothing, then allowed them to create derivatives from nothing, and now we allow them to control our markets – not to mention control of our politics.

Meanwhile, the other nice bankers at the MBA report that the mess they’ve made is getting worse quickly as interest rates rise. The Purchase Applications Index fell another 5.9% in the last week, with refinance activity supposedly falling 11.9%. This pushed their overall index down 9.5%. Here’s Econoday:

Highlights
Rising rates, up nearly one full percentage point from October, are drying up refinancing demand and are cutting into already weak demand for home purchases. The refinancing index fell 11.4 percent in the February 11 week to the lowest level in more than 2-1/2 years. The purchase index fell 5.9 percent. The average rate for 30-year mortgages was little changed at 5.12 percent.

What’s there to say about that? A one percent move in interest rates translates into 11% less house that people can afford over the course of a 30 year loan.

Housing Starts in January supposedly rose, but are still at depression era levels, coming in at just 596,000 units. This is up from December’s 529k, and is better than expected, however, permits fell which spells a weaker future. Note that nearly all of January’s advance was due to multi-family housing (apartments for the former middle-class):

Highlights
Housing construction was mixed in January and remained at a very soft level. Starts advanced while permits fell back. Housing starts in January jumped 14.6 percent after slipping 5.1 percent the month before. The January annualized pace of 0.596 million units beat analysts' forecast for 0.540 million units and is down 2.6 percent on a year-ago basis. January's pace is the highest since 0.601 million seen in September 2010. The latest gain was led by a monthly 77.7 percent surge in multifamily starts, following a 10.8 percent rise the month before. The single-family component slipped 1.0 percent after declining 8.4 percent in December.

By region, gains in starts were seen in the Northeast, up 41.8 percent; the Midwest, up 36.4 percent; and South, up 15.8 percent. For the West, starts declined 9.7 percent.

Housing permits, in contrast, fell 10.4 in January after improving 15.3 percent in December. Overall permits came in at an annualized rate of 0.562 million units and are down 10.7 percent on a year-ago basis. The latest decrease was led by the multifamily component which was down a monthly 23.8 percent while single-family permits declined 4.8 percent.

Data were mixed in January with starts up and permits down. But there are two key issues. First, strength (albeit soft strength) is in the multifamily component. Homebuilders are still very cautious about the single-family sector with inventory overhang still high. Second, seasonal factors are large during winter months and it is difficult to really sort out the marginal changes. The bottom line is that housing is still anemic although some apparently are a little optimistic about the multifamily sector.

Inventory is still far too high, and the upper-end homes are on the verge of a dramatic rise in the number of resetting Option-ARM loans which will place great pressure on home prices just as interest rates are rising.

Industrial Production unexpectedly declined in January by .1% versus the prior .8% rise and .5% consensus. Capacity Utilization, at 76.1%, rose by one-tenth, but is also less than consensus and is at a level only seen during an economic depression. This utilization rate is after more than two years of severe deleveraging and more than two decades of sending our production capacity overseas. This utilization statistic is one of the few not measured in dollars and is proof of a very sick economy as healthy rates are well above 80%. Here’s Econoday who will not state it quite so bluntly:

Highlights
Key underlying detail on major components reversed position in January from December. This time a decline in utilities output masked a moderately healthy showing in the manufacturing component. Industrial production dipped 0.1 percent, following a 1.2 percent jump in December. The latest number fell short of analysts' projection for a 0.5 percent gain. January's decrease was led by a 1.6 percent fall in utilities output, following a 4.1 percent spike in December. Also, mining tugged down on industrial production, declining 0.7 percent in the latest month. In contrast, manufacturing output advanced 0.3 percent after a 0.9 percent jump in December.

Within manufacturing, output of motor vehicles and parts was up a sizeable 3.2 percent, following a 0.2 percent gain in December. Excluding autos, manufacturing edged up 0.1 percent in January after a 0.9 percent jump in December. Essentially, manufacturing is continuing a healthy uptrend with some months stronger than others.

On a year-on-year basis, overall industrial production slowed to 5.2 percent from 6.3 percent in December.

Overall capacity utilization slipped in January on the decline in utilities and mining, easing to 76.1 percent in January from 76.2 percent the month before. The January rate came in lower than the median forecast for 76.3 percent.

Volatility in the utilities component has been making the headline production number unreliable as a measure of underlying strength. In contrast, manufacturing continues to post healthy gains.

Nice spin blaming utility volatility – this report shows that we continue to produce little real and with utilization that low there is excess capacity that will eventually be dismantled because it’s not being put to use. As an example of that, Boeing recently sold off several of its older buildings in the Seattle area. As those buildings are taken out of production, capacity utilization rises, even if overall production declines.

The cooked PPI numbers came in at a completely unrealistically low level yet still hotter than expected. Overall PPI supposedly rose .8% in January, this is down from 1.1% in December, and on consensus. When we remove the repressive food and energy components, however, the “Core” rate accelerated from .2% to .5%. While they don’t want to annualize these rates, that translates to an overall 9.6% rate of Producer Price inflation and 6% in the core reading. Zowie, that’s hot. Certainly not the 2% rate the “Fed” advertises as their guarantee to kill our currency, no, no they are hell bent on doing that sooner than later. And remember, this is the trumped-up measurement...

Highlights
Inflation is heating up at the producer level for both headline and core numbers. The overall PPI inflation rate posted at a still strong 0.8 percent increase, following December's revised 0.9 percent boost and 0.7 percent jump in November. The January gain matched the median forecast for a 0.8 percent rise. At the core level, the PPI jumped 0.5 percent, following a 0.2 percent increase the month before. The market expectation was for a 0.2 percent rise.

By components, food prices increased 0.3 percent, after a 0.8 percent boost in December. The energy component remained red hot, jumping 1.8 percent after surging 2.8 percent in December. The usual suspects were not behind the surge in the core rate. Nearly forty percent of the January advance can be traced to the index for pharmaceutical preparations, which moved up 1.4 percent. Higher prices for plastic products also contributed to the rise in the finished core index. The usual suspects were relatively tame. Passenger car prices dipped 0.1 percent while light trucks rose a moderate 0.2 percent. And tobacco edged up only 0.1 percent.

For the overall PPI, the year-on-year rate slipped to 3.7 percent from 4.1 percent in December (seasonally adjusted). The core rate edged up to 1.6 percent from 1.4 the previous month. On a not seasonally adjusted basis for January, the year-ago the headline PPI was up 3.6 percent while the core was up 1.6 percent.

Despite Fed comments to the contrary, there are signs of building inflation pressures.

Riiight… food only rose .3% in the month. Note how their measurement is completely disconnected from all the other food inflation measurements that we’ve been following over the past couple of months. There is no doubt that the trend is up and that price inflation is accelerating.

Continuing to pour hot money into the markets will absolutely cause commodities to rise in price. Those furthest from the production of money suffer, while those closest to it have nearly perfect trading years. Congratulations JPMorgan.

Morning Update/ Market Thread 2/15 – Inflation Tsunami or Transitory Blip?

Good Morning,

Equities are lower this morning. The dollar is down, the Yen is down, Euro higher, bonds are down slightly, oil & gold higher, and most food commodities are lower with rice substantially lower. Of note is that Brent crude, at over $103 per barrel, is now roughly $18 higher than NYMEX crude.



Retail Sales, remember measured in dollars, rose .3% in January, that is down from .6% reported in December, and is below consensus that was looking for a .5% gain. Not only are Retail Sales measured in inflated dollars, but this report is subject to large errors due to substitution bias. Here’s Econoday:

Highlights
The consumer appears to be pausing after a robust early holiday season. Headline sales in January posted a moderate gain but it was largely due to higher gasoline prices. Overall retail sales gained 0.3 percent, following a 0.5 percent boost in December and 0.8 percent jump in November. The latest figure fell short of the median forecast for a 0.5 percent rise. Excluding autos, sales printed a 0.3 percent improvement, matching the increase the month before. Analysts' expected a 0.5 percent rise. A large gain in gasoline station sales boosted the ex autos figure. Sales excluding autos and gasoline rose only 0.2 percent after a 0.1 percent boost in December and 0.4 percent advance in November.

The latest sales gain was led by a 1.4 percent increase in gasoline sales with food & beverage stores up 1.3 percent and nonstore retailers up 1.2 percent. Other notable increases include a 0.8 percent advance for general merchandise (which includes department stores) and a 0.5 percent boost for motor vehicles and parts. The weakest components were building materials & garden equipment, down 2.9 percent, and sporting goods, hobby, book & music stores, down 1.3 percent. Food services & drinking places fell 0.7 percent.

Overall retail sales on a year-ago basis in January advanced to 7.8 percent from 7.6 percent the previous month. Excluding motor vehicles, sales were unchanged at a year-ago 6.2 percent.

Consumers are pausing after a robust November as holiday sales were front loaded due to early discounting by retailers. Also, sales in January likely were softened by severe winter weather in parts of the U.S. Still, the numbers were disappointing and equity futures were down.

Most of the gain is due to gasoline and things that people NEED. This gives them less discretionary money as incomes aren’t even close to keeping up with the rate of real inflation, not to mention the ridiculous and usurious interest rates that consumers are forced to pay on their debt hangovers from the mass commercial marketing season that used to be about a religious holiday.

Considering the amount of inflation, that Retail Sales report is extremely weak in my view.

And both Import and Export Prices jumped in January, even with our understated numbers. Still, as you read this report, compare the price jumps to that of the supposed increases in Retail Sales and you will see a large disconnect that is getting larger.

Import prices rose 1.5% in January, or 5.3% year over year. While Export prices rose 1.2% in January, or 6.8% year over year! That is HUGE, and yet it is understated. It is unconscionable that the “Fed” is still pumping hot money into the system with those types of figures, but they continue to pump billions every single day! The rate of growth in these numbers is advancing dramatically.

Here’s Econoday:

Highlights
Import prices jumped 1.5 percent in January to extend a long string of similar gains. But inflation pressures continue to be isolated to energy and food where year-on-year rates are moving into the mid teens, at plus 14.3 percent for petroleum imports and at plus 14.8 percent for food/feed/beverages. These rates are up from December's 13 percent handles. The year-on-year rate for food/feed/beverages on the export side is at plus 18.0 percent. Monthly change shows a 2.6 percent rise for food/feed/beverage imports and a 3.6 percent gain for exports with petroleum imports at plus 3.4 percent.

All this pressure, however, remains confined to energy and food. Prices for finished goods remain subdued showing a second straight 0.1 percent monthly gain for capital-goods imports and a 0.2 percent gain on the export side. Year-on-year, capital-goods imports are up only 0.2 percent with consumer import prices at zero.

High energy and food costs are a serious burden to the public but these results won't shift expectations for low core readings in this week's producer and consumer price reports.

“Subdued… Isolated… low core readings…” WHAT NONSENSE! What is clear is that things that you need like energy and food are zooming, while all the other stuff that is still ridiculously fluffed up in price due to loose monetary policy are holding steady at best. Right now the only falling prices I can see is in real estate.

And this brings up probably the most important aspect of what’s wrong with the “Fed,” and again WHO controls the production of money. As they inflate and food prices zoom to all-time starvation levels, the proportion of money spent on food rises around the globe – and here in the U.S. too. Yet our measurements of inflation do not incrementally adjust to reflect that greater proportion of income spent on food. In fact the politicians do just the opposite in an attempt to make things look better than they actually are.

In China, for example, just yesterday it was reported that food prices for just a ten day period at the end of January rose by a stunning 4.6%! In just ten days! That’s a 416% rate of inflation for food! I don’t know about you, but for me that crosses the line between high and hyper inflation. Stunningly, the Chinese announced that they are LOWERING the ratio of food in their inflation statistics which will have the net effect of lowering their reported inflation rate! Again, if they don’t like the results, just message the statistics!

And just this morning the Chinese reported their annual inflation rate, minus food at 4.9%, citing rising rents! Food, according to them, “climbed 10.3 percent last month from a year earlier. Vegetable prices rose 2 percent, fruit prices surged 35 percent and grain rose 15 percent,” according to the statement.

The rising price of food is going parabolic, with the bulk of those increases occurring recently.

The Chinese report that their broadest measurement of money supply has risen 48% in the past two years! Is there any wonder food prices are zooming?

While the Chinese pump massive amounts of money, the Japanese pump trillions upon trillions of Yen. The “Fed” pumps trillions of dollars, and the ECB pumps hundreds of billions.

It’s being reported this morning that the Euro Zone has just bailed out the PIIGS (again) by DOUBLING the size of their bail out fund, this according to Business Insider:

“The new ESM, or European Stability Mechanism, will be able to lend up to €500 billion ($674 billion). The current fund can only lend €250 billion. This new, permanent fund will come into effect in 2013, so the eurozone needs to muddle through a little under another two years of uncertainty before this takes effect.”

Everywhere one looks, it’s hundreds of billions here, trillions there. Again, people on the margins suffer the most as the greatest percentage of their income is spent on food.

And the disinformation regarding the tsunami in food prices is at a fevered pitch. It’s the weather, global warming is changing the planet! Yes, there have been areas of locally harsh conditions for crops, but that is true every year. And even if this is an abnormal year, when you look at the charts of rising commodities, they began to go parabolic nearly 5 months ago! The charts fit the math of money pumping far more than they fit the weather pattern. The tsunami is in the supply of money – and the statistics don’t reflect the true height of the oncoming wave.

But the Empire State Survey grew… this is a survey of managers who measure their activity in dollars:

Highlights
Activity remains strong in the New York manufacturing region. The Empire State index rose more than 3-1/2 points to 15.43 to indicate monthly growth in general activity at an accelerating rate. Details show less strength with new orders decelerating slightly but still showing strong growth at 11.80. Shipments slowed in half but again are strong at a reading of 11.31. One reading that isn't positive is a slowing in hiring to only 3.61.

Other details are mostly positive. The rate of inventory build doubled in the month to 9.64 while the draw in unfilled orders was half December's rate. Price data show increasing cost pressure for inputs and solid, steady pricing power for outputs. This report hints at another month of strength, though perhaps a little less strength, for the manufacturing sector at the national level.

The common thread is clear – rising input prices. And since when is rising inventories a good thing?

And while the data continues to get more distorted as the tsunami of debt backed money washes ashore, real people and governments who do not possess the power of the printing press become prisoners to their debt slave masters. Pat Quinn, the Illinois State Governor, looked like he’s on the verge of a hypertension meltdown when announcing yesterday that he was delaying the next Illinois bond issuance because he “wants time for investors to hear his budget speech.”

Evidently his game plan is to woo overseas investors for his junk debt. This is so sad! Wall Street completely milked the state and now leave them to wallow in their debt, begging for international lenders (who also print their money from nothing). The really sad part is that it doesn’t have to be like this at all! The State of Illinois should create their own state bank and lend money to themselves! Yes, they can do that and they would cut their interest expense in so doing in addition to cutting the strings to the mobsters both at home and abroad.

Meanwhile the Treasury continues to make up false reports about how much foreigners are buying our debts. I simply do not believe their data, the numbers do not add up and there is no transparency into the Treasury or into the “Fed.” Here's Econoday's report:

Highlights
The nation's enormous national debt requires continued strong foreign buying of our financial securities. And foreigners were solid buyers in December, purchasing a net $65.9 billion in long term securities which is down from November but still right in trend. Foreign purchases of $76.8 billion in the month were offset by $10.9 billion in U.S. resident purchases of foreign securities. Foreign buying was concentrated where it needs to be most, in Treasuries. Foreigners were also solid buyers of equities and also agencies. Total net inflow, which includes short-term securities, rose to $48.2 billion in December from November's $35.6 billion inflow.

Isn’t it amazing how “solid buyers” show up just where they are needed? Turns out that it's the British buying while the Chinese are selling. So, I am left to wonder how much of the money coming from London is first funneled there by our own "Fed?"

Note in the report below that net "official" flows were negative $45.1 billion and that is up from November, while total flows were net positive by $48.2 billion:

TIC december

We need positive $40 billion plus each month just to finance our nation’s trade deficit. But none of that matters when you can just print a hundred billion per month!

There was another small movement in the McClelland Oscillator yesterday, be prepared for a large price move today or tomorrow.

There is a tsunami of inflation rolling ashore. It’s unconscionable that the world’s largest countries continue to pump money into such dramatically rising food and energy prices. It’s a desperate act, and now that the spiral is set into motion, it becomes very difficult, if not impossible, for a single country to stop. They are now completely dependent on the growth in numbers. Should they stop, the numbers will fall. This is life when lived inside of the central banker debt money box. It doesn’t have to be like this.