Selasa, 31 Mei 2011

Morning Update/ Market Thread 5/31 - Just Another Scheme Edition…

Good Morning,

Equity futures are up substantially this morning, clearly breaking up and out of the May downtrend. The dollar is lower, the Euro higher, bonds are lower, oil is breaking out higher (>$103), gold is flat, silver is higher, and food commodities are mixed with wheat lower and corn higher.

Stocks are breaking out higher on what (as if we didn’t know)? Downgrades in Europe? Goldman lowering forecasted U.S. growth? No, no, yet another supposed “bailout” of Greece part XVII… just another sad Greek Tragedy. This tragedy is a total repeat of history, the people failing to remove the shyster money changers.

But for U.S. futures to zoom wildly can only happen because there is an excess of hot money. The total supply of the three money forms is simply too much and it has allowed the money changers to capture politics, the markets, and the productive efforts of the world.

While their assets are soaring in manipulated value, your “assets” are falling in value. The Case-Shiller Home Price Data just came in for the end of Q1 (March) and home prices not only sank during March, and year over year, but they hit the lowest point of the crisis so far. Here’s Econspin:
Highlights
No relief in sight for falling home prices is the unfortunate conclusion drawn by the S&P Case-Shiller report which says its latest data confirm a double dip for the housing sector. The Case-Shiller adjusted composite 10 index is down 0.1 percent for March and down 0.2 percent for the composite 20. Despite the report's commentary, these readings aren't that bad as the rates of decline are less than prior months and given that the readings are three-month averages suggesting that the March data may actually show a small gain. But the year-on-year rates are showing deterioration, at minus 2.8 percent for the 10 index and minus 3.5 percent for the 20.

The unadjusted readings, which are given preferred attention by the report, also show easing rates of decline, at minus 0.6 percent for the 10 index and minus 0.8 percent for the 20. These readings were minus one percent and worse in prior months. The unadjusted year-on-year rates are very close to the adjusted data.

The breadth of decline is a big negative in the report with 18 of 20 cities showing unadjusted month-to-month declines, which however again are three-month averages. The report's national quarterly reading is at minus 4.2 percent in the first quarter vs minus 3.6 percent in the fourth quarter. This reading is at a new low for the cycle and is back to the mid-2002 level.

Here is the entire report:

Case Shiller MARCH

Remember all the people who said that housing had bottomed some time ago? Well, they were wrong again, all the while I’ve been pointing to the impossible math and the number of Option-Arm resets that peak later this year. Data since March also shows that prices are continuing to fall.

The Chicago PMI and “Consumer” Confidence come out later this morning and will be reported inside of today’s Daily Thread.

Following the waves, this breakout higher in the markets probably signifies the start of the 5th wave up (e). It may go on to produce new highs, but fifth waves can truncate or extend. From my perspective its simply the devaluing of our money and manipulation, actions that lead to nowhere good for those who are caught in the squeeze.



Jumat, 27 Mei 2011

Morning Update/ Market Thread 5/27 - Money for Nothing Edition…

Good Morning,

Equity futures are higher once again in the face of obviously weakening data. The dollar is lower of course, bonds are a little lower, oil is higher, gold & silver are higher, and food commodities are mixed.

Stocks have been in a downtrend for most of May, but it has been a mild decline, one that looks like a wave 4. That means we will likely see a fifth wave higher, and that could start at any time. There is a clear down channel, or descending wedge, and breaking the upper boundary will likely signal that fifth wave higher has begun. Below is a 30 minute chart of the SPX:



According to McHugh, this fifth wave may take us to new highs and it could put in a very long decades long top as can be seen in this decade long expanding megaphone top of the DOW:



Personal Income and Outlays were reported for April, matching expectations with consumer spending basically matching small increases in income, but neither keeping up with actual inflation as the squeeze continues due to the money for nothing policies of the magical and mystical all-knowing “Fed.” Here’s Econohope acting as if these numbers have any basis in reality – they don’t as any number made “real” by the “Fed” is vastly distorted to cover up their money debauching ways:
Highlights
Income growth continued to support the consumer sector in April. Spending was moderately strong but largely due to higher prices. Notably, inflation is still on the warm side. As the report's biggest positive, personal income in April posted a 0.4 percent gain equaling the pace in March and matching analysts' forecast. Importantly, the key wages & salaries component increased 0.4 percent, following a boost of 0.3 percent in March.

Spending looks healthy at face value but inflation was the underlying factor for the most part. Personal consumption expenditures expanded at a 0.4 percent rise in April after increasing 0.5 percent the month before. The consensus expected a 0.4 percent gain. Providing upward lift was another sizeable increase in gasoline sales. But real spending has been soft recently, rising 0.1 percent in April and in March after a 0.4 percent jump in February.

Strength in nominal PCEs was largely in nondurables, up 0.8 percent after a 0.9 percent jump in March. Durables rebounded 0.3 percent, following a 0.7 percent drop the month before. Services spending slowed to a 0.2 percent increase after a 0.6 percent jump in March.

Energy is keeping overall inflation on the high side. The headline PCE price index posted a 0.3 percent gain, down marginally from 0.4 percent in March but still strong. However, the core rate firmed to 0.2 percent from 0.1 percent in March.

On a year-ago basis, headline PCE inflation worsened to 2.2 percent from 1.8 percent in March. Core PCE price inflation edged up to 1.0 percent on a year-ago basis from 0.9 percent in March. Core inflation has been on an uptrend since the recent year-ago low of 0.7 percent in December 2010.

Year on year, personal income growth for April posted at 4.4 percent, compared to 4.8 percent the prior month. PCEs growth rose a year-ago 4.8 percent, up from 4.4 percent the prior month.

The good news is that income growth remains moderately strong. The bad news is that inflation has eaten into those earnings and has restrained real spending. The slowing in real spending may be transitory (a recently favorite word among Fed officials) but softer inflation and healthier income growth are needed.

No, what’s needed is level prices to go along with level incomes that can support sustainable levels of debt. The only way to do that is to get rid of the private central banker's rob-your-productive-efforts, fraud based paradigm.

At least this piece from Bloomberg on the issue is a little bit closer to reality on the health of the “consumer:”
U.S. Consumer Spending Climbed Less Than Forecast in April

May 27 (Bloomberg) -- Consumer spending in the U.S. climbed less than forecast in April as food and fuel prices rose, a sign that faster income gains are necessary to boost the biggest part of the economy.

Purchases rose 0.4 percent after a revised 0.5 percent gain the prior month that was smaller than previously estimated, Commerce Department figures showed today in Washington. The increase compared with the 0.5 percent median estimate of economists surveyed by Bloomberg News. Incomes climbed 0.4 percent, matching the median forecast.

Retailers like Wal-Mart Stores Inc. are feeling the pinch as higher grocery and energy bills force households to cut back on less essential items. Federal Reserve Chairman Ben S. Bernanke is among central bankers who predict the acceleration in commodity prices will be temporary, providing some relief for Americans whose spending accounts for 70 percent of the economy.

“When you account for higher food and energy prices there’s barely anything left for consumers” to buy, said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who accurately forecast the April gain in spending. “We need to see job growth pick up and we need to see commodity prices continue to cool.”

“Consumer” Sentiment and Pending Home Sales will be released at 10 Eastern. We'll cover those inside today's Daily Thread, so please check back later for those.

I could yammer endlessly about the impossible math of Europe, but impossible is impossible and the people of Europe will continue to be led down the primrose path until they tell the central bankers to pound sand.

The suffering in Japan continues, three nuclear meltdowns, massive contamination and still Nero fiddles.

As long as the bankers are allowed to print, they will continue to spin reality into their own warped, marketing all the time, Prozac, Viagra, never ending debt, world of lost economic prosperity and environmental disasters. Just look at them yo-yo's...

Kamis, 26 Mei 2011

Morning Update/ Market Thread 5/26 - Ground Control to Major Tom Edition…

Good Morning,

Equity futures were higher overnight but have fallen back on more negative economic data (remember, bad is good as long as we can print still more fluff… until it isn’t). The dollar is significantly lower, bonds are shooting higher, oil is down slightly as are gold & silver, while food commodities are mostly higher still.

Here’s the deal, Major Tom… Once macroeconomic debt saturation is reached, the more debt you pump into a system, the higher unemployment will go. All the money printing fluff in the world won’t create real jobs, in fact that will also destroy jobs in the long run as well if the total quantity of all money types are not kept under control.

And once again the Weekly Jobless Claims shoots higher, this time jumping back up to 424,000 with yet another revision higher to the previous week. This economy has not stopped shedding jobs, the nascent “recovery” was really no recovery, it was simply a money fluff façade. Here’s Econoday having a hard time making excuses – it’s obvious that that they, along with all the shills who surround this industry, don’t understand the underlying dynamics:
Highlights
With no special factors to blame, initial jobless claims rose 10,000 in the May 21 week to a 424,000 level that's 20,000 higher than expected. Revision to the May 14 week is also a negative, up 5,000 to 414,000. The Labor Department isn't citing any weather or auto-related factors for the results. The four-week average of 438,500 is nearly 30,000 higher than a month ago in a comparison that points to trouble for the May employment report. Even the four-week average for continuing claims is higher, at 3.742 million in data for the May 14 week vs 3.702 million in mid April. Stock futures are moving off early gains following this report and following a softer-than-expected revision to first-quarter GDP.



The first revision of Q1 GDP also failed to live up to the fluff hype. The consensus was looking for a revision higher to 2.1% annualized growth rate, but it came in at a disappointing 1.8%. Again, this figure is completely distorted with debt, false deflator values, and other manipulations. Even taken at face value, “growth” here is far less than real inflation (again due to false deflator use) and thus it is my claim that real economic product is negative and still shrinking. Here’s Econoshill doing their best to pump you up:
Highlights
The economy did not get the hoped for upgrade for the start of the year. The Commerce Department's second estimate for quarter GDP growth was unrevised at up 1.8 percent annualized and came in lower than the consensus forecast for 2.1 percent. The first quarter remains notably softer than the 3.1 percent pace in the fourth quarter.

Unfortunately, demand numbers were nudged down and inventory investment bumped up. Final sales of domestic product were revised to an annualized 0.6 percent from the initial estimate of 0.8 percent. Final sales to domestic purchasers were revised to 0.7 percent from the original estimate of 0.9 percent annualized. The downward revision to final sales was mainly in personal spending, now at up 2.2 percent instead of the initial 2.7 percent for the first quarter.

For overall relative strength (not merely the direction of revisions), PCEs growth remained moderately healthy. Also, business investment in equipment & software is strong. Inventory investment is positive but levels are still low. Weakness remained in government purchases, nonresidential structures, and net exports.

Economy-wide inflation was unrevised, with the GDP price index posting at 1.9 percent. The median forecast was for 1.9 percent.

Even though the headline number was disappointing, odds are that growth will not slow further in coming quarters. Momentum is still favorable for consumer spending, equipment investment, exports, and inventories.

Gee, I think I have to pull out my favorite word for all that gobbly-gook, OBFUSCATION. If you read something about the economy and it sounds like they are making up fancy words to try to make it sound good, then you are witnessing someone who either doesn’t actually understand real economic dynamics or it is an intentional effort to dazzle you with their bullshit. That is an example of both.

In the real economy, yesterday we found out that oil inventories built to a new record high while demand for gasoline is still falling.

Oil Inventories:


Also yesterday, the FHFA Home Price Index showed that home prices are still cratering, the year over year rate of crater is increasing, coming in at -5.8%. Various things are being blamed for the falling prices in the media, the latest being foreclosures. No, foreclosures are a sick and twisted symptom of banker asset stripping. The root of the problem is the fraudulent and still out of control bankers who created a huge fraud bubble in housing.

Take a look at the FHFA Home Price Index chart (the red line) and it is obvious that a new downtrend is in progress – call it a “double-dip” if that makes you happy, the truth is that it’s all part of the same fraud, the first dip is from the subprime fraud, and the second dip that’s occurring now is being driven by the Option-ARM scam. Compare the shape of the two charts below and I think the correlation is obvious – wave of subprime, wave of Option-Arm…





Note that there is about a four to nine month lag between the resetting maximum and the home price minimum. Taking that into the future, then, home prices MAY reach a low point sometime in the first half of 2012. Take that with a grain of salt, of course, as there are other threats to the economy, especially since it’s obvious that we’re nowhere near changing out WHO it is that controls the production of money.

Major Tom, are you there?

Rabu, 25 Mei 2011

Morning Update/ Market Thread 5/25 - It's All Mixed Up Edition...

Good Morning,

Equity futures are a little lower prior to the open after being down considerably overnight – another “gift” from our “Fed” no doubt (eye roll). The dollar is slightly higher, bonds are close to even, oil is off slightly, silver & gold are close to even, and most food commodities are slightly higher.

The morally challenged Mortgage Banker’s Association reported that Purchase Applications rose by 1.5% in the past week, and that their Refinancing Index grew by .9%. What, no double digit swings? How reasonable of them. No, I don’t believe anything that comes from them, but know that purchase applications are still hovering near all-time modern lows that are less than half of what they were. Here’s Econoneverabadday:
Highlights
The volume of mortgage applications for home purchases rose 1.5 percent in the May 20 week, partially reversing the prior week's 3.2 percent decline. Purchase applications jumped 6.7 percent in the first week of May, a month that so far looks to show a gain compared with April in what would be good news for the housing sector. Applications for refinancing rose 1.5 percent reflecting favorable mortgage rates which however rose in the week, up nine basis points for 30-year loans to 4.69 percent.

If May isn’t better than April, then you know how messed up it is. Most of the housing data has been weak, New Home Sales was the exception. Remember, massive Option-ARM loans are resetting and that will pressure upper end homes.

Yesterday the Richmond “Fed” Manufacturing Index took a header in May, falling from a positive reading of 10 all the way to negative 6. That shows outright contraction according to them, not just a slowing of growth.

This morning Durable Goods Orders also took a header, falling from the prior 2.5% gain to a 3.6% loss month over month. This is the largest drop in the past six months, and the declines were widespread. Remember, orders are measured in dollars, not units, so to have a contraction of that magnitude at the same time that we’re still throwing out billions in QE every day says a ton about how powerful the underlying forces of deflation are.

More and more data points are showing contraction. Any slowing in the devaluing of our money will allow the deflationary forces to show. Those forces are always present since our economy is debt saturated, printing money simply masks them. Slow the printing, or even indicate that it may slow in the future and those deflationary forces will express themselves.

Of course it is the reaction to the debt saturation that causes greater inflation. And with daily doses of freshly printed debauched dollars, the stock market is artificially kept from seeking a realistic level. This creates bizarre phenomena like an IPO valuation of 1,000+… there is simply too much “liquidity” sloshing around in the criminal central banker hands. Of course they tell you that the problems here and in Europe are one of “liquidity,” but that is complete nonsense, the real problem is insolvency because macro incomes cannot possibly handle more debt. Income to debt is what matters, debt to GDP is a Red Herring argument designed to distract, confuse, and confound. It’s all mixed up…

Selasa, 24 Mei 2011

Morning Update/ Market Thread 5/24 - Manipulate Your Wealth Away (same old) Edition...

Good Morning,

Equity futures are higher overnight, with bonds gapping significantly lower (higher interest), oil is regaining yesterday’s loss and testing $100 again, gold & silver have broken out higher from their recent consolidation, and most food commodities are slightly lower.

New Home Sales and the Richmond “Fed” data will be released at 10 Eastern and we’ll cover those inside our daily thread, please check back.

Gee, I guess all those Eurozone debt concerns magically were cured overnight… Barely making the headlines, the bombing of Tripoli continues. We’re still neck deep in Afghanistan. Rumor mongering about Pakistan and their nuclear weapons continues, and bombs galore continue to kill in Iraq. Severe weather in the U.S. continues, and another Iceland volcano blows its top spewing ash towards the debt saturated Europe. More and more people are finally acknowledging complete meltdown in all three Fukushima reactors, duh. And the radiation levels in Tokyo are severe in spots as the contamination continues to migrate – still no acknowledgement of what must really be done in order to contain it.

In other words, nothing new in the big picture, just another complete capture/ manipulate your wealth away day…

Yesterday's action threw the major indices below the bottom Bollingers and some below their 50dma's. The XLF closed a perfect outside inverted hammer below the bottom Bollinger band and right on top of the 200dma. This is a classic reversal set up I showed yesterday, and sure enough it appears it will open higher today:



Note that the XLF and RUT both produced new closing lows below the April lows, but as of yet the other fluff indices have not.

Hey - you can't go on
thinking nothing's wrong...

Senin, 23 Mei 2011

Morning Update/ Market Thread 5/23

Good Morning,

Equity futures are tumbling again this morning, with the dollar higher, euro lower, bonds higher, oil down sharply, gold & silver down only slightly, and most food commodities slightly lower as well.

The ongoing (never ending) debt crisis in Europe is garnering attention over the weekend. The debate about who’s worse off in the world still mindlessly rages while the vast majority fail to understand the root problems of debt saturation, how we got that way, and WHO is behind the monetary madness. No real progress can or will be made until we exit the central banker paradigm, stop arguing about “stimulus” versus austerity (false left vs. right argument), and get on with the job of creating a money system that works at the benefit of the entire population, not just a few self-anointed narcissists.

The stimulus/ austerity waves go back and forth and right now the market appears to be pricing in the possibility that austerity is next… again. At least that’s a mainstream take on things. My take is that the markets are 100% captured and none of it has meaning except in how we’re being manipulated context. Keep that in mind especially when you see a chart of the dollar – talk about squishy, there are more manipulations there than in Obama’s long form birth certificate! Still, the dollar is getting close to a down slopping area of overhead resistance just as the major indices are nearing the bottom of a downtrend line of the recent decline.

Below is a daily dollar chart showing this overhead. A break above that trendline may mean that equities and commodities are about to have a harder time, but a turn back down in the dollar may mean another rally leg higher:



Below you can see that this morning the DOW has slid to recent down slopping support on the 30 minute chart of the DOW futures:



Meanwhile the manipulated economic data can’t even be manipulated into positive territory anymore. The Chicago “Fed” National Activity Index fell from +.26 to -.45 in April with the three month moving average also falling negative. Here’s Econonotaclue:
Highlights
The Chicago Fed national activity index fell to minus 0.45 in April for the lowest reading since August and down from March's revised plus 0.32. April shows a month-to-month decline in manufacturing-related indicators which the report attributes in part to Japanese-related shortages in the auto sector. The three-month moving average is minus 0.12 for the first negative reading since December. The average indicates that economic activity was below trend in the month though it also indicates that inflationary pressures were subdued.

Oh yeah, another wave of austerity and the pulling of liquidity will subdue inflationary pressures all right… oh, for about a month maybe until the “Fed” can’t stand the heat and then the justification for QEinfinity rolls out. Waves of deflation and inflation, but the overall trend will be inflation until we create a system that is not built around the need for inflation. The only way to do that is to end the process of financing national debts with the private banks via the bond and treasury market and to create a system like Freedom’s Vision that ensures that overall price inflation targets ZERO (the ONLY inflation target that makes any sense).

This week we’ll get several housing market data points, and we’ll get version 2 of Q1 GDP. The consensus is that it will be revised higher to 2.1% - I say only in the “Fed’s” money printing dollar debauched fantasy world is that true.

In the real world, attempts at never-ending growth always hit limits. Drill and spill in the Gulf, build nuclear reactors right on the shoreline in an earthquake/ tsunami zone. Those are the types of things done when we are pushing the boundaries of our knowledge – I happen to think boundaries need to be pushed, but when we’re talking about such important things we need to push with care and oversight. When special interests rule politics, oversight is out the window.

In Arnie Gunderson’s latest update he discusses the implications of the Fukushima disaster on our existing reactors and has clear thoughts on weak areas that need to be addressed. My take is that they won’t truly be addressed and new disasters will continue to happen until we get our money system and our politics back into the hands of the people. Here’s Arnie:

The Implications of the Fukushima Accident on the World's Operating Reactors

Jumat, 20 Mei 2011

Morning Update/ Market Thread 5/20 - Bubbles for Sure Edition…

Good Morning,

Equity futures are down slightly this morning with the dollar higher, bonds lower, oil up slightly, gold higher, silver flat, and food commodities falling.

There is no significant economic data today, next week will bring Durable Goods, and a several pieces of information on housing.

How do you know for sure that you’re in a bubble? Launch ridiculous multi-billion dollar IPOs on companies with little earnings. LinkedIn’s share price doubled before launch, then doubled in the first couple of minutes after launch, reaching as high as $120 a share before pulling back into the mid $90 range.

This is a company that social networks for businesses – yes, a useful tool and a good concept, but based on current earnings that share price puts the price to earnings ratio into the 1,000+ stratosphere. That means that it would take more than a thousand years at current earnings to make the stock price whole. It’s definitely nuts to even discuss valuations like that as if they’re real - they’re not.



Again, what this type of thing really shows is that there is simply too much hot money sloshing around. Anyone considering “investing” in a market that is doing things like that is very likely to be disappointed with long term performance – to put it mildly.

The economic risk from Japan is still quite large. An independent group has taken measurements around Tokyo and has found radiation levels there are 5 times higher than what the government has admitted to. Imagine if they are forced to evacuate a 200 mile area or larger. What would that do to their economy? To their ability to service their tremendous debts? Japan is the world’s second largest economy (sorry China, but money printing and false data doesn’t make you second), there is great risk there for the economy.

But I’m sure that’s nothing they couldn’t just paper over with more dollars to create apparent growth, right? Wrong. That kind of hot money causes commodity inflation and rampant speculation bubbles that eventually burst. So, it’s time to republish the Hyman Minsky section from my book regarding bubbles to remind us how this ends:
HYMAN MINSKY’S SEVEN BUBBLE STAGES
The late Hyman Minsky, Ph.D., was a famous economist who taught for Washington University’s Economics department for more than 25 years prior to his death in 1996. He studied recurring instability of markets and developed the idea that there are seven stages in any economic bubble:

Stage One – Disturbance:
Every financial bubble begins with a disturbance. It could be the invention of a new technology, such as the Internet. It may be a shift in laws or economic policy. The creation of ERISA or unexpected reductions of interest rates are examples. No matter what the cause, the outlook changes for one sector of the economy.

Stage Two – Expansion/Prices Start to Increase:
Following the disturbance, prices in that sector start to rise. Initially, the increase is barely noticed. Usually, these higher prices reflect some underlying improvement in fundamentals. As the price increases gain momentum, more people start to notice.

Stage Three – Euphoria/Easy Credit:
Increasing prices do not, by themselves, create a bubble. Every financial bubble needs fuel; cheap and easy credit is, in most cases, that fuel. Without it, there can’t be speculation. Without it, the consequences of the disturbance die down and the sector returns to a normal state within the bounds of “historical” ratios or measurements. When a bubble starts, that sector is inundated by outsiders; people who normally would not be there. Without cheap and easy credit, the outsiders can’t participate.

The rise in cheap and easy credit is often associated with financial innovation. Many times, a new way of financing is developed that does not reflect the risk involved. In 1929, stock prices were propelled into the stratosphere with the ability to trade via a margin account. Housing prices today skyrocketed as interest-only, variable rate, and reverse amortization mortgages emerged as a viable means for financing overpriced real estate purchases. The latest financing strategy is 40, or even 50 year mortgages.

Stage Four – Over-trading/Prices Reach a Peak:
As the effects of cheap and easy credit digs deeper, the market begins to accelerate. Overtrading lifts up volumes and spot shortages emerge. Prices start to zoom, and easy profits are made. This brings in more outsiders, and prices run out of control. This is the point that amateurs, the foolish, the greedy, and the desperate enter the market. Just as a fire is fed by more fuel, a financial bubble needs cheap and easy credit and more outsiders.

Stage Five – Market Reversal/Insider Profit Taking:
Some wise voices will stand up and say that the bubble can no longer continue. They argue that long run fundamentals, the ratios and measurements, defy sound economic practices. In the bubble, these arguments disappear within one over-riding fact – the price is still rising. The voices of the wise are ignored by the greedy who justify the now insane prices with the euphoric claim that the world has fundamentally changed and this new world means higher prices. Then along comes the cruelest lie of them all, “There will most likely be a ‘soft’ landing!”

Stage Five is where the real estate industry is today [written in 2005/2006]. This stage can be cruel, as the very people who shouldn’t be buying are. They are the ones who will be hurt the most. The true professionals have found their ‘greater fool’ and are well on their way to the next ‘hot’ sector, like the transition from real estate to commodities now.Those who did not enter the market are caught in a dilemma. They know that they have missed the beginning of the bubble (gold, silver, and oil today [2005/2006]). They are bombarded daily with stories of easy riches and friends who are amassing great wealth. The strong will not enter at stage five and reconcile themselves to the missed opportunity. The ‘fool’ may even realize that prices can’t keep rising forever… however, they just can’t act on their knowledge. Everything appears safe as long as they quit at least one day before the bubble bursts. The weak provide the final fuel for the fire and eventually get burned late in stage six or seven.

Stage Six – Financial Crisis/Panic:
A bubble requires many people who believe in a bright future, and so long as the euphoria continues, the bubble is sustained. Just as the euphoria takes hold of the outsiders, the insiders remember what’s real. They lose their faith and begin to sneak out the exit. They understand their segment, and they recognize that it has all gone too far. The savvy are long gone, while those who understand the possible outcome begin to slowly cash out. Typically, the insiders try to sneak away unnoticed, and sometimes they get away without notice. Whether the outsiders see the insiders leave or not, insider profit taking signals the beginning of the end (remember who has sold their rental properties?).

Stage seven – Revulsion/Lender of Last Resort:
Sometimes, panic of the insiders infects the outsiders. Other times, it is the end of cheap and easy credit or some unanticipated piece of news. But whatever it is, euphoria is replaced with revulsion. The building is on fire and everyone starts to run for the door. Outsiders start to sell, but there are no buyers. Panic sets in, prices start to tumble downwards, credit dries up, and losses start to accumulate.

This is where you may see the “lender of last resort” who is usually the government. The government, although they were talking up a soft landing, are now forced to step in to prevent the crises from spreading to other sectors. Ironically, this is where the savvy investor who profited before, really profits now. With government backing, they are asked to step in and return “normalcy” to a now damaged sector.

The government’s attempt to “put out the fire” usually works. However, the conditions beyond the year 2010 will require oceans of water that the government does not posses. You must be ready!

Kamis, 19 Mei 2011

Morning Update/ Market Thread 5/19 - Good News = Good News, and Bad News = Good News, Doh(!) Edition…

Good Morning,

Equity futures are higher this morning prior to the open, but so is the dollar, and bonds are just a little lower. Oil is slightly higher, gold is lower, silver is flat, and most food commodities are surging again, some are back near recent ridiculous highs (still waiting for the margin increases here).

Let’s face it, with multi-Billion dollar daily POMOs behind them, good news in the market is read as good news, and bad news is still read as good news. This is exactly the type of logic that was occurring late in 2006, only then the markets didn’t have the risk of liquidity being pulled as the market does now. Fluff is the result of that mentality, and the fluff in the market right now is extreme. Valuations? Ridiculous that people can even make the arguments they do! Today’s “valuations” are based upon accounting fraud, plain and simple. Remove Mark-to-Model and other accounting nonsense and the true valuations would be readily apparent.

YEAY! What good news! There was only 409,000 people filing initial Jobless Claims in the past week! LOL, that figure is astronomical, it shows yet again that our economy is still shedding jobs, much less keeping up with the growth in our population. Still, it is “better than expected,” as if the “experts” have some magical power to price the market. Look, it’s been YEARS with extremely elevated jobless claims, and you need to see this figure less than 350k just to show break even. It’s testimony to the failed policies of the “Fed,” that despite wasting Trillions, job growth has NOT returned. Here’s Econospin for the Alice in Wonderland read:
Highlights
Weekly initial jobless claims are still over 400,000 but they came down very substantially in the May 14 week to 409,000, for a 29,000 fall following the prior week's 40,000 decline (prior week revised 4,000 higher to 438,000). Stock futures are rising in reaction to this report.

Auto and weather effects were no more than isolated in the week's data which sees the four-week average only very slightly higher at 439,000. A decline in next week's data would push the four-week average down for the first time since early April.

Other readings show an 81,000 decline in continuing claims in data for the May 7 week to 3.711 million. The unemployment rate for insured workers is unchanged at 3.0 percent.



Existing Home Sales, the Philly Fed, and “Leading Indicators” will be released at 10 Eastern this morning and will be presented in the market thread below this post. More importantly, things are deteriorating rapidly at Fukishima, we will also be discussing events there.

Until further notice, good news is good, and bad news is good too because it means our money will be debauched further!

Rabu, 18 Mei 2011

Morning Update/ Market Thread 5/18 - Paying Attention Edition…

Good Morning,

Equity futures are slightly higher this morning after beginning their bounce yesterday afternoon. The Dollar, however, is also higher, bonds are flat, oil is higher and looking to retest $100 from below, gold & silver are both higher, and most food commodities are adding to yesterday’s gains.

The very broken MBA Purchase Application Index supposedly fell by 3.2% last week - remember, this is spring and it's odd that the housing indicators are turning negative this time of year. Still a very large move for one week, but it seems quite tame compared to the wildly and completely unbelievable swings we’ve seen over the past two years or so. But then we look at the Refinance Index and see the claim that it jumped 13.2% last week! Is there anyone who believes that? Sorry, but I don’t – data from the MBA is nothing but FRAUD, I’m not sure that even the direction of movement is right, but I’m definitely sure that weekly swings of that magnitude are not real.

Yet gullible people who should have alarms ringing in their heads pretend and pretend because their own livelihoods depend upon it. Here’s Econopretend:
Highlights
Falling interest rates gave a big 13.2 percent boost to MBA's refinance index which has now risen 33 percent over the last five weeks, a span that has seen 30-year mortgage rates drop more than 50 basis points. The average 30-year rate fell seven basis points in the May 13 week to 4.60 percent for the lowest level in six months. But low rates are not boosting buyers, not at least in the latest week as the purchase index fell 3.2 percent to upend four weeks of gains.

Pleeeeaaaassse… Anyone believing that has rocks in their head. The fact that the morally challenged MBA has anyone believing their fantasy only means that they should be nominated at the creative writing awards.

The petroleum status will come at 10:30 eastern, it will be interesting to see if the Mississippi flooding has any effect. Already record levels of oil in storage and falling demand for gasoline are clear – the price of oil being elevated is nothing but another fraud, the distortion created by creating vast sums of money.

And the debate about the end of QE2 continues – some “Fed” members arguing that conditions allow them to stop. I can guarantee you that if they do stop, the next wave of deflation will almost immediately arrive. Unless they are prepared to profit from the fall, and to asset strip Americans – and they may very well be – then I think the printing will absolutely have to continue at some point. Regardless of how the waves unfold, there will be waves, and they will grow larger in scope, not smaller. “Other Events” will also need to be larger in scope as the exponential growth of the impossible math continues to express itself in ways that completely confounds those who are not paying attention.

FRAUD is pervasive at all levels in our economy. FRAUD starts at the top. Allow it at the top, and it will be allowed in the middle. Even the bottom feeders will revert to fraud to survive, they have to because they are being defrauded by everyone above them. Lie upon lie, fraud upon fraud. And it is coming from the top, we are paying attention - Whistling... (Birth Certificate Is A Forgery).

As the true nature of events at Fukushima are slowly coming to light, the awful truth that I have been reporting here from the beginning is just now being acknowledged by the Japanese. But on the very same day they admit to complete core meltdown(s) that have breached containment, our own government via the Nuclear Regulatory Commission proclaims that the Japanese have it all under control, that the situation is improving, and therefore they are not even going to monitor the situation over there anymore! Of course this comes after the FDA FALSELY proclaims readings in food over here have been improving (and also stops monitoring) – a direct contradiction of evidence from Berkeley.

Up is down, black is white. And FRAUD is prevalent everywhere you dare to look. So is government capture by special interest money – as in complete and total capture.

Of course the large banks are INSOLVENT, and the FRAUD continues in that space. Mortgage FRAUD is so out-of-control that no one can admit how ridiculous it got, much less do anything to actually fix it. Now the New York Attorney General finally says they are going to investigate 8 banks who “misled rating agencies.” Pleeeaaase. The FRAUD is so in your face, and the regulators so captured that we all know exactly where this is headed – nowheresville, or at worst finesville. And of all the banks named, funny how the largest New York Bank, the one whose CEO sits on the New York “Fed” and has the world’s largest (by far) portfolio of financially engineered and marked-to-complete-fantasy derivatives is the only large bank NOT named (JPM). Pathetic.

Yet again your attention is being directed away from the fraud and onto men who can’t keep their tools in their pants. Yes, these men are all about FRAUD, the sick and perverted personality traits of the fraudsters is clear. The wrong men are running the government and their lack of morality is HUGE in letting the special interest capture of government continue unabated.

Well, that’s all the fraud that even I can stomach for today. Yes, I’m paying attention and the day of accountability is getting closer.

Markets? Give me a break, there are no real markets until we find men who are willing to remove the fraud.



Selasa, 17 Mei 2011

Morning Update/ Market Thread 5/17

Good Morning,

Equity futures are down a little this morning after rising about 80 DOW points overnight as part of the typical overnight futures ramp job. These no volume overnight ramps are just one of the not so subtle ways that the market is manipulated higher. And thus no matter what occurs in the world, as long as the printing press is allowed to continue, the stock market is captive to our narcissistic masters (all “markets”). The dollar is higher, bonds are higher, oil is down, gold & silver are down, and most food commodities are higher.

Housing Starts came in substantially worse than expected, falling from March’s 549,000 units to only 523,000 units in April. This is way off the consensus guess of 570k, and not a good thing especially when put into the spring context which is when we expect gains. Unbelievably, Econopray doesn’t mention the southern storms as being a factor, and this is probably the one time that they actually were as you can see that the southern market was hit the hardest. Also, this number has become extremely volatile with large monthly shifts that are greater than 10% moves, and also very large revisions. This is a red flag for me… it tells me that there is likely manipulation occurring and probably outright fraud. We know that NAR has been caught red handed in this regard and so I wouldn’t be surprised to learn that this report is being massaged as well:

Highlights
Housing activity is continuing to confound and is refusing to establish any kind of uptrend. Housing starts in April fell back 10.6 percent, following a revised rebound of 12.9 percent in March. The April annualized pace of 0.523 million units posted below the median market forecast for 0.570 million units and is down 23.9 percent on a year-ago basis. The drop in April was led by a 24.1 percent fall in the volatile multifamily starts component, following a 30.8 percent jump in March. The single-family component dipped 5.1 percent after rebounding 7.0 percent in March.

The good news within the report was an upward revision to starts in March which were revised up to 0.585 million from the original estimate of 0.549 million.

By region, the drop in starts in was led by a monthly 23.0 percent plunge in the South with the Northeast declining 4.8 percent. However, gains were seen in the Midwest and West, up 15.7 percent and 3.7 percent, respectively.

Housing permits have been volatile in recent months but trending flat. Housing permits declined 4.0 percent in April, following a 7.5 percent surge the month before. Overall permits came in at an annualized rate of 0.551 million units and are down 12.8 percent on a year-ago basis.

The bottom line is that housing is flat and at anemic levels. Likely, we need to look to other sectors in the economy to keep the recovery moving forward. Recovery in housing appears to be some time off but that is not a surprise to many.



Note that starts at this level are less than half what they were – a true depression.

Industrial Production was just released and also came in worse than expected for April. In March it supposedly “grew” (apparent growth) by .8%, but was flat month to month versus a consensus of +.4%. The Capacity Utilization Rate fell from an already woeful 77.4% to 76.9% when higher was expected. Utilization rates this low are sick, especially when it’s been years now since the financial crisis began and thus companies have had plenty of time to shed excess capacity. This tells me that the shedding is not over, and in the big picture is just another confirmatory piece to my debt saturation thesis:
Highlights
Industrial production surprised on the downside for April with weakness led by a drop in auto assemblies. Overall industrial production in April was unchanged, following a revised 0.7 percent gain the prior month (originally up 0.8 percent). Analysts had called for a 0.4 percent advance for the latest month. Notably, manufacturing posted a 0.4 percent decline in April, following a 0.6 percent gain in March. Auto assemblies likely were weighed down by supply disruptions for parts from Japan. Excluding motor vehicles, manufacturing rose 0.2 percent after a 0.4 percent advance in March. Moving to other sectors, utilities increased 1.7 percent after gaining 0.7 percent in March. Mining rose 0.8 percent after a 1.4 percent jump the month before.

Within manufacturing, durable goods dropped 1.0 percent in April. The output of motor vehicles and parts fell 8.9 percent after increasing 3.6 percent in March. Nondurables edged up 0.1 percent in April after advancing 0.5 percent in March.

Overall capacity utilization in April slipped to 76.9 percent from 77.0 percent the prior month. The April rate fell short of analysts' estimate for 77.6 percent.

Today's report is disappointing at the headline level and for total manufacturing. But the auto industry is relatively healthy based on demand and recovery should be expected soon for assemblies. Non-auto manufacturing is mixed but still net positive.

Yesterday Little Timmy Geithner announced that he’s robbing government retires in order to keep government afloat. Great choice to make the most political impact – hold retirement pension funds hostage for maximum scare effect. The implied threat, of course, is raise the debt ceiling or the people will suffer further. Gee, WHO is it that benefits from still more debt? Uh, huh.

Don’t worry, Little Timmy promises to pay it all back.

Japan officials finally admit that unit 1 has suffered a complete and total meltdown, and that the molten corium is not only laying on the bottom of the reactor, but has exited the bottom and may very likely be in the basement of the reactor building. It is also possible that it is beyond the concrete and that it is the world’s first true “China syndrome” meltdown.

What these reactors are doing to Japan is horrific, and the radiation continues to spread around the globe. How does our President react? Yesterday he urged Japan’s government to “to take steps to prevent a further decline in Tepco stock!”

That’s right, he is concerned about phony paper and once again missed the opportunity to do something real on behalf of humanity. He sounds just like a central banker, I won’t be surprised to learn that he’s been romping with maids. Sick. Speaking of which, Arnold Schwarzenegger just admitted to romping with household staff. Politicians and bankers… so many have that sick narcissistic tendency – power trippin’.

Senin, 16 Mei 2011

Morning Update/ Market Thread 5/16

Good Morning,

Equity futures are lower this morning with the dollar flat, bonds slightly lower, oil down slightly at $98 and change, silver & gold are both off a little, and food commodities are mixed.

The Empire State Manufacturing Index plunged from 21.7 all the way to 11.88 which is way below the consensus range. Here’s Econospin:

Highlights
The first indication on this month's activity in the manufacturing sector points to a slowing in an otherwise still solid rate of growth. The Empire State index fell nearly 10 points to 11.88, a level that's well over zero to indicate month-to-month growth but below April's 21.70 level to indicate a slowing rate of growth.

The news is definitely not that bad with new orders and shipments still strong, though again showing slower rates of growth than April. Unfilled orders show an increasing rate of growth with inventories posting a sizable build. Job indications are special positives with the number of employees on the rise and the workweek on the rise. Price readings are a concern with inputs rising sharply to their highest level since 2008 and output prices, that is prices that customers pay, at a high and slightly accelerating level.

A plus in the report is data on the six-month outlook where optimism across nearly all readings is on the rise. This report is mixed but does point to healthy growth. The Philadelphia Fed will post its report on the manufacturing sector on Thursday.

We’ve had a huge shot of sugar in the form of massive money printing. That money printing has masqueraded as “growth,” but also as productivity because things that are measured in dollars will appear to grow (apparent growth) when the value of the dollar is being diluted with quantity. Thus, I expect that any attempt to wean our economy off the sugar will result in a pretty quick case of glucose crash. And thus the need to inject more figurative sugar for the addict as the economy rots from the inside out just as a drug addict’s teeth rot and fall out.



Yeah, not a pretty sight... but an accurate analogy nonetheless.

The monthly TIC flows for March continue to look very questionable to me as they don’t match what I’m seeing in the rest of the world. If you believe the Treasury’s accounting, then March saw net foreign inflows of $24 Billion. Sorry, but I don’t believe it and never will… not with central bankers skanky swapping and never ending creative self-aggrandizing financial engineering (Note the head of the IMF chasing maids naked down the hallway is just one aspect of their narcissistic personality wherein everything on the planet is here to cater to their desires).

TIC March 2011

Here’s Econohope:
Highlights
Net foreign purchases of long-term U.S. securities slowed slightly in March to a moderate $24.0 billion from $27.2 billion in February (revised from $26.9 billion). Foreign purchases totaled $54.7 billion in March offset but by $30.7 billion in purchases of foreign securities by U.S. residents.

Holding back March's inflow were purchases by official accounts which slowed. In a positive, private investors showed strong demand for U.S. securities especially equities. Private demand for Treasuries, corporate bonds and government agencies all show month-to-month gains. Total inflow, which includes short-term securities, rose nearly $10 billion in the month to $116.0 billion.

A negative in the report is Treasury disinvestment by China where holdings slipped more than $9 billion to $1.15 trillion. This dip is limited but does extend a long trend of monthly decline. Holdings by Japan, which is the second largest foreign holder of Treasuries, rose nearly $18 billion to $907.9 billion. This reading will be interesting to watch to see if Treasury selling picks up as Japan rebuilds.

The Housing Market Index is released at 10 Eastern today, and tomorrow will bring Housing Starts and Industrial Production, the rest of the week will be the usual parade of half truths and disinformation with a quiet Friday. Of course we have to be tortured with the debt ceiling limit debate – you know... threats from the Secretary Treasurer, threats from the bankers, and now threats from our President who sounds as if his mouth is remote controlled directly from Jamie Dimon’s office at JPMorgan.

The latest report from PIMCO shows that Bill Gross has loaded his “equity fund” up with gold which is now the largest holding in that fund. Hmmm… why do you suppose that is?

Now, only about a year-and-a-half behind us and those who pay attention, 60 Minutes finally aired a piece on the corrupt actions of the banks regarding loan processing. This piece falls woefully short in its discussion of outright bank fraud, the setting up and use of MERS is not even mentioned. Still, even with much of the fraud missing, it’s obvious that it’s nothing but non-stop fraud 100% of the time. The other thing is that this piece leads you to believe something’s changed, it hasn’t:



But not to worry, the “Federal Reserve Bank” (not Federal, no Reserves, not a bank) of New York vows that they are going to “fix” this securitization mess! As if they have the jurisdiction to do so! As if they can simply chase any old maid naked down the hall they wish! It’s a nice fantasy, really… no, you pervert, I’m talking about anointing yourself the power and ability to print your own money!

And what's not even being discussed is how the banker's fraud created an overpriced bubble for EVERYONE. Everyone who lives in a home, be it rent or own, pays too much to live in that home because of the fraud perpetrated by the bankers. Let that sink in... this is FAR beyond simple paperwork fraud or simple lazy paper "errors."

The mess in Europe to me is just such a sad joke. The never ending talk of bailouts, rejection of bailouts, debt limits, defaults, etc… sad. It’s sad that the people of the world have been enslaved by the debt pushers and that they are failing to break free from their trap. More disinformation and news over there than you can shake a stick at, I won’t even attempt to cover it all because the bottom line is clear to me. That being that Europe is saturated with debt, the math is impossible, and all attempts to force more debt or to “restructure” via longer loan terms is nothing but kicking the debt bubble down the road. Default is 100% going to happen, and is in fact already in progress via devaluation of everyone’s money.

The situation in Fukushima is dire. Very high amounts of radiation have been found in areas of Tokyo. The Japanese are pretending that this radiation does not exist and the government and TEPCO have been slow leaking the data – all the while school children go to schools that are massively polluted with radiation. The reactors are melted down, the cores have obviously been breached. The phony “plan” meant to placate the public just a few weeks ago has already completely fallen apart. Meanwhile those reactors continue to spew radiation, and that radiation absolutely is making its way around the planet while being ignored by all the world’s governments, and particularly our own.

…and I feel fine!

Kamis, 12 Mei 2011

Morning Update/ Market Thread 5/12 - Squeezing the Turnip Edition…

Good Morning,

Equity futures are lower again prior to the open, with the dollar continuing its bounce higher, bonds continuing higher, and oil, gold, silver, and most food commodities receiving further smack down treatment.

China announced they are tightening up bank reserve requirements again, this time by .5%, which is adding pressure to the commodity trade in addition to the usual CME and banker manipulations. The increased oil margin requirement is a good example of how political pressure begins to bear down on the market once prices begin to affect sentiment (and yesterday the CME DOUBLED the trading limits on oil and gas as a part of the slam down).

The obfuscation from the media, of course, is to pin the blame on anything and everything but the excess money policies of the fantasy “Fed.” It’s always one of the never ending profit opportunities, errr, I mean WARS that’s to blame, or it’s the fantasy “recovery” bolstering demand, but never is it the “Fed.” Well, here’s where all the lies are laid bare…

Yesterday there was yet another large build of oil inventory, taking it to the highest levels EVER, including during the last crisis when demand crashed.



Gasoline demand is DOWN, and refineries are producing gasoline at very low refinery utilization rates. So, if inventories are at record highs, and demand is falling, why is the price so high? And there’s the lie right there. There is no economic recovery, the storyline of burgeoning demand and falling supply is FALSE, at least at this juncture in time. And that is proof that it is a monetary phenomenon.

Below is an updated chart of base money versus oil price – again, note that the sudden and dramatic rise in hot money has led to the mirror image in oil price since the debt saturated crash in 2007/2008:



Now, further proof to the lie is found by comparing the Baltic Dry Shipping Index to the price of commodities. In general, as the price of commodities rise, the cost of shipping also rises IF the rising price is due to an increase in demand:



In this case, however, you can see the continued collapse in shipping rates while commodity prices zoomed. Again, this is proof of a monetary phenomenon, and proof that we’re not talking about real demand.

Same goes for the stock market! Below is the BDI versus the SPX – if the move in stocks is real, where’s the real demand? It’s not there, because it’s not real, it’s monetary:



That disconnect between the BDI and SPX is HISTORIC. And that makes sense, doesn’t it, as the money debasement is also historic. Below is a chart showing the timing of the Base Money ramp with the latest ramp in equities:



It’s no accident that they are coincident – our economy grew as debt was added over the years, but then we reached saturation and the economy collapsed, as in free fall. Then came the money printing, and now we are experiencing the fluff – the saturated condition remains, the debt service remains, but the fluff is keeping prices high.

And all this adds up to pressure. The reality, of course, is that the middle-class squeeze is in full swing and high energy and food prices are just one part of that blood out of a turnip squeeze.

Another large part of the squeeze is coming from health care costs:
Your family's health care costs: $19,393

NEW YORK (CNNMoney) -- Health care costs for a family of four rose again in 2011, with employees paying a much larger share of the rising expenses, according to a new industry report Wednesday.

American families who are insured through their jobs average health care costs of $19,393 this year, up 7.3%, or $1,319 from last year, according to independent actuarial and health care consulting firm Milliman Inc.

More significantly, employers are making workers shoulder an even bigger share of total health care expenses.

Of the $1,319 annual increase, workers' out-of-pocket costs this year rose 9.2%. That was more than the 6.6% increase the prior year.

Payroll deductions for insurance coverage rose 9.3% this year, also more than the year before.

However, employers' share of workers' health care costs fell 6% in 2010, compared to 8% the year prior.


So, not only are healthcare costs rising, but corporations are winning the battle to push even more of the costs off on the employees. This expense is becoming a huge percentage of total income, keep in mind that the last officially reported median income was a little over $45,000. Thus total healthcare costs are approaching HALF of income – if the employer is paying half of that, then the employee is paying a quarter of their income just on healthcare.

This is yet another example of impossible math in progress – healthcare costs simply cannot continue to rise and for us to still have a functioning economy. Costs here are yet another bubble created by the fast and loose monetary situation. Add up the cost of bubble taxes, bubble home ownership, bubble auto prices, bubble healthcare, bubble energy, and bubble food costs then you will clearly see that massive pain is already in progress for those on the margins right here in this country, not just in other parts of the globe.

Weekly Jobless Claims are adding to the impossible math with yet another week well above the 400k level. Coming in at 434,000, this is down 40k from the prior 474k (revised higher, of course, to 478k). I note that without seasonal adjustments, the raw figure was down only half that amount. While Econopray is hopeful, this is another horrid reminder that the economy continues to shed jobs and that the supposed “recovery” is nothing but a monetary hoax:
Highlights
In what is a big relief for the jobs outlook, initial claims fell back sharply as hoped following a giant special-factor spike in the prior week. Initial claims fell 44,000 in the May 7 week to 434,000 with the prior week revised to 478,000. Despite the decline, the current level is significantly above March with the four-week average continuing to rise, up 4,000 to 436,750 for a very significant 40,000 increase from the month-ago comparison. Claims thankfully came down in the latest week but further declines will be needed in the weeks ahead before confidence in job growth can build.


Keep that dream alive, Prozac saturated turnip. Evidently you enjoy the squeeze.

The PPI continues to rise, and the rise is accelerating. In April, the PPI rose .8% (9.6% annualized), compared to March’s .7% uptick. Gee, doesn’t that feel good? And this is the trumped up version of reality. Here’s more Econohope, expressing their ‘core’ belief in obfuscation:
Highlights
Producer price inflation at the headline level continues to run hot while the core is more moderate. Nonetheless, the core has been a little warmer in recent months. Overall PPI inflation in April increased 0.8 percent, following a 0.7 percent jump in March. April's figure topped analysts' estimate for a 0.6 percent rise. Energy increased 2.5 percent after a 2.6 percent advance in March. The main culprit was gasoline which rose 3.6 percent in April, following a 5.7 percent surge the month before. However, food also added to the latest PPI jump, rebounding 0.3 percent after a 0.2 percent dip in March. At the core level, PPI growth held steady at 0.3 percent, coming in higher than the median forecast for 0.2 percent. Upward pressure at the core was led by passenger cars and light trucks.

It’s all contained… that’s why they are raising margin requirements and smashing the outsiders in the commodity space (while simultaneously printing money like mad).

Speaking of hot money, the Treasury just released their latest POMO schedule – “only” $93 billion more in the next month, the lowest yet of QE2! And even that isn’t enough to keep everything moving higher. But I’m sure the perfect trading insiders were well positioned in advance.

Speaking of insider trading, RAJ was convicted on all counts. To me this is nothing other than finding a few scapegoats to keep appearances up. RAJ obviously was not a true insider – he may have been acting like one, though, and obviously he did not have the insider handshake. Meanwhile, quarter after quarter, the real insiders continue to spew disinformation while bringing home the HFT bacon with perfect trading performances.

So, if the PPI rises .8% in the same month that Retail Sales rose a supposed .5%, did Retail Sales really rise at all? My answer is NO, they didn’t! Real Retail Sales are negative, as in fewer real items sold – end of discussion.

Well, not entirely the end… you see, Retail Sales are trumped on the high side at the same time inflation numbers are trumped on the low side.

Markets? What are the master manipulators up to?

Ouch, that squeeze sure hurts...

Rabu, 11 Mei 2011

Morning Update/ Market Thread 5/11 - Losing our Religion Edition…

Good Morning,

Equity futures are down slightly this morning prior to the open, the dollar is higher, bonds are flat, oil is lower, gold is lower, silver is lower, and most food commodities are slightly higher.

The hypocritical shills at the MBA released their gutter bound Purchase Applications Index which supposedly grew by 6.7%, and the Refinance Index rose by a whopping 9.0% in the past week if you can believe that – in case you can’t tell, I don’t. Here’s Econoshill going along with the charade, however, I will note that it is spring and I do expect purchases to rise due to seasonality, but the wild swings found here are purely fiction, a result of people who have given up on reality in exchange for a few bucks – they have exchanged their morality for paper fluff and false prestige:
Highlights
Falling rates are giving a boost to mortgage applications according to the Mortgage Bankers Association whose composite index jumped 8.2 percent in the May 6 week. Mortgage applications rose for both purchases, up 6.7 percent, and refinancing, up 9.0 percent. The purchase index has gained about 1/2 percent over the past four weeks which points to badly needed improvement for home sales. Thirty-year mortgage rates, at 4.67 percent in the latest week, have fallen more than 30 basis points over the past month.

Just as a reminder, we are now in the phase where Option-Arm loans are resetting in mass.



This will cause massive pressure on upper-end homes and prices as people are faced with resetting mortgage payments. If they cannot afford those higher payments, or if their home is upside down (most who took these loans are), then it will be difficult, if not impossible, for them to refinance. Look for upper-end inventory to build throughout the year and to pressure prices and banks. Don’t worry about the banks, of course, they will simply shed their wickedly worthless paper off on the public who is still largely unaware that the “Fed” IS the banks and only looks after their interests, not yours.

The International Trade Data is showing a widening between what we export and import, the gap grew from -$45.8 Billion in February to -$48.2 Billion in March, largely on the back of rising oil prices. High oil prices eventually rise the price of everything, even our trade deficits. Of course since we’re running still massive deficits, we need to pay for it somehow, and that would mean more debt via bond/Treasury sales, and/or more printing. In this space we lost our way a long time ago, exporting far less than we import, and not really paying for any of it. Can you imagine working to produce products to sell to a country who returns you only financial engineering for decade upon decade?
Highlights
The U.S. trade deficit worsened notably, largely on higher oil prices. But there are some positives in the report as well as negatives. The overall U.S. trade deficit in March expanded to $48.2 billion from a revised $45.4 billion gap in February. The March deficit came in worse than analysts' estimate for a $47.7 billion shortfall. Exports jumped 4.6 percent, following a 1.5 percent decline the previous month. Imports rebounded 4.9 percent after dropping 1.9 percent in February.

The widening of the trade deficit was led by the petroleum gap which grew to $31.3 billion from $25.5 billion in February. The nonpetroleum goods shortfall shrank to $29.8 billion from $32.8 billion the prior month. The services surplus expanded somewhat to $13.9 billion from $13.7 billion in February.

Looking at end use categories for goods, the increase in imports was led by a $7.7 billion jump in industrial supplies with $3.6 billion from oil imports. Auto imports rose $2.1 billion while capital goods ex autos gained $1.6 billion. Foods, feeds & beverages were essentially unchanged. However, consumer goods imports dipped $2.0 billion.

By end-use categories, the boost in improvement in exports was led by a $2.5 billion jump in industrial supplies, followed by automotive exports, rising $1.6 billion. Also increasing were consumer goods, up $0.7 billion, and foods, feeds & beverages, up $0.6 billion.

On a not seasonally adjusted basis, the March figures show surpluses, in billions of dollars, with Hong Kong $2.7 ($2.5 for February), Australia $1.1 ($1.4), Singapore $0.9 ($0.8), and Egypt $0.4 ($0.5). Deficits were recorded, in billions of dollars, with China $18.1 ($18.8), OPEC $10.8 ($9.4), European Union $9.0 ($6.9), Mexico $6.2 ($5.3), Japan $6.1 ($5.2), Germany $4.6 ($3.3), Venezuela $3.0 ($2.1), Canada $2.8 ($3.0), Ireland $2.6 ($2.6), Nigeria $2.5 ($2.5), Korea $0.6 ($0.8), and Taiwan $0.6 ($0.9).

The direction of the trade gap was not a surprise but the impact of higher oil prices was more than expected. However, the good news is that exports are back up and sharply. Export gains were broad based, likely benefiting from a soft dollar and moderately healthy economic growth overseas. Manufacturers should be happy about the export numbers. However, the growing oil gap is a drain on U.S. consumers, businesses, and the economy. And the slippage in imports of consumer goods indicates that businesses may be notching down their forecasts for economic growth the remainder of this year.


This is just another measurement that is made in Dollars. And this points out the fantasy of money printing to inflate away debts. Note that the more you print, the larger this deficit gets because oil and other real things are priced in dollars… thus the debt is growing faster because you printed, which is the exact opposite of what you are told will happen by people who simply have been brainwashed with the “Fed’s” B.S..

Let me say that again to make it clear – printing does NOT reduce your debts, it increases them! If you don’t believe that, then take a look at the U.S. debt since the time “QE” began and report back.

No, we have lost our way. The introduction of the “Federal Reserve Act” in 1913 was the beginning of a very slippery slope. Initially the introduction of debt backed money created a boom, but now we are totally saturated with debt, our collective incomes completely incapable of ever paying it back.

This moral decline accelerated greatly with the removal of Usury Laws. Taking advantage of people via the production of money has always been a sin and always will be. The production of money is the most powerful right that exists, it is as powerful as all of human imagination. That power rightfully belongs to everyone, not a few individuals who have wrongfully staked their claim to that power.

The people of Europe are being sold down the river, while paper is being created by the central bankers to mask it over – paper that enslaves future generations. The impossible math there is staring everyone there point-blank in the eyes. The people of Europe need to send the central bankers packing, but their money is corrupting the politicians and their political systems as it is here in the United States.

Keep an eye not only on Europe, but also on Japan. The media ignored disaster there is certainly not over, and in fact there are several risks that are further threatening Fukushima. The real news there is only deteriorating, the contamination is far worse than let on, it is spread far further than let on, and there is still a risk that this could get worse.

The markets and our banking system are nothing but fraud, completely controlled by the same people. The whole shebang is coming down and “other events” are coming. That’s what happens when people lose their way…

Selasa, 10 Mei 2011

Morning Update/ Market Thread 5/10 - Sweet Little Lies Edition…

Good Morning,

Equity futures are higher this morning prior to the open. The dollar is higher and bonds are close to even, gold and silver are higher, and most food commodities are higher as well, with the price of wheat soaring.

Last night they raised the margin requirement for oil, and the result so far is a decline of about a buck and a half with the price still well above the $101 level. While this is clearly manipulation of that market, my take is that margin and the use of derivatives was way out of control and it is way past time to reel in the speculation in commodities. The use of margin and derivatives is an act that actually creates a temporary form of money – there are very few legitimate reasons to allow this, and when it comes to commodities I think the rule should be that you must be ready and prepared to actually take delivery of the commodity or else you have no business “investing” in it. Bringing in outside players is not price discovery, it is speculation. The flip side of being willing to take delivery is that the exchanges should be required to ensure that there is physical commodity that’s available to be delivered – again, if not, then the person at that end of the contract has no business playing either.

The Small Business Optimism Index fell yet again with only one segment of the index rising, but many, including employment, falling. Here is Econohugebusinessshills:
Highlights
The nation's economic recovery is not centered in small business where, in contrast to big business, growth is no better than marginal, according to the National Federation of Independent Business. NFIB's April index of small business optimism slipped for a second straight month, down seven tenths to 91.2 in what the report says reflects the "anemic" pace of economic recovery. The report notes the sample's hiring plans, which are limited, are not consistent with the solid payroll gains of the April employment report. This mismatch, according to the NFIB, suggests that the bulk of new hiring is happening in larger firms.

What economic recovery? They must mean money printing recovery?

The NFIB writes one of the very few 'with it' reports, the commentary in this month’s release is very good and worth a read. Again, only one of the areas surveyed improved, and most worsened. The index has fallen every month this year so far:

Small Business Economic Trends May

Import and Export Prices in April came in still white hot although not quite as hot as March… IMPORT prices rose 1.1% on the month, but 9.6% on the year, versus 1.5% and 9.5% respectively. EXPORT prices rose 2.2% on the month (26.4% annualized), but 11.1% on the year, versus 2.7% and 9.7% respectively.

Note that while the month to month increase while still HUGE is down somewhat from the month prior, but the year over year figures are accelerating and in what I think is very dangerous territory – as in famine, wars, etc., that kind of dangerous. But not to worry, we can spin giant numbers like that just as easily as we manufacture money:
Highlights
Import and export price data show inflationary pressures moving into what are still however subdued consumer prices. Import prices for consumer goods rose 0.4 percent in April extending what is an upward monthly trend though the year-on-year rate, at plus 0.6 percent, has just begun to rise into positive ground. Export prices for consumer goods, also up 0.4 percent in the month, have been showing more tangible pressure with the year-on-year rate at plus 3.2 percent.

The rise in prices for consumer goods reflect, to a degree, pass through of high energy prices. Import prices for petroleum rose another 7.2 percent in April for a year-on-year rate of plus 37 percent. High food prices are also a factor, up 0.6 percent on the export side for agricultural products for a year-on-year rate of plus 35 percent.

Headline numbers show a 2.2 percent rise for import prices, a severe increase that pushes the year-on-year rate into the double digits at plus 11.1 percent. Export prices rose a heavy 1.1 percent in the month for a year-on-year rate that is nearly in the double digits at plus 9.6 percent. Today's data will likely raise talk of non-core pressure in this week's producer and consumer price reports.

Talk about economic obfuscation, it’s a wonder this field has any credence whatsoever.

Senin, 09 Mei 2011

Morning Update/ Market Thread 5/9- Seems like a Dream has Got the Public Hypnotized Edition…

Good Morning,

Equity futures are up slightly at the open this morning, the dollar is up again, bonds are flat, oil is higher and challenging $100 from below, gold and silver are strongly higher, and most food commodities are higher as well.

No significant economic data today, and the rest of the week is fairly light with the highlight being PPI, CPI, and International Trade.

I see exactly no beef, all I see is fluff and a public that has been totally hypnotized with disinformation. Not one shred of evidence to support the Bin Laden storyline (sorry, but that video released this weekend is a joke), no one is investigating an obviously tampered Birth Certificate presented by our President, and meanwhile the truly important stories drop from everyone’s attention, like the fact that we’re brewing another war in Libya, trying to brew one in Pakistan, and we’re still ignoring the fallout from Fukushima.

The business media is definitely all fluff – I watched a report that centered upon the question, “Was the ‘investment’ the American public made in GM the best public investment ever?”

Gee, and I’m not being led anywhere by the way they framed that question, am I? Of course they roll out the happy idiots who have no remorse at taking fluff money to shill a mindless storyline. Not one person even hinted what would have happened had they been allowed to fail – like the possibility that new companies would have been allowed to start up and bring truly innovative products to market. Alternatives are not allowed to be discussed when shilling is in progress.

Just like people who see alternatives to the storyline being offered by our politicians are ridiculed in the press for having alternative opinions or for even, heaven to Betsy, asking for proof of ridiculous assertions. It’s stunning to me the wide acceptance of the storyline when it is accompanied by absolutely no proof and completely unbelievable assertions. In fact I believe there are several assertions in the official storyline that are outright lies – a couple are even physical impossibilities like the timeline presented to test and compare his DNA. Again, they have made this a matter of faith, like religion, but I must remain agnostic until convinced otherwise. Actually I lean more to disbelief as the evidence and reality do not match the storyline.

Yet no reporter questions, for they know that if they do they will have no job in order to feed their family and to keep them in the lavish lifestyle which they are now accustomed to. For those who feed the storyline Kool-Aid are rewarded, while those who question it are passed off as whack-jobs.

Thankfully in Japan the Prime Minister ordered CHUBU Electric to shutter the most vulnerable nuclear plant in Japan – Hamaoka. This is a step in the right direction, and it’s still unfathomable to me the way our own government is ignoring the risks. Again, it’s a sign that total government capture has occurred by the special interests.

Greece was downgraded once again – Europe is simply a debt saturated mess where few wish to acknowledge reality. The central bankers made it known that they expect “collateral” for their worthless money loans, and fortunately it looks like they are being told to pound sand. Finally talk of “restructuring” is occurring, just don’t call it “default” though because that might sound bad and we can’t handle that because it would mean that something might have to be done about the criminality of the way the central bankers are acting.

Turning back to the U.S., let’s talk about the long term market situation. While the hot money printing, HFT, and market manipulation has propelled equities to new fluff heights, there is a long term glaring non-confirmation now in place. That was set up when the Transports closed last week at a new all-time closing high, but the Industrials are still more than 1,450 points away from its new all-time high:

TRANSPORTS:


INDUSTRIALS:


Yes, they can simply gun the Industrials higher to erase that situation, but I want you to consider that the current crop of POMO money is about to run out – and they are talking somewhat hawkish about QE3. As you buy a rising market to buy it still higher, the cost to do so gets progressively more expensive - this means that each injection to maintain that trajectory must get larger. If they delay QE3, then the market will likely stumble and this stumble may occur prior to this confirmation. Big non-confirmations like this are often seen at major tops, so this is one to watch over the next few weeks and months.

Since we’re looking back to the 2007 peaks, I just want to point out the XLF… it STILL has failed to break even a 38.2% retrace making it STILL the worst performing sector of them all. All those trillions, all the taking off their balance sheets of toxic waste, all that mark-to-fantasy accounting, all those perfect HFT trading rob you blind quarters… all of that, and yet they still are hugely divergent from the rest of the market:



So, the storyline goes that we’re supposed to believe, and not even question, an obviously tampered birth certificate, an obviously fabricated Bin Laden storyline, and a stock market built upon money printing and manipulation where the Financials trail far behind, and where our economy still is not producing positive jobs (but the storyline says it is), where housing is still in the gutter, and where oil prices rise (and fall) wildly despite record high inventories and falling demand. Sorry, but I have to ask, “Where’s the beef?”