Wednesday, May 6, 2009

Morning Update/ Market Thread 5/6

Good Morning,

Futures are higher this morning with the /ES right on the 912 pivot:

The next higher pivot is at 935, and the next lower is at 848.

And let me say to all those who wrote me and said that the automakers should not be allowed to go bankrupt, “Pfluuuutttting fricken #%&?!” Okay, there, I said it. See, we were handing out billions to the automakers and now that Chrysler is finally in bankruptcy we learn that they will not be paying back the government for the billions YOU AND I gave them - EVER. Way to go.

Remember who the owners of Chrysler are. They are the political and the elite who own Cerberus, a hedge fund… of the elite. And where did those billions go? See, this is most definitely NOT the rule of law. The rule of law has a hierarchy for the repayment of obligations through the bankruptcy process. What happened here is that the rule of law was skirted to give the elite an out before the other creditors, and it was your money and my money that gave them that out. Money that they STOLE. They are thieves and they belong in prison.

Please, do not tell me ever again that we should be bailing some asshats out. Thank you. It was NOT in the best interest of AMERICA, it was completely against the interests of AMERICA and those who continue the robbery and theft are TRAITORS to our country.

Okay, now that I got that out. I’ll continue.

According to Econoday, Purchase Applications rose in the first week of May:
Housing reports have been on the upswing, at least most of the data but not MBA's purchase applications index which is lagging behind. But there was some improvement in the May 1 week as the purchase index rose 5.0 percent to 264.3, a still very weak level. In contrast to purchase applications, applications for refinancing are very strong, up another 1.2 percent to 5,169.3. Refinancing makes up 74.4 percent of all applications. Rock-bottom mortgage rates are behind the rise in refinancing though rates did move higher in the latest week with 30-year fixed loans averaging 4.79 percent. The outlook for the housing market is definitely improving but expectations won't take off until MBA's purchase index shows some life.

And according to Econoday, the Challenger Job-Cut Report is showing improvement:
Challenger layoff count shows month-to-month improvement, at 132,590 vs. 150,411 in March. Interestingly layoffs were led by the government component, reflecting job cuts in New York City. The report noted that local and state governments are feeling the pinch from foreclosures and lost property taxes. Also interesting is that hiring intentions, a less looked at category in the report, improved to 27,062 from March's 19,309. The hiring gain was led by autos of all sectors, but the report stressed that the sector nevertheless is seeing heavy downsizing. Today's report points to easing contraction in Friday's jobs report. ADP is up next at 8:15 a.m.

AND, the ADP Jobs Report shows that jobs are being lost at a significantly lower pace in April than in March:
ADP estimates private payrolls fell 491,000 in April, indicating an easing rate of job losses. The report will increase talk that the worst of the recession has already passed. There was limited reaction to the report at least initially, but the result is very likely to increase risk appetite in what would be a positive for stocks and commodities and a negative for the dollar and Treasuries.

Greenshoots indeed, unless you’re one of the 491,000 of course. This was a significant improvement over March which was a -742,000 figure. While I do not like or trust ADPs methodology, this is definitely a large improvement but still a very distressed level.

The Petroleum report comes at 10:30 eastern and there are several bond auctions once again. Must crank up the debt to give to the robber barons while indebting Americans. Nice.

And reports are out that Bank of America will need $34 billion in additional “capital.” No problem, it’s a buy of a lifetime. And Jamie Dimon claims that JPM is such an angel company that they don’t need any more stinking capital. And how true that is! They have the taxpayers there to give them capital anytime they need it! This despite being the most highly leveraged financial institution in the history of the planet – derivative central.

And if you’re a common stock holder in General Motors, you just got the shaft royal. In a dilutive shotgun of new stock, current shareholders are going to net approximately 1/100th the stock’s current value as their debt is rolled into common shares. Again, this violates the RULE OF LAW for a bankrupt company. This is not how bankruptcy is supposed to happen and it places the American public as shareholders instead of bond holders in a company that is sure to go bankrupt later and when it does all those billions will be wiped away too, rewarding others and giving YOU the shaft AGAIN.

Very complex deal, yet that sums it up. And do you think the average American sees through the complexity to the bottom line?

I hope America wakes the heck up. To hell with the greenshoots, the only thing that should be sprouting up in America are the pitchforks!

Oh, and as far as the markets go, they are corrupt beyond belief. The rule of law is completely out the window. This is a time to be protective as risk takers will get burned eventually, count on it.

I think America needs to take a collective week off to mark the end of common sense and the end of morals and ethics in America. Then we need a revolution and a new independence day. This time independence from the central bankers.

Have a good day,