Tuesday, August 11, 2009

Chart and Data Potpourri - Temporarily Exiting the Twilight Zone...

Perusing all my usual destinations, I run across a mix of articles – here’s a short take on what’s caught my eye… Not to worry if you live in the Twilight Zone, this temporary glimpse of reality will do no long term damage, you will be free to return to whichever mixed metaphor reality you choose... Take the RED pill!

Of course every bear wants to know when this GS orchestrated trumped up rally will finally end…

When will Now be Then?

Let’s begin with China. Exports CRASHING, down 23% year over year in July. YET, Industrial Production rocketing up 10.8%. Oh yeah, that’s a picture of pure health. Their market is clearly re-entering bubble fantasy land yet I see market callers, some of who I almost began to respect, pumping, pumping, pumping returns in China and Brazil. That is a story that will not end well for those buying in now – what a disconnect from reality.

And then there's Russia... Russia GDP Shrank 10.9% Last Quarter as Slump Deepens . Gee, where are their central bankers to pressure their government to massage their numbers? It's hard to live in the Twilight Zone with numbers like that.

Confirming the crashing exports, the Baltic Dry Index which reached bubble heights, CRASHED, then rallied, and is now CRASHING again, losing 20% of its value in just 5 days.

Here’s a chart showing the past 3 years of the BDI with the SPX in black behind it.

Here’s the BDI versus the SPX over the past 9 months showing the current DIVERGENCE between the BDI and the SPX:

The rebound in the BDI was quite the reflexive bounce. The numbers sound big as it rallied in the giant percentage category. But really – look at it. It was clearly a bubble… the bubble popped… there was a reflexive bounce… and then reality sets in again. Look for this show coming soon to an equity near you!

And Sentiment trader posted a chart showing NYSE up issues the highest they’ve been since 1991. As the caption reads, “Redefining what OVERBOUGHT means.”

Econompic Data produced a chart showing Federal Receipts versus Federal Outlays. SIMPLE. THIS IS THE REAL DEAL FOLKS!!! FOOT STOMP!!! For those WHO DO NOT GET IT, please, PLEASE study this chart REAL HARD. Think about it. Think about the math. Think about the debt. Let me know when the light bulb comes on - perhaps people will see a sign.

How about the fact their credit has been yanked?

Doug Short (dshort.com) who produces the “Four Bad Bears” chart as seen below…

...Produced a new chart he’s calling “The Road to Recovery?” What he did was simply align the reflexive bottoms of the four bad bears. Interesting for sure:

Did all the stimulus simply make us take longer to get to the same point as during the Great Depression? I think so, but let’s see how it tracks over time. My take is that all the stimulus, debt hiding, number massaging, manipulation, lies and deceit will make the inevitable fall that much worse. Sure, call me a pessimist – I call it reality, would you like to come in?

Doug also produced this chart showing the DOW rally in ‘29/’30 compared to the current rally:

And this chart that he produced shows what Doug calls the REAL four bad bears. Here all the indices are adjusted to “real” dollars and the chart begins in the year 2,000 for the S&P 500. This chart is actually somewhat bullish in that it bolsters the case that we made a giant ABC correction from the 2,000 top. For a myriad of reasons, that is not what I believe to be the case and not the way McHugh counts it either.

And the most bullish chart I have seen also comes from Doug. Here he aligned the S&P with unemployment and noted the peak turns in unemployment correspond with a lag to the turn in equities. This is what has the bulls deluded. The question you have to ask yourself, of course, is did unemployment really peak? Of course for that to happen, the real economy must be producing jobs. Is that happening for REAL? I say no, sorry. The numbers are massaged beyond belief, real hiring has not begun, and that’s all part of the Economic Mass Psychosis brought to you by the central banks who control both your government and the media.

Oh, I know what you bulls are thinking… which is the dream and which is reality?

We now return you to your regularly scheduled programming…