Wednesday, August 5, 2009

Morning Update/ Market Thread 8/5

Good Morning,

Futures are mostly flat this morning, here’s they are for the DOW and for the S&P overnight:

What is going on? I have never seen anything like what’s been occurring lately with the data! From Econoday:
The purchase index rose 0.9 percent in the July 31 week to an undisclosed level with MBA saying only that it's been little changed over the last three weeks between 260 and 265. Likewise, MBA did not post a level for the refinance index, saying it increased 7.2 percent in the week and is about 35 percent higher than the low in June. Mortgage rates were mostly lower in the week with 30-year loans down 19 basis points to an average 5.17 percent.

Welcome to Wonderland!

And both ADP and Challenger Job reports are out this morning. I normally do not give much weight to either as their track record has been spotty and inconsistent especially when compared to the fanciful data from the BLS which, of course, is one of the government data sets that falls into the suspect data category. Anyway, here’s Econoday with the latest from Challenger:
In a reminder that employment lags economic recovery, Challenger's July count of layoff announcements jumped to 97,373 vs. 74,393 in June. Trouble is centered squarely in transportation where factory shutdowns and reopenings in the auto sector have been skewing jobless claims badly for the last month. Announcements don't correlate immediately to actual layoffs but today's report is not a plus for Friday's monthly jobs report.

And from ADP:
ADP's private payroll count shows substantial improvement as expected, at -371,000 for July vs. a revised -463,000 in June. The result, the best since October last year, confirms expectations for improvement in Friday's jobs report.

Again, I personally don’t give much credence to either, but they do set market expectations for the BLS Jobs report that is released this Friday.

Yesterday’s price action produced a few hammers… the late day rally produced yet another small movement in the McClelland, setting up a large price move for today or tomorrow. This type of action looks contrived as this entire rally and attempt to reinflate the economy has been. It’s looking very toppy in here with RSI divergences as well as Advance/Decline and other divergences as well.

There is no substance to this “recovery,” it is all fluff. A printed money “empty suit.” Of course it is going to end in pain and agony for those who buy into it. Real production and real capital is fleeing the United States and going overseas – still. Remember, 50% rallies only happen in the worst of bear markets as prices are whipped by extremes in sentiment and government/central banker manipulation.

The central bankers and brokers are all singing a song of hope… “come sail away with me,” but it’s a cruise that’s looking more and more destined to land on the rocks like the SS Minnow!