Wednesday, February 24, 2010

Morning Update/ Market Thread 2/24

Good Morning,

Equity futures are up slightly this morning, below left is a 60 minute view of the DOW, you can see that we are resting on the bottom of the current channel, and on the right is a 5 minute version of the S&P 500 showing the overnight action:

Both the dollar and bonds are slightly lower, oil is flat and gold is down about $8 and ounce, now below the important $1,100 level again and coming up on support at $1,080. The HUI did have a very large move lower yesterday, the miners getting hit hard.

We will receive New Home Sales at 10 Eastern, meanwhile the still worthless MBA Purchase Applications Index moved lower another 7.3% last week which follows a 4% drop the week before. The only clue we truly have about history from this report is that the MBA now claims this reading is the lowest since 1997 – here’s Econoday:
The purchase index fell a steep 7.3 percent in the Feb. 19 week to the lowest level since 1997 in what the Mortgage Bankers Association calls another indication that housing demand remains weak: "With home prices continuing to drift amid an abundant inventory of homes on the market, potential home buyers do not see any urgency to lock in purchases." The refinance index also fell, down 8.9 percent. (Note MBA does not provide index levels, only percentage changes.) New home sales for January will be posted at 10:00 a.m. today.
Yes, even at the lowest interest rates in history people cannot refinance anymore and homes are still overpriced even at these levels. Keep in mind that as taxpayers we have spent literally trillions buying these rates down. We are so saturated with debt that we are failing to even maintain with a Fed Funds Rate of Zero.

Efforts aimed at the banks were the largest mistake in history. They did absolutely nothing to cleanse and repair anyone’s balance sheets but the very largest firms. If we would have spent that money on the bottom up, the entire system would have been given more time. But in the end, it may be evolution at work as the debt backed money system that the private Federal Reserve manipulates is destined to fail. This mistake will make that failure come sooner and hopefully we will take the next step forward.

Speaking of making failure happen sooner than later, little Timmy Geithner is giving that his all:
Geithner May Give Regulators Leeway in Applying Volcker Rule

Feb. 24 (Bloomberg) -- The U.S. Treasury Department wants to give regulators discretion to define proprietary trading as the White House tries to revive its plan to bar banks from making hazardous bets that could cause another financial crisis.

One month after President Barack Obama said firms “will no longer be allowed” to trade for their own accounts, officials say they need flexibility to avoid impairing the $7.2 trillion Treasury securities market.
I guess it depends on how you define the word “incest.” Note, once again who these people really serve. They do not serve YOUR interests, they serve the private banks’ interests. This is why our system is failing and it is why the “Federal” Reserve system is going to fail. It is also why Freedom’s Vision is the next step forward in the progression of our country.

And remember all the lip service about pulling support?
Treasury to expand Supplementary Financing program

By Greg Robb

WASHINGTON (MarketWatch) -- The Treasury Department announced Tuesday that it is expanding its Supplementary Financing Program to help the Federal Reserve manage its enormous balance sheet. In a statement, Treasury said it will boost the SFA to $200 billion from its current level of $5 billion. The fund had been up to $200 billion but was scaled back when Congress delayed passage of an increase in the debt limit.

Now that an expansion of the debt limit has been signed into law, the department is able to resume the program. Starting on Wednesday, Treasury will conduct the first of eight weekly $25 billion 56-day SFP bills to restore the program. The department said it will then roll the bills over. "We are committed to work with the Fed to ensure they have the flexibility to manage their balance sheet," a Treasury official said.
They will simply steal as much money as you allow them. The government’s spending is in a parabolic blow-off phase and it is going to come to an end sooner rather than later. When the spending by the government subsides, the debt backed economy will be laid bare.

Speaking of revealing clothing, our government statistics are simply flat out LYING. They are so distorted and off the mark that very little can be taken at face value. This is a major part of the confidence problem. Did someone say confidence? Yesterday’s Citizen Confidence level for February plummeted nearly 18% from 56 all the way back to 46. Do they believe that retail sales are positive? No, and despite what your government says, retail sales are still down year over year. Proof? Again, we turn to sales tax data:
New York Sales Tax Receipts In Unprecedented Collapse

It's a good thing Wall Street bonuses rebounded in 2009 because otherwise the State of New York would be totally screwed.

Yesterday the Comptroller released its survey of the state's sales tax receipts -- a proxy for consumer spending that shows a trend opposite to Wall Street.

Here's the top-line view:

Counties across New York State, including New York City, saw one of the sharpest declines in sales tax collections on record, according to a report released by State Comptroller Thomas P. DiNapoli. The report, which compares 2009 to 2008 collections, found a 5.9 decrease in collections statewide. Only four counties saw an increase but these numbers were primarily due to administrative and technical adjustments, not better economic performance.

“This is yet another sign that the Great Recession
is having a continuing impact on our communities across New York,” said DiNapoli. “These numbers are sobering. Fortunately, many local governments have taken sometimes painful budgetary steps to stave off disaster. It’s a struggle, but all levels of government have to make every taxpayer dime count.”

Among the report’s findings:

* Fifty-three of New York’s 57 counties outside of New York City saw a sales tax decline and many of these counties share sales tax revenues with their municipalities;
* The largest decline occurred in the Lower Hudson Valley, at 8.4 percent;
* In state fiscal year 2009-10, the state’s sales tax base (value of all goods and services subject to the sales tax) shrank by 7.1 percent;
* Among New York’s counties, Westchester saw the steepest drop at 10.3 percent;
* The Mohawk Valley region saw the smallest downturn at 2.5 percent;
* Only Oneida, Chautauqua, Schuyler and Seneca counties saw increases, but this growth was mostly attributable to factors other than economic growth; and
* According to the New York State Association of Counties, most counties prudently budgeted little or no growth in their sales tax revenues for 2010.
Still predicating growth estimates on words and statistics coming from the government is a HUGE mistake. The “value of all goods and services subject to the sales tax shrank by 7.1%!” Good thing they had multi-billion dollar bonus payouts, what would this figure have been without? Of course those bonuses were not only not deserved, they are criminal and based solely upon marked to fantasy models – the regulators long since bought off and bowed to pressure.

Yesterday’s price action obviously satisfied the large movement forecast by last Friday’s small move in the McClelland Oscillator. Yesterday's 85% down day left all of the short term oscillators oversold, so a bounce of some type can be expected.

Despite mark-to-fantasy, the XLF is one of the POOREST performers of this recovery, retracing only a very small portion of their losses over the past couple years. Yesterday the XLF was hit hard, engulfing the prior days’ candle with volume coming up off of the pathetic ramp job, game playing, levels of the week prior:

The bond market bounced very strongly right off the support level I showed on Monday. That was the game, it was indeed time to make a choice. They can continue to hold down rates, but if they continue to pump all the markets simultaneously then they will have chosen a quick death to our monetary system. Of course it’s already dead, they can only decide how quickly the funeral services are held and which path they want to drive to get there. Dead man walking.

Yesterday’s move very likely was the beginning of wave 3 down but we need to see prices drop below the SPX 1,090 level to be sure. We are sitting right on the uptrend line of support now. There’s a possibility we could run higher, but really… are there any legitimate buyers left in the market? Only ones who don’t do math! While she may be able to make one last trip around the dance floor, I’m thinking we’re already witnessing Mary Jane’s last dance…

Tom Petty – Mary Jane’s Last Dance: