Wednesday, March 24, 2010

Morning Update/ Market Thread 3/24

Good Morning,

Equity futures, unbelievably, are lower this morning. For awhile there it was looking like they only go up as they have for 15 of the past 18 sessions. Below is a 30 minute chart of the DOW futures on the left and a 5 minute chart of S&P futures on the right:



Below is a daily chart of the Dollar. It has broken out to new highs, climbing very sharply this morning:



The Euro is continuing to break down. Below is a daily chart of the Euro, clearly now in its 5th wave down:



Don’t look at the long bond unless you want to see money fleeing DEBT, as it is getting nailed this morning headed straight down in a race back to support and its very large Head & Shoulders neckline. Should that neckline break, we will be looking at much higher interest rates and our debt saturated economy will be forced to attempt to carry that weight. That won’t be a fun thing to do with the entire world living on rolled-over short term debt.

Again, all this movement this morning is DEBT driven. Add the festering debt problems in Portugal to the list:
March 24 (Bloomberg) -- Portugal’s credit grade was cut by Fitch Ratings, underscoring growing concern that Europe’s weakest economies will struggle to meet their debt commitments as finances deteriorate.

The rating was lowered one step to AA- with a “negative” outlook, Fitch said in a statement today. The euro extended its decline, weakening 1.1 percent to $1.3355 as of 10:32 a.m. in London. Portuguese bonds fell, with the yield on the 10-year note rising 5 basis points to 4.33 percent. Portugal’s PSI-20 Index of stocks dropped 2 percent.

More rioting in the streets anyone? The world is awash in debt because the central banking system has used debt as a tool for power and control. Countries simply do not have to live under control of bankers. Debt is the most inappropriate way to control an economy as it puts exponential math to work for the banks and against the people who rightfully own their own money system.

Yesterday’s Existing Home Sales report was not sterling. It came in at 5.02 million, a very depressed level and even lower than last month’s disastrous reading. And yet stocks continue to move in a parabolic fashion. Are we witnessing money running away from debt? That very well could be a large part of what we’re witnessing. Anyone who calls this action in the market a good thing is simply insane. A 60% plunge followed by a 73% year long ramp and we’re still 3,300 points below where we were in ’07. No, not a good thing, this is the type of volatility that destroys wealth for the vast majority and benefits only a few.

The equity markets are not a sign of health, instead they are a symptom indicating there’s a huge problem. That problem is manifesting itself all over the globe and it is rifling our markets. The problem lies in the central banker’s control of our money.

The markets? Yes, they broke above another area of resistance yesterday and triggered a small inverted head & shoulder’s pattern that has a target now up at about SPX 1,185. The chart below is a 10 minute view of the SPX:



Boy, are they ever over extended – historically so.

The wild and completely worthless MBA Purchase Applications Index rose by 2.7% in the past week, yet another obscured piece of data designed to be a marketing tool and should not be considered for any economic consideration, yet is sold to you that way.

New Home Sales are released at 10 Eastern this morning.

Durable Goods orders did continue to rise with year over year growth rates now in the double digits compared to the year ago stand still numbers. While there is improvement, our economy is not that far off that bottom with still nearly 30% of our manufacturing capacity sitting idle and a great number of workers idle too. Here’s Econoday’s report of the numbers:
Highlights
Although the headline durables number did not rise as much as expected, a sharp upward revision to January put the level for February about as expected. Overall new orders for durable goods in February gained 0.5 percent, following a revised 3.9 percent surge in January. February fell short of analysts' projections for a 1.0 percent increase but January's number was much higher than the prior estimate of 2.6 percent. Excluding the transportation, new durables orders rebounded 0.9 percent, following a 0.6 percent decline in January. The combination of the upward revision to January's headline number to a modest shortfall in the February percentage left traders content that today's report was essentially in line with expectations.

The latest advance in new durables orders reflected components mixed in direction after such a huge gain in January. New orders were led by machinery, up 4.7 percent, with fabricated metals and primary metals also rising-by 1.9 percent and 1.5 percent, respectively. On the downside were electrical equipment, down 3.3 percent; transportation, down 0.7 percent; and computers & electronic equipment, down 0.6 percent.

Nondefense capital goods orders excluding aircraft made a partial rebound, rising 1.1 percent after dropping 3.9 percent in January. Shipments for this category-a key ingredient in equipment investment in GDP-rose 0.8 percent in February, following a 1.9 percent dip the month before. Both shipments and orders have been volatile but remain on healthy uptrends. For both, January was notably strong.

Year-on-year, overall new orders for durable goods were healthy and little changed at up 10.9 percent in February, compared to up 11.1 percent the prior month. Excluding transportation, new durables orders slipped to 7.9 percent from 8.5 percent in January.

On the news, trading remained more focused on concern about Greek debt woes as equity futures were little changed but Treasury yields edged up. But the bottom line is that manufacturing is still the greatest source of strength for the recovery and today's durables report supported that view.

What I see is an attempt at another cycle off the bottom. Each cycle now is pulled down by the burden of debt.

Interest rates fell from 1980 to 2008, nearly 30 years of constantly declining rates. Then we hit zero. Then we resorted to buying down interest rates to keep them from rising. Now, as we attempt to reestablish growth on the back of exponential debt backed money, I believe our monetary system is taking its last breath, a final inhale. The next downturn will require even more effort than that last. Confidence will not continue and you are already seeing that confidence shattered across the world.

Events are going to force changes to the system, its coming. Not the change espoused by bankers or their puppets on the Senate Banking Committee. No, the change that’s coming is going to rock the world. It’s an opportunity for the people to take a step forward if they have the guts. It’s also an opportunity for very ugly forces to rise. The path that’s taken is up to us. Which path do you choose? To choose the path of negative historic events, continue to do nothing. To choose the path of advancing mankind, rise up and take back your money system and the power that follows with it.

Styx – Suite Madame Blue (America):