Tuesday, April 6, 2010

Morning Update/ Market Thread 4/6

Good Morning,

Equity futures are down this morning. Below is a 60 minute chart of the DOW futures on the left and 5 minute chart of the S&P futures on the right that show the overnight action:

The dollar is up sharply, while the Euro is down sharply on concerns that Greece’s bailout may be falling apart. Of course it’s falling apart, that’s because it makes no sense and the math is impossible. You cannot save a drowning person by throwing water on them, and you cannot save a person unwilling to help save themselves – more on that concept later. Bonds are higher, both oil and gold were lower overnight but just turned positive again.

Yesterday’s advance to new highs was on the lowest volume of the year. The divergence between price and volume has been in place all year, it is historic in nature, as in there has never been such a large and sustained divergence in modern history. Then again, we are witnessing the collapse of the largest debt bubble in history too and we need to be cognizant of the flow of funds.

The move down in bond prices, up in yields was huge yesterday and left large gaps in the charts. Today’s action indicates that we may get some backfilling. The move did break the very large necklines and long term trendlines on the longer duration charts.

Below is a 2 year chart of TLT, the 20 year bond fund. You can see the smaller Head & Shoulders pattern and the larger H&S pattern, BOTH are now confirmed, doesn’t matter if prices rise back up above the neckline. The green trendline you see is a long term uptrend line that is now clearly broken as well:

Below is a 6 month version of TLT, you can see that prices closed below the lower Bollinger Band and that the move came on very heavy volume. Unlike equities, here volume is confirming price:

The chart of the TNX (10 year Treasuries) is telling the same story. Yields went over 4% yesterday and closed just below. The large inverted H&S pattern is now confirmed, the target is now 6%, but it may take anywhere from a few months to a year or even two to get there, this is a very large pattern, it will take a while to play out:

What will 6%, a 50% increase in interest rates do? It will make houses about 20% less affordable. It will mean that all the people who have Adjustable Rate Mortgages that are rolling over soon, and there is a giant wave of them coming, are facing the prospect of attempting roll-over into higher rates with homes that are likely underwater already. This wave will put them even deeper underwater.

Yesterday equities rose, the dollar rose, oil rose, and gold rose. Bonds (DEBT) lost. That is all about the asset wheel. The supply of debt is a tsunami that has already crested and is now landing on shore. The government is but a sponge placed upon the beach, they cannot stop it, they cannot buy up all the debt.

No word on the emergency meeting on rates yesterday. That’s a weird one, only Market Watch carried it, there has been no release or otherwise mention about the meeting that supposedly occurred yesterday. If anyone sees anything on it, please forward to me, thank you.

Here’s a report on Office Vacancy rates that came out yesterday, the highest in 16 years:
NEW YORK (CNNMoney.com) -- Office vacancy rates are now at their highest level in 16 years, according to a report published Monday, as elevated unemployment levels across the country continue to temper the demand for space.

Roughly 700 million square feet, or 17.2%, of the more than 4 billion of available office space nationwide was unoccupied as of the end of March, according to the real estate research firm Reis. The last time office vacancies were this high was in 1994.

And we are learning more about the stupendous Jobs Report that showed 162,000 jobs were created. More than 48,000 were temporary Census workers, there were 81,000 phantom jobs supposedly created by new businesses using their “birth/death” model (that doesn’t work), and there where another 40,000 temporary jobs, meaning that in reality no meaningful jobs were created at all. And we require 150,000 to 250,000 new jobs each month just to stay even with population growth (depending upon who you ask).

We are now marking the one year anniversary of the return of Mark-to-Fantasy accounting standards. Stock market’s been going up ever since. Imagine that, letting the bankers who own the quant computers, operate “dark pools,” and run the “Federal Reserve” mark their debt portfolios to their own models. And stocks have been going up the entire time. Just wait and see what happens next, it’s what happens when you turn over the money power to private interests. The fact that we allowed it, and the fact that the people have done nothing to stop it means that we deserve what’s coming to us.

Those who think that gold and silver are honest money are going to get what’s coming to them too. They in fact are the opposite of “honest” money, they are the most manipulated commodities on the planet. Today it is very likely that there has been many times the amount of gold and silver sold on paper than exist in reality. My caution to you is that there could easily be a run on the metal should that fact be fully realized. If you are “hedging” via the metals, we are at the stage of the game where taking physical possession is simply the smart thing to do.

Using only precious metals to back our money? Utter catastrophe. The central bankers are the ones who hold the vast majority of it now, the private bankers have stolen and swapped away a large portion of our reserves from us and from the entire world. The IMF, for example, is now the world’s third largest holder of gold. If you create a gold money system, you are simply giving control right back to the same people who already control it via debt. Debt, gold, they don’t really care, they own you either way. If you are tired of being owned and you seek true freedom, you will find it, it is there waiting for you to take it if you dare.

Jefferson Airplane – Volunteers: