Wednesday, November 24, 2010

Morning Update/ Market Thread 11/24 – Opt Out Day…

Good Morning,

Equity futures are higher this morning following another 90% down day yesterday that obviously fulfilled the large price movement called for by the small movement in the McClelland Oscillator which now stands at -145.85. The dollar is down only a very slight amount this morning after breaking up and out of its downtrend channel. Bonds are sharply lower, oil, and gold are higher.

The conflicted, still worthless, and hypocritical Mortgage Banker’s Association reported a rise in Mortgage Applications last week of 14.4%, as if that type of move in a week is possible – I highly doubt it, but for them this is a mild move as they attempt to paint reality as something it is not. The Refinancing part of their report fell by 1.0% which pushed the composite index to up 2.2%. I don’t know why I even bother with this report other than to keep an eye on what the criminals are disseminating – here’s Econoday:
In surprisingly good news for the housing sector, applications for home purchases surged 14.4 percent in the November 19 week. The report says the increase, which lifts purchase applications to their highest post-stimulus level, suggests consumers are feeling more confident with their own finances. Yet calendar effects surrounding the Thanksgiving holiday may be it magnifying the gain, one that will have to be confirmed in subsequent weeks. The refinance index isn't showing any lift, down 1.0 percent to hit its lowest level since June. Rates were mixed in the week with 30-year mortgages rising four basis points to 4.50 percent. Next data on the housing sector will be new home sales for October to be posted at 10:00 ET today.

“Calendar effects surrounding the Thanksgiving holiday?” What? Econoday is losing it as they are talking about last week, it is this current week that will have Thanksgiving week adjustments.

Durable Goods Orders fell sharply in October from last month’s report on September. If you remember, that was spiked higher by a surge in aircraft orders. Well, not this month. The prior report was +3.3%, this report was looking for -.1%, but the actual came in at -3.3%:
While the consumer sector looks good today from personal income and jobless claims, manufacturing has taken a step back. Durables orders in October fell 3.3, following a 5.0 spike the month before. The October figure came in notably below the median market forecast for a 0.1 percent decline. Weakness was broad based but led by transportation. Excluding transportation, durables declined 2.7 percent after rising 1.3 percent in September.

By major industries, transportation fell 5.2 percent in October after surging 16.5 percent the month before. The drop was mainly in defense aircraft but nondefense aircraft and also motor vehicles orders eased. Other industries generally declined but mostly after a moderate gain in September.

Orders for equipment investment are showing notable volatility. Nondefense capital goods orders excluding aircraft in October declined 4.5 percent after rising 1.9 percent the previous month. Shipments for this series slipped 1.5 percent, following a 1.0 percent gain in September.

Today's durables report is a disappointment but should be viewed in the context of being one of the most volatile monthly series for a major indicator produced by the government. Also, a weaker dollar points to likely improvement ahead for durables orders and manufacturing.

What a joke! “One of the most volatile monthly series…” Didn’t used to be. Nice to see them admit that this data (and all data based upon measuring in dollars) is influenced by the direction of the dollar. When the dollar falls, it has the ILLUSION of increasing everything – growth in sales, growth in imports and exports, growth in GDP… but when that is from a falling dollar, it is not real. Well, guess what, the dollar is way UP for the month of November, not down, so these figures may not be coming in as good as thought over the next few months. Fourth Quarter GDP, how’s that going to look with a rising dollar? What would Q3 have been had the dollar not been plunging during that timeframe? Guess what, it can’t fall forever.

Meanwhile Personal Income and Expenditures are also bending reality. A 4.1% year over year increase in income? I highly doubt it:
The consumer is making a moderately strong comeback in October in both income and spending. Meanwhile, core inflation is subdued and still too low for Fed comfort. Personal income in October posted a healthy 0.5 percent gain, following no change in September. Income growth topped analysts' forecast for 0.4 percent increase. Importantly, the wages & salaries component jumped 0.6 percent, following a 0.1 percent improvement the month before.

Household spending also showed strength. Personal consumption expenditures rose 0.4 percent, following a 0.3 percent increase in September. For the latest month, strength was led by a 1.9 percent monthly spike in durables. Nondurables advanced 0.8 percent while services edged up 0.1 percent.

Year on year, personal income for October came in at up 4.1 percent, compared to 3.7 percent in September. PCEs growth slipped to 3.6 percent in October from 3.8 percent in September.
PCE inflation nudged up at the headline level but the core remained anemic. The PCE price index increased 0.2 percent in October, following a 0.1 percent uptick in September. The core rate was flat for the second month in row. On a year-ago basis, the headline number in October was 1.3 percent, down from 1.4 percent in September. Meanwhile the core was 0.9 percent, down from 1.2 percent the prior month.

Relative to typical recoveries, the rebound in income in income and spending is still sub-par but at least we are seeing some strengthening. Retailers and policy makers should be happy that the trend is up.

Again, all these figures are measured in dollars which were falling in value ahead of and during this timeframe. Furthermore I simply do not believe the supposed increases in income and there is likely tampering with that data by using a working population size that is shrinking – the same distortion used by the BLS to artificially lower the unemployment rate. Despite a growing population, they claim the size of the workforce is shrinking considerably.

And speaking of fudging the numbers – something that I am sick of having to report – the Weekly Jobless Claims came in at 407,000, a drop of 32,000 from last week’s reported 439k (revised higher of course). The problem with this drop? IT DIDN’T HAPPEN! When we look at the unadjusted numbers, they ROSE by 52,490! In the DOL’s own words, “The advance number of actual initial claims under state programs, unadjusted, totaled 462,027 in the week ending Nov. 20, an increase of 52,490 from the previous week.”

And here’s more on the unadjusted data, “The advance unadjusted insured unemployment rate was 3.1 percent during the week ending Nov. 13, an increase of 0.1 percentage point from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 3,839,033, an increase of 103,105 from the preceding week.” My, that’s a lot of increases for a week that reported a large decrease.

And there you have it. I can see the news headlines already, “BIG DROP in unemployment claims shows you should go out and spend, spend, spend like a drunken sailor in front of Christmas because never ending growth is what Christmas is all about!”

Last week’s data was similarly fudged with the unadjusted figures way higher while the adjusted and reported number was way lower. It’s all false, don’t shoot the messenger – here’s Econoday whose economic interests' obviously are tied to the economy remaining artificially propped up:
Seasonal factors tied to Thanksgiving may be at play yet the trend for jobless claims is clearly positive. Initial claims fell 34,000 in the November 20 week to a far lower-than-expected level of 407,000 (prior week revised slightly higher to 441,000). The four-week average is down 7,500 to 436,000 for a nearly 20,000 improvement in the month-ago comparison.

Continuing claims fell for the third week in a row and at 142,000 posted their biggest decline since July. The four-week average fell 51,000 to 4.309 million. The unemployment rate for insured workers fell one tenth to 3.3 percent for its lowest rate of the recovery.

Claims readings, due to the problem of making weekly adjustments in shortened weeks, start to get cloudy during the holidays. This puts the focus on the four-week averages which are offering a strong signal for rising payroll gains.

LOL, riiiiggght… As artificial as a made in China Wal-Mart Christmas tree. There are those holiday factors again. Once again this was during a week that contained no holiday, it was full length, although we must fluff up the reports in front of Black Friday. What a sad joke on the American public. Again, I will remind everyone that readings above 350k are job losing weeks – we have been losing jobs despite a growing population for a very extended time – sad, but manipulation of the data like this is not sad, it is sick.

Consumer Sentiment and New Home Sales are released at 10 Eastern this morning.

North Korea says they are on the brink of war. Does the market have a global conflict priced in? Oh, that’s right, war is a profit center for the oligarchs who manufacture our money and own the military industrial complex. Must keep growth going at any cost?

Yesterday’s equity and currency moves were quite bearish. Again the big news was what occurred with the dollar and with the Euro. The Euro is toast and the dollar is toast, it truly is a race to the bottom, the only question is who reaches the bottom first. Right now I would say that the Eurozone falls apart before we do – that is well in motion already.

The financials have been hit very hard. Below is a chart of BANK, yesterday in the daily thread I pointed out that it created an inverted hammer, today price is higher confirming that some type of trend change has occurred – I’m thinking minor, but we’ll see:

The “other” events worry me far more than market events. That’s because history shows repeatedly that those other events follow economic upheaval. Right now we’re seeing lies and manipulation. We’re seeing a public that is being conditioned and repressed. I don’t like being lied to and I don’t like the general sense I’m getting…