Friday, February 5, 2010

Swarm Politics - The Art of Swarm…

George Patton: Americans love to fight. All real Americans love the sting of battle.

Americans have never shirked their responsibilities, and we’re not going to shy away from the sting of battle now. This is our character, we fight for freedom! For if we ever stop fighting for freedom we will surely lose it. There are obviously many in the world who would gladly take our freedom from us, either directly through force or covertly at the rate of 3% per year.

Surely it would behoove us to develop our strategy before entering the “battlefield,” of politics would it not? Strategy is important not only in politics and war, but in all games and all complex endeavors. A good pilot, for example, plans his flight and has flown it in his mind before even taking off. While the flight itself never goes according to plan, having the plan gives you focus to return to path as you are forced to take deviations along the way. The destination is the goal, the strategy is the way in which you plan to reach your destination.

Chinese General Commander and Strategist Sun Tzu wrote much in his Masterwork The Art of War about strategy. “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat." He went on to say, “Thus, what is of supreme importance in war is to attack the enemy's strategy.”

Sun Tzu said that you must know yourself and your enemy to ensure victory, so who and what is our “enemy?” The enemy is the power structure that unjustly controls the money power of the United States. The Constitution requires that the power to Coin money remain in the hands of the people, yet when the Federal Reserve Act was passed in 1913 the few members present turned over the money power of Congress to private interests. Victory then, is to implement Freedom’s Vision which will return the money power to the people and will remove special interest control over our political system. That’s the destination.

And what is their strategy and their tactics? For starters, they use money created from nothing and backed only by taxpayer future earnings to buy influence from all over and especially from politicians. This has become so out-of-control that these special interests have the audacity to write their own laws and then simply hand them over to their political lap dogs who pass them without any real debate and many times without even reading them. This is NOT the way our system is supposed to work and it has led to a debt based money system that is in its terminal phases.

These money brokers are practiced at “divide and conquer.” They use their paid-for politicians and other groups to bring in divisive issues designed to create internal strife that diverts people’s attention from the destination.

Another time honored tradition of these special interests is buy both sides of an issue. They literally sponsor both sides so that they are assured to have the winning sides’ favor. They are the ones who can afford to do this, it is a business and profit decision for them, their special interest does not have to align with the interests of our nation and the people in it, for unlike real people, legal entities have no conscious and no guiding morale principles. Providing those guiding principles to entities granted the privilege to exist is one of the very fundamental functions of government, yet that function has been co-opted by the very money generating capability which government surrendered in 1913!

Yet another tactic of special interests is to use their money creating power to literally buy, own, and control the media which is so vital at shaping opinions and disseminating information, good or bad, right or wrong.

And finally, the greatest tactic of all is to discredit those who simply point to the facts! Despite the history and events being clear as day, they obscure their trail, they confuse by turning the simple into the complex. Then they turn into a joke the “conspiracy nuts” who point out the realities such as the meeting that occurred in the year 1910 on Jekyll Island in which the foundation for the PRIVATE yet “Federal” in name reserve system was established. Since that time debts have grown and are now rising at exponential rates, the U.S. Treasury instead of issuing money, borrows it from them and we must pay them interest on the “deficit!” It’s absurd, but we are paying private people for the right to use the money system that belongs to us.

Who are the ones that are nuts? Who was responsible for indebting our nation far beyond any hope to repay? Who are the ones who have PLANTED their own people inside of OUR government, the very “money experts” who have allowed this situation to transpire and claim to have all the answers for the future yet had not an inkling of prior knowledge of what has already transpired?

Is there anyone left in America who does not see this? Their tactics are stale and they have been exposed. They hide behind “free speech” because that’s in the Constitution, yet they stole the power to Coin money subverting the checks and balances designed into the Constitution.

That’s the game they play! We know the enemy! The enemy are the ones hiding behind those special interest entities and yes, the Swarms and Freedom’s Vision are headed in their direction in order to reestablish the rule of law. They will label us destroyers of business and they will claim that the system will collapse without them and their “special” talents there to guide our economy. The opposite, is of course, true! It is they and their debts that hinder business and the very future of the United States. We believe in corporations and the importance of capital to concentrate. We believe that the way for that to best occur is to assert the rule of law and to cleanse and clear out the leverage that truly threatens our well being.

Sun Tsu, “If your opponent is of choleric temperament, seek to irritate him.” Did we just accomplish that? Boy, I hope so. No, we are not afraid.

And now that we know our enemy and we know their tactics, what is our strategy? Well, as Sun Tzu said, “Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.”

The key Swarm tactic is one of placing mass on target. Instead of everyone contacting their own representatives asking for support, we all contact one representative at a time. This has proven to be quite effective when large numbers can be brought to bear.

This brings us to the first of three key battle strategies:
1. When possible, attack with overwhelming force. This is what General Schwarzkopf did prior to invading Iraq, a very successful strategy. In terms of the Swarm, this means building a critical mass of Swarm members BEFORE we go political so that we overwhelm Swarm targets in order to win their support. The best way to win their support is for them to see the massive Swarm coming and thus decide to support Freedom’s Vision instead of face the wrath of the voters and citizens of the United States who are otherwise going to DEMAND that their representatives do that which is moral and JUST.

In this regard, we will be spending a fair amount of time using the Swarm to build the Swarm before we set off to accomplish implementation of Freedom’s Vision. Do not confuse this time with weakness, you must understand the importance of scale, we need everyone focused on growing the size of the Swarms.

As the Swarms grow in size, it will be possible to split the Swarm into groups, targeting several people for their support at a time.

2. Once scale is achieved, attack weak points of their defenses in order to break through defenses and then encircle the pockets of strength, isolating them.

For the Swarms this means beginning with the states who have been hit hardest by the debt backed economic policies that have wreaked havoc upon them. It means finding political allies who are potential supporters of Freedom’s Vision - those who believe in State Chartered banks, those who consider themselves to be conservative monetarily, and those who champion the cause of freedom and understand the debt and how it got there. Those will be the supporters. We build enough of them that we encircle and isolate those who live entirely on special interest debt backed money.

“Opportunities multiply as they are seized.”

3. A war is won through many small battles. Just as a journey of a thousand miles begins one step at a time, so too does war. It is important to achieve small victories, especially in the beginning and to keep the momentum going once we have begun. In this way we keep building morale and empowering the Swarm. As the Swarm begins to realize that it is truly they who hold ALL the cards, that it is THEY who are the People in “We the People,” and that it is we who hold our nation’s destiny in our own hands, then we will again become a nation “of the people, by the people, and for the people” instead of a country by the special interest for the special interest.
Now let’s talk about DEFENSE and the difference between an organization and a movement.

An organization has leaders who head the organization. Let’s say 20 people all sitting in a room, making decisions for the rest of say 20,000 followers. With this structure, it is easy to label the activities of the 20 in the room as “Conspiring” to __________. This structure is vulnerable to attack, because the head can be easily identified and removed, and/ or the lines of communication to the followers can be cut.

Now imagine 200,000 people or more, all working towards the same goal. Now it’s not as easy to call it a conspiracy, it becomes a movement. A movement has no head. It has founders who started the movement, but if the founders or current leaders are removed, then new ones pop up. That’s a movement, and that’s what we are creating.

The same thing goes for lines of communication. We need to have more than one. Take it down, it simply pops up again over there. That’s defense.

Place a label on us? What label is that? Left, Right, Radical, Anti-American, Terrorists? They can try, but any such label will NOT stick! A simple reminder of how, why, and who brought us to this destination will quickly refocus attention where it rightly and justly belongs. We are American Citizens, we will not tolerate such nonsense, we will call it what it is and we will work to remove from power those who attack American Citizens with such mislabeling. Attempting to do so will only stir up the Hive!

Finally, as Sun Tsu says, “Build your opponent a golden bridge to retreat across.” Doing so may anger many true Americans who wish to see retribution. It’s not smart to back your opponent up against a wall, you should always leave them an out, thus you can either avoid the battle altogether, or allow a shorter path to victory. With that, and in the interest of our nation, we propose that anyone who is willing to put their name onto the Freedom’s Vision supporter list be deemed to be on the side of the United States of America and her Citizens and be given special consideration.

To those who doubt our will or our courage to achieve victory we remind you of the following…

“If we are together nothing is impossible. If we are divided all will fail.”
- Winston Churchill

While we use Sun Tsu to express The Art of Swarm, make no mistake, this is America and her Freedom that is on the line...
Welcome to the Swarm!

Styx – Suite Madame Blue (America Patriotic):

Morning Update/ Market Thread 2/5

Good Morning,

Equities were substantially lower overnight but then began climbing in the early morning hours (cough, cough) and then the jobs report came out and sent futures climbing back up to about level as I type. Below is a 60 minute chart of the DOW and 5 minute of the S&P:

The dollar is close to level, bonds are close to level, oil is up slightly, and gold is down a little more.

The headline Unemployment Rate fell to 9.7%, if you can believe that, while the number of people losing their jobs was only 20,000 during the month of January, if you can believe that. Let’s just start with Econoday’s spin, note all the revisions!
Today's employment report had conflicting trends between the payroll numbers and the household survey. Although the unemployment rate fell unexpectedly, payroll jobs continue to contract. Nonfarm payroll employment in January fell 20,000, following a revised 150,000 drop in December and revised gain of 64,000 for November. In the previous employment situation report, December showed an 85,000 drop and November rose 4,000. However, today's report contains annual revisions and they were down significantly. The December payroll decrease fell short of the consensus forecast for no change in payroll jobs.

Probably the biggest positive in the report was another gain in temp help-up 52,000 after a 59,000 boost in December. This is often a leading indicator for permanent hiring.

From the household survey, the unemployment rate declined to 9.7 percent from 10.0 percent in December. The household survey for January 2010 reflects updated population estimates.

Wage inflation in January edged up to a 0.2 percent increase, following a 0.1 percent gain the month before. The median expectation was for a 0.2 percent gain in January. The average workweek rose to 33.9 in January from 33.8 in December.

Today's report, from the payroll survey, shows the economy weaker than previously believed due to downward revisions from annual updates. Also, January contracted despite the startup of the hiring of temporary Census workers. One temporary factor that could reverse next month was a sharp drop in construction-75,000 for January. This may have been weather related and may reverse and add to February. Overall, the labor sector is still struggling as employers are reluctant to hire.

Below is the full Employment report from the BLS:

Unemployment - January

Notable was the number of jobs lost in construction, at 75,000 for the month and 1.9 million since December of ‘08! Oh yeah, there’s jobs being “saved” right there. The Government added 33,000 jobs including 9,000 census workers. There’s a lasting future economy. The number of people counted as being in the civilian population fell slightly and the civilian population ratio was about flat.

Please go to page 5 and 6 of the above report and you will find discussion and tables of the annual revisions. While they present the table, they don’t bother to add up the revisions, but I did… and the number is 617,000 more jobs were lost than they originally reported! This is largely due to their use of a totally false “Birth/ Death model” for businesses. Below is a picture of their revision table, note only one month was positive, and in the average month, jobs were overestimated by 51,400 people!

But wait, reading their verbiage we find:
The November and December 2009 revisions also reflect the routine incorporation of additional sample receipts into the November final and December second preliminary estimates. The total nonfarm employment level for March 2009 was revised downward by 902,000 (930,000 on a seasonally adjusted basis), or 0.7 percent. The previously published level for December 2009 was revised downward 1,390,000 (1,363,000 on a seasonally adjusted basis).

Only 1.4 million in adjustments? Whoa.

Below is the “Alternative Table” where we can look at U-6 unemployment rate, both seasonally and non-seasonally adjusted. This rate is the closest to how unemployment used to be tracked. Thus, if you are comparing eras, like now to the Great Depression, U-6 is what you should be using… that or John William’s numbers. You can see that the not seasonally adjusted U-6 jumped from 17.1 to 18%! While miracle of miracles, the seasonally adjusted rate fell from 17.3 to 16.5%! The gap between seasonally adjusted versus not seasonally adjusted was running at .2%, and now the gap is 1.5%... to be fair, January of 2009 the gap was 1.4% reflecting large seasonal adjustments for this time of year.

Next is John William’s chart showing his alternative which is now running close to 22%. That’s a long way from 9.7%, and frankly, if I’m going to trust one number or the other, it’s going to be his. This chart will automatically update itself as John updates his data:

Chart of U.S. Unemployment

Stocks are having problems staying positive, it is obvious that wave 3 down has begun. We may have finished (1) down of 3 of 1, or should be close at any rate. That means we should get a small degree wave 2 somewhere followed by wave 3 of 3 of 1 down which should be very powerful.

McHugh shows a convoluted Head & Shoulder’s top with an SPX target of about 970 to 990. It’s a little too malformed for my taste, so I won’t show it to you, but what I do know is that there is a large volume void down in the 960 area and prices get drawn towards these voids. So, let’s just call the target range for now 960 to 990 and then we’ll have to see what happens. That’s a long way down off the top, I’m sure that the bulls will be saying, “it was a healthy correction, now we’re headed to new highs!” And we’ll bounce some gaining their confidence and then Jim Creamer will come on saying that we’re going to the moon, and the next day we will put in a lower high to kick off the larger wave 3 down of C. Just sayin.

Man, you have got to love those seasonal adjustments and revisions… kind of leaves you with a little less confidence, eh? Like maybe we have become a Zombie Nation?

The Zombies – Time of the Season:

Thursday, February 4, 2010

Post-Market Update

Today the DOW Industrials fell 268 points (2.6%), the SPX fell 34 points (3.1%), the NDX gave back 51 points (2.9%), and the RUT lead the way by losing 21 points (3.4%). Volume was substantially higher across the board – volume confirms price.

Oil lost 5.1% to close at $73, a huge move. Likewise, gold sliced through support, giving up nearly $50 in one day worth 4.3%. The dollar jumped higher and closed just a smidge under 80, bonds jumped as well, while the Euro was pummeled.

The internals were the nastiest in quite some time. This is an indication that today’s move is likely the beginning of wave 3 down of the larger wave 1. Ninety percent of the issues on the NYSE were decliners, and a tremendous 97% of the volume was on the downside. Bounces or sideways action are typical following such extreme readings, however, since this comes at what is likely the beginning of a wave, the selling may not be done and much will depend on tomorrow morning’s employment situation report for the month of January.

The number of new 52 week lows is beginning to pick up again, now at 13. It won’t take too much more of this action before they start to rise in earnest and that could set up the possibility of a Hindenburg Omen down the road, possibly in a few weeks.

Let’s look at the damage done to the charts.

On the 3 month daily chart of the SPX you can see what is clearly a very powerful down move that landed nearly on the bottom Bollinger which is now pointed steeply downwards. A larger channel is beginning to emerge and prices ended just above the 1,061 pivot point. The next lower pivot is at 1,041, the next higher is 1,090 but there is now strong overhead in the 1,078/ 1,080 area:

If we zoom into a 30 minute SPX chart, we can see the channel more clearly. It looks to me as if we received a very weak wave 2 retrace that went just above the 38.2% and now we have entered wave 3 down. Yes, rules allow for some type of flat formation, but I think the internals are not suggesting that. Note how deeply oversold the oscillators are on the short time frames:

Below is a 3 month daily chart of the DOW Industrials. They landed just above strong psychological support of the 10,000 level. That is the most bullish thing I see. The down slopping blue line is the old bear market downtrend line that we broke and are now coming back to. The volume is higher on the down moves and is more pronounced in the other indices:

The DOW's P&F chart produced a bearish target of 9,350:

Here’s a shot of the Russell 2000 which led the way downward today:

The XLF is coming up on key support here. A breakdown below this level will be bearish. Note the rising volume:

The dollar is at the 80 area, there’s a gap in the 81 to 82 area that is just begging to be filled. This is a very powerful move, continuing to move higher despite being overbought. Remember how many people were short the dollar? Remember about lopsided trades, when they get too far to one side, they MUST go the other direction, at least for a while, and nothing moves in a straight line:

Gold broke hard through support and the gold P&F chart produced a new bearish target of $930 an ounce:

The VIX made a powerful move upwards, again shadowing the third leg of the move. The upper Bollinger is moving upwards and out of the way on this 3 month chart:

Here is a two year chart to give some perspective of the VIX. Pretty clear example of a bottom megaphone, that is bullish for the VIX, bearish for equities:

Tomorrow’s action should be another clue to what’s transpiring, the jobs data with its revisions will also be important. Pretty uninspiring to see such large corrections in the data, every such occurrence is another blow to credibility and confidence. Here’s what the bulls are singing this evening:

The Band & Neil Young – Helpless:


Come Join the Swarm!

Morning Update/ Market Thread 2/4

Good Morning,

Equity futures are down this morning, below is a 30 minute snapshot of the DOW on the left and 5 minute S&P on the right with the overnight:

The dollar and bonds are both much higher, oil and gold are lower.

The Monster Employment Index for January fell from 115 to 114. The weekly Jobless Claims came in at 480,000, much higher than the forecast of 455,000, and up 10k from last week. This is a horrid number after this much time, once again showing that the effects of debt saturation and the craziness of the attempts to force more debt into the system:
Layoffs appear to have picked up through January judging by disappointing jobless data. Initial claims in the Jan. 30 week rose 8,000 to 480,00 with the prior week revised 2,000 higher to 472,000. Importantly, the Labor Department said there are no special factors in the latest week. The four-week average rose for the third straight week, up 11,750 to 468,750. The average hit a low of 440,750 in early January before the run higher. A month-to-month comparison of the four-week average against December shows little change. Equities and commodities fell in immediate reaction to the data.

Continuing claims rose 2,000 to 4.602 million in data for the Jan. 23 week. The four-week average fell 51,000 to 4.618 million. The unemployment rate for insured workers is unchanged at 3.5 percent. The change in continuing claims, a mix of new hiring and the expiration of benefits, is harder to read than the change in initial claims. In data for the Jan. 16 week, 281,442 filed emergency unemployment compensation claims bringing the total to 5.632 million. Extended benefit claims fell 39,1239 to 222,833.

Getting close to a broken trend line on that chart? Hmmm, a,b,c…

And still related to the labor statistics, Productivity numbers are out and it’s yet another “miracle” jump in productivity as more people hit the street, yet more inventory is bought and shipped in from overseas??? Huh? Yes, that’s what I said, I am raising the B.S. flag on this productivity number as well. Sorry, the GDP report was false, and now you are seeing those false numbers affect the productivity numbers in yet another example of bad data rippling through the economy and giving the pundits some more bad data with which to overestimate the condition and health of our economy. This report is nonsense. However, note the drop in labor costs…
With the earlier announced surge in fourth quarter real GDP, today's outstanding productivity report should not be much of a surprise. An output jump led to a fourth quarter spike in productivity and drop in unit labor costs. The initial estimate for fourth quarter nonfarm production came in at a strong 6.2 percent annualized boost, following a revised fourth quarter 7.2 percent gain. The latest productivity number marginally beat the market forecast for a 7.0 percent increase. Unit labor costs declined again, dropping an annualized 4.4 percent in the fourth quarter, following a revised 1.5 percent dip the prior quarter. The consensus expectation called for a 3.8 percent decrease in costs.

The fourth quarter boost in productivity reflected a 7.2 percent surge in output, following a 2.2 percent gain the prior quarter. Hours worked actually rebounded a modest 1.0 percent after a 4.7 percent annualized drop in the third quarter. Compensation cost inflation is easing as compensation rose only 1.5 percent, following a 5.5 percent boost in the third quarter.

Year-on-year, productivity improved to up 5.1 percent in the fourth quarter from 3.8 percent in the third quarter. Year-ago unit labor costs decreased to minus 2.8 percent from down 1.2 percent in the prior quarter.

The latest productivity and costs report is good for near-term corporate profits. However, they come at the expense of a continuation of a lack of hiring. Analysts will be lowering their expectations of recovery in the labor market. Equity futures dipped on the news. Also, a rise in initial jobless claims weighed on stock futures.

Next up for an update on the labor market is tomorrow's employment situation report for January which will include benchmark revisions. We could see sharp downward revisions to 2009 if the Labor Department overestimated the impact of net growth of business establishments.
Revisions for 2009? Oh dear followers of the Economic Edge, you are going to love this one. For how long have we been talking about false numbers and bad statistics? To my surprise I load up CNN and see a headline with the words “The Great Recession” (still can’t call it a depression) and read the following:

Poof: Another 800,000 jobs disappear

NEW YORK ( -- As bad as the government's jobs readings numbers have been during the Great Recession, we'll soon find out the real situation likely was worse.

Much worse.

Job losses during the recession may have been underestimated by close to a million jobs. So instead of employers cutting just over 7 million jobs from their payrolls since the economic downturn began in December 2007, it's expected that the Labor Department's new estimate will be a loss of 8 million jobs.

"It's an enormous understatement of the severity of the crisis," said Heidi Shierholz, labor economist with the Economic Policy Institute, a union-supported think tank. "It confirms that things were actually worse on the ground than what the reports suggested."

The new reading will come when the economists at the department's Bureau of Labor Statistics release their annual revision of U.S. payrolls from April 2008 through March of 2009 Friday, using data that wasn't available as the monthly readings were being estimated and reported.

Typically the revision results in only a slight change in the previous estimate -- about 0.1% to 0.2% of the total number of jobs. But there was nothing typical about the twelve month stretch that ended last March.

That period included the bankruptcy of Lehman Brothers, the seizing up of financial markets and the U.S. economy toppling close to the brink of another depression.

Battle brews over hourly jobs

The government's current readings show that 4.8 million jobs were lost in those twelve months, more than twice the jobs lost during any comparable April-March period going back to 1939, when the numbers first started to be compiled.

But the department has already given a preliminary look at this Friday's revision, and it says it believes it will show 824,000 fewer workers on payrolls than the current estimates. That would be the biggest downward revision in the 30 years for which comparisons of those adjustments is possible.

"There's certainly a disconnect between economists like myself who say the recession ended in May or June and the person on the street who says the recession hasn't ended," said John Canally, economist LPL Financial. "This report is only going to widen that gap."

Canally said the big revision is one reason that it's difficult to estimate what Friday's report will show about the labor market in January, or how investors will react to the report.

Economists surveyed by are forecasting a net gain of 13,000 jobs in January, following a loss of 85,000 jobs in December. The unemployment rate is expected to remain at 10%.

Economists say it shouldn't be a surprise that there is such a big revision this time, given the severity of the economic downturn.

"Most of the time it's reasonably accurate. But when there are very sharp changes in the economy, they tend to miss and it becomes a big problem," said Dean Baker, co-director of the Center for Economic and Policy Research.

The problem is that BLS models appear to have grossly overestimated the number of new businesses that opened during the recession.

The payroll number is created through a monthly survey of employers, but that survey misses employers who start a business during the course of the year, as well as those who have gone out of business.

So every month BLS uses what is known as a birth-death adjustment to estimate the number of jobs created or lost from that turnover in business.

During the April 2008-March 2009 period, that adjustment added jobs to the overall payroll number in 11 of the 12 months, resulting in a net gain of 717,000 jobs.

"When the numbers were coming out, the idea that we had a significant number of businesses being created didn't make sense," said Baker.

There is a concern that this problem didn't end in March of 2009. In fact, the adjustment added even more jobs -- 990,000 -- in the nine months reported since then.

So another big revision in the payroll numbers could be looming a year from now. That means this Friday's report should give pause to anyone who is depending on the official numbers to signal real improvement in the economy.

Nice job, mainstream, only about two years behind the curve. Think you’ll be reading about how DEBT SATURATION is the root cause two years from now? Hey, you never know, it’s going to be sooner than that if the Swarms are half as successful as I think they will bee.

Here’s a little beauty that friend, Don, sent me in a chain email. This one is different in that it was attached to a Wall Street Journal article:
Obama Underwrites Offshore Drilling

Too bad it's not in U.S. waters.

You read that headline correctly. Unfortunately, the Obama Administration is financing oil exploration off Brazil.

The U.S. is going to lend billions of dollars to Brazil's state-owned oil company, Petrobras, to finance exploration of the huge offshore discovery in Brazil's Tupi oil field in the Santos Basin near Rio de Janeiro. Brazil's planning minister confirmed that White House National Security Adviser James Jones met this month with Brazilian officials to talk about the loan.

The U.S. Export-Import Bank tells us it has issued a "preliminary commitment" letter to Petrobras in the amount of $2 billion and has discussed with Brazil the possibility of increasing that amount. Ex-Im Bank says it has not decided whether the money will come in the form of a direct loan or loan guarantees. Either way, this corporate foreign aid may strike some readers as odd, given that the U.S. Treasury seems desperate for cash and Petrobras is one of the largest corporations in the Americas.

But look on the bright side. If President Obama has embraced offshore drilling in Brazil, why not in the old U.S.A.? The land of the sorta free and the home of the heavily indebted has enormous offshore oil deposits, and last year ahead of the November elections, with gasoline at $4 a gallon, Congress let a ban on offshore drilling expire.

The Bush Administration's five-year plan (2007-2012) to open the outer continental shelf to oil exploration included new lease sales in the Gulf of Mexico. But in 2007 environmentalists went to court to block drilling in Alaska and in April a federal court ruled in their favor. In May, Interior Secretary Ken Salazar said his department was unsure whether that ruling applied only to Alaska or all offshore drilling. So it asked an appeals court for clarification. Late last month the court said the earlier decision applied only to Alaska, opening the way for the sale of leases in the Gulf. Mr. Salazar now says the sales will go forward on August 19.

This is progress, however slow. But it still doesn't allow the U.S. to explore in Alaska or along the East and West Coasts, which could be our equivalent of the Tupi oil fields, which are set to make Brazil a leading oil exporter. Americans are right to wonder why Mr. Obama is underwriting in Brazil what he won't allow at home.
So, the U.S. is going to lend a Brazilian oil company $2 Billion dollars. Let’s just stop right there… what gives our politicians the right to lend money to foreign companies? Where does it say that’s okay in our rule of law? Okay, but let’s follow the money trail a little here. It turns out that the largest stockholder in Petrobras is American George Soros, who was one of President Obama’s most generous financial supporters during his campaign. Now there’s change you can believe in!

Can you say “special interest?” I thought you could. Please, PLEASE, go to and register for the Swarms, help enact Freedom’s Vision which will secure our money, our freedom, our future! Or, for those having a difficult time following it all, “It’s the DEBT, stupid!”

Speaking of debt, it appears that the E.U. has agreed to backstop Greece. But now Spain and Portugal are in the spotlight, each are riddled with more debt than they can ever hope to repay. You can just see the debt saturation and the waves of damage rippling around the globe. Monetary reform IS COMING. Let’s get out there and take the money power back from the greedy and crazies who are destabilizing the world.

Where are the markets now? Right back on the 1,080 support level, eating away at support. This move looks like the wave (b) we’ve been expecting. It should find support above the previous low and then bounce upwards in wave (c) which should be over by next week. The setup? I think the jobs report tomorrow may do it. The CNN article today is the setup to expect horrid, it won’t be so bad and wave (c) may begin off this level later today or tomorrow. If not, then there’s always another Monday ramp job to kick it off.

The other, more bearish, alternative is that wave 2 is already complete, the a,b,c having already happened. I doubt that, but it's possible. We would know if the markets break the prior low. On this 30 minute chart of the SPX just after the open you can see that we made a perfect 38.2% retrace and are now falling away:

It would be quite bearish if we do make a new low here...

Beware the beautiful woman from the IMF who is bearing the gift of DEBT. If she appears at your nation’s door, be sure to tell her NO!

The Zombies – Tell Her No:

Wednesday, February 3, 2010 Open House – Now through Sunday!

Our new site, http// is now open for initial viewing!

Please bee among the first to register for the site as this registers you as a member of the Swarm! The larger the Swarm, the more sting we will have.

Welcome to the Swarm!

The goal, of course, is to enact the monetary and political reform contained within Freedom’s Vision. The American Party PAC is now fully formed to support these efforts and the National level organization is moving forward to fulfill our mission.

After signing in, please take a look around the site to get familiar – there’s a lot there, including a full featured forum called “The Hive.” Please make yourself at home, the intent is to generate discussion around the issues in an environment that is fun and inviting for people beyond just those who understand the inner workings of our monetary system.

Please keep it warm by being the first to welcome new members as they appear. Help guide them so they understand the issues, but keep them focused on the issues that are at the root of the matter! For example, tax reform would be nice, but implementing meaningful change will be much easier and far more meaningful once the monetary system is fixed and special interests are not as deeply entangled in the political process. Also, the more issues that are brought in at the beginning, the more interests there will be working against us. We are politically neutral, the Swarms are meant to implement reforms that are NOT inside of typical boxes – these are key issues to everyone no matter your affiliation.

The site is mostly finished, but you will find a few blank pages still awaiting content and the most important part, the pointy-end of the spear, Swarm Central, still is awaiting as much automation as we can build into it. The idea is to make contacting Swarm targets as easy and a fast as possible for members of the Swarm. Please provide feedback and give suggestions for improvement if you have them. You can use the Private Mail system inside the Hive to communicate, post your comments in the appropriate forum thread, or you can send your comments and suggestions to

Speaking of Swarms, we have another piece on Swarm Strategy coming out later today. The first part of the strategy is to build up the size of the Swarm. Please take this opportunity to tell other people about it wherever you can, Facebook, other forums, blogs, wherever! Point them to the site so that they can start absorbing the information that is there in preparation for the upcoming Swarms!

While you're there, make sure to sign up to follow the swarm on Twitter and Facebook.

These issues are critical to the direction and future health of our nation. Thank you for spreading the word and we look forward to Swarming with you. See you at the pointy end of the stinger!

Artwork by AZ Rainman

Morning Update/ Market Thread 2/3

Good Morning,

Equity futures are down this morning, below is an hourly of the DOW on the left and S&P overnight action on the right:

The dollar is higher, bonds are lower, both oil and gold are lower before the open.

Yesterday’s vehicle sales report showed a decline in vehicle sales from 8.5 million to 7.9 million, which was much less than forecast. Amazing that things you can actually count say one thing while statistics with all kinds of adjustments and are Indexes or percentages without a base show something else.

Speaking of something else and percentages without a base, the totally worthless MBA purchase applications “report” came in with some more wild & crazy gyrations, with the headline number swinging from -3.3% one week to +10.3% the next:
MBA's purchase index jumped 10.3 percent in the Jan. 29 week with the refinance index jumping 26.3 percent, both returning to levels from mid-December. Though very volatile from week to week, the purchase index's gain may get some notice given the big market reaction to yesterday's marginal improvement in pending home sales. For the refinance index, despite its jump, MBA continues to warn that refinancing volumes are not substantial: "We expect that rates will rise over the next few months as the Federal Reserve winds down its mortgage-backed securities program, and this will likely lead to a decline in refinance volume." Mortgage rates remain very low but are still up slightly from last year's lows. Thirty-year fixed loans averaged 5.01 percent in the latest week.

That’s just embarrassing to even call an economic report. 26.3% weekly swing in refinancing? Please. Stuff like this simply needs to go away, kept only as a lesson in how to destroy confidence and undermine an economy.

If that report tells you nothing you can believe in, the next two reports won’t make you feel any better whatsoever…

The Challenger Job cut Report jumped from 45,094 announced layoffs in December to 71,482 in January. Hmmm, Econoday seems confused by raw data:
Challenger's count of layoff announcements jumped to 71,482 in January, the worst result since August and well above December's 45,094. Cuts in the retail sector, both in seasonal and regular jobs, were the central factor behind January's increase. In an offset, overall hiring intentions held solid, at 31,381 vs. December's 35,592. Challenger's data are difficult to use as an indication for monthly payrolls. The data are unadjusted and company announcements don't immediately equate to actual job actions. ADP's payroll count, based on payroll processing for its large customer base, offers a direct, if not always accurate, indication on monthly payrolls. ADP will be posted at 8:15 a.m. ET.

The ADP report came in with a loss of 22,000 in January, an improvement over the 84,000 loss in December:
ADP private payroll count for January fell 22,000, a result that will likely edge expectations lower for Friday's employment report where expectations are centered at no change for non-farm employment

Are both these reports accurate, with one suggesting a jump in layoffs and another saying employment is improving? Or, are they both just simply worthless data that also belong in the dustbin of history? I say the latter. I’m sure you have friends who are reliable and always there for you over time? You trust them, right? Well, these reports are not like that, both these reports are simply worthless and have been for the last couple of years.

Below is a 30 minute chart of the SPX. You can see the entire decline over the past couple of weeks and how it ended in an expanding formation at the bottom which has now obviously broken upwards. Sure looks like a clean wave 1 down and now 2 up. Expanding formations like that usually usher in relatively strong moves. I fully expect that we’ll likely see a 61.8% retrace, or more, by the time this rally is over. So far it has hit the 38.2% retrace of the decline. The short term indicators up to the one hour level are way overbought, thus I would expect some decline or sideways action. It appears to me that what you see off the bottom here is wave (a) up of what is likely to be an a,b,c type of move. Wave b should be next:

This move still looks very corrective in nature, coming on much lower volume than the previous fall. Of the indices, the DOW is holding up the best.

Here’s a daily chart of the XLF. Note the volume pattern – again, as prices rise, volume falls off. That is simply not what you see when a market is genuinely headed higher. Note the fresh buy signal on the daily stochastic. Again, I think we pause and then head higher before the next serious wave down begins:

Hey, crossroads seem to come and go – and that’s about the only way I can think of to introduce Melissa, LOL…

The Allman Brothers Band - Melissa

Tuesday, February 2, 2010

Zombie Nation – The Rise of the Mathematical Plague…


Dead, yet still walking.

Soul long since gone, it doesn’t take much to send the undead to the realm of simply being dead. No silver bullet, no wooden stake to the heart. Any old weapon will work on a rotting zombie corpse.

What set off this zombie epidemic? Why, that would be the exponential rise of the Mathematical Plague!

You can see the zombies in our banking system if you look under their mark-up… everyone knows they are there, but few will acknowledge their zombified presence. What you may not realize is that there are even mathematical zombies living amongst you in your own neighborhood! That’s right, you may also be living in a city that is a mathematical zombie, and the odds are that you are living in a state that is a mathematical zombie as well.

Most importantly, whether you realize it or not, if you are a U.S. taxpaying citizen, you have already been touched by the plague and are infected yourself! Yes, we are all now living in a mathematical Zombie Nation! Ahhhh!

Ha! You don’t think it’s gotten you yet, do you? Zombies are always the last to realize they have transitioned to the realm of the undead! Just wait until you see the math, YOUR math. You have the plague, we all have the plague.

This zombie story and the rise of the Mathematical Plague begins in the year 1910 when on the evening of November 22, 1910, men representing one quarter of the worlds’ banking interests met on Jekyll Island to produce in one week what would become the guts of the current Federal Reserve Act. This meeting was attended by; Sen. Aldrich, A.P. Andrews (Assistant Secretary of the Treasury Department), Paul Warburg (a naturalized German representing Kuhn, Loeb & Co.), Frank A. Vanderlip (president of the National City Bank of New York), Henry P. Davison (senior partner of J. P. Morgan Company), Charles D. Norton (president of the Morgan-dominated First National Bank of New York), and Benjamin Strong (representing J. P. Morgan).

Then, taking advantage of a technicality in which Congress failed to close their session as required when leaving for Christmas recess, the Federal Reserve Act was then passed with very few members in attendance on behalf of those special interests. This Act set in motion the privately owned Federal Reserve system, the third federal reserve system in the United State’s history. The Federal Reserve Act authorized the establishment of a Federal Reserve Corporation, with a Board of Directors (The Federal Reserve Board) to run it. The United States was divided into 12 Federal Reserve Districts. The Federal Reserve banks are owned by the member banks which in turn are owned by private interests. The largest banks are by far the largest owners. There is nothing “Federal” about them besides their highly placed personnel within our government. Is there any wonder that the bailouts have focused on the banks and not the people?

The system of selling debt mostly to those very bankers to finance our deficits was born and the debts have been building ever since. The money is not created by the government, it is borrowed from the private banks. That means that interest on the debt goes to them. This took the money making power from the people and from Congress and it still resides with those same private interests today. Remember, the money system is different than the banking system, two completely separate things.

As the debt and interest build over time, the rate of growth begins to pick up speed and then the rate of growth in debt begins to outstrip the rate of growth in income. That is happening now and this has led to some very nasty math zombies. Anytime you hear people talk about inflation and growth rates, the hackles should stand up on the back of your zombie neck, knowing that such rates are not sustainable over time! The Good Dr. Bartlett explains the mathematical plague well (Spend some Time with the Good Dr. Bartlett…).

Since the time the Federal Reserve Act was enacted, we have gone from figures in the thousands representing a lot of wealth to figures in the millions, and then to billions and now on to trillions. This is the end of the zombie line – no currency has ever successfully made it into the next level, the quadrillions! Also note that each successive set of three zeros came in a shorter time frame than the last. That’s an exponential rise.

The math of debt led to the latest financial crisis. The debt that underlies this crisis has not gone away and is rippling around the globe today. Economic forces have been trying to clear the debt out, just like a body attempts to reject foreign invaders. Unfortunately, instead of ejecting the poison, your own government, now bought off by the special interests, is continuing to administer more and more poison as the cure to your plague. More and more zombies are catching on, here’s Dylan Ratigan explaining that the math of the recent bailouts and backstops is much greater than you are being told:

Dylan Ratigan - Fed Gave Banks Access to $23.7 Trillion Not $700 Billion!

Access to $23.7 Trillion!? Oh my. That’s $77,198 per person in the United States! For my family of four that’s $308,792. Now, I don’t know about you, but I don’t really have that type of money just floating around in a drawer and I don’t really appreciate Uncle Sam using my money, or my future earnings, or my children’s future earnings to backstop the people doing High Frequency Trading, paying their bonuses, or using my money to artificially inflate the price of oil! No, I don’t believe the nation would have failed had we let the big banks go! In fact, I believe the exact opposite is true, that failing to let them go is going to ruin our country, and has given us the kiss of the mathematical plague!

On the day that TARP rolled out, I sat down and began crunching the numbers typing out an article I then called Death by Numbers. At that time we ran through the math of debt at the personal level, the Federal level current account deficit, unfunded Federal level obligations (the most conservative number), and without even counting debts on the state and local government levels we came to an astonishing $303,053 per person in the United States, or $1,212,212 for my family of Four!

Today there are 307 million people in the U.S. and about 140 million of us are workers. Get this… the amount of debt that produced those numbers is equal to $662,387 for every WORKER in the United States (currently 140 million). Looking a little zombie green in the mirror?

Since that time we have tacked on another $2.3 Trillion onto the current account deficit, bringing it up to $12.3 Trillion – that’s just Federal level current debt, nothing else (doesn’t include trillions poured into the GSEs and other programs as Ratigan points out). And now the Senate has voted to raise the debt ceiling by another $1.9 Trillion, bringing the expected current account debt by the end of 2010 up to $14.3 Trillion! That $1.9 Trillion represents $6,188 for every worker in America, just for the federal level DEBT added on just this year, a year in which the government will only take in $2.2 Trillion!

Next year? The Administration just released their $3.8 Trillion Budget, another $1.6 Trillion shortfall, and that is WITH the passing of Cap and Trade to generate billions in new tax dollars. See the progression of bad math fellow zombies?

By the end of 2011, each man, woman, and newborn child will be responsible to service $321,283 in debt. Each worker in the United States will be responsible to service $704,530! For the four working members of my family, that is an obligation of more than $2.8 million. Just the interest on $704,530 at 5%, JUST THE INTEREST, is $35,266 per year! That’s getting up towards what an average worker earns, just for the interest, no principle included! Is that skin I see sloughing off your face?

But wait, as they say on the infomercial, there’s more! That figure doesn’t include debt on the state level. A site called Illinois is broke shows that each residence in the state of Illinois is indebted by the state for $25,000 per person! Remember, these are the same people who already owe $321,283 each! True, Illinois is at the high end, but we still haven’t talked about debt hiding out in the GSEs, at the Treasury, and at the many layers of local government.

That’s right fellow working American. You, too, by the end of 2011 are responsible for at least $704,530! And that’s using the most conservative numbers for future obligations! Think the average family with two workers and two children can support more than $2 million in debts? I don’t. The math is clearly not sustainable and that’s exactly why the current monetary system is going to change. Until that time, we’re all zombies. Best get on it now because later we might find out that Lady Liberty’s skipped town and is no longer there!

The Zombies – She’s Not There!

Artwork by AZ Rainman

Winter Warning – DOW 1,000 is Not a Silly Number…

Ian Gordon of the Longwave Group specializes in studying the Kondratieff economic cycles known as Spring, Summer, Fall, and Winter. As you may know, Kondratieff was taken, held, and executed as a political prisoner for his beliefs. What happened to him is fascinating, let me distract you momentarily by posting a Wikipedia entry on the history of his life:

Nikolai Dimitrievich Kondratiev was born on 4 March 1892 in the province of Kostroma, north of Moscow, into a peasant family. He was tutored at the University of St. Petersburg before the revolution by Mikhail Tugan Baranovsky. A member of the Socialist-Revolutionary Party, his initial professional work was in the area of agricultural economics and statistics and the problem of food supplies. On 5 October 1917, at the age of 25, he was appointed Minister of Supply of the last Alexander Kerensky government, which lasted for only a few days.

After the revolution, he dedicated his attention to academic research. In 1919, he was appointed to a teaching post at the Agricultural Academy of Peter the Great, and in October 1920 he founded the Institute of Conjuncture, in Moscow. As its first director, he developed the institute, from just a couple of scientists, into a large and respected institution with 51 researchers by 1923.

In 1923, Kondratiev intervened in the debate about the "Scissors Crisis", following the general opinion of his colleagues. In 1923-5, he worked on a five-year plan for the development of Soviet agriculture. In 1924, after publishing his first book, presenting the first tentative version of his theory of major cycles, Kondratiev travelled to England, Germany, Canada and the United States, and visited several universities before returning to Russia.

A proponent of the Soviet New Economic Policy (NEP), Kondratiev favored the strategic option for the primacy of agriculture and the industrial production of consumer goods, over the development of heavy industry. Kondratiev's influence on economic policy lasted until 1925, declined in 1926 and ended by 1927. Around this time, the NEP was dissolved by a political shift in the leadership of the Communist Party.

Kondratiev was removed from the directorship of the Institute of Conjuncture in 1928 and arrested in July 1930, accused of being a member of a "Peasants Labour Party" (a non-existent party invented by NKVD). As early as August 1930, Soviet Premier Joseph Stalin wrote a letter to Prime Minister Vyacheslav Molotov asking for the execution of Kondratiev.

Convicted as a "kulak-professor" and sentenced to 8 years in prison, Kondratiev served his sentence, from February 1932 onwards, at Suzdal, near Moscow. Although his health deteriorated under poor conditions, Kondratiev continued his research and decided to prepare five new books, as he mentioned in a letter to his wife. Some of these texts were indeed completed and were published in Russian.

His last letter was sent to his daughter, Elena Kondratieva, on 31 August 1938. Shortly afterwards, on 17 September during Stalin's Great Purge, he was subjected to a second trial, condemned to ten years without the right to correspond with the outside world. However, Kondratiev was executed by firing squad on the same day the sentence was issued. Kondratiev was 46 at the time of his execution. He was rehabilitated almost fifty years later, on 16 July 1987. His collected works were first translated into English by Stephen S. Wilson in 1998 (see Bibliography).

Captivating story, and similar to how Martin Armstrong is being held today right here in the U.S.A. Of course much of Armstrong’s work is rooted in Kondratieff’s. The book, The Fourth Turning is also rooted in these cycles.

Ian Gordon at the Longwave Group understands these cycles and has written much about them. They asked that I share their latest work with you.

The first one that I’ll share was published in November and is called, DOW 1,000 is Not a Silly Number. It's a terrific read with many outstanding charts, I highly recommend that you spend some time understanding them. In particular the charts displaying historic price to earnings ratios and where we sit now are important. Pay attention to where the market would have to be in order to call it fairly priced. Hint – a lot lower than here.

Dow 1000 is Not a Silly Number

Gordon’s second article is called Winter Warning. There he shows his cycle chart that you may have seen before:

He then he goes on to describe Autumn as having ended in the year 2000 here and 20 years ago in Japan. Good stuff in this article too. Thank you to Longwave for sharing!

Winter Warning

Economic Bloggers Survey – Q1 of 2010…

Below is a look at the current survey of top economic bloggers. I had been invited before but did not participate, however, I did take part in this one. I found that most of the survey questions forced me into the same old boxes – it’s either this or that. No, the real answer is NEITHER this or that, it is over there (Freedom’s Vision)!

Nonetheless, it is fair in that it measures the sentiment of economic bloggers, and in this report the tone is leaning more negative with concerns over the budget deficit and rising debt levels. It’s an interesting skim with some well presented charts.

KEY FINDINGS - The Economy

Economics bloggers have a bleak outlook of the U.S. economy, with 48 percent responding that conditions are worse than official statistics indicate, and only 6 percent saying it is better. Seven percent of respondents say the economy is strong, while 33 percent say it is weak, with the remainder saying it is mixed.

When asked for the growth prospects for key measures of economic activity over the next three years, the largest increases are expected to be in interest rates, inflation, and the budget deficit. U.S. output and jobs are expected to increase, but with about half the intensity of growth in global output. The respondents say the prospects for the entrepreneurial economy in the United States are grim as well. The panel assesses conditions as “bad” or “very bad” for small business (52 percent) and bank lending to business (51 percent) and individuals (50 percent). The outlook for entrepreneurs is a relative bright spot, with opinions mixed between bad conditions (36 percent) and good (26 percent).

Economic Bloggers Survey Q1 2010v12

Morning Update/ Market Thread 2/2

Good Morning,

Equity futures are up a little overnight after barely breaking out of the down trend channel yesterday. Below is an hourly chart of the DOW on the left showing the channel and the Fibonacci retrace levels. On the right is a 5 minute version of the S&P showing the overnight action:

The dollar is down slightly, bonds are up a little, oil is up a little, and gold is adding onto its large gain yesterday, now at $1,114 and ounce, $34 more than I reported this time yesterday.

The Redbook same store sales along with the worthless Goldman ICSC showed their usual small weekly and YOY sales gains, again not real and not worth discussing. Pending home sales is released at 10 Eastern and vehicle sales will be reported throughout the day.

Yesterday Construction Spending came in less than expected again with a -1.2% reading month over month, and -9.9% year over year. As in minus 10% from the same time last year, at the height of the crisis? Wow. Oh yeah, GDP plus 5.7%... because of re-inventory buying stuff that’s made in China to sit on shelves waiting for debt saturated consumers to come buy it. Please.

The ISM Manufacturing Index did rise to 58.4 which was higher than expectations. Remember, anything above 50 is supposed to show expansion… it will take years at that rate to get us back to the level of prior activity. I really don’t like indexes like this because they do not show anything but relativity. But the ISM is a strange one based on surveys anyway. But get this… yesterday the Institute for Supply Management (ISM) moved to change the definition of growth from a reading of 50 to any reading above 42, LOL! Yep, it seems that history shows to them, that the economy is expanding when the Manufacturing ISM is above 42 and therefore anything over 42 shows expansion. Sound reasonable? Based on what? Trumped up GDP data! Based on what? Trumped up inflation data and mark to fantasy financial assets!

See how the whole system gets corrupted? It starts out slowly and one point of bad data compiles upon itself, amazing to watch, the world of investing is now completely disconnected from reality. No good measurements means investors and economists are worse than blind, they are being fooled and that leads to misallocating capital and it leads to mispriced risk.

Below is a 3 month chart of the SPX. Note that yesterday’s action brought it right back to the 1,091 pivot, the base of the old sideways zone. 1,100 will be the next resistance, you can see that the oscillators are oversold on the daily and will likely produce buy signals fairly soon. You can’t see the volume here, but volume on the advance yesterday was much lower than during the previous decline, showing the corrective nature of the advance which was not that strong – volume confirms price:

Below is a 10 minute version of the SPX that I put Fibonacci retracement levels on. At the 23.6% already, should run higher in waves, reaching the 50% to 61.8% level with in the next week or two. That would be typical wave 2 action, but wave 2 can run anywhere from here to the height of the prior wave, the old highs:

All the short term stochastics up to the hourly are now overbought, therefore I would expect a pullback at some point soon. I would expect that wave 2 would unfold as an a,b,c movement with each leg itself broken into an a,b,c… We may be close to completing the first (a) move of (a) by my reckoning.

The President’s $3.8 Trillion budget announced yesterday is $1.6 Trillion above current year receipts. And we learned that the budget is based upon gaining massive new revenue from cap & trade which hasn’t even been passed yet. That’s called betting on the come. Of course a “budget” is just a plan, and none of our government’s plans in regards to budgets have been working out as envisioned. I am sure 2011’s budget will only be different in terms of scale. Yep, American citizens ultimately pay the price for such debt backed folly, they are the ones who have been tied to the whipping post….

Allman Brothers Band - Whipping Post:

Monday, February 1, 2010

Morning Update/ Market Thread 2/1

Good Morning,

Today’s Money Monday, is there any question which direction the equity futures went overnight? Up, of course:

If you’re betting on the Monday effect to continue, beware, it’s looking a lot like a bearish flag. The dollar is taking a little breather, bonds are about level, oil is hanging on just above $73, and gold is holding just above $1,080 support for now. Funny, but the SPX, as someone pointed out, is also at the 1,080 level:

Remember when the Euro broke its rising wedge and I said it would likely fall to the base of the wedge? Well, it’s well on its way, the 1.35 target of the bear flag looks to be coming up pretty soon:

Personal Income and Outlays report came in at a supposed .3% growth gain in December, but the wages and salaries portion only showed a .1% rise. Here’s Econoday:
This morning's personal income report definitely requires some digging beyond the headline numbers. Income was not as good as the headline but spending might be a little better. Personal income in December advanced 0.4 percent, following a gain of 0.5 percent in November. The latest number beat the median forecast for an increase of 0.3 percent. But where it really counts, income barely rose. The important wages and salaries component edged up 0.1 percent after improving 0.4 percent increase in November. Strength in December income was in proprietors' income (notably, the farm component) and in rental income.

Spending shifted around a bit last quarter as personal consumption posted only a 0.2 percent gain in December, following a 0.7 percent boost the month before. The December gain came in below expectations for a 0.3 percent rise in PCEs. However, November was revised up from the original estimate of 0.5 percent. Apparently, most of the holiday shopping was front loaded in post-Thanksgiving surge as December sales slowed.

Inflation was quite soft in December. Headline PCE price inflation slowed further in December, rising only 0.1 percent, following a 0.3 percent rise the month before. Meanwhile, core PCE inflation in December firmed incrementally to a 0.1 percent increase, following no change in November. The consensus had projected a 0.1 percent uptick in the core rate.

Today's income report does not bode well for spending in coming months by the average consumer as wages & salaries are being constrained by lack of income growth. Equities should focus on the softness in wages & salaries – and not like it.

Soft inflation in December? Note how the various inflation measurements are all saying something else. That’s what happens when the data is massaged by a bunch of different groups and there is little transparency.

Manufacturing ISM and Construction spending come out at 10 Eastern. Friday is the Employment Situation Report for January, the consensus is for a Zero number…

Obama’s Budget for 2011 is set at $3.8 Trillion! Right now we are taking in $2.2 Trillion in total income, so that leaves him only $1.6T short at first whack! No biggie, just tack on yet another $11,428 per worker in America just in federal level debt.

Oh, but it was built under the principles of “Paygo!” Wow, I am so impressed with that word, aren’t you?

According to the Administration, “If Congress passed the budget, the deficit in 2011 would reach 8.3% of the U.S. gross domestic product -- down from a high this year of 10.6%. By 2014, it would drop to 3.9%.”

Ahh, okay. Evidently they are thinking people still believe in the Tooth Fairy. By the way, the actual percentage of REAL GDP is actually MUCH higher, again due to the over statement of GDP by a large margin. The game is to overstate growth and to understate DEBT. This is the same game subprime mortgage companies helped people play with mortgages they couldn’t afford.

Technically we are oversold but still inside of the downtrend channel. Again, watch for a break of the upper channel to know that wave 2 up has begun. There was a fake out on Friday, but we’re not too far from it again.

January was a negative month for stocks, and the past two weeks have been very negative. The character of the market has changed. This is very similar to the change of character near the ’07 top. Takes a while to set in.

On the SPX 1,080 is still the key level. SPX 1,090 should be fairly strong overhead, then 1,100. 1,107 is the next higher pivot, 1,061, then 1,041 are the next support levels. The character of the wave 2, when it comes, is going to be important to watch. It is Monday after all…

The Allman Brothers Band - Stormy Monday:

Sunday, January 31, 2010

Frontline – The Wizards of Consumer Lending, Credit Cards…

Listen carefully near the beginning as to why this was allowed to get out of control – “lobbying.”

Can you say “Freedom’s Vision – Securing Our Money, Our Freedom, Our Future!?” I thought you could…