Saturday, November 20, 2010

Weekend Open Thread...

Friday, November 19, 2010

Morning Update/ Market Thread 11/19

Good Morning,

Equity futures are down slightly, the dollar is up slightly, bonds are up a little, while both oil and gold are down more significantly.

Well it’s Options Expiration, and so there’s yet another reason to monkey with the markets – what will it be today? Do we have any good reason to manipulate data or to have the President get on T.V. and state how happy he is that we can produce funny money and POMO our way into creating a FRAUDULENT IPO for GM? Best of luck to all the suckers who bought it, and note that when the public could finally have access to it, it opened at $36 and promptly melted down to just above $33, losing nearly 10% right off the bat. As Forrest would say, “Stupid is as stupid does.”

And what a loser of a President and Administration...

As James Carville said yesterday, "If Hillary gave up one of her balls and gave it to Obama, he’d have two."

I think that’s being too generous, I don’t see that he has one to begin with. What I do see are tracks running up his back from being run over by the banking interests, that’s about it.

What a great market run up yesterday on nothing volume. And get this, of that pathetic volume, GM accounted for nearly a quarter of the volume traded on the Big Board. Sweet, sweet POMO. Could it have gone off like that without all the easy money? No way. And now not only am I seeing that the market is completely rigged, but I’m also coming to the conclusion that the economic data reported to us has been completely hijacked to be used for manipulation purposes as well. The Philadelphia Fed data yesterday was simply disconnected from reality as it made one of the largest advances in history. This comes despite data from other regions to the contrary, and it leaves me noting how the data floated better prior to the elections, fell afterwards, and then on the day they must show the world how successfully they can create money while robbing others of money via the GM IPO, the data magically is wonderful (margin compression aside). But hey, Obama had something “wonderful” to read from his teleprompter.

Boy, we can all be proud of that.

And the thing is that despite the media hype over the IPO, the people aren’t buying it! Even those who don’t understand the mechanics of it understand that it’s just simply false. And thus everyday that passes with more and more FRAUD coming to light, confidence crumbles because there are still no adults to be found, and because, well, Obama has yet to grow a pair.

And the bankers are doing a full-court-press on Ireland to accept a bailout. The people of Ireland are just flat out pissed, as they should be. The leadership is trying to negotiate terms in trying to keep their corporate tax rate low, but ultimately any “bailout” would simply put the people on the hook for money to bail the banks out of their problems. Of course after Ireland comes Portugal, then Spain, then Italy, then all the rest of Europe. It really is the theatre of the absurd as all the developed world is bankrupt as are all the large banks – and thus it is the bankrupt offering to bailout the bankrupt, but again it all comes down to power, control, and the using of other people’s productive efforts on behalf of the few.

And speaking of the few, yesterday Goldman announced they are promoting a record number of people to “Managing Directors.” Yet another in-your-face to people who expend their life’s energy on something REAL, they wind up supporting these debt pushing criminals who create nothing but havoc around the globe. Congrats on the promotion, I want all those who are being promoted to know that I hold them directly responsible for supporting the continued destruction of America.

The municipal bond funds took another hit yesterday, and the media is not talking about it yet. This is very significant in that it means small government is going to have more trouble raising funds going forward, not to mention the direct havoc it will raise within people’s investment accounts if it continues.

On the 30 minute chart of the SPX below you can see that the run up yesterday took prices up to a perfect 50% retracement level which is also coincident with overhead resistance at 1200:

So far that move looks corrective and it might be the b wave of an a,b,c correction. It could be over, and if so we should see more selling soon. However there are several possible counts here and I am cautious as after today we are heading into a holiday week next week, and then the traditionally low volume period from there thru the end of the year. Low volume plus tons of POMO money will likely bring us what, higher gas prices for the New Year? That, or it may be used to bet against the next bank victim in line, Portugal, whose bonds are surely next to get the “take the rescue or else” shake it up treatment.

Thursday, November 18, 2010

Morning Update/ Market Thread 11/18

Good Morning,

Equity futures are higher this morning going along for a media circus GM IPO/ POMO frenzy. Bonds are lower, the dollar is lower, while oil and gold are both higher.

The GM IPO, as if you can refer to it as “initial,” is nothing but more criminal behavior. The offering wasn’t even made available to the public, the same public who spent billions inappropriately bailing out the wrecked FINANCIAL institution that GM became. Automobiles? Forget it! And even the poor workers didn’t understand that it was GMAC that sunk GM while their bosses and the media attacked the unions. And nothing has changed – they are back into the same risk filled financial gambling that they were in before. It’s not about the cars people, it’s only about the money. And GM through GMAC was PRINTING MONEY! They PRINTED far more money (from nothing) than they made cars! Still do!

That’s right, GMAC was making all kinds of loans from subprime homes to automobiles and they were making money from thin air every time they originated a loan. Of course they buried GMAC, but then THIS JULY GM bought subprime lender AmeriCredit in order to crank up their printing presses yet again. Oh, and that was financed on YOUR nickel. LOL, and people are talking about cars and unions as if they are important to this company – not even.

And where did the money for the IPO come from? Gee, the “Fed” is pouring $8 billion a day into the market… thus the “largest offering in history” only absorbed 2.5 days of POMO!

And cars are most certainly a bubble themselves. Run up to completely unbelievable prices on the back of longer financing terms and artificially low interest rates. This too shall pass as wage arbitraged Americans who earn $10 an hour are not going to be able to afford $30,000 autos forever.

Weekly Jobless Claims were reported for the prior week at 439,000, that is up from the prior week’s 435k which was revised up to 437k. Here’s Econoday, and then we can discuss reality:
Jobless claims held onto the big improvement of the prior week, rising only 2,000 to a lower-than-expected level of 439,000 in the November 13 week (prior week revised 2,000 higher to 437,000). The four-week average, at 443,000 and down more than 15,000 from a month ago, is signaling solid improvement for November payrolls.

Continuing claims have also been coming down, falling 48,000 in the November 6 week to 4.295 million. The four-week average of 4.353 million is down 133,000 from its month-ago comparison. The unemployment rate for insured workers fell one tenth to 3.4 percent.

Special factors aren't a factor in the improvement underway though the November 13 week does include Veterans Day. Jobless claims remain one of the brightest spots on the economic calendar.

Reality. Last week had Veteran’s Day in it and government offices were closed. Despite that, the unadjusted actual number of claims increased by 28,808 people during the week. There were 3.8 million people who made Emergency Unemployment Claims during that week. Thousands are falling off those rolls every week as they have simply been out of work for too long. And all 3.8 million are going to lose their benefits by the end of the month unless those benefits are extended yet again.

Any number greater than 350k reflects a loss of jobs – period. And as Mish’s article I linked yesterday shows, the number of people truly unemployed is far greater than what’s being reported – 6 million in the past year.

So called “Leading” Indicators and the Philly Fed Index are released at 10 Eastern this morning.

Yesterday the VIX closed back inside the range of its Bollinger Bands thus producing a market buy signal:

Note that the Bollingers were narrow, and thus it didn’t take much movement to send the VIX outside of the range. This set up for me is indicative of a bounce in the market, but not necessarily a change of trend. It was noted in our daily thread yesterday that a VIX buy signal preceded the Flash Crash last May by about one week:

Indeed, stock prices are about the same exact place as they were then – similar setup with prices sliding, then a bounce, then the real selling wiped off 1,000 DOW points in 15 minutes. No two moves are ever identical and I don’t expect that now, but I do think that the entire rally since QE was announced is false and will be undone.

There are still bearish divergences in the longer time frame and the stochastic is divergent from price still on this decline even though it is approaching oversold.

The dollar and euro are finding respective resistance and support on their channel boundaries. It’s still in question as to whether or not those boundaries break – if they do then the down move in the dollar was an a,b,c – but if not then it may be a 5 wave move:

I think the action of the week belongs to the municipal bond market where rates are skyrocketing and prices got pummeled. They did recover some, but so far just a fraction. And yesterday the city of Philadelphia’s debt got downgraded as did San Francisco’s. Of course this occurs AFTER the market has pummeled their bonds – the rating agencies are again WORSE THAN WORTHLESS as their conflicted and corrupt business models cause great distortion and harm to our economy.

Wednesday, November 17, 2010

Morning Update/ Market Thread 11/17

Good Morning,

Equity futures are roughly flat this morning following yesterday’s very powerful 93% volume down day. The dollar and bonds are also roughly flat, while oil and gold are up just a little. It’s typical to pause after such a powerful move and it appears that we are moving sideways, possibly creating a flag, just above support at DOW 11,000.

The still worthless Purchase Applications report from the hypocritical Mortgage Banker’s Association showed a dramatic falloff in both purchase (-5.5%) and refinance (-16.5%) activity, for a composite loss of 14.4%. Here’s Econoday:
Purchase activity, after two prior weeks of strength, slowed in the November 12 week, down 5.0 percent according to the Mortgage Bankers Association. Refinance activity fell 16.5 percent. MBA blamed the drops, especially for refinancing, to a surge in rates including an 18 basis point jump for 30-year loans to an average 4.46 percent.

And there you have it. The surge in rates followed the QE2 announcement which means that the Fed’s actions are causing direct harm.

Housing Starts for October just released came in as a complete disaster. September was reported at 610,000, the consensus was looking for 590,000, but the actual came in at only 519,000! This number is only a fraction of peak, yet another depression era print:
Homebuilders appear to be more pessimistic about the housing sector as housing starts dropped significantly in October. Housing starts in October fell 11.7 percent, following a downwardly revised 4.2 percent decline the month before (previously up 0.3 percent). The October annualized pace of 0.519 million units was notably lower than analysts' forecast for 0.590 million units and is down 1.9 percent on a year-ago basis. The dip in October was led by a monthly 43.5 percent plunge in multifamily starts, following a 19.2 percent decrease in September. The single-family component slipped 1.1 percent after edging up 2.1 percent the prior month.

But looking ahead, the outlook is not so negative but is still soft. Permits edged up in October, rising 0.2 percent after declining 4.2 percent in September. Overall permits came in at an annualized rate of 0.550 million units and are down 4.5 percent on a year-ago basis. The rebound was led by the single family component which was up 0.5 percent while multifamily permits eased 0.7 percent.

Due to continued concern over excessive supply and potential additions from pending foreclosures, homebuilders remain extremely cautious about new construction with starts remaining new record lows.

Note how all of the sudden all the reports have turned negative with big negative revisions? Contrast that with how they magically levitated just prior to the elections. Nothing is real anymore in the economy and markets, it’s all a central banker led circus. In fact, I’m beginning to view the markets less in the technical sense and more in the banker sense – not political, BANKER. By this I mean that all one has to do is to look at whether the bankers are getting their way at robbing, hiding, and committing FRAUD. If they are getting their way, then the markets go up… when they want something (like Ireland to take on more debt) then markets begin to sink as a threat of imminent implosion if they don’t get their way, and markets do actually implode if they don’t get their way like in ’08 when mark-to-fantasy accounting was temporarily halted. This new market view sees politicians as simply an obscuring interface between the banks and the public who are being manipulated and robbed.

Meanwhile the latest holographic economic report comes with the CPI following the PPI in being both flat month over month, and in being lower than expected at the core level. The month to month consensus was looking for a .4% rise, and the actual came in at .2%. Less food & energy it was flat. Of course these numbers are contrived. Here’s Econoday:
Headline inflation worsened but only marginally and less than forecast. The overall CPI in October posted a 0.2 percent boost, following a 0.1 percent rise in September. The market consensus had expected a 0.4 percent boost for the latest month. Excluding food and energy, CPI inflation was unchanged for the third month in a row. Analysts had projected a 0.1 percent rise for October.

By major components, energy increased a strong 2.6 percent, following a 0.7 percent boost in September. Most of the latest gain was from a 4.6 percent surge in gasoline prices. According to the Bureau of Labor Statistics, 90 percent of the CPI increase came from the increase in gasoline. Food slowed to a 0.1 percent rise after gaining 0.3 percent the month before.

Weakness in the core was led by declines in indexes for new vehicles, used cars and trucks, apparel, recreation, and tobacco. Also, shelter rose only 0.1 percent.

Year-on-year, overall CPI inflation firmed to 1.2 (seasonally adjusted) from 1.1 percent September. The core rate in September slipped to 0.6 percent from 0.8 percent the prior month. On an unadjusted year-ago basis, the headline number was up 1.2 percent in October while the core was up 0.6 percent.

On the news, Treasury yields eased marginally. Today's report corroborates the view by many at the Fed that inflation is too low as the core has been flat for three months. Nonetheless, consumers are noticing higher gasoline prices and not noticing weak shelter costs. But other components in the core showing declines support the Fed's concern about price weakness in the economy. With lower than expected housing starts also out this morning, the odds of continued QE2 went up.

Food only rose .1%? Wow, they must be measuring price on planet Morgan.

And the problem with QE is obvious. They can’t control where the flood of money goes – where it’s not going is your wages or to pay down your debt – the two places it’s needed. Where it is going is straight out of the country, and into oil and other commodities where it works against the people who need those things to live. Businesses also use those things as inputs, and thus margin compression is occurring.

And so, the latest gimmick to manipulate and control the price of everything is to tamper with the margin requirement! The latest margin adjustment this morning comes to, get this, Irish debt! That’s right, for the second time in two weeks, Clearnet is increasing margin requirement for Irish government bonds (Clearnet Announces Management of Sovereign Credit Risk for RepoClear Service).

What effect will this have? Well, it will make it harder to buy Irish debt on margin, which could spike borrowing costs higher! This also happened just prior to the last surge. Is it intentional? You bet – it forces Ireland’s hand – remember, take the DEBT (“rescue”) or else!

Who is LCH.Clearnet?

“LCH.Clearnet is the leading independent clearing house group, serving major international exchanges and platforms, as well as a range of OTC markets. It clears a broad range of asset classes including: securities, exchange traded derivatives, commodities, energy, freight, interest rate swaps, credit default swaps and euro and sterling denominated bonds and repos; and works closely with market participants and exchanges to identify and develop clearing services for new asset classes.

LCH.Clearnet Group Ltd is owned 83% by users and 17% by exchanges.”

And who are those users and who owns the exchanges? Well, with a little bit deeper research we find that in 1980 “Ownership of LCH passes to a consortium of six British Banks.”

And there you have it. Take our DEBT OR ELSE (we crash the entire planet).

Note how completely obscure they show the ownership trail, and yet it comes right back around to the same bankers – it always does.

For now Ireland is holding out strong, as they should – GO PEOPLE OF IRELAND, TELL THE BANKERS TO PISS OFF! And let’s remember that one of the main reasons Ireland is so in debt is that the country came to the rescue of the BANKS! The people of Ireland didn’t get a say in that – they simply did it, indebting them without permission and without representation. Now the banks want the people to commit to paying new debt forever and ever. FORGET IT.

And if that’s not clearly happening here, then I don’t know what is. Yet we are so blinded we can’t even see it much less act on it like the people of Iceland and Ireland.

But our day will come – you see now we’re talking massive austerity as the money for more unemployment benefits and food stamps runs out. And if you haven’t read Mish’s latest on how more than 6 million jobs disappeared in the past year, then you should follow this link and see for yourself just how whack our job situation is and how underreported the statistics are: 6 Million Benefit Paying Jobs Vanish in One Year!

And disgustingly, yesterday late afternoon we learned that today the House is going to attempt a VETO override vote in order to implement HR-3808. This would create a stealth bailout of the banks who committed FRAUD by allowing interstate electronic signature. This must be stopped AGAIN, so please call your representative ASAP this morning if you can, and let them know in no uncertain terms that you will remember this treasonous act in 2012, just as you remember those who voted for TARP: Find Your Representative

This is just one of many attempts to sweep foreclosuregate under the rug… hold your state representatives feet to the fire as well, tell them to prosecute the banks for their FRAUD! Do not let them get away with it, we will NOT have a thriving economy again until the FRAUD is prosecuted!

And as sickening as that is, I almost couldn’t contain the puke this morning when I read the following:
Buffett to Uncle Sam: Thanks

NEW YORK ( -- Financial titan Warren Buffett praised the U.S. government's response to the financial crisis Wednesday, writing in an open letter addressed to "Uncle Sam" that Washington responded well to a "destructive economic force unlike any seen for generations."

"People will second-guess your specific decisions; you can always count on that. But just as there is a fog of war, there is a fog of panic -- and, overall, your actions were remarkably effective," Buffett said in an op-ed published in the New York Times.

After describing corporate America in September 2008 as a series of dominoes "ready to topple at lightning speed," Buffett paints the U.S. government as the backstop preventing collapse.

"Only one counterforce was available, and that was you, Uncle Sam," Buffett wrote. "Yes, you are often clumsy, even inept. But when businesses and people worldwide race to get liquid, you are the only party with the resources to take the other side of the transaction."

Members of both the Obama and Bush administrations earn specific praise from Buffett.

"In the darkest of days, Ben Bernanke, Hank Paulson, Tim Geithner and Sheila Bair grasped the gravity of the situation and acted with courage and dispatch," Buffett writes. "And though I never voted for George W. Bush, I give him great credit for leading, even as Congress postured and squabbled."

HURL! This from a man with no spine, a TRAITOR to his country – he took BILLIONS from U.S. taxpayers by getting in bed with Goldman Sachs and then lobbying for taxpayer backed bailouts. Buffett belongs in PRISON with the rest of the criminals, this type of public pandering is simply sickening. It is brainwashing, plain and simple, and it is the reason that the people of the United States are blinded by the bullshit instead of rising up to do what is RIGHT. Disgusting.

So, what is the market doing? Is it a wave 4 before higher, or is it going down in earnest? Too soon to tell, but wave 4’s usually don’t contain 90%+ down days coupled with sovereign debt problems and imploding municipal bond markets!

Yesterday’s selling came on good volume and was powerful. It stopped just short of DOW 11,000 and its 50dma. In the SPX weekly chart the double-top looks ominous. Remember, the wider they are, the deeper the coming decline:

The DOW triggered a new sell signal on the Point & Figure diagram targeting 10,500:

Yesterday the VIX broke out higher and closed above the upper Bollinger band. This sets up a market buy signal that will be triggered once the VIX returns back inside the Bollinger’s range:

This breakout in the VIX yesterday produced an initial bullish VIX P&F target of 33.5:

So, for now we just have to watch key levels, realizing that the markets are manipulated beyond words by the bankers. I see it as our DUTY to remove the bankers from power – we owe that to future generations.

Tuesday, November 16, 2010

Morning Update/ Market Thread 11/16

Good Morning,

Equity futures are tumbling this morning, with the dollar roughly flat to rising, the Euro slightly higher, the long bond pushing rates significantly higher again, oil continuing to fall, and gold slightly higher.

There was a very small change in the McClellan Oscillator yesterday, that means odds are very high there will be a large directional price change today or tomorrow.

Note in the daily charts below that the dollar (left) and Euro (right) are about to reach the boundary of their respective channels. There may be a turn as that occurs, it will be very important to see how these currencies react as they near those borders:

Let’s recap the situation in Ireland… the country, encouraged by the big banks to borrow more than they could possibly hope to repay, falls under attack by those same banks and hedge funds thus spiking their bond borrowing costs. Yet Ireland claims it has enough money to operate through the end of their next fiscal year, what’s the hurry?

In comes the IMF and European banks – the very same banksters as above – DEMANDING that they BORROW MORE MONEY in order to “RESCUE” them! Yesterday the threat became real when Ireland was, “warned it has 24 hours to make decision as EU emergency talks loom amid fears Irish banks' contagion may spread to other eurozone countries.”

And here is the very same threat used by bankers time and time again throughout history!!! DO THIS OR ELSE WE CRASH THE MARKETS AND THE ECONOMY!

And that’s what you get and what you deserve for GIVING THE POWER OF MONEY CREATION to the banks in the first place! This is exactly why what’s MOST IMPORTANT IS WHO CONTROLS THAT POWER.

And yet it is being reported that Ireland is in talks again this morning:
Nov. 16 (Bloomberg) -- Ireland is in talks with European and International Monetary Fund officials about a bailout that would shore up the state’s finances as well as enable it to inject capital into the country’s banks, said a European official with direct knowledge of the talks.

The two-part funding package would mean Ireland wouldn’t have to tap the bond market for an extended period as it tries to cut the budget deficit, said the person, who spoke on condition of anonymity. It would also give the government capital to help banks if necessary. Ireland says it’s fully funded into mid-2011.

I can only hope that they resist this “two part funding package.” But that doesn’t sound so bad does it? LOL, their “funding package” is just a euphemism for DEBT. While it’s true that Ireland represents just 1% of the EU economy, it is requiring 15% of the bailout proceeds. But this is just like the subprime borrower – WHO is most responsible, those who borrowed more than can be repaid, or the debt pusher who knew when he was lending money from nothing, then selling it across the globe despite the fact that they KNEW it could never be repaid?! I say the bankers get what they deserve – bring the system down and start over! Change the equation of WHO is in control!

There is only one true escape for the people of Ireland, that is to tell the bankers to pound sand! They, and all countries should exit the Euro and be producing their own currency (with quantity controls of course)! They should DEFAULT on current debts and let the holders of their debts go broke as they deserve.

Rumors are flying that Portugal is threatening to leave the Euro, again, there is strength in numbers and they should do so.

Meanwhile, back in the states we learn its pump and dump as usual, the headline says that Uncle Warren Buffett (hopefully soon to be called prisoner #669) dumped all his shares in Home Depot. Gee, I just happened to catch the shills on CNBC advising people to buy HD. The people are being robbed, it is blatant.

And the biggest robbery of them all is now UNDERWAY IN THE BOND MARKET. Nearly two years ago I was warning that eventually even muni bonds would be hit, and now they are in spades. You had a tech bubble, turned into a housing bubble, turned into another stock bubble, that turned into yet another stock bubble, and all the while the mother of all bubbles in bonds was growing and growing. Of all those bubbles, the bond bubble is the biggest and it just now may be starting to unwind.

This will massively harm most retirement accounts – IF YOU HAVE BOND FUNDS UNDER YOUR CONTROL, YOU HAVE BEEN WARNED. The people have been herded like cattle from one bubble to the next, only to have the bubble pulled out from under them. House prices never go down, and bonds are the most safe investment there is. Okay, take a look at these “safe investments,” one year charts:

Make no mistake, this means that the cost of funding debt for municipalities just got more expensive, and that is not a good thing for the economy, nor is it a good thing for your retirement plan.

PCK… that is the PIMCO California Municipal Income Fund. All the gains of the past year, GONE in about 3 days. How many real people in the herd do you figure made an exit before this occurred to their accounts? Not many I’m willing to wager… the majority will figure it out and sell just as the carnage is concluding – bankers will be long gone, far away from the crap they generated.

And those inflation expectations that QE2 is going to “save us” all and produce massive hyperinflation? Well, not exactly yet.

The PPI just came in flat month to month at .4% which is half of expectations that were looking for a .8% rise. And, excluding food and energy, the PPI FELL .6% which is opposite the direction of expectations. Gee, could that mean that what we need is QE3??? LOL, here’s Econoday:
Inflation at the producer was more moderate than expected in September with the core tugged down by discounts in motor vehicle prices. The overall PPI inflation rate held steady at 0.4 percent in October, coming in significantly below the consensus forecast for a 0.8 percent increase. At the core level, the PPI surprisingly fell 0.1 percent, down from a 0.1 percent gain in September and coming in lower than the median forecast for a 0.1 percent uptick. The core was led down by a 3.0 percent drop in passenger car prices and a 4.3 percent decrease in light truck prices

For the latest month, food slipped 0.1 percent after jumping 1.2 percent in September. The energy component spiked 3.7 percent, following a 0.5 percent increase in September. Gasoline surged a monthly 9.8 percent in October, following a 1.8 percent dip the prior month. For the food component, a majority of this decrease is due to an 8.1 percent drop for fresh and dry vegetables.

For the overall PPI, the year-on-year rate increased to 4.3 percent from 4.0 percent in September (seasonally adjusted). The core rate softened to 1.4 percent from 1.5 the previous month. On a not seasonally adjusted basis for October, the year-ago the headline PPI was up 4.3 percent while the core was up 1.5 percent.

However, producer price inflation is strengthening in earlier stages of production. Intermediate goods prices rose 1.2 percent in October following a 0.5 percent increase in September. Crude goods surged 4.3 percent, following a 0.5 percent decline the month before. On a year-ago basis, intermediate is up 6.4 percent (not seasonally adjusted) while crude is up 17.0 percent.

So, what do you figure this reading would be had the hot money not run up the cost of energy so severely? The sad fact is that the people are being sold a bill of banker goods. Inflation is NOT good for the vast majority of people, in fact DEFLATION is exactly what is necessary and good for most people! Houses, cars, food, tuition, medical care, etc. should all cost less! In fact, if you really want future prosperity without having the guts to throw the bankers out on their asses, then deflation is what you want.

Of course I say throw the bankers out on their asses! Prison for the ones at the very top – start yesterday. In the mean time, enjoy the ride, it’s getting real interesting.

Monday, November 15, 2010

Morning Update/ Market Thread 11/15

Good Morning,

Equity futures are naturally higher this Monday POMO morning, surprisingly with the dollar higher. Bonds are significantly lower in price, oil is higher, while gold is lower.

The Empire State Manufacturing Index just produced a major league miss, crashing from its prior level of 15.73 all the way down to -11.1 when the consensus was +15! My oh my, the disconnect between reality and fantasy has never been larger. That’s the first negative print in that index in well over a year. Here’s Econoday:
Empire State data for November are surprisingly weak showing a major month-to-month decline in new orders, at minus 24.38, together with an equally major decline for unfilled orders, at minus 24.68. Contraction in unfilled orders has been ongoing since April, keeping a lid on production needs. Shipments a very steep 25 points to minus 6.13 in the month, the workweek fell to minus 12.99 with delivery times, at minus 9.09, improving for a fifth month in a row.

The employment index continues to show strength, at plus 9.09, as do readings on the six-month outlook. But as an indication for November's manufacturing data on the national level, this report points to trouble. Watch for trouble in Thursday's Philadelphia Fed report, a report that has been trending significantly lower than Empire State.
Those are some hugely negative moves. So new orders are way down yet employment is up over the same time period? What does that tell you about margins? Yet more evidence of businesses who were led astray, and whose margins are getting crushed with QE2 rescue. Good luck.

Speaking of fantasy, the Retail Sales Report came out at positive 1.2% growth month over month, and at .4% year over year. This report is riddled with error and I can guarantee you that the real year over year figure is substantially negative. This is due to substitution bias as this report fails to account for stores that close, and also due to the falling purchasing power of the dollar as sales are measured in dollars. Still, the consensus for this drivel was .7%, here’s Econoday:
The consumer sector continued to strengthen in October with sales topping expectations. Overall retail sales in October jumped 1.2 percent after gaining 0.7 percent in September. The latest number sharply topped analysts' projection for a 0.7 percent increase. Excluding autos, sales posted a more moderate but still healthy 0.4 percent increase, following a 0.5 percent advance in September and coming in a little higher than the median market forecast for a 0.4 percent boost. Sales excluding autos and gasoline increased 0.4 percent, matching the increase in September.

The good news is that the consumer sector is continuing to prop up the recovery-maybe even given it a modest strengthening. October gains were mixed but notably more on the positive side. Motor vehicles & parts led the way, jumping 5.0 percent. And apparently, even though housing is sluggish, households are fixing up homes as building materials & garden equipment posted a 1.9 percent boost. Gains were also seen in food & beverage, gasoline stations, clothing, sporting goods & hobby, general merchandise, nonstore retailers, and food services & drinking places.

Furniture dipped but after several strong gains. Declines were also seen in electronics (likely price cutting), health & personal care stores, and in miscellaneous store retailers.

Equity futures eased slightly but on a much weaker than expected Empire State manufacturing number released at the same time.

Business Inventories are released at 10 Eastern. This week is fairly busy for economic reports, but nothing that’s so important that it will freeze the markets. Friday is options expiration and there are no reports that day.

I have to report on the following bizarre incident in Kansas City where police shot at a passing by van that backfired thinking they were being fired upon (ht Ron):
Backfires from broken-down van draw bullets from KC police

Phillip Ransom thought he had trouble Thursday night when his old van broke down on the side of the road, booming out backfires.

But that was when his troubles really began.

Two Kansas City police officers, mistaking the van’s backfires for gunshots, began firing at it.
It was a terrifying moment for the Kansas City man, who was unarmed and said he did not own a gun.
“I’m just an ordinary guy,” he said. “I go to work every day.”

Fortunately he was not hit. At least three bullets hit the van. Ransom said he did not know how many shots were fired.

“I wasn’t counting,” he said. “But it sounded like a lot.”

A department spokesman confirmed that Ransom was unarmed and said the officers have been placed on administrative leave while the incident is investigated.

The incident occurred just before 6 p.m. Thursday on Gregory Boulevard near Interstate 435. Ransom, who owns a janitorial service, said he was on his way home from work.

Besides the damage to Ransom’s van, windows of the patrol car were also shot out — apparently by the officers as they got out of the patrol car.

Police and media reports initially described the incident as the police car being hit by a bullet fired from a suspect in the van.

Why do I think this idiocy is important? I think it shows just how jumpy the population is, there is tension in the air. That tension was also very evident in the reaction to the “missile” contrail last week. Who else has an itchy trigger finger? My point here is that the spring seems to be wound tight, a triggering event could occur at any time, and the equity markets are grossly overvalued.

And the bad math of debt has certainly produced massive tension around the globe. I could cite article after article as evidence of that, but there’s so much of it, I can’t possibly discuss it all. In flying circles when talking about safety we talk about the Swiss cheese analogy. If your slices of Swiss cheese have a lot of holes, then sooner or later as you stack the layers of cheese those holes will eventually align and cause an accident. If, however, you are operating in the center of the envelope and trapping errors, then you lessen the number of holes and thus decrease the odds of the holes aligning into an accident. It would seem to me to be impossible to keep an economic and market accident at bay as the number of holes I see is staggering.

There are reports out that the Obama Administration may be working with the banksters to cover up the foreclosuregate FRAUD by retroactively sanctioning the fraudulent activity of MERS (Are Obama and Congress Set To Screw American Counties, Homeowners and Give Wall Street Mortgage Banksters a Retroactive Immunity Bailout?). This, in my opinion, would make the Administration accessories to the crime and frankly traitors to their own country. They better not. And the people need to get active NOW to prevent this from being the biggest cover-up in history.

The jump in the ten year Treasury rates this morning is very large, about .15%! Rate moves like that in one day may scare people out of debt instruments. That can have very distortive effects in other asset classes as money moves around the globe, and higher interest rates will not be a positive for the Fed who is trying to force rates down, nor for the economy that is saturated in debt. Housing recovery? Don’t bet your life on it.

The Yen is finally moving back down. That correlation is generally good for the Japanese, but it has not been so good for the equity markets as it forces our dollar up. The Euro is weak, and as far as I can see, it’s simply a race to see which countries implode first as every country who comprises the dollar basket is nothing but a basket case full of debt that can never possibly be serviced. The pretend part can and will only go so long.

Turning to the markets, as I look at the longer term weekly chart of the SPX, it is apparent that we may have produced a double-top. This comes right on the 61.8% retrace of the entire market. If it is a double-top, then the coming decline is likely to be very significant. Despite the higher high in the market, check out the negative RSI divergence that has produced a lower high, that is quite rare on this timeframe:

The divergences on the longer timeframe indicate that the decline may be significant in terms of both price and time. I note that the Hindenburg Omens are still in effect and that the McClellan Oscillator is now very negative with a -165.29 reading on the close this past Friday. If, however, we turn to Elliott Wave, this current decline would appear to be a wave 4 movement of the larger wave B, and that would mean that a 5th wave higher is in the wings. As McHugh says, that 5th wave may possibly be a Christmas rally. I am not personally sure, nor confident in the count, and thus I am simply watching support and resistance levels watching the battle between deflationary forces and ridiculous self-destructive POMO.

That potential double-top looks ominous to me, especially if the markets fail to mount a rally here. Unfortunately, we won’t know what the count is unless we descend all the way beneath SPX 1128. That’s because a wave 4 can’t invade the space of wave 1 and that’s where wave 1 topped. So, if our current descent turns higher before then, then it’s likely a wave 4 and 5 is coming. If 1128 falls, then all bullish bets are off and something else is happening, but that’s quite a ways down from here, and downward movement has to battle never ending Fed intervention. It’s all lunacy to me, everyone’s been blinded by the light and the market’s no place for long term “investments,” that’s for sure.

Sunday, November 14, 2010

Uncle Jay Explains the News...

Well, boys & girls... Your Uncle Jay has been away on a loooonnnng Journey in search of his sense of humor. It appears he's found it...

Where the Power Lies…

Politicians are now talking austerity for America – adios home mortgage deduction! What is that going to do to the home market and to prices? What will that mean for what’s left of America’s middle class?

Is it necessary? Absolutely not! The national debt does not even need to exist in any form whatsoever, we have been controlled to believe that we owe banks for the use of our own money system! It’s a brainwashing and in this short video David Icke spells it out as to where the power really lies.

The power rests with us!

David Icke - We Have The Power to Bring Down The Pyramid!