Thursday, January 20, 2011

Morning Update/ Market Thread 1/20

Good Morning,

Figures often beguile me, particularly when I have the arranging of them myself; in which case the remark attributed to Disraeli would often apply with justice and force: "There are three kinds of lies: lies, damned lies, and statistics."
~Mark Twain, autobiography, 1904

Yesterday’s correction continues this morning with equities down across the board, the dollar is up, bonds down, oil is sharply lower and back below $90 a barrel, while gold is falling as well - now at $1,348 which is down $21 so far.

Weekly Jobless Claims fell to 404,000 for last week from 445,000 the week prior. This is better than consensus that was looking for 420k. This series has been very volatile lately, and what has been the trend of increasing non-seasonally adjusted numbers ended with a very large drop in the raw data for this week. This, frankly, concerns me as I know that reality is not that volatile, so why is this data?

The DOL wants me to believe “The advance number of actual initial claims under state programs, unadjusted, totaled 550,594 in the week ending Jan. 15, a decrease of 212,504 from the previous week.” Huh? I’m supposed to believe that actual initial claims fell by 27.8% in one week, is that right? Sorry, I don’t believe it reflects reality, this type of reporting is beginning to look like what the Mortgage Banker’s Association does with Housing numbers. Still, note that the raw number is much larger than the reported number due to seasonal adjustments. Here’s Econoday marching ahead without question:
Initial jobless claims swung in the other direction for the January 15 week, dropping an unexpectedly sharp 37,000 to 404,000 from a revised 441,000 the prior week. The latest decline more than offset the prior week's 30,000 boost. With recent weekly volatility, the four-week average likely provides the best insight. The average is down 4,000 to 411,750 and is down more than 14,000 from a month ago in what is good signal for the monthly payroll report.

Continuing claims claims fell for the third week, down 26,000 in data for the January 8 week to 3.861 million. The four-week average is down 53,000 to 4.006 million. The unemployment rate for insured workers is unchanged at 3.1 percent.

Just remember that despite what is propagated by The Ministry of Truth, weekly claims above 350k are still showing that jobs are being lost in the economy, not created.

Existing Home Sales, the Philadelphia Fed Index, and supposed Leading Indicators are released at 10 Eastern this morning. I will report results inside of the Daily Thread.

I found the following comments very interesting. They came from Forbes’ Annual Investing Roundtable. The first comes from Bill Gross:

I don't know if the U.S. has reached a desperate point, but it is employing instruments and vehicles and policies that smack of desperation. We are not looking at a default here, but at years of accelerating inflation, which basically robs investors and labor of their real wages and earnings. We are looking at a currency that almost certainly will depreciate relative to other, stronger currencies in developing countries that have lower levels of debt and higher growth potential. And, on the short end of the yield curve, we are looking at creditors receiving negative real interest rates for a long, long time. That, in effect, is a default. Ultimately creditors and investors are at the behest of a central bank and policymakers that will rob them of their money.

Gee, is Bill not on the Insider’s list anymore?

And this second comment comes from Marc Faber, a classic and nothing but the truth:
If you measure the stock market not in dollars but gold, it is down 80% since 1999. I no longer regard the U.S. dollar as a valid unit of account. People shouldn't value their wealth in dollars because one day, in dollars, everyone will be a billionaire.

How true. Although I note that food commodities began correcting yesterday… and interesting that corn topped out at $666, the same level at which the SPX bottomed in March of ’09… interesting. Also interesting is that the rounded low in corn was exactly half that amount at $333. I do pay attention to strange numbers like that as they do tend to stick around a long time, meaning that they often do mark significant turning points.

And more countries are trying to stem the flow of “Fed” hot money. Brazil just raised interest rates by .5% in order to keep inflation down. It’s a problem for Brazil as it makes their currency relatively strong. Again, the “Fed’s” pumping affects everyone around the globe… how much more abuse are the relatively good players going to take?

Our landlord came visiting yesterday. China’s Hu and President Obama gave a press conference that was just embarrassing from my perspective. Obama’s speech was nothing but why we were going to be good little boys for our landlord, and when Hu began to speak, he didn’t give a speech but instead turned to Obama and began asking questions like a banker would ask of someone who is asking for a loan.

This reminded me of when Bill Clinton took over the White House Press Conference. Obama is out of his element when the teleprompter is turned off. He is failing to LEAD and to take care of business that needs to be taken care of. Proof that he and our government are nothing but banker puppets came again last night… all you have to do is look at the guest list of those attending the White House dinner last night with Obama and Hu. High on the list was all of the top BANKERS. I’m sorry, but giving private banks the run of the White House with current, past, and foreign Presidents is just SICK. We need to separate our government from private special interests, until then our economy will be nothing but a façade.

Equally SICK is this:
Goldman's Eileen Rominger to Join S.E.C.

The Securities and Exchange Commission has announced that Eileen Rominger, the global chief investment officer of Goldman Sachs Asset Management, has been named its director of investment management.

She is not the first GS employee to be transferred to their S.E.C. Division. How much more of this government takeover are the people going to allow? Very ill, and we are stepping further and further along that scale towards despotism.

It sure is looking more like a correction has begun, a drop in the SPX below 1,275ish will signal that one is under way. The bottom of the large rising wedge is now approximately 1250ish, we can look for support there next should 1,275 fall.

Just remember that the markets do not move in a straight line and headfakes will come in both directions. I note that the McClellan Oscillator has turned negative again.