Monday, January 24, 2011

Morning Update/ Market Thread 1/24 – Desperate People…

Good Morning,

Equity futures are roughly flat just prior to the open with the dollar higher, bonds higher, oil sharply lower, gold falling, and most food commodities marching still higher. Oil is very close to breaking its daily uptrend line.

There are no economic reports today, just POMO after POMO. Actually, this Wednesday will stand out due to the fact there is no POMO that day. $7 to $9 more billion is planned for today – sickening. The data will start coming tomorrow with Case-Schiller data, the House Price Index, and Consumer Confidence. The FOMC meets again this week and will announce they are leaving interest rates at zero and printing your money into oblivion on Wednesday. The first cut at Q4 GDP comes on Friday, so it should be a very interesting week, especially for the economic disinformation that is flowing like the mighty river Nile.

Speaking of economic disinformation, this week the world’s foremost dispensers of economic Kool-Aid meet in Davos:
Super-Cycle Leaves No Economy Behind as Davos Shifts to Growth

Jan. 24 (Bloomberg) -- For only the third time since the Industrial Revolution, the world may be entering a long-term growth cycle that will lift all economies simultaneously, driving bond yields and commodity prices higher.

The depth and scope of the expansion will be a focus for discussion at this week’s annual meeting of the World Economic Forum in Davos, Switzerland. Evidence of a broadening global recovery will enable U.S. Treasury Secretary Timothy F. Geithner, investor George Soros and 2,500 political, business and academic leaders to shift their emphasis away from crisis- fighting.

With the economic and investment outlooks “much better” than in recent years, “people are talking about how to get back to business as normal and what comes next,” said Jitesh Gadhia, a delegate to the conference and the London-based senior managing director at Blackstone Group LP, which runs the world’s largest buyout fund.

Goldman Sachs Group Inc., PricewaterhouseCoopers LLP and London’s Standard Chartered Bank are among the financial companies sending executives to the meeting. Their economists predict a growth spurt in coming decades led by emerging nations that will be strong enough to boost developed countries.

That’s right… global growth! The emerging nations are going to pull developed nations up by their boot-strap! Sure, why not? And maybe Santa will bring me that new Aston Martin I’ve always wanted! Vroooom!

What could go wrong with that scenario?! Let’s see, food prices double in 6 months. People starving, riots, bankrupt nations, states, cities, revolutions spreading… oh, and governments being overthrown Iceland style!

Got to love the fighting Irish who are so angry at what was the current regime for taking banker “bailouts” that sold them and their retirement plans down the river, that they are throwing them out on their rears and forcing a new election. I can guarantee you that the next government will unwind whatever damage the world bankers are currently doing to that country, appropriately so.

Just remember that desperate people do desperate things. Take a look at this morning’s news. Four police shot inside of their own Precinct offices in Detroit. Two police shot in Port Orchard, WA at the local WalMart. Three more officers shot in St. Petersburg Florida. Now we’re also learning of a bomb exploding at the Moscow airport in Russia, 31 killed and more than 100 wounded. It seems to me that there are more and more desperate people. Keep printing that money, nothing bad will happen… sure. Just remember those “other” events have roots that run deep. When the desperate people get organized, real change will come, just as it did in Tunisia. That’s why you’re likely to see attempts to break lines of communication in the future. Of course none of these events will be related to the economic disinformation and outright thievery that’s occurring and begins at the very top – at least that’s the picture painted by the bankers, politicians, and media that they own and control. No worries, look over there, the DOW rose 20 points today (shhh, don’t remind anyone that it took $9 Billion in POMO to get it, just shut up and fork over $15 for that hamburger).

Major top in the markets coming? You bet. There are signs aplenty that we are forming one right now. People are already forgetting the recent Hindenburg Omen, the VIX sell signal that occurred just four trading days ago, and no one is talking about the decline of the Transports while the Industrials continue to make new highs. That’s a setup for a potential DOW Theory non-confirmation, something that is almost always seen very near major market tops. Again this morning the Transports are sinking with the Industrials making new highs… the same thing occurred in 2007 just before the real fun began. The McClellan Oscillator is still very negative and is declining despite the rising DOW Industrials. This is showing that breadth is narrowing and it is yet another divergence in the marketplace.

How long will POMO hot money be able to create the illusion of “growth?” I don’t know for sure, but I am guessing until “other events” force those meeting this week in Davos to stop it.