Wednesday, January 26, 2011

Morning Update/ Market Thread 1/26

Good Morning,

Equities are slightly higher following Obama’s misdirect-you State of the Union speech and in front of today’s FOMC disinformation announcement. The dollar is close to level, bonds are slightly lower, oil is flat, and gold is still in correction mode with food commodities continuing to impoverish those on the margins – funny how food riots and revolution by starving people in Tunisia is okay and even touted by the President… he sees it as democracy taking out despots, while I see it as a banking cabal impoverishing the world. Always glad to see a despot get the boot, but is that going to put food on Tunisian’s tables? More on the President’s speech in a moment…

Meanwhile, the unethical, corrupt, and hypocritical Mortgage Banker’s Association reported that Purchase Applications fell yet another 8.7% in the prior week, refinancing activity supposedly also fell a whopping 15.3%, pulling their composite index down 12.9%! They were already near historic lows, the MBA’s math and reporting methods are ridiculous. Here’s Econoday:
The run of weakness in purchase applications deepened severely in the Janauary 21 week, down 8.7 percent to take the index back to its lowest point since October. Heavy weather and the shortened holiday week put the focus on the unadjusted index which fell a less severe 3.1 percent for a still substantial 20.8 percent year-on-year decline.

Refinancing activity also fell heavily, down an adjusted 15.3 percent for the lowest level since January last year. Rates are affordable but well off their lows, up three basis points in the week to 4.80 percent for 30-year mortgages.

The recent jump in rates motivated the fence sitters in December, at least for existing home sales in data released last week. But the ongoing slide in the purchase index points to a January setback.
A 20.8% year over year decline? These numbers put the lie to supposed improvement in the housing market, not to mention the economy as a whole. I think a lot of activity is based on foreclosures, many are cash deals done by investors and not by families intent on living in them. In other words, the housing market, I believe, is even worse than the numbers make it appear, which is already pathetically weak.

New Home Sales are released at 10 Eastern, and the FOMC Announcement comes at 2:15 Eastern.

Obama touted economic “growth” in his speech last night. He repeated his last year’s radical and crazy call for our nation’s exports to DOUBLE in just five years (!) and he trumpeted how with the “growth” in the past year we are well on our way to meeting that goal! I literally can’t laugh hard enough at such nonsense. There’s only one way we accomplish that goal, and that’s by cutting the value of our money in half! That’s because exports and GDP “growth” are measured in dollars. Sure, if one throws $112 billion a month, month after month into the system then we’re going to see the number of dollars “grow.” But that’s entirely different than REAL economic growth, and thus the disinformation and game playing continues.

Now, don’t get me wrong, Obama is an excellent speech giver when he has teleprompters directly in front of him. And last night’s speech sounded just like a most excellent campaign speech – long on talk, short on specifics, and EMPTY when it comes to paying for us “winning” the future. No mention of our debt saturated condition, no mention of bankrupt states, bankrupt cities, bankrupt nations around the globe, or WHO made them that way. Everything’s rosy, America is the greatest nation on the planet, and therefore we’re going to win the future, launching somehow forward from this “Sputnik” moment in time.

And just look at our shining example of maintaining the rule of law! According to him, we’re doing a terrific job of that too! Of course none of the criminals looting our country, past and present, are being prosecuted, but again, we continue to gloss over that. All happy talk in an attempt to convince the “consumers” of America that it’s okay to open your wallets and bury yourself as deeply in debt as your income can possible stand. President of Marketing should be his real title, Disinformation Minister/ Czar is his role in reality. Otherwise, it was a very fine speech - well delivered, his timing from one teleprompter to the other was excellent.

And I like positive people and positive talk about the future as much as anyone. And if we weren’t beginning from a completely impossible math situation then I’d be happy as the proverbial clam. But while we are now at least talking about what appears to be the elephant in the room, the deficit, it turns out that the elephant in the room is much, much bigger than anyone in the Administration admits, and in fact is a Trojan Elephant with the central bankers playing the part of the Greeks.

The disinformation will continue as long as the money printing can cover it up. We are not too far from losing confidence as it is, again I simply point to a doubling of food commodities in the past six months. No talk about that, gee, I wonder why that is as I watch wheat put in a new high.

There was a small movement in the McClellan Oscillator yesterday, expect a large directional move today or tomorrow. But I would not expect a large move until after the FOMC provides their “Fed” disinformation this afternoon. Interest rates at zero, and print to the moon, we have exports to double and only four years left to do it!