Friday, January 28, 2011

Morning Update/ Market Thread 1/28

Good Morning,

Equity futures are mixed to slightly higher before the open this morning with 4th quarter trumped up GDP coming in weaker than the consensus was expecting. The dollar is up slightly, bonds are down, oil is up, gold is down slightly, and most food commodities are roughly flat.

Quarter four GDP came in at 3.2%, this is up from Q3’s 2.6%, but is short of the 3.5% expectation. Here’s Econoday falling for and then disseminating the banker’s disinformation:
The economy regained momentum in the final quarter of 2010-and in most of the right places. Fourth quarter GDP accelerated to a moderately healthy 3.2 percent annualized gain, following a 2.6 percent increase the prior quarter. The latest figure fell short of analysts' median forecast for a 3.5 percent boost. But the detail is stronger than the headline number.

The last quarter of 2010 was led by sharp improvement in net exports to a gap of $392.2 billion from $505.0 billion in the third quarter. Exports rose an annualized 8.5 percent while imports dropped 13.6 percent Also boosting GDP were personal consumption expenditures, up an annualized 4.4 percent; business investment in equipment & software, up 5.8 percent; and residential investment, up 3.4 percent. Nonresidential structures posted a modest rise.

Weakness was led by a sharp slowing in inventory investment to $7.2 billion from $121.4 billion in the third quarter. Government purchases slipped 0.6 percent.

The bottom line is that final sales have picked up significantly. Final sales of domestic product strengthened to a 7.1 percent increase from 0.9 percent annualized in the third quarter. Growth in real final sales to domestic purchasers (takes out net exports) picked up to 3.4 percent, following a 2.6 percent boost in the third quarter.

Year-on-year, real GDP in the fourth quarter is up 2.8 percent, compared 3.2 percent in the third quarter.

Economy-wide inflation as measured by the GDP price index softened to 0.3 percent in the fourth quarter, following a 2.1 percent increase the prior quarter. The consensus expected a 1.5 percent gain.

Today's report is clearly positive for forward momentum in the recovery despite a slightly disappointing headline number. Demand is picking up and inventories are not out of control-a very good combination. Still, growth is moderate and there are no signs of pending excessive growth.

No excessive growth? Well, if it were real, which it’s not, it would be very high growth, nearly unsustainable over just a very short number of years. But since its monetary growth and not real growth, it represents a quickening of the death of our currency. Oh boy, let’s cheer that on!

The UGLY in this report is exactly what is being touted as good! Exports rose at an 8.5% rate, while Imports fell at a 13.6% rate! That’s huge, but what, exactly, would cause something like that to occur? A booming economy? NO! Monetization and the devaluation of your dollars is what causes that. And from the other trumped up data with no transparency, the monthly TIC flows and trade data, our monthly trade deficits are still running in the $40 billion range. If these numbers are true, how come our trade deficits aren’t coming down? Oh, that’s right, because it’s all monetization and has nothing to do with actual production. And if the “consumer” is really as strong as is being touted, how come imports are falling at 13.6%!!! This entire GDP report is NOT BASED IN REALITY. It is representative of the FRAUD and DISINFORMATION in our nation, it is vastly overstated, and it is a product of WHO controls the production of money. Pure garbage.

And note how clever Obama was (his speech writers and teleprompter programmers) in calling for a doubling of our exports from 2009 to 2014. Using the rule of 72 (or 70), to double something in only five years requires approximately a tremendous 14.4% growth rate. According to this report, indeed, we’re not too far from that target! Imagine that, doubling exports in only 5 years! So, what’s really going on? They know that printing larger quantities of money devalues it. What they are saying is, “We are going to cut the value of your money in half in only five years!”

That’s exactly what the President told you just the other night. That’s how he can smugly assure you that “growth” will occur and he certainly acts as if he’s got a little secret that you don’t and thus his “confidence” in being able to, with a straight face no less, proclaim that he will double exports in only five years!

OMG! I can’t think of a faster and surer way destroy the middle-class, to jack up the cost of everything priced in dollars (hello food and energy), and to destabilize the entire globe (hello Tunisia and now Egypt and Syria).

But it’s all good when despots are overthrown, right? Did everyone catch that after Egyptian police shot a rioter and the shooting made it onto the internet that the internet in Egypt was promptly taken down? Now it's being reported that the internet in Syria has been taken down. That is one of the 10 sure signs of a despot regime, they kill communication in an attempt to stay in power. And Obama anointed this very same power to himself disguised, of course, in the name of fighting the war on “terror.” People in a highly functioning society should NEVER allow any individual such power, NEVER.

The Employment Cost Index came in steady showing a .4% quarter over quarter rise, on a 2% annual “growth” rate:
Wage inflation is no threat to accommodation by the Federal Reserve which closely watches the employment cost index. The ECI rose a very mild and lower-than-expected 0.4 percent in the fourth quarter compared with the third quarter. Compared with fourth quarter 2009, the ECI rose 2.0 percent for the second lowest year-on-year fourth-quarter reading ever. The lowest reading ever was plus 1.4 percent in fourth-quarter 2009.

Details show 0.4 percent increases across the board for both wages & salaries and for benefits in both the civilian-worker and private-industry breakdowns. It was not, to say the least, a big pay-raise year for the American worker whose wages & salaries rose only 1.6 percent. This is the second lowest reading ever behind fourth-quarter 2009's plus 1.5 percent. Workers did get a bit bigger boost of 2.9 percent on the benefit side.

No, I don’t trust this data either and believe that in real terms people’s wages are sliding down, not going up. This data suffers from all sorts of bias and should not be considered meaningful in the real sense. Still, it shows that the Export data is monetary. We are exporting money, we have already exported most meaningful jobs. True and sustainable price inflation requires rising wages. Wages aren’t rising in America, they are rising in other parts of the world. Double exports for America, you halve the value of the money, and double the cost of buying things from other parts of the world for Americans whose wages are absolutely not keeping pace. In fact, if anything that 13.6% import figure is probably very close to what the actual inflation rate is. Think about that – it represents a 5.3 year doubling time, how sustainable is that, and what are the ramifications throughout the world?

“Consumer” Sentiment is released to us debt peons at 9:55 this morning.

The global state of debt saturation was caused by greedy bankers – period. They seized control of the ability to create money and this is their doing (although our greedy politicians let them). Now we have a doubling of food commodity prices in
only six months and riots/ revolution that is spreading quickly. Those two events are not put together enough, yet the bankers who brought it to you, like JPMorgan’s Jamie Dimon, are angry and tired of being berated, lol. His latest child-like temper tantrum comes, you’ll notice, while meeting in posh circumstance in Davos, Switzerland.

And just because nobody seems to care anymore, I want to point out what it is that’s occurring there. The world’s top bankers and financiers are meeting. What are they doing at this and other meetings? Why they are colluding, that’s what the term is for businesses who meet and develop joint strategies together and who work to price fix, which is exactly what they have done to the bond market, the stock market, commodity markets, interest rates, nearly everything. Collusion and price fixing… Those things are illegal if you do them, just so you know.

And it used to be that we, the people, had laws that prevented USURY. Remember that quaint little concept? Remember when the gangsters would lend money at a usurious 20% and then break kneecaps if the sap borrower didn’t pay? Well now that’s all legal, well, except for the kneecap part. Although many people who can no longer discharge credit cards with usurious rates in bankruptcy, and those who are losing their homes, their health, and their families, might just rather wobble than to go through banker induced slavery and debtor hell. And again, due to the lack of moral concepts, the exponential rise of debt and the killing of your money system gathers pace. You’ve been told, “exports will double.” Now you just have to be smart enough to know what that means.


Credit card rates at record highs near 15%

NEW YORK (CNNMoney) -- Interest rates are now hovering near record highs, at an average rate of 14.72%. And if your credit is bad enough, you could even end up with a rate as high as 59.9% APR.

That's because while the CARD Act helped crack down on certain fees and requires more disclosures, it didn't cap every credit card holder's worst enemy: interest rates.

Sure, the new rules prevent banks from raising most interest rates retroactively, but there's no limit on the rates they can charge new customers.

"Rates are going up because card issuers know that once you get a card they can't raise the rates, so they're raising rates on the front end to ensure they get the revenue from that interest," said Beverly Harzog, credit card expert at

APRs have climbed more than 20% over the past two years and hit an all-time high of an average 14.78% in mid-November, based on weekly data collects from 100 of the nation's top credit card issuers.

And there's no end in sight. While interest rate caps have been proposed -- including a proposal earlier this month from New York Congressman Maurice Hinchey that would limit rates at 15% -- none have been passed into law so far.

My oh my, talk of an interest rate cap? That’ll go nowhere as long as the private banks are in control of producing money – which in the scheme of history, and of their own doing, won’t be too much longer.

There was yet another very small movement of the McClellan Oscillator yesterday, expect a large directional move possibly today or tomorrow. I note that the McClellan has turned positive once again.

Divergences still in place, the Transports are still not confirming the Industrials – a very high risk time as even my own dollar negativity (which is longer term) has reached a very high point, and we know that nothing, except trumped up markets, moves in a straight line.

Just to keep you spatially aware, below is a long term monthly chart of the dollar. It has been descending, and appears that it wants to touch that lower rising trend line once again, now in the 76.7 range:

We’re not too far from that now, the reaction of the dollar from here will be important. And note that this index does not represent REAL movements of the dollar’s worth, it simply represents itself relative to other currencies which are also attempting to devalue themselves. Thus, for the dollar to move lower, it actual means that we’re winning the race to the bottom. With goals like doubling our exports (as measured in dollars), it’s no wonder we’ll eventually win that race. Oh wait, Zimbabwe already crossed the finish line… well, there’s always second place!