Thursday, February 17, 2011

Morning Update/ Market Thread 2/17

Good Morning,

Equity futures are lower this morning, moving lower on the release of Weekly Jobless Claims and Inflation data. The dollar is slightly lower, bonds solidly higher, oil and gold are up, and most food commodities are higher.

Weekly Jobless claims jumped back up above the psychological 400k level, coming in on consensus at 410k, up from last week’s 383k. Again, any number above 350k shows that jobs are contracting as they have been for years now. Here’s Econoday:
Jobless claims are not pointing to underlying payroll growth. Initial claims rose a steep 25,000 in the February 12 week to 410,000. The prior week was revised 2,000 higher to 385,000, one of only two weeks this recovery that claims have been under 400,000. The four-week average rose 1,750 in the latest week to 417,750 to show no significant change from mid-January in a comparison that doesn't point to improvement for the February employment report.

Continuing claims have been coming down but only slightly and not in the latest data, up 1,000 to 3.911 in the February 5 week. The four-week average of 3.942 million is down 73,000 from the month earlier. The unemployment rate for insured workers is unchanged at 3.1 percent. In data for the January 29 week, an unadjusted total of 9.25 million Americans were claiming benefits, down about 108,500 from the prior week.

Weather may be blamed for the failure of initial claims to show improvement so far this year, which does hold out hope for the weeks ahead. Otherwise, the jobs market remains a central risk to the economic recovery.

Oh yeah, it’s the weather – weather never happens in January. The swings in these numbers are caused not by the weather, but by the seriously flawed seasonal adjustments made by the Department of Labor. Unadjusted claims were actually down from last week, but are at a horrendous level for an economy that has a “Fed” throwing trillions at its banking members. When will Americans learn that banks don’t create jobs? We need to throw the “Fed” out the window (many members belong in prison) and take back the power to create money. That is the only way true employment is ever going to increase.

Below is a chart showing an increasing population against a declining number of people who actually have jobs.

This chart covers the past decade – not one new net job for all the trillions of debt, that’s called Debt Saturation, or as some people are calling it now “the Keynesian End Point.” No matter what you call it, it’s the point where there is so much debt (profiting the bankers) that incomes can no longer support the debt. Thus we have zero interest rates and money creation now billions every single day. But no new jobs…

…Just inflation – that profits you know WHO.

Surprise! The CPI comes in “hotter than expected.” By who? The truth is that inflation is many times, as in multiples, higher than data released by the “Fed.” Still, headline CPI came in at .4% for the month of January, that is an annualized rate of 4.8%. And that’s less than the .5% reported for December, but is more than the .3% expected. “Core,” less food and energy, came in at .2%, and the “Fed” reports that because it removes the volatility, lol, as if people don’t need food or energy. And the insidious truth is that as food and energy increase in price while wages stagnate, they consume a greater percentage of one’s income over time, and thus should be weighted MORE, not less. C’est la vie… revolution is in the air. Here’s Econoday:
Headline CPI inflation continues its trend of outpacing core inflation-largely on strong gains in energy costs but with food price hikes also contributing. The CPI in January increased 0.4 percent, following a 0.4 percent jump in December. The consensus had called for a 0.3 percent gain in January. Excluding food and energy, CPI inflation in January posted at a 0.2 percent rise, compared December's increase of 0.1 percent and exceeding expectations for a 0.1 percent gain.

By major components, energy increased 2.1 percent after jumping 4.0 percent in December. Gasoline rose 3.5 percent, after spiking 6.7 percent the previous month. Food price inflation picked up the pace to 0.5 percent from 0.1 percent in December. Hikes in energy commodities and food accounted for over two thirds of the all items increase.

The firming in the core rate was led by a 1.0 percent jump in apparel and 2.2 percent boost in airline fares. Medical care commodities gained 0.5 percent. On the more moderate side, the shelter index rose 0.1 percent in January, with the rent index increasing 0.2 percent and the index for owners' equivalent rent rising 0.1 percent. Tugging down were declines in new vehicles, down 0.1 percent, used cars and trucks, down 0.3 percent, and medical care services, down 0.1 percent.

Year-on-year, overall CPI inflation increased to 1.7 (seasonally adjusted) from 1.4 percent in December. The core rate rose to 0.9 percent from 0.6 percent on a year-ago basis. On an unadjusted year-ago basis, the headline number was up 1.6 percent in January while the core was up 1.0 percent.

Overall, today's report shows a firming in inflation pressures and points to upward pressure on interest rates.

No, interest rates can’t rise. That is not unless you wish to crash the entire debt saturated planet. Welcome to the impossible math created the day the “Fed” stole the people’s rightful ability to control the production of money. Interest expense, from that day forward, went to benefit a few individuals instead of the general good of the people. Thus our money system is not ours. Note the word “Note” printed on every bill inside of your wallet. That term denotes a LOAN, it is not money, the “Federal Reserve Bank” is not Federal, they possess no reserves when marked to reality, and they are not even a bank. And then we wonder why we have no jobs, we’re losing our homes, and what jobs we have are all menial.

We have the “freedom” to pursue happiness, yet we wonder through life producing nothing of meaning, not really happy, failing to advance humanity, while we await the next shoe to be dropped – American spectator style. Quite the reality show, at least we have stolen from the Asians the technology to observe the disintegration in real time. Perhaps we can all stage a virtual sit in – somewhat Egyptian style? Of course if we all stopped our current “productive efforts” I wonder if anyone would even notice?
But since inflation is so “low” then the “Fed” can justify their continued printing of trillions, right? But what if we simply measured inflation like we did in the year 1980, before the several administrations tinkered with it? Well, that’s how John Williams at ShadowStats tracks inflation, and he says inflation tracked that way is pushing 10%:

I think that even that is understated, as food and energy have not been rebalanced appropriately to incomes.

Food commodities have doubled in the past six months, the run up began not when winter weather struck, but the ramp began in earnest at the same time as QE2. The banks can manipulate gold and silver, but at the same they are pumping money and playing games with the markets and precious metals, some of their hot money began to leak into food. Now they are really boxed in. If the economy is improving, can interest rates rise? Before they rise, the assumption would be that they would stop monetizing. Yet they can’t do that or the markets they are propping up, along with the entire financial industry, will crumble. Yet if they continue to monetize at ZIRP, then food and energy do a moonshot. This is the situation THE CENTRAL BANKERS created, and I say let them eat it, as they most certainly will in the end.

The "markets?" Oh yeah, the VIX rose against rising prices yesterday. Wake me when POMO is over...