Thursday, March 10, 2011

Morning Update/ Market Thread 3/10 - The Wall Edition

Good Morning,

Equities are sharply lower this morning with the dollar higher, bonds higher, and most commodities lower.

Spreads in Europe continue to widen, Spain’s debt was downgraded and spreads there are rising quickly. China is decelerating quickly with markets falling.

In Wisconsin the Senate bypassed the Democrats and passed the Governor’s anti-union legislation. Now Democrats are coming back to Wisconsin from their self-imposed exile to “take back their government.” Good luck with that, you will not truly do so until you change out WHO it is that produces and controls the money in this nation. Until then you and everyone else are victims of the impossible math created not by the unions, but by the central banks.

And what happens when legislation is introduced to reel in the bankers? Why the threats flow like flood waters, and the markets tumble, that’s what. The latest threat? How about capping debit cards to $50 per transaction?
Debit cards: $50 spending limit coming?

NEW YORK (CNNMoney) -- Declined! Your debit card may soon be denied for purchases greater than $100 -- or even as little as $50.

JPMorgan Chase, one of the nation's largest banks, is considering capping debit card transactions at either $50 or $100, according to a source with knowledge of the proposal.

Why? Because of a tricky thing called interchange fees.

Right now, every time you swipe your debit card, your bank charges the retailer an average fee of 44 cents, which it shares with its partners. Those little fees, however, add up to about $16 billion per year, according to 2009 data from the Federal Reserve.

But as part of the Wall Street reform legislation that was passed last year, these fees are being slashed. The Fed is currently proposing rules that would go into effect in July and would cap interchange fees at 12 cents.

That's a big enough cut to cost Chase (JPM, Fortune 500) more than $1 billion a year. And Chase may not be alone. Other major issuers are also projecting huge losses from the interchange fee cap.

Joe Price, president of consumer banking for Bank of America (BAC, Fortune 500), said in an e-mailed statement that the lower fee wouldn't fairly compensate the bank for the infrastructure and services it provides to retailers.

That’s right, the threat is that if you take away usurious fees from the banks, then they will cap transactions and make life difficult for everyone. They can do this because it is THEM who control the money! YOUR MONEY!

What the banksters fail to realize is that the money system of the United States belongs to the people, not the private banks. Sadly, the people also largely fail to understand this. Of all the infrastructure in the world, the money system and the production thereof is THE most basic and necessary GOVERNMENT function. Threats like this are the exact reason that the government must take back control of our money. But we know that’s not happening, and thus the impossible math mounts and “other events” continue to pick up pace.

Here’s an “other event” you may not have envisioned – try the price of lettuce rising 220% in just 3 weeks and school districts removing lettuce and other veggies from your children’s school lunches:

Are you angry yet?

Of course the weather affected the crops, that never happens in the winter does it? What’s the real reason? Try injecting more than $100 Billion per month of hot money into the banks who use it to speculate all over the globe, and that’s how little glitches turn into instant hyper price inflation. Right now that spillover is rotating from one hot sector to the next, but price gains like this ratchet up one item after the other. That is everything except income – and that is why we are hitting a wall.

Oil prices are not going to cause recession once we hit $140 a barrel, that is nonsense. We’ve been in recession for well over a decade now, and any oil price over $80 a barrel rapidly kills the U.S. economy. We passed that mark months ago.

Oh yay, foreclosures are down from their horrific levels… but only due to the dysfunction of the banking industry and foreclosuregate. Of course the politicians know that if they really put the bankers in their place, then everything comes unwound. They don’t have the balls to do what’s right and what’s necessary, so they cower in fear while taking the banker’s special interest money.

And we STILL are running unbelievable trade deficits as we buy things from overseas that we can’t pay for:
The U.S. trade deficit worsened sharply and oil had only a small role in it. But the detail in imports indicates it may be a response to healthy demand. The overall U.S. trade deficit in January widened to $46.3 billion from a revised $40.3 billion shortfall in December. The January gap came in worse than analysts' forecast for a $41.0 billion deficit. Exports gained 2.7 percent, following a 2.0 percent boost the prior month. Imports posted a huge 5.2 percent increase after rising 2.6 percent in December.

The expansion of the trade deficit was led by the nonpetroleum goods gap which grew to $32.0 billion from $27.0 billion in December. The petroleum shortfall widened moderately to $26.7 billion from $25.5 billion the prior month.

Looking at end use categories for goods, the jump in imports was led by a $4.4 billion spike in industrial supplies but only $1.7 billion came from oil imports. Notably, capital goods imports excluding autos jumped $2.1 billion while automotive imports increased $2.7 billion. The surge in these imports may be related to meeting expected demand and this actually would be a positive sign for forward momentum although for the near term, it means a downward revision to first quarter GDP growth estimates.

By end-use categories, the boost in goods exports was led by a $3.7 billion jump in industrial supplies with automotive exports advancing $1.3 billion. Capital goods exports slipped 0.4 billion-largely on lower aircraft shipments. Consumer goods exports edged down $0.6 billion while food, feeds & beverages were essentially unchanged.

On a not seasonally adjusted basis, the January figures show surpluses, in billions of dollars, with Hong Kong $2.2 ($2.2 for December), Australia $1.2 ($1.2), Singapore $0.8 ($1.3), and Egypt $0.5 ($0.7). Deficits were recorded, in billions of dollars, with China $23.3 ($20.7), OPEC $9.9 ($8.3), European Union $5.6 ($6.6), Japan $5.0 ($5.9), Mexico $4.9 ($4.7), Canada $3.7 ($3.9), Germany $3.1 ($3.3), Nigeria $2.9 ($2.5), Venezuela $2.8 ($2.0), Ireland $1.9 ($2.6), Korea $1.0 ($0.7), and Taiwan $0.9 ($0.6).

On the news, equity futures dipped on the belief that first quarter GDP is not as strong as earlier believed. Also, a rebound in initial jobless claims weighed on equity futures-though the weekly volatility led to some discounting of the rise.

Imports are rising because the central banks are creating monetary inflation – everything, except housing, is costing more dollars. Measure things in devaluing dollars and they appear to rise. Create enough dollars and you can even mask falling demand, which is exactly what is happening with oil and food.

Weekly Jobless Claims jumped again, rising from 368,000 reported last week, to 397,000 this week. Here’s Econoday:
A catch-up from the prior holiday week fed a 26,000 increase in initial jobless claims for the March 5 week to a higher-than-expected level of 397,000 (prior week revised 3,000 higher to 371,000). The gain follows two prior weeks of sharp decreases reflected in the four-week average which rose only slightly to 392,250. A month-ago comparison still shows significant improvement of nearly 25,000. The Labor Department noted that a school break in New England, when bus drivers and other personnel are laid off, also increased claims.

Continuing claims extended their decline, down 20,000 in data for the February 26 week to 3.771 million. Continuing claims have fallen for five of the last six weekly periods. The unemployment rate for insured workers is unchanged at 3.0 percent.

Today's report will cut short hopes for strong momentum on the jobs front but not expectations for continued meaningful improvement. Markets are showing no significant immediate reaction.

The economy is STILL losing jobs. Not just once in awhile, but each and every week. And it’s been years now. And not just outright losing jobs, but our population is also growing and not creating any jobs for that larger population. What jobs are created are shells of what were middle-class living wages. Inflation is necessitating more earnings and more benefits, but workers are simply losing everything while bankers take home trillions for something they have no right to have in the first place. And that includes profiting from our nation’s debts which absolutely does not, and should not, have to be like that in the first place.

The wall of debt saturation is something I’ve discussed time and again. Adding debt to an economy that is comprised mostly of sovereign money (of which there is currently NONE), actually does create leverage and fuels job creation… temporarily. Once a money system becomes mostly debt, then adding more debt actually makes jobs go down as the cost to carry even more debt cannot be supported without giving something real up. And now we are so far into debt saturation that we already hit the wall, fell back and are trying, fruitlessly, to claw our way back beyond debt saturation – which of course is impossible. It’s impossible because it requires income to service debt, and the math is so far gone that it’s not even laughable, sad, or disgusting anymore – it’s just pathetic that we STILL haven’t removed the bankers from power.

So we hit the wall, fall back, and do it again because as a group we are psychotic. Literally. As in we don’t even acknowledge reality. Economic Mass Psychosis.

The markets? They are so far removed from reality that again it’s just delusional to even discuss it because none of the underlying numbers are real, much less work. Oh yeah, keep contributing to your “retirement” by giving your money to the HFT owners who are creating the holographic stock market - that will surely be to your benefit in the end. “Never been a better time to buy.”

And for the past two years people have now been conditioned that the market never goes down. This despite the fact that the truth is that in the long run the market never actually goes up. I can say that because every company of the original DOW Industrials has failed – all of them, including GE who lives only due to the criminals who revived them using your money. And in the past decade, even in nominal terms the broad market still is not near where it was, this despite the fact that your money now buys you far less.

The game is totally tilted in favor of those closest to the production of money, yet the production of money rightly is supposed to benefit all in society. We’re going to keep beating our heads against the wall until we get smart enough to take back that which was stolen from us in the year 1913.