Friday, March 4, 2011

Morning Update/ Market Thread 3/4

Good Morning,

Equity futures are near even just prior to the open on a Headline Employment rate that fell to 8.9%, and Nonfarm Payrolls that supposedly increased by 192,000. The dollar is dropping steeply again this morning falling further beneath major support, bonds are flat to slightly higher, oil is higher near new highs, gold is higher, silver is near new highs, most food commodities are higher. Corn is also near a new high, its daily chart is below, just look at the trajectory in the past eight months – up a staggering 122%!



…And corn’s certainly not alone when it comes to food commodities – the entire complex is way up.

The IMF of course, comprised of the world’s central criminals, says that high food prices are here to stay. This is due, of course, not to their money pumping – oh no – according to them it's entirely due to higher demand – hey, just “get used to it:”
Consumers Should Get Used to Higher Food Prices, IMF

March 4 (Bloomberg) -- Consumers should get used to paying more for food, after prices rose to a record, because farmers will take years to expand production enough to meet demand and drive down costs, the International Monetary Fund said.

People in developing countries are becoming richer and eating more meat and dairy, meaning more grain for livestock feed and land for grazing animals, Thomas Helbling, an adviser for the IMF’s research department, and economist Shaun Roache wrote in an article. Rising demand for biofuels and bad weather also tightened supply, they said.

“Rising food prices may be here to stay,” Helbling and Roache wrote in the article published in the agency’s Finance & Development magazine. “The main reasons for rising demand for food reflect structural changes in the global economy that will not be reversed.”

The world food price index tracked by the United Nations rose to a record in February. Food inflation fueled political unrest across North Africa and the Middle East that toppled leaders in Tunisia and Egypt, the largest wheat importer.

“Over time, supply growth can be expected to respond to higher prices, as it has in previous decades, easing pressure on food markets, but this will take time counted in years, rather than months,” the IMF’s Helbling and Roache said.

Riiigght… the story line is that higher demand has caused the price of corn to rise 122% in just eight months! Quite the disinformation – this is yet another example of how a planted story such as this puts false ideas into people’s heads. Yes, there may be a grain of truth to the supply/demand equation, but skyrocketing commodities are mostly due to central banker money pumping, plain and simple. Food commodities are rising in the exact same way that tulips did back in the year 1637 – too much money by hot money speculators.
And the disinformation is full steam ahead in the Employment Situation Report from the BLS where the rate is still trending down despite employment not close to keeping up with population growth. For your reading pleasure, the entire report is included below:

Employment March 2011

Here’s Econoday’s spin:
Highlights
After several months of stagnant growth, the economy finally posted a respectively healthy gain in payroll jobs for February. Also, the unemployment rate unexpected slipped further. Overall payroll employment in February grew by 192,000, following a revised 63,000 rise in January and a 152,000 gain in December. The February advance came in marginally lower than the updated consensus forecast for a 200,000 gain (180,000 prior to Thursday's jobless claims report). The December and January revisions were up net 58,000. Private nonfarm payrolls were somewhat stronger, increasing 222,000 in February, following a 68,000 boost in January. Analysts had projected a 190,000 advance in the latest month.

By major sectors, the goods-producing numbers look good, showing a 70,000 jump, following a 35,000 rise in January. For the latest month, manufacturing jobs advanced 33,000 after a 53,000 boost in January. Even better, only 1,000 of the February gain in manufacturing was for motor vehicles. Construction employment increased 33,000 in February, following a 22,000 decline the prior month. Mining rose 4,000 in February.

Private service-providing jobs jumped 152,000 after a 33,000 increase in January. The latest was led by a gain of 47,000 in professional and business services with 16,000 coming from temp help. Health care employment continued to increase in February, expanding by 34,000. Transportation and warehousing employment increased by 22,000 in February, with half of that gain in truck transportation. On the downside, employment in retail trade slipped 8,000-possibly due to adverse winter weather.

Government jobs fell 30,000, following a 5,000 dip in January.

A disappointment in today's report was in earnings. Wage pressures eased in February as average hourly earnings were flat in February, following a 0.4 percent jump the previous month. The February number fell short of the consensus forecast for a 0.2 percent increase. However, given that February followed a very strong January, the latest number is not worrisome. The average workweek for all workers printed at 34.2 hours, compared to the market median forecast for 34.3 hours and prior month level of 34.2 hours.

On a year-ago basis, overall payroll job growth improved to up 1.0 percent in February from up 0.8 percent the prior month.

Turning to the household survey, the unemployment rate edged down to 8.9 percent from 9.0 percent in January. Analysts had expected 9.1 percent.

Today's report is quite encouraging in that a real boost in payroll employment helps to pump up the recovery as the jobs gain will support more consumer spending. The drop in the unemployment rate looks good statistically and politically but is a bit of a quandary as most economists have been expecting a surge in the labor force as discouraged workers return to the job hunt.

On the news, equities initially firmed but then eased slightly. Treasuries were little changed. Overall, the report was net as expected.

The rate in the household survey is expected to go up because analysts know that if the economy is really creating jobs, then the number of people counted in the labor force should rise causing the unemployment rate to rise temporarily – at least that is the thinking. But that’s not happening for a number of reasons, not the least of which is that people with MBA’s don’t really want to work at McDonalds – and neither do people who used to have real family living wages.

Note how wages continue to be under pressure and how that does not square with other forms of disinformation regarding wages. Let’s see, corn up 122% in eight months, wages going nowhere… oh yeah, that’s quite the economic recovery there, why I’m sure it has nothing to do with the money pumping whatsoever… And just look at the reaction of the dollar in this weekly chart as it clearly breaks a long term rising trend line:



Turning back to the BLS disinformation, U-6, the measurement most similar to how unemployment used to be measured is still nearly 17%:



John Williams at Shadow Stats puts it closer to 22%:



Meanwhile the completely phony “Birth/Death” model went from subtracting 339,000 jobs in their annual correction last month to adding 112,000 jobs this month. That is a 451,000 swing from one month to the next with just this model, and note how the adjustments this year are growing substantially over last year. This is nothing but manipulation of the data, plain and simple:



Along comes the reinstatement of Mark-to-Fantasy accounting, TARP, FNM trillions, FRE trillions, then one bailout after another, then QE1, QE2, etc, and what this did was to turn our economy into a corpocracy where large corporations are able to privatize their profits and socialize their losses. This shifted the RISK from the private sector onto the public sector. So, first we had employment falling in the public sector and now we have employment falling in the public sector – not that falling employment in the public sector isn’t a good thing, it is, but it still pressures the real economy while its happening. Below is a chart showing Government Employment from 1939 to present where .gov went from 4 million employees all the way to 22.2 million – that’s a 555% increase, far greater than the increase in the size of the population which slightly more than doubled in the same time:



But since 2009, the government has been shedding jobs as the impossible math of debt has saturated government on all levels:



How high will oil and food prices go? How long before Americans rise up to put a stop to it?

You know, last night on the local news I watched a report about FRAUD by those in the Seattle area who convert their “food stamps” into cash by trading their cards to “dealers” who give them 50 cents on the dollar so that they have drug money or whatever. The news painted these poor and desperate people as if they were the biggest criminals in the history of the world. They talked about the cards and how they are not secure, etc., etc., bullshit. Not surprisingly, the government agency who oversees the cards refused to talk about it (there’s transparency for you).

But of course the entire time I’m reminded of the fact that it is JPMorgan who created the cards, and who “won” a government contract to administer the program. And I’m reminded that the states and the federal government are playing accounting games with the program because there is actually almost no money in the program compared to what they are spending, and that the money is simply being created from nothing by private banks like JPM who then simply add debt and interest onto the people after doing exactly nothing, and after giving up exactly nothing.

If you want to see the biggest criminals in the history of the planet, they are not the ones giving 50 cents on the dollar for food stamps. Oh my, but we are one messed up society.