Monday, March 7, 2011

Morning Update/ Market Thread 3/7

Good Morning,

Equity futures are just ahead of even prior to the open. The dollar is slightly lower still trapped beneath what was support and is now resistance, bonds are lower, oil is higher and testing $106, gold is setting a new record high while silver jumps too, and most food commodities are also higher.

There is no data this morning, but Consumer Credit is released late this afternoon. This week will be a very light week for economic data. POMOs of course big time through Wednesday and on Thursday we receive the new POMO schedule. The daily POMOs are growing in size, that along with other ways the “Fed” is adding liquidity is creating one giant risk bubble – Zimbabwe style, but on a global scale.

Of course the economy and the stock market are two different things – yet psychologically many equate the stock market as a reflection of health in the underlying economy. At this stage it’s most certainly not, it is the product of hot money creation and fraud, there is little real that is currently underpinning the heights that the market has attained. This fantasy that inflating our money supply will someday result in a spontaneously healing economy is absolutely ridiculous. What it results in is starvation for those on the margins and violence as the difference between the haves and have-nots has already surpassed the revolution tipping point along the scale of despotism in most countries. The only thing keeping revolution at bay in the U.S. are our social welfare programs that keep genetically modified grain and plenty of corn syrup in the bellies of the underclass while those who can afford “organic” pay the extra price.

JPMorgan even managed to capture the food stamp program for the entire U.S., that’s how complete the capture of our government and people is.

But revolution is never that easy as the people in Egypt, Libya, Bahrain, Tunisia, and Saudi Arabia are finding out. I can’t help but think things are going to get far worse in the Middle East at some point… whenever things get out towards the edges, the risk of a larger event or series of events grows.

And no, oil is not doing a moonshot only due to tension in the Middle East. It requires hot money to fuel the rocket effect in price, and the world’s central bankers have certainly been supplying plenty of that. Still, those on the margins are already being dramatically affected by the high price, we are far beyond the tipping point for the U.S. economy. Oil above $80 has always resulted in economic pain, and this time will certainly be no different, especially for those living on the margins and the numbers of those marginal in our economy is growing daily.

For those keeping score, the pullback in the markets so far doesn’t even qualify as a pimple on Bernanke’s hot money rear. Still, as long as price remains below the upper blue line you see in the DOW flag below, it is possible that prices are still inside of a wave 2 movement about to move down in a wave 3. If prices rise above the top of the flag, however, then the hot money and HFT parade continue onto new highs starving the masses all the sooner: