Wednesday, April 13, 2011

Morning Update/ Market Thread 4/13 - Never Ending Fantasy Edition...

Good Morning,

Equity futures are bouncing this morning, with the dollar lower, bonds lower, oil higher after bouncing off Goldman’s $105 manipulation… errr target price, gold and silver are higher, and food commodities are slightly higher after falling the past couple of days.

JPMorgan managed to “beat” estimates, doing so by marking their goliath “portfolio” to fantasy and by taking smaller loan loss reserves, particularly on credit cards. Without the reduced charge offs, earnings would have been a large miss. The truth is that JPM is 100% insolvent the day they are forced to mark their “assets” to market.

Many, including myself, are crediting “Fed” manipulation and money printing for running markets up, but don’t forget that mark-to-fantasy accounting rules are just as big a part of the illusion and no one is talking about them anymore.

By the way - why do we allow banks to even participate in speculating in equity and commodity markets? Is there really a need for that? Oh yeah, I almost forgot that the markets are all about them, owned by them, manipulated by them - and they can because they're the ones producing the money and getting the rules written for their benefit. Silly me, I almost forgot.

The still conflicted and morally bankrupt Mortgage Banker’s Association reported Purchase Applications fell 4.7% in the prior week, and the Refinance Index fell 7.7%, bringing their overall fantasy down 6.7%. Here’s Econotrip:

Highlights Purchase applications for mortgages fell back 4.7 percent in the April 8 week to only partially reverse a 6.7 percent jump in the prior week. On refinancing, the Mortgage Bankers Association which produces the report has been warning that rates have moved too high to attract much interest from creditworthy borrowers. Refinance applications fell 7.7 percent in the week to a two-month low. April may be getting off to a slow start but purchase applications did move higher in prior weeks signaling improvement for March home sales data.
Okay, I have to admit that I don’t think I can keep reporting on such drivel from such obvious shills.

Speaking of shills, Retail Sales – one of the most inaccurate reports due to measurement in dollars and survival bias – rose by “only” .4% in March, this is below Feburary’s 1.0%, and is also less than expectations. I say “only” because although at an annualized rate that’s a whopping 4.8% of unsustainable growth, but it PALES in comparison to yesterday’s import price growth of 2.7% (annualized 32.4%, and compounded for a year is over 37%!). So, retail sales not only fail to correct for stores gone out of business, but in this case they lagged import inflation by 2.3%! Thus, the reality is that retail sales are FALLING, and they are falling dramatically in real terms. Here’s Econoshill for your daily dose of rationalizing and “consumer” conditioning:

Highlights As expected, retail sales in March posted a strong gain on higher gasoline sales, helping to offset weakness in auto sales. But spending was reasonably healthy overall outside these two components. Overall retail sales advanced 0.4 percent, following a revised 1.1 percent gain in February and a revised 0.8 percent increase in January. The March boost fell short of the median market forecast for a 0.5 percent rise. Excluding autos, sales gained 0.8 percent, following a 1.1 percent increase in February. Analysts had called for a 0.7 percent boost. February increases for headline and core were originally estimated at 1.0 percent and 0.7 percent, respectively. But spending is holding up overall.

Importantly, sales excluding autos and gasoline in March advanced 0.6 percent, following a 0.9 percent increase in February. Some of components that are strong include furniture & home furnishings (3.6 percent), building materials (2.2 percent), electronics & appliance stores (2.1 percent), clothing (0.6 percent), general merchandise (0.4 percent), and food services & drinking places (1.0 percent).

Overall retail sales on a year-ago basis in March slipped to 7.1 percent from 9.1 percent the prior month. Excluding motor vehicles, sales were up a year-ago 6.5 percent, following 6.8 percent in February.

While the headline number came in below expectations, it also was strong. And even after discounting higher gasoline prices, spending is healthy. The cost of filling up at the gas station may be cutting into discretionary income-but not yet spending. While there is talk of a more moderate GDP number for the first quarter, it is not because of the consumer.
Speaking of fantasy… Ummm, okay… I think I know what that light at the end of that tunnel is.

Business Inventories will be reported at 10 Eastern, and the criminals’ “beige book” (ever wonder where they keep their real “books?”) will be released this afternoon.

The headline on the front page of my local newspaper reads, “An "alarming" number of students are Homeless.” Our “wealthy” small town, it seems, has seen the number of homeless children skyrocket 400% in the past 3 years. The children tracked are in temporary quarters, “living in motels, cars, camp grounds, trailer parks, multi-family housing, and foster kids in temporary placement.

My first reaction to the article was that I had no idea it was rising that quickly, and of course if anyone would expect that, it would be me – but still, it’s hard to swallow. My second thought quickly swung once again to that famous quote:

“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
- Thomas Jefferson – attributed
Yep, very sad. Oh, and if the middle-class wasn’t getting squeezed enough, this just in from the Washington State Senate:

Wash. Senate budget cuts teacher pay by 3 percent
The headline says it all. Doesn’t sound like much, but a couple hundred bucks a month out of pocket into the face of skyrocketing costs is exactly what the continued destruction of the middle-class is all about.

Is there any wonder that the teachers have a union? Further, can you really blame them for wanting their wages to keep up with that inflation? In fact, the VOTERS passed legislation in Washington state a few years ago that ties their wages to measured inflation, as trumped up as those measurements are. The state actually followed the voter’s mandate for about two years, but then promptly froze wages anyway, and now they’re going backwards. Oh yeah, it’s all the union’s fault. But heck, they’re just teaching homeless children anyway, right?

Meanwhile the phony left blames the phony right, and they argue about austerity and debt limits – boxed in by the central banker bond market paradigm and a money system that is designed to work for them, and not for the people who rightly own this nation’s right to produce money. Very few are willing to talk about the interest payable to private bankers – but here’s a guy who is:

And he’s using the government’s own trumped up numbers. The truth is that we already pay out ALL the taxes we collect just to pay interest on the national debt. I say that because all the QE and other stimulus money are basically an attempt to artificially buy down interest rates. And when that money is combined with the already outrageous direct interest expense, then you will find that ALL of your federal taxes are being funneled to the private banks and ALL real government activity is turning into more DEBT – or is devaluing the value of your money as they print.

THAT is the elephant in the room, it is a product of WHO benefits from and controls the production of our money.

The amount of disinformation surrounding the nuclear catastrophe in Japan in amazing. Yes, it’s worse than Chernobyl and it has the potential to be far, far worse and they are doing exactly the wrong things in order to keep it from being worse. The Japanese Prime Minister finally admitted that it might be “ten or twenty years” before it would be safe for people to return to the evacuated zone. LOL, they are talking ten years just to get the fuel cool enough to manage. The reality is that heavy particles with half-lives in the thousands of years are now spread across that land. It will likely be centuries before that land is inhabitable again – government and corporate officials are doing the slow, slow walk towards reality, but they are doing almost nothing to prevent it from spreading even further – in fact their actions are causing it to spread further.

Those who are making the claim that these reactors are different than Chernobyl and that they have better safe guards are ignoring the fact that just as much radiation (or more in reality) has already escaped and that there is 24 TIMES, yes 24 times, as much nuclear fuel at risk in Fukushima as there was at Chernobyl - The Amount of Radioactive Fuel at Fukushima DWARFS Chernobyl.

And we are going to dilly dally about upping our standards and improving facilities here in the U.S.? Are we sane?

And to those who claim that the “small” amounts detected in the U.S. are safe – I say come on over and let’s shuck back some of the local food and we’ll wash it down with plenty of milk. No amount of radiation in our food supply is good, and those who proclaim otherwise are simply sick and conflicted.

The economy, financial company earnings, and markets… pure fantasy.