Thursday, April 14, 2011

Morning Update/ Market Thread 4/14 - Only a Matter of Time Edition…

Good Morning,

Equity futures are lower this morning as the dollar swings wildly lower, then higher. Bonds are just heading higher to safe ground, oil is down, but gold and silver are higher, and food commodities are going lower.

What could be sparking the swings in the dollar? Try this:
BRICS agree to use local currencies for mutual credit

Member countries of the BRICS forum have agreed to establish mutual credit lines in their own currencies, skipping the existing exchange medium of the dollar.

Development banks of Brazil, Russia, India, China and South Africa today signed a framework agreement to establish mutual credit lines denominated in their own currencies.

"The agreement is aimed at strengthening financial cooperation between partner banks and support financial institutions and companies seeking to enter BRICS markets," the bank said in a statement.

While local currency credit lines may have limited role and are more symbolic in nature, BRICS said the long-term prospect of the dollar as the dominant currency for international trade is a cause of worry.

It is a little bit more than symbolic when countries actually move to subvert using the dollar in international trade. It is a significant step in the loss of power and influence the United States has in the world, as we have mismanaged our reserve status and will ultimately pay the price for that mismanagement.

Keep in mind that the dollar index is a phony measurement – the “Fed” banks manipulate the hell out of our own currency and it is being measured against the other worst actors in the world in regards to manipulation. Free markets is the last thing that dollar dominance has brought the world. Sure, the dollar has fallen a long way, and if we are entering another deleveraging leg the dollar may mechanically rise for a time, but structurally the dollar is underpinned by impossible math.

So now both the left and the right puppets are giving lip service to tackling the bad math. Hey, at least they finally both agree that the math is bad – yet they fail to acknowledge just how impossible it is. Note that Obama’s multi-year plan to save $4 trillion from the DEFICIT does not mean that he is getting in the neighborhood of actually paying back the current DEBT. When you are running $1.5 trillion deficits each year, then “SAVING” $4 trillion over 12 years is only shaving $333 billion per year from our current situation, but still adds $1.2 trillion per year in debt, which means that 12 years from now our national debt will have doubled! LOL, and that’s a wildly optimistic number as we are on an impossible exponentially expanding climb straight up debt mountain, even with interest rates at zero!

And that makes all this tough talk just bullshit. The people will suffer and suffer until they change out WHO controls the production of money in this nation.

Oh, look, I think I see some people suffering now as the weekly Jobless Claims number shoots back above the psychologically important 400k number, but is just another marker as job losses have yet to stop unlike the media and politicians are portraying. This week’s number came in at 412,000, up from 382k, and only 32,000 higher than expected. Here’s Econospin:
Initial unemployment claims jumped 27,000 in the April 9 week to a much higher-than-expected total of 412,000 and the first plus 400,000 reading since early March (April 2 week revised 3,000 higher to 385,000). The Labor Department said effects tied to the beginning of a quarter may be behind the rise. Supply disruptions tied to Japan were not cited. The four-week average rose 5,500 to 395,750 for its highest reading since mid March.

In other data, continuing claims in data for the April 2 week fell 58,000 to 3.680 million. The unemployment rate for insured workers slipped one tenth to 2.9 percent.

Markets are showing no significant reaction despite the possibility that today's report could be the first signal of trouble for April payrolls.

Yeah, and $110 oil wasn’t cited either, nor was printing money to the moon and giving to bankers instead debt saturated zombie “consumers.” Trouble for the upcoming jobs report? On clue to that number comes from Washington State where our unemployment rate just “unexpectedly” ticked up a tenth.

The PPI rose .7% in March, down from the extreme 1.6% reading in February. This is still a very high reading (8.4% annualized) which I believe is far from the actual inflation experienced – the Import and Export numbers are closer. Still, as you read Econospin sweating the numbers, keep in mind that indeed oil and food rocketed higher, but they were still shooting higher through much of March. PPI numbers lead Consumer Prices, and those will be reported tomorrow:
Producer price inflation at the headline level in March remains under heightened upward pressure from higher oil costs. Meanwhile the core was bumped up but not to the same degree. Overall PPI inflation in March eased but came in at a still hot 0.7 percent after surging 1.6 percent in February. The boost in March came in lower than analysts' forecast for a 1.0 percent increase. Energy led the latest gain while food edged back from a huge surge in February. At the core level, the PPI firmed to a 0.3 percent rise, following a 0.2 percent advance in February.

By components, food prices edged back 0.2 percent after surging 3.9 percent in February. Energy continued upward, jumping 2.6 percent, following a 3.3 percent jump in February. About 80 percent of the boost in energy came from a 5.7 percent spike in gasoline, following a 3.7 percent increase in February. Heating oil rose 2.7 percent in the latest month.

The biggest culprits in the core acceleration were light motor trucks and passenger cars, which rose 0.7 percent and 0.9 percent, respectively. Not surprisingly, the category of jewelry, platinum & karat gold jumped 3.7 percent in March, following a 4.6 percent increase the prior month.

For the overall PPI, the year-on-year rate in March posted at 5.7 percent, compared to 5.8 percent in February (seasonally adjusted). The core rate rose to 2.0 percent from 1.9 percent the prior month. On a not seasonally adjusted basis for March, the year-ago the headline PPI was up 5.8 percent while the core was up 1.9 percent.

This morning's dual release of the PPI and jobless claims may be presenting a difficult policy decision for the Fed. Producer price inflation remains strong while initial claims unexpectedly rose. While some within the Fed continue to say that the impact of higher oil prices is transitory, not all agree. And the job market may not be improving as much as believed. Tough decisions are ahead for the Fed.

First mention I’ve heard from Econoday regarding the “Fed’s” corner they have backed themselves into.

Don’t bee fooled by all the deficit reduction talk – while it may produce another wave of deflation, the impossible math insures that in the end it is inflation that will kill the confidence in our money. That said, the more deflation that comes now, the longer it will be before the end game plays out. If deflation is not allowed to play out, then we are in the throws of the end game now – which frankly would not surprise.

You know there’s a ton of stuff going on and I can’t address it all, but it’s all important nonetheless. Like the sham agreement with the banks to keep their illegal fantasy MERS game going, or the 27% plunge in Chinese new home prices in just the past month, or how new fancy hotels in Bahrain are only 5% occupied demonstrating that you can build temples of wealth, but if you do not build a solid base beginning with the rule of law that those temples will be meaningless, or worse, they will drain productivity from your society – something that is happening big time in the United States. And over in Europe games with the PIIGS continue. Iceland voters told the bankers to stuff it, good on them. Now Finland has a vote to say no to bailing out Portugal – terrific! The people of the world need to continue to rise up to the bankers – that is the only way to escape the impossible math.

The impossible math of debt and the intertwining of special interest money and politics absolutely played a huge role in the Japanese nuclear disaster. That aspect of their crisis was NOT a natural disaster, it was absolutely man-made. Again, subverting the natural rule-of-law eventually results in getting spanked by nature. And now Japanese officials are admitting that they knew this was as bad as Chernobyl from the start – but they kept quiet because, “If we immediately decided to label the situation as Level 7, we could have triggered a panicked reaction.”

Um, pardon me, but if a Mack truck is about to run you over, then the flight response is absolutely critical – and very appropriate – in order to avoid becoming road kill. This admission is a confidence destroyer and you should be wondering what else it is that officials (both here and there) are not telling you in their effort to not trigger “a panicked reaction?”

I would politely suggest that you do panic and that you take steps to protect your health – something I’ve been saying all along. You should have stocked up on food and water produced pre mid-March, but now you may consider drinking less milk, eating fewer leafy vegetables, avoiding seafood (from both the gulf and Pacific), and you may want to consider a reverse osmosis filter for water consumed at home, particularly if you live on the West Coast, and particularly if you are pregnant or have an infant at home. No, the radiation won’t kill you today if you consume it, but it may cause problems for you later – and I remind you again that the radiation is still coming, that they are failing to do the right things to contain it.

And now we are finally starting to hear from some experts about the potential harm in Japan – try the possibility of 400,000 cancers from it there, how’s that sound? It sounds far worse than the horrific tsunami to me…

Here’s Arnie Gunderson’s latest interview… and why is it that these types of conversations are only happening on alternative media? You should think long and hard about that one…

As I watch three RIDICULOUS wars by America, thousands and thousands killed… and as I see and empathize for the real suffering that hundreds of millions of debt saturated people, losing their homes, losing their jobs, or just experience the degradation of the middle-class squeeze (all due to complete central banker capture)…

Then I watch the mainstream media scream and make big noises about air traffic controllers – working inappropriately by themselves and at all hours of the night during extreme conditions from mostly bore you to death, all the way to one arm multi-tasking paper hanger busy – who fall asleep on the job, and then the uproar is about the people being put at risk! LOL, JUST TAKE A LOOK AROUND YOU AT THE PEOPLE BEING PUT AT RISK.

And then DO YOUR JOB! Instead of being just another corporate captured consumer zombie reporter.

And while the central bankers and politicians put the entire world at jeopardy, while our PRESIDENT is giving a speech about “fixing” the impossible math – there’s our Vice-President snoring away!

Yes, it does strike me as a little bit more than ironic in that the budget pressures that put a single controller in the tower to begin with are treated with such complacency by our politicians, by our mainstream media, and of course by the bankers who brought you the impossible math in the first place.

Meanwhile the markets produce a small Head & Shoulders pattern over the past couple of days and are now playing that pattern out to just above the SPX 1,300 level. Oh yeah, the markets are complete fluff - the Fukushima nuclear disaster is good analogy – built upon a faulty and corrupted base, it is only a matter of time…