Thursday, April 21, 2011

Morning Update/ Market Thread 4/21

Good Morning,

Equity futures are up slightly following yesterday’s wild gap. The dollar is down some more, falling below the 2009 lows showing that this is a higher level wave lower. Of course as the dollar falls in value, the cost of oil goes up, and WTI is now $111 and change. Gold and silver are both higher still, with rumors now floating that someone/ some group/ some nation is working to corner the silver market. Personally doubt that the heavy buying is an attempt to “corner the market,” rather it is a statement about the value of the dollar – I say that because silver is catching up to gold which is also setting records. Of course most food commodities are also higher.

The weekly Jobless Claims number came in above 400K again. At 403,000, this is well above the consensus that was looking for 390k, and once again last week’s number was revised higher. Here’s Econohope:
Fewer workers filed for initial unemployment benefits in the latest week but the data nevertheless point to risk for the April-to-March comparison. Initial claims fell 13,000 in the April 16 week to 403,000, not quite as low as expected and compared with 416,000 in the prior week (revised 4,000 higher). The latest improvement was too modest to keep the four-week average from rising for the fourth time in five weeks, up 2,250 to 399,000. A look back at this time last month shows the average at 391,000.

The Labor Department cited no special items in the latest week and once again made no mention of a possible Japanese effect. Before the ongoing bump, jobless claims had been showing two years of steady improvement. Stocks edged off highs in initial reaction to today's results.

The Philly Fed, Home Price Index, and “Leading Indicators” are released at 10 Eastern and will be reported inside of the daily thread comments below this post.

Why is the market and commodities zooming? Could billions per day in hot money have anything to do with it? Let’s take a look at a chart I built this morning showing the cost of oil versus the monetary base:

Hmmm… there’s a pretty big story there I think, and it pretty much puts the blame squarely where it belongs. You can blame demand (falling), or mid-east wars (American manipulation), or even speculators for the cost of oil, but it is the constant flow of hot money, including billions of dollars per day, that is really behind rising prices. The “Fed” is out of control with the production of money.

This week the housing data was touted in the mainstream as “flexing muscle.” [insert major eye roll here] Below are the freshly updated charts of Housing Starts and Permits, you decide how bright the future looks based on these:



I’ll simply note that a REAL economic recovery has never occurred without the housing industry leading the way. If you look at all the info in the charts above what is it that’s leading the way? Oh yeah, money printing. Extraordinary money printing. Of course there needs to be sufficient money or the economy will suffer, but when you overdo it, the economy also suffers. These wild swings are brought to you because of the “Fed” controlled system. It doesn’t work to have private individuals manage the nation’s money – period.

Now there are rumors that the “Fed” may be selling put options on Treasury Bonds in order to drive down yields. While I don’t know if they are doing this for a fact, it wouldn’t surprise me as I know that desperate people do desperate things. The “Fed” is desperate to keep “growth” going at any cost, and they are taking actions that only desperate men would take. Manipulation is everywhere and because there is a complete lack of transparency in the markets, it is impossible to know everything that those doing the manipulating are up to. Here’s a clear explanation of what might be happening in this regard:

Fraud is what it amounts to – and fraud is rampant.

Updating the nuclear situation, forecasts are showing a large amount of radiation crossing the Pacific and reaching the United States – again crickets from our mainstream and our politicians. Meanwhile tests by Berkeley University are showing increasing levels of radiation in milk (San Francisco) and in the soil at the base of the Sierra Nevada Mountains. Radiation is also now turning up in breast milk tested in Japan. Still, the radiation pours out of Fukushima and no serious action to contain the radiation is occurring.

Yesterday’s ramp in the market managed to push the DOW Industrials to new highs, but the Transports and SPX failed to confirm that, thus there is a potential non-confirmation now in place. But as long as the money pumping continues, we can expect higher prices for everything – and that’s the catch. They can’t force the hot money to go only where they want it. And they’re not willing to pass it on to the people so that they can keep up with inflation, and thus their pump money strategy is clearly limited – we are at or near those limits now.