Wednesday, May 11, 2011

Morning Update/ Market Thread 5/11 - Losing our Religion Edition…

Good Morning,

Equity futures are down slightly this morning prior to the open, the dollar is higher, bonds are flat, oil is lower, gold is lower, silver is lower, and most food commodities are slightly higher.

The hypocritical shills at the MBA released their gutter bound Purchase Applications Index which supposedly grew by 6.7%, and the Refinance Index rose by a whopping 9.0% in the past week if you can believe that – in case you can’t tell, I don’t. Here’s Econoshill going along with the charade, however, I will note that it is spring and I do expect purchases to rise due to seasonality, but the wild swings found here are purely fiction, a result of people who have given up on reality in exchange for a few bucks – they have exchanged their morality for paper fluff and false prestige:
Falling rates are giving a boost to mortgage applications according to the Mortgage Bankers Association whose composite index jumped 8.2 percent in the May 6 week. Mortgage applications rose for both purchases, up 6.7 percent, and refinancing, up 9.0 percent. The purchase index has gained about 1/2 percent over the past four weeks which points to badly needed improvement for home sales. Thirty-year mortgage rates, at 4.67 percent in the latest week, have fallen more than 30 basis points over the past month.

Just as a reminder, we are now in the phase where Option-Arm loans are resetting in mass.

This will cause massive pressure on upper-end homes and prices as people are faced with resetting mortgage payments. If they cannot afford those higher payments, or if their home is upside down (most who took these loans are), then it will be difficult, if not impossible, for them to refinance. Look for upper-end inventory to build throughout the year and to pressure prices and banks. Don’t worry about the banks, of course, they will simply shed their wickedly worthless paper off on the public who is still largely unaware that the “Fed” IS the banks and only looks after their interests, not yours.

The International Trade Data is showing a widening between what we export and import, the gap grew from -$45.8 Billion in February to -$48.2 Billion in March, largely on the back of rising oil prices. High oil prices eventually rise the price of everything, even our trade deficits. Of course since we’re running still massive deficits, we need to pay for it somehow, and that would mean more debt via bond/Treasury sales, and/or more printing. In this space we lost our way a long time ago, exporting far less than we import, and not really paying for any of it. Can you imagine working to produce products to sell to a country who returns you only financial engineering for decade upon decade?
The U.S. trade deficit worsened notably, largely on higher oil prices. But there are some positives in the report as well as negatives. The overall U.S. trade deficit in March expanded to $48.2 billion from a revised $45.4 billion gap in February. The March deficit came in worse than analysts' estimate for a $47.7 billion shortfall. Exports jumped 4.6 percent, following a 1.5 percent decline the previous month. Imports rebounded 4.9 percent after dropping 1.9 percent in February.

The widening of the trade deficit was led by the petroleum gap which grew to $31.3 billion from $25.5 billion in February. The nonpetroleum goods shortfall shrank to $29.8 billion from $32.8 billion the prior month. The services surplus expanded somewhat to $13.9 billion from $13.7 billion in February.

Looking at end use categories for goods, the increase in imports was led by a $7.7 billion jump in industrial supplies with $3.6 billion from oil imports. Auto imports rose $2.1 billion while capital goods ex autos gained $1.6 billion. Foods, feeds & beverages were essentially unchanged. However, consumer goods imports dipped $2.0 billion.

By end-use categories, the boost in improvement in exports was led by a $2.5 billion jump in industrial supplies, followed by automotive exports, rising $1.6 billion. Also increasing were consumer goods, up $0.7 billion, and foods, feeds & beverages, up $0.6 billion.

On a not seasonally adjusted basis, the March figures show surpluses, in billions of dollars, with Hong Kong $2.7 ($2.5 for February), Australia $1.1 ($1.4), Singapore $0.9 ($0.8), and Egypt $0.4 ($0.5). Deficits were recorded, in billions of dollars, with China $18.1 ($18.8), OPEC $10.8 ($9.4), European Union $9.0 ($6.9), Mexico $6.2 ($5.3), Japan $6.1 ($5.2), Germany $4.6 ($3.3), Venezuela $3.0 ($2.1), Canada $2.8 ($3.0), Ireland $2.6 ($2.6), Nigeria $2.5 ($2.5), Korea $0.6 ($0.8), and Taiwan $0.6 ($0.9).

The direction of the trade gap was not a surprise but the impact of higher oil prices was more than expected. However, the good news is that exports are back up and sharply. Export gains were broad based, likely benefiting from a soft dollar and moderately healthy economic growth overseas. Manufacturers should be happy about the export numbers. However, the growing oil gap is a drain on U.S. consumers, businesses, and the economy. And the slippage in imports of consumer goods indicates that businesses may be notching down their forecasts for economic growth the remainder of this year.

This is just another measurement that is made in Dollars. And this points out the fantasy of money printing to inflate away debts. Note that the more you print, the larger this deficit gets because oil and other real things are priced in dollars… thus the debt is growing faster because you printed, which is the exact opposite of what you are told will happen by people who simply have been brainwashed with the “Fed’s” B.S..

Let me say that again to make it clear – printing does NOT reduce your debts, it increases them! If you don’t believe that, then take a look at the U.S. debt since the time “QE” began and report back.

No, we have lost our way. The introduction of the “Federal Reserve Act” in 1913 was the beginning of a very slippery slope. Initially the introduction of debt backed money created a boom, but now we are totally saturated with debt, our collective incomes completely incapable of ever paying it back.

This moral decline accelerated greatly with the removal of Usury Laws. Taking advantage of people via the production of money has always been a sin and always will be. The production of money is the most powerful right that exists, it is as powerful as all of human imagination. That power rightfully belongs to everyone, not a few individuals who have wrongfully staked their claim to that power.

The people of Europe are being sold down the river, while paper is being created by the central bankers to mask it over – paper that enslaves future generations. The impossible math there is staring everyone there point-blank in the eyes. The people of Europe need to send the central bankers packing, but their money is corrupting the politicians and their political systems as it is here in the United States.

Keep an eye not only on Europe, but also on Japan. The media ignored disaster there is certainly not over, and in fact there are several risks that are further threatening Fukushima. The real news there is only deteriorating, the contamination is far worse than let on, it is spread far further than let on, and there is still a risk that this could get worse.

The markets and our banking system are nothing but fraud, completely controlled by the same people. The whole shebang is coming down and “other events” are coming. That’s what happens when people lose their way…