Thursday, June 16, 2011

Morning Update/ Market Thread 6/16

Good Morning,

Equity futures were lower again this morning, but are now bouncing towards even, with the dollar higher, bonds higher, oil down again now just above $94 a barrel, gold & silver are hanging tough with gold at $1,528 an ounce still, and food commodities are in correction mode and are lower again this morning.

The DOW is getting close to its 200 day moving average which may offer some support just above 11,700. The key number to watch here is 11,613, as a daily close below that level will produce a major DOW Theory non-confirmation:

Yesterday the VIX jumped its 200dma and closed above the upper Bollinger band. This sets up a potential market buy signal that will be triggered once a daily candle closes back inside of the Bollinger bands:

The dollar is up against overhead resistance at this moment. There is a descending triangle in place on the daily timeframe, a break above this level is bullish for the dollar which will imply bearish for equities and commodities:

Below is a monthly chart of the dollar. There is a larger pennant formation that is very bearish on the longer timeframe. The dollar broke below this pennant, the bottom of which will offer resistance to the dollar if it moves higher. Keep in mind that the dollar index is meaningless in my mind due to the manipulated nature of all the currencies against which it is measured – I watch it just to see how we’re being manipulated:

Weekly Jobless Claims came in slightly better than last week, but still well above the 400k mark at 414,000. The prior week was initially reported at 427k, but of course was revised upward to 430k. The monkeys who build the “consensus” simply parrot the previous week’s number and thus this number was “better than consensus.” Again, numbers over 350k are a job losing proposition, this number is nothing to celebrate and it has been years now of job shedding – listening to the government claim they are “creating jobs” is nothing but a nauseating outright lie. Here’s Econospin:
In what is very good news for the economy, the number of unemployed filing for first-time jobless claims fell 16,000 in the June 11 week to 414,000 (prior week revised 3,000 higher to 430,000). The four-week average, though unchanged at 424,750, is more than 15,000 below where it was a month ago in a comparison that points to stronger payroll growth and a lower unemployment rate for the June employment report. Continuing claims also came down, down 21,000 to 3.709 million in data for the June 4 week with the unemployment rate for insured workers unchanged at 2.9 percent. There are no special factors skewing this report, one that should help boost confidence in the economic outlook and help limit the troubles underway in the financial markets.

It’s one thing to be optimistic, but it’s quite another to be a shill.

Housing Starts rose a little in May, rising from April’s 523k to 560k which is exactly what we would expect for the spring time. Definitely nothing to celebrate either, these numbers are less than half the number of starts pre-2007. The shills want to call a bottom every month, you would think that after years of being wrong they would at least humbly zip it, unfortunately no such luck:
Housing construction shows signs of life in May. Housing starts rebounded 3.5 percent, following a revised 8.8 percent drop in April (originally down 10.6 percent). May's annualized pace of 0.560 million units topped analysts' projection for 0.547 million units and is down 3.4 percent on a year-ago basis. The gain in May was led by a 3.7 percent rebound in the single-family component, following a 3.3 percent decline in April. The volatile multifamily component made a partial comeback, rising 2.9 percent after falling 21.7 percent the month before.

By region, the drop in starts in was led by a monthly 18.1 percent gain in the West with the South rising 1.5 percent. However, the Midwest and Northeast saw declines of 4.1 percent and 3.3 percent, respectively.

Housing permits are pointing to a little more optimism on the part of homebuilders. Housing permits jumped 8.7 percent in May, following a 1.9 percent decrease in April. Overall permits posted at an annualized rate of 0.612 million units and are actually up 5.2 percent on a year-ago basis.

Housing starts remain at low levels but the May numbers for starts and permits indicate that there is modest demand in some local markets for new construction-likely built to order rather than spec. But the fundamentals are unchanged. There is still enormous supply on the market and the best sustainable trend in the near term is incrementally up or more likely merely holding steady.

On the news, equity futures rose (became less negative) with a better-than-expected jobless claims number also contributing.

The nation’s Current Account Deficit grew in the first quarter from $113.3 Billion to $119.3 Billion. This number is as trumped up as the day is long, the United States now has trillions upon trillions in debt off balance sheet in Freddie, Fannie, and on the “Fed’s” balance sheet. Unfunded liabilities, of course, are also multiples of the acknowledged current account deficit. The math is impossible, the lies about it are non-stop, and this is one whopper of a lie. Yet, as much of a lie as it is, it is still horrid:
The nation's current account deficit deepened in the first quarter, to $119.3 billion vs a revised $112.2 billion in the fourth quarter (revised from $113.3 billion). The deeper deficit is due to a wider trade gap on goods & services, at $140.8 billion vs the fourth quarter's $118.8 billion. Note that much of this is tied to oil prices. A plus in the report is the balance on investment income which rose to a surplus of $54.8 billion vs the fourth quarter's $39.9 billion reflecting mostly short-term investment from foreigners. The bottom line is that the current account as a percentage of GDP is 3.2 percent, above 3.0 percent in the fourth quarter but under the 3.3 percent of the third quarter.

Lies, fluff, and more lies. Whatever, we know how this ends, we just don’t know every jink in the road on the way to the destination.

If you want a clue as to some of the “other events” that will follow impossible math like this, look no further than Greece. Now Ireland is finally growing a set, too, stating that bond holders should take a hair cut along with everyone else. I say it is the bond holders who not only knowingly took a stupid risk, it was them who created the risk in the first place. It is the bond holders who should take the hit, not the people – that is the rule of law which has stood for centuries, only recently it has been turned upside down by the money changers who created the unworkable system that benefits only them.

Martin Armstrong has been busy writing and this morning he released an interesting and timely piece on the situation in Greece including a nice review of history: