Friday, June 24, 2011

Morning Update/ Market Thread 6/24 – Still No Adults Edition…

Good Morning,

Equities are close to even this morning after being down earlier. The dollar is higher, with oil falling to just above $91 a barrel, gold and silver fading too, and most food commodities rising slightly.

The dollar is approaching key down slopping overhead resistance again. Yesterday it rose right into it and retreated right on queue:

The Yen is getting close to breaking out of its sideways move and also needs to be watched closely.

As I watch the actions of the United States, the central bankers, the Japanese, and the Europeans I am left to just shake my head and wonder if there are any adults left in this world whatsoever? It seems to me that the globe is being run by a bunch of precocious teens who know absolutely nothing about reality – certainly they never learned even the most basic math.

Release oil out of the strategic reserve into record high levels of inventory and falling demand. Okay, boy, am I impressed. I could go on and on about how that is only 16 hours of world consumption, but I see through their games. That’s why I prefer to view such immature actions simply as manipulation to drive the markets in their preferred direction, and to make a political statement so as to look like the clowns are actually “doing something.”

Then we get version 1,238 of the same old play, this one is definitely a Greek tragedy. Again, no adults, just immature narcissists fighting over how they will split up and rob the productive efforts of the people. Sickening.

As far as I can see, no one in a position of power is willing to even admit reality… Well, there is one, unfortunately Mr. Farage doesn’t reside in America:

Note the reaction of others when confronted openly about reality. Nothing. It’ just like talking to a stone wall.

Meanwhile our completely trumped up statistics show a .1% improvement in GDP from 1.8% to 1.9% supposed “growth.” This is the third revision for Q1, 2.0 was the consensus of idiots. Complete baloney, the only thing that’s actually growing is the supply of digital money and the private “Fed’s” balance sheet. Here’s Econoday for anyone who still cares to read the spin:
The economy in the first quarter was marginally stronger than previously believed as the Commerce Department's third estimate for GDP growth was nudged up to 1.9 percent annualized from the prior estimate of 1.8 percent. The consensus called for 1.9 percent growth.

Final sales of domestic product were unrevised at an annualized 0.6 percent. Final sales to domestic purchasers were revised down to 0.4 percent from the earlier estimate of 0.7 percent annualized. The lower estimate for final sales to domestic purchasers was from lower numbers for investment in equipment & software and government purchases. PCEs growth was unrevised overall.

Economy-wide inflation was incrementally higher with the GDP price index rising 2.0 percent, compared to the earlier estimate of 1.9 percent. Analysts expected 1.9 percent.

What irrelevant bull.

The Durable Goods report came in plus 1.9% in May, most of which was aircraft orders which is about the only thing of value still made in America – although I note that at the Paris airshow that EADS (Airbus) is outselling Boeing by about 4 to 1 this year. Again, money printing equals higher costs, those higher costs translate into “higher sales,” and thus apparent growth is created. Of course the problem with apparent growth is that wages don’t keep up, and thus eventually only the wealthy have the money to fly or even to eat. Here’s the spin the way the narcissists see it:
Manufacturing may not be as weak as suggested by recent manufacturing surveys. New factory orders for durables in May rebounded 1.9 percent, following a revised 2.7 percent decline the month before (previously estimated at down 3.6 percent). May's figure came in higher than analysts' projection for a 1.5 percent gain. New durables orders excluding transportation also made a comeback, increasing 0.6 percent after a 0.4 percent drop in April.

For the latest month, gains were broad-based by industry. Transportation led the way with a monthly 5.8 percent jump, following a 9.4 percent drop in April. The swing in both months was largely nondefense aircraft (Boeing) which surged 36.5 percent in May after a 29.0 percent fall the month before. Defense aircraft rebounded 5.5 percent after a 0.4 percent dip. However, the auto industry appears to still be suffering from supply shortages. Motor vehicles edged up only 0.6 percent, following a 5.3 percent fall in April.

Also seeing gains in May were primary metals, up 1.8 percent; machinery, up 1.2 percent; computers & electronics, up 0.4 percent; and electrical equipment, up 3.2 percent. Fabricated metals were flat while "other durables" slipped 0.8 percent.

Business investment is improving in coming months as new orders for nondefense capital goods excluding aircraft also rebounded, by 1.6 percent after dipping 0.8 percent in April. Shipments for this series rose 1.4 percent, following a 1.5 percent decline the month before.

Today's report is good news for manufacturing and the economy. Yes, durables orders are volatile but the gains were widespread and were not dependent on a rebound in autos. Once supply disruptions are addressed, autos will add to underlying strength in coming months.

Sorry, but this same old tripe is just getting old.