Wednesday, June 29, 2011

Morning Update/ Market Thread 6/29

Good Morning,

Equity futures are higher again this morning, the reason du jour being the Greek Parliament’s passing of yet another phony “bailout.” As if dumping oceans of debt on someone bails them out. As if “restructuring” bonds into permanent fixtures that never ever retire is some sort of cure. As if forcing the populace to pay higher taxes to the wealthy class actually moves an economy forward. Of course the people are rioting, they recognize a stick-up when they see one, and they know who the victims are. In the U.S. we remain oblivious to reality as we are placated with endless tripe from those who stole the ability to produce our money. So the dollar goes down some more, bonds sink a little lower, oil rises a little higher, gold & silver continue to climb, and food commodities rise on the hope the dopes can keep their robbery in motion a little longer. We’ll be revisiting this Greek tragedy soon enough.

News flash for ya – there is only one real way to bail Greece out, and that’s through the process of default. Default eliminates their debt saturated condition and nothing else will except debt forgiveness which is exactly the same thing, with exactly the same results. The U.S., of course, is in a FAR deeper hole than all the PIIGS but again we don’t acknowledge reality because we are baffled with phony debt to GDP boloney that doesn’t consider the “Fed’s” balance sheet, our off balance sheet debt, nor any of our future financial obligations. If you or I used that type of accounting we’d be in prison. Do the math, and our true debt compared to our income – the only measurement that really matters – and you will find that there is no place on earth like America. It’s nice to be temporarily unaware, what a luxury to be the world’s purveyor of fraud.

Speaking of fraudsters, the hypocritical Mortgage Banker’s Association says that their Purchase Index fell another 3.0% last week – nice of them to invent a number that doesn’t move 20% or 30% in one week, maybe they are reading here that we don’t really believe that kind of action? Here’s Econospin speechless over the fact that interest rates fell and yet refinancing activity also fell:
Mortgage applications for home purchases extended their June decline, falling 3.0 percent in the June 24 week in results that point to weakness for the month's home sales. Applications for refinancing fell 2.6 percent, but unlike purchase applications, have been trending higher most of the month. Mortgage rates fell significantly in the week, down 11 basis points for 30-year loans to an average 4.46 percent.

Pending Home Sales are released at 10 Eastern this morning and will be reported inside of our Daily Thread.

Yesterday, “Consumer” Confidence was reported lower again, and for once the State Street Investor Confidence report was also lower. Yet the markets continued to bounce on the supposed Greek bailout as if the world was all going to pretend for awhile longer that such a farce was actually possible.

The Gulf oil disaster long forgotten, the fact that we have Fukushima followed by four nuclear plants threatened in the United States and it is garnering no change of policy in the United States is going to be a far greater tragedy than anything produced in Greece. We have pushed the energy envelope far beyond our understanding of nature, but it is our lack of acknowledging that fact when confronted head on that is truly stunning.

As of now the downtrend is still intact, however the markets did manage to get above key overhead resistance yesterday. Below is a daily chart of the DOW, a break above that trendline, now about 12,300, would mean that an uptrend has replaced the downtrend since May:

Remember, that the end of month, beginning of month window dressing is occurring and there are a lot of changes coming in July, such as the end of open POMO. The fireworks around that time should be interesting to watch.