Friday, July 29, 2011

Morning Update/ Market Thread 7/29 - Productivity Not Edition...

Good Morning,

100% fraud, 100% of the time. That’s what happens when all the money you produce is backed by debt and the proceeds go to a few greedy narcissists instead of to the good of all the people. The GDP report this morning is simply more fraud that counts the creation of debt as productivity and yet still has to fudge reports to manipulate the people from who the narcissists are robbing.

Equities are lower still, the dollar is also lower, bonds are higher, oil is lower, gold & silver continue to shine against the turd colored backdrop, and food commodities are falling for today.

The Q2 GDP report stunk up the joint, coming in at a supposed +1.3% versus the 1.9% that was expected. Worse, this is the report where they correct the prior year and from that we learn that Q1’s reported 1.9% growth was really only .4%. Feel manipulated now? Did you buy into the BS growth story? Again, why would any American support this paradigm? The markets are false, the data is false, our money system is false. Again, my advice is to GET REAL when it comes to your “investing.”

Here’s Econohopeondope:
It's official but it's worse than believed. The soft patch continued into the second quarter as GDP growth for posted at a very sluggish 1.3 percent annualized rise, following a downwardly revised increase of 0.4 percent in the first quarter. Analysts had forecast a 1.9 percent boost for the latest quarter and the first quarter was previously estimated at 1.9 percent. Today's report includes standard annual revisions going back three years for most series.

Demand numbers improved but barely. Final sales of domestic product improved to up an annualized 1.1 percent from 0.0 percent (unchanged) in the first quarter (previously 0.6 percent). Final sales to domestic purchasers also nudged up, rising 0.5 percent from 0.4 percent in the prior period (previously 0.4 percent).

Most of the anemia in the second quarter came from the consumer sector which came to a screeching halt with a 0.1 annualized percent uptick in the first quarter, following a 2.1 percent rise the prior quarter. Government purchases declined modestly while gains were seen in net exports, business investment in structures and equipment, and even residential investment. Inventories nudged up.

Economy-wide inflation according to the GDP price index only incremental change in momentum, rising 2.3 percent, following an increase of 2.5 percent in the first quarter. Analysts expected a 2.0 percent gain.

High but still underreported inflation, and little to no real productivity.

The Employment Cost Index rose, not due to higher pay mind you, but due to inflation in the cost of benefits provided. Inflation is inflation, and especially in healthcare where you are being robbed blind by the “insurance” industry, the cost of doing business is far outstripping real revenue earnings (not the trumped-up earnings touted by accounting fraudsters):
Increasing acceleration in benefit costs fed an outsized 0.7 percent second-quarter increase in the employment cost index, the largest increase of the recovery. Benefits, which make up 30 percent of the index, rose 1.3 percent on top of the first-quarter's 1.1 percent jump with wages & salaries, which make up the remaining 70 percent, showing no acceleration at plus 0.4 percent.

When stripping out government workers and looking at just the private sector, benefits rose a quarterly 1.6 percent vs 1.2 percent in the first quarter with wages & salaries showing incremental acceleration at plus 0.5 percent. Add these two together and total compensation in the private sector -- and this is a special sign of increasing pressure -- rose 0.8 percent vs 0.5 percent gains in the prior two quarters.

Year-on-year rates tell the same story with benefits up 3.6 percent vs 3.0 percent in the first quarter and wages & salaries unchanged at plus 1.6 percent. These readings are for both government and private workers combined. Total year-on-year compensation is up 2.2 percent from 2.0 percent in the first quarter. A look at just the private sector shows an outsized three tenths increase in the year-on-year rate to plus 2.3 percent.

If the economy were in a solid growth mode these results would definitely be a concern for Federal Reserve policy makers who keep a close eye on compensation and often comment in detail about benefit costs. But the economy, based if nothing else on this morning's accompanying release of GDP data, isn't in a solid growth mode, making these early signs of compensation inflation a distant secondary concern.

“Solid Growth?” Give us a break for crying out loud. The production of debt has never been, nor will it ever be "productivity."

The Chicago PMI and Consumer Sentiment come out just prior to 10 Eastern… for those who enjoy the masochistic manipulation of the “Fed” – can’t wait.

Hark! Is that the ring of truth I’m hearing from a man who’s been mostly telling the truth for years?

Ron looks tired – don’t blame him as I watch the dollar plummet on the open. Gold’s running into another record, too bad Paul believes in gold backing money – that part of the manipulation he doesn’t get. But he does get the WHO it is that’s at the root of the problem, and that makes him the closest politician out there.

The VIX remained above the upper Bollinger yesterday, no signal yet:

100% fraud all the time – the markets are not real, the data is not real. When it comes to investing the fruits of your hard labor, you need to GET REAL.

Rest in Peace Dan Peek of America…