Tuesday, August 2, 2011

Morning Update/ Market Thread 8/2 – Shouldn’t Have Took More Than You Gave Edition…

Good Morning,

Equity futures are lower again this morning as the reality sets in of what a “deal” means. Bonds are higher again, the dollar is higher and close to rising above the descending wedge top boundary, oil is lower at $94 a barrel, gold is setting another new all-time high at an amazing $1,643 an ounce, silver is higher too, and food commodities are lower.

Gold is shouting that what we have is a MONETARY problem. Heck, yesterday Russian Prime Minister Putin accused the U.S. of living beyond its means, and went so far as to call the U.S. a “PARASITE” on the global economy. Hard to argue with that. Macroeconomic debt saturation has led to impossible math. If nothing else, this silly debt ceiling “deal” has highlighted the impossible math for what it is.

We’re currently running $1.5 Trillion deficits (that’s $15 trillion over ten years without increasing which it most certainly will due to exponential math), but this deal is only going to “save” approximately $2.1 billion over the next decade. Hardy, har, har… It is nothing, yet it is austerity and it means you get less while continuing to give the same or greater.

But the truth is that it stands a snowball’s chance in Hades of actually slowing down the impossible and exponential math that the central banks created. Remember Greece? Oh yeah, they were saved! And then saved again… and again. Well, that type of thing lies in our not too distant future.

The impossible math will continue to manifest itself in a sundry of ways – yes, downgrade by the corrupt rating agencies is possible – yes, higher interest rates – yes, more money printing and more inflation – yes, more waves of deflation – yes, the central bankers will continue to rule the markets and manipulate the data to their advantage and your disadvantage – yes, the likelihood of “other” nasty events occurring goes up the longer we try to operate business as usual with the impossible math in the background, never really clearing out the debt and the criminals WHO need to be cleared out.

One manifestation could be seen yesterday when the Manufacturing ISM cratered 8% in one month, falling from 55.3 to 50.9. And that’s the trumped-up version of the story.

And just this morning in yet another report you have trumped up inflation figures that are way low still far outpacing Personal Income. How long can prices outstrip income and you still have anything that one could refer to as an “economy?” Money printing does not an economy make. Here’s econohope:
Highlights
In June, both income and spending were soft, reflecting slow job growth, a decline in motor vehicle sales, and a decrease in gasoline prices. Again, inflation news is mixed but more favorable. Personal income in June edged up 0.1 percent, easing from a 0.2 percent rise in May. The market median called for a 0.2 percent rise for the latest month. Wages & salaries were unchanged, following a gain of 0.2 percent the prior month.

Consumer spending declined 0.2 percent rise after posting a 0.1 percent uptick in May. The latest personal spending expenditure figure matched analysts' projection for a 0.1 percent rise. By components, durables dropped 0.4 percent after falling 1.3 percent in May. Nondurables dropped 0.6 percent, following a 0.3 percent dip the month before. Services were flat, following a 0.4 percent jump in May. Discounting inflation, overall PCEs were unchanged in June, following a 0.1 percent slip in May.

On the inflation front, the headline PCE price index declined 0.2 percent on lower energy costs, after increasing 0.2 percent the month before. The core rate rose but eased to 0.1 percent from 0.2 percent in May.

Year-on-year, headline prices are up 2.6 percent-the same as in May. The core is up 1.3 percent on a year-ago basis, matching May's pace.

Here’s Bill Still’s latest, tirelessly working to get the truth out for now for decades about the root of our money problem:



Yesterday the VIX returned to inside the Bollinger Bands and thus a short term market buy signal was given. These can work immediately, or they can take a few days:



The major indices bounced off their 200 dma’s to close above them, and they are bouncing off them again this morning. I don’t know what way the criminals who own and manipulate the markets are going to take them – I guess you would have to know their agenda and be able to out millisecond their HFT’s – good luck with that.