Wednesday, August 17, 2011

Morning Update/ Market Thread 8/17- Confidence is Lost Edition…

Good Morning,

Equity futures are higher this morning but still tracking inside of that rising wedge. Of course we are sacrificing the dollar to do it, bonds are flat, oil is higher, gold is flat, silver is higher, and food commodities are breaking higher out of the range they have been in.

On the front page of is a poll asking, “Have you lost confidence in the ability of world leaders to tackle economic problems?” Currently the response is that 86% have already lost confidence! That’s really all you need to know, with numbers like that, it is game over for those in power… eventually. In the mean time we have to suffer through “other events” while we watch the central criminal’s control slip away.

Gold at $1,800 an ounce? Yeah, there’s your confirmation right there that confidence is gone. It’s not just in the process of leaving, it’s already gone, the victim of impossible math. Merkel-Sarkozy deal? Who cares? These clowns come up with scheme after scheme – they are all the same… Make money from nothing to indebt already over-indebted countries (countries that are made up of real people with stagnant and falling incomes). Its impossible math, it simply doesn’t work, can’t work, and thus the loss of confidence is finally here. Those who can ‘do’ math knew this was coming a long time ago, while those who can’t generally are elected to public office. Those who know, but lie or shill, work in central banks.

Markets? Again, they are not real, they are a highly manipulated illusion. Wait. The loss of confidence will eventually shake out the criminals and a new monetary system will be installed. Depending upon events of that shakeout and how the next system evolves will determine whether or not the markets become real again. The criminals must be prosecuted, the rule of law must be restored, the debt saturated condition of the PEOPLE must be cured, and nations need to learn how to operate a money system that does not give private bankers the right to charge the nation interest for its own money, nor give unlimited money making privileges to a few private individuals. Furthermore, the ability of special interests to capture government must be reversed – that is a part of restoring the natural rule of law, the government works for the people, not for the interest of corporations (that are NOT people).

Speaking of special interest create money from nothing criminals, the Mortgage Banker’s Associate claims that Purchase Applications fell another 9.1% in the past week, but that refinance activity increased 8.0%. Sure, whatever… anyone gullible enough to believe that nationwide activity swings 30% or nearly 10% every week, deserves to have their money stolen from them. Here’s Econogullishill:
The ongoing drop in interest rates is driving refinancing demand higher but, unfortunately, has yet to drive up demand for home purchases. The refinancing index extended its run of jumps in the August 12 week with an 8.0 percent gain. But the purchase index continues to show weakness, down a very steep 9.1 percent. The report, which is produced by the Mortgage Bankers Association (MBA), cites stock market volatility and weak economic data as possible reasons for the drop in purchase activity.

The rate for 30-year mortgages fell five basis points in the week to 4.32 percent with the 15-year rate also down five basis points, to 3.47 percent for a new survey low. Next housing data will be tomorrow with existing home sales for July, which based on prior gains in the pending home sales report and not any strength in MBA's purchase index, are expected to show improvement.

Interest rates have been at historic lows for years now. Really, a few basis points move spurs huge swings in refinancing activity? BullS___! Anyone who still wonders how confidence can be lost need only study the operations of the MBA.

Speaking of fraudulent reports, the PPI came in at .2% month over month, but at 7.2% year over year. Here’s Econocon:
Producer price inflation surprised on the high side despite a softening in energy costs. The culprits included food, motor vehicles, and tobacco. Producer prices in July rebounded 0.2 percent, following a 0.4 percent drop the month before. The July pace came in higher than the market median estimate for no change. By major components, energy dipped 0.6 percent after a 2.8 percent fall in June. Gasoline declined 2.8 percent after dropping 4.7 percent the month before. In contrast, food costs jumped another 0.6 percent, following a rebound of 0.6 the previous month.

At the core level, PPI inflation accelerated to a 0.4 percent rise after jumping 0.3 percent in June. Analysts had forecast a rise of 0.2 percent. Strong gains were seen in tobacco products, light trucks, and pharmaceutical preparations. Nearly one-quarter of the July advance can be attributed to a 2.8 percent increase in prices for tobacco products. Light truck prices jumped 1.0 percent in the latest period while pharmaceutical preparations surged 3.2 percent. Passenger car prices rose but a more moderate 0.2 percent. Still, shortages of motor vehicle models dependent on parts from Japan continued to put upward pressure on prices.

For the overall PPI, the year-ago pace in July posted at 7.2 percent, compared to 7.0 percent in June (seasonally adjusted). The core rate in July rose to 2.5 percent from 2.3 percent the month before (seasonally adjusted). On a not seasonally adjusted basis for July, the year-ago headline PPI was up 7.2 percent while the core was up 2.5 percent.

Overall, inflation has picked up due largely to food costs and despite softer energy costs. The core rate is up significantly but likely due to temporary factors.

Inflation statistics vastly underreport inflation. According to Shadow Stats the CPI is understated by about 9% (!), and that would apply to Producer Prices as well, which tend to lead Consumer Prices:

Get Real.