Monday, August 22, 2011

Morning Update/ Market Thread 8/22

Good Morning,

Equity futures are soaring… after tumbling more over the weekend. No, I won’t offer up some lame reason, I will simply remind that these “markets” are not real, they are a computer simulation designed to separate you from the fruits of your productive efforts, if any such efforts still exist. Of course the dollar must be giving up purchasing power for that to happen, bonds are lower, oil is higher, gold reached just under $1,900 (!!!) an ounce before pulling back, silver is zooming as well, and at this rate it won’t be long before than $17 hamburger costs $50.

The Chinese came right out and said it to Joe Biden – basically that we are in process of defaulting by devaluing our money, but that at some point in the future America will default on her debts. Yep, welcome to reality – I guess they really do teach math better over there.

The July Chicago “Fed’s” National Activity Index came in at -.29, this is better than June’s -.60. Remember two things about this; one is that it comes from the “Fed” and therefore is as real as the stock market activity; and two, is that the productivity cliff dive came in August, so next month’s reading should be interesting. Here’s Econodon’tknow:
Growth remained below historical trend in July but only slightly. The Chicago Fed's national activity index improved to minus 0.06 from an upwardly revised minus 0.38 in June (minus 0.46 first reported). The improvement is led by a plus 0.28 contribution from production-related indicators, well up from a very slight plus 0.03 contribution in June. Employment-related indicators came in at plus 0.05 vs June's minus 0.10. Consumption & housing was minus 0.33 in July, barely changed from minus 0.34 in June. Sales, orders & inventories are a negative in the month, at minus 0.06 vs June's plus 0.03.

The three-month moving average improved sharply in July, to minus 0.29 from minus 0.54 (upwardly revised from minus 0.60). Improvement in this report is of course welcome but whether it will extend into this month is uncertain given that July's strength is concentrated in manufacturing where early indications for August, that is from last week's Empire State and Philly Fed reports, are decidedly weak.

Huh? Did that make any sense whatsoever to you? If you don’t really know what you’re talking about, then the economic experts resort to the time-tested method of “Baffle ‘em with bullshit.” That, of course, is the favorite tool of almost everyone surrounding the markets and finance in general.

The economic data is fairly light this week, with housing data, consumer sentiment, and Q2 GDP revision later in the week.

The NASDAQ created an inverted hammer on Friday, and that was mirrored on the VIX. Below is a daily chart showing that hammer, whenever you see one like that you should be thinking reversal and it looks like we now are getting confirmation:

What will the markets do from here? Who cares? If you are smart, you will not contribute to the criminals and their enterprises, and you will instead look for REAL opportunities to put your money to work with real people who are doing real things.

Bill Still created an excellent video this weekend that should go viral because he is 100% correct: