Tuesday, August 9, 2011

Morning Update/ Market Thread 8/9 – My Precious Edition…

Good Morning,

“Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves.”
— Norm Franz

Equity futures were down hard overnight but recovered in the low volume overnight, perfect for intervention, hours… and are now positive prior to the open – as always, buy into their fluff at your own risk. By the way, if the latest market action hasn’t convinced you get real with your investments and to stop feeding the criminals, then probably nothing will. The dollar is down, bonds are down, oil ran all the way down to $75 overnight but recovered all the way back up to $82 (are you sick yet), gold blasted into orbit reaching $1,782.50 (!!), interestingly silver is down (hmmm), and food commodities are higher while the major news networks attempt to convince you that famine in Africa is something new, that you should care and focus your attention on that, and that money policies have nothing whatsoever to do with the number of people starving throughout the world.

Meanwhile riots on the streets of London – buildings burning. Again, anarchists, nothing whatsoever to do with money policy. M-u-s-t c-r-a-c-k-d-o-w-n, t-o r-e-m-a-i-n i-n c-o-n-t-r-o-l! Is that northern Africa I smell?

The NFIB Small Business Confidence Index fell for the fifth straight month from 90.8 to 89.9. Below are the NFIB’s comments along with the entire report, which as usual is a good read:
Fifth Consecutive Month of Decline
For the fifth consecutive month, NFIB’s monthly Small-Business Optimism Index fell, dropping 0.9 points in July—a larger decline than in each of the previous three months—and bringing the Index down to a disappointing 89.9. This is below the average Index reading of 90.2 for the last two-year recovery period. Expectations for future real sales growth and improved business conditions were the major contributors to the decline in optimism. With the repercussions of the debt compromise yet unknown, next month’s report will provide a more complete picture of the reaction on Main Street

"Given the current political climate, the protracted debate over how to handle the nation’s debt and spending, and the now this latest development of the debt downgrade, expectations for growth are low and uncertainty is great," said NFIB Chief Economist Bill Dunkelberg. "At the two year anniversary of the expansion, the Index is only 3.4 points higher than it was in July 2009. And considering the confidence-draining performance of policy makers, there is little hope that Washington will stop hemorrhaging money and put spending back on a sustainable course. Perhaps we might begin referring to the 'Small-Business Pessimism Index' from now on."

Small Business Optimism August 2011

Productivity and Costs were just announced, with nonfarm Productivity falling from a supposed +1.8% in Q1, to -0.3% in Q2 – oops. To make this report worse, Unit Labor Costs rose during the same time from +.7% to 2.2%.

And with all that’s going on, we get to hear from the moron Bernanke this afternoon, at 2:15 Eastern, tell us how he is going to continue to rob us, manipulate us, and in general cause more damage than ever to the United States people while the narcissists run off with the loot – oh, and Bank of America – you will be assimilated, resistance is futile.

Interesting, isn’t it, that all the rats are bailing off the ship just prior to Bernanke’s announcement? Gee, I wonder why…
Fed’s Sheets Quits as Bernanke’s Chief International Adviser

The Federal Reserve said D. Nathan Sheets quit as the central bank’s chief international economic adviser after almost four years in the position and a day before policy makers meet.

The Fed, in a statement today in Washington, didn’t say why Sheets, 46, is leaving the institution. As director of the Division of International Finance, Sheets briefed Chairman Ben S. Bernanke and other officials on economic developments outside the U.S. and represented the Fed at international meetings.
Steven B. Kamin, a deputy director of the division, will serve as acting director, the Fed said.

Sheets is leaving as European leaders take action to avert a widening of the continent’s sovereign debt crisis and U.S. officials gauge reaction to the Aug. 5 downgrade of the country’s AAA credit rating by Standard & Poor’s. The Federal Open Market Committee meets tomorrow in Washington.

“Nathan has provided invaluable insight and stellar leadership at a time of great volatility in the world economy,” Bernanke said in a statement. “We thank him for his dedicated service and wish him well.”
Sheets is using annual-leave days between now and his official departure date of Sept. 9 and won’t attend tomorrow’s FOMC meeting, said David Skidmore, a Fed spokesman.

The departure means all three of Bernanke’s top staff advisers have left their positions or announced their departures in the last 13 months. Brian Madigan, former director of the Division of Monetary Affairs, retired last year, while the Fed said in May that David Stockton, director of the Division of Research and Statistics, is retiring Sept. 30.

Sheets, who like Bernanke earned a Ph.D. in economics from the Massachusetts Institute of Technology, joined the Fed as an economist in 1993. As division director since September 2007, he led a staff of about 120.

Hmmm… I wonder what Sheets learned at MIT that Bernanke didn’t? Maybe a better sense of when to jump the Titanic? Hey Bernake, time to get one that floats!

Oh, I know, that was harsh. Well, you would think that after injecting trillions upon trillions of worthless debt that the clue light might come on at some point. I was just looking at the Employment Population Ratio again, noting that it has now fallen to the lowest point in this ongoing macroeconomic debt saturation saga. This all by itself completely discredits the claim of “job creation” and any notion that there ever was any “recovery.”

That chart is telling you that a smaller and smaller percentage of the population is working.

Recovery? What there was is a Bernanke money explosion:

You want to talk about bombs going off and financial “terrorists” – there you go.

Here in Washington State the Governor just notified all agencies, including education, to expect 10% across the board cuts… that the economy is not improving and that the deficit situation is getting worse quickly. Yesterday, S&P downgraded Washington State’s second largest city, Tacoma… and we’re in a relatively good state.

The VIX, of course, is shooting the moon, having jumped into rarified air above an important resistance level:

The RUT is already in Bear Market territory, having fallen more than 20%. The SPX, in just a few short days, has plummeted all the way back down to the 50% retrace Fibonacci of the entire prior decline:

Obviously there can and will be violent reversals with this type of manipulation, errr, I mean completely free market action. There were 1,292 new 52 week lows on the NYSE and only 3 new highs. Really… safe and sane is required for our fireworks, but we have yet to throw the little boys and their rob you toys out of our lives. “Other Events” are on the way and underway…