Wednesday, September 28, 2011

Morning Update/ Market Thread 9/28 - U.S. is Worse Off than Europe Edition…

Good Morning,

Equity futures are higher this morning, with the dollar down slightly (four days of down dollar only erased one day of dollar up), bonds are lower, oil is down slightly, gold & silver are flat, and food commodities are down slightly.

The hypocritical and morally challenged Mortgage Banker’s Association reported that Purchase Applications supposedly rose 2.1% and Refinancing Activity supposedly rose a ridiculous 11.2%. Oh right, like there are a ton of people who STILL have not refinanced to lower rates and a measly four basis point phony move by the “Fed” is causing a rush of people to refinance (insert eye roll here). While I’m sure there are some who have, I still don’t believe double digit one week moves. And by the way, anyone foolish enough to refinance every quarter point swing in rates is someone who will never be out of debt. Here’s econofool:
Last week's fall in mortgage rates, which was tied to the Fed's policy shift to longer-term Treasuries, sparked a rush into refinancing and may have also given a boost to home purchase applications, according to the Mortgage Bankers Associations. The refinancing index jumped 11.2 percent in the September 23 week while the purchase index rose 2.1 percent. The rise in purchase applications was due to a 4.9 percent rise in conventional purchase applications that offset a 0.6 percent decline in applications for government loans which MBA tied to the pending decline in FHA loan limits. The purchase index has been on the rise in recent weeks and the gains hint at welcome strength in tomorrow's pending home sales report.

The average rate for 30-year mortgages with conforming loans ($417,500 or less) fell four basis points in the week to 4.25 percent with the jumbo loans ($417,500 or more) also falling four basis points to 4.51 percent. FHA 30-year loans fell two basis points to 4.05 percent.

The Durable Goods Report for August missed expectations of a .2% rise by coming in at -.1% both with and without Transportation components. Year over year the Ex-Transportation figure fell from 9.6% to 7.8% supposed “growth.” I say supposed because Durable Goods are measured in phony and increasingly worthless dollars which are nothing but debt instruments designed to profit private central bankers. Did we make more planes, more factory equipment? Who knows? You cannot know because we do not measure the actual number of anything, we measure sales in terms of dollars and we incorrectly calculate inflation to intentionally delude ourselves. Take another Prozac and read what econotripping has to say:
Durables orders edged down in August, but after such a strong July, the pace is still healthy. New factory orders for durables in August nudged down 0.1 percent, following a 4.1 percent surge in July (previously up 4.1 percent from the factory orders report). The August dip came in a little lower than analysts' forecast for a 0.2 percent gain. Excluding transportation, durables slipped 0.1 percent after rising 0.7 percent in July (factory orders report revision).

Components were mixed. On the downside in August were primary metals, down 0.8 percent; fabricated metals, down 0.5 percent; transportation, down 0.3 percent; and "other," down 0.8 percent. On the plus side were machinery, up 0.1 percent; computers & electronics, up 1.3 percent; and electrical equipment, up 1.3 percent.

Within the important transportation component, motor vehicles fell 8.5 percent after a 10.2 percent jump in July. Nondefense aircraft increased a monthly 23.5 percent in August, following a 49.9 percent surge the month before. And defense aircraft advanced 22.5 percent after edging up 0.1 percent the month before.

Looking at private capital equipment related numbers, a big positive was a 1.1 percent rebound in nondefense capital goods excluding aircraft, following a 0.2 percent decline in July. Shipments for this series jumped 2.8 percent in August after a 0.4 percent rise the month before.

Overall, today's report indicates that despite sluggishness elsewhere in the economy, manufacturing remains on a moderate uptrend, taking into account the volatility of durables orders. While businesses may not be hiring people, it clearly looks like they are "hiring" equipment with the rise in nondefense capital goods excluding aircraft. This will be a plus for third quarter equipment investment and export components.

Sorry Econodelude, the only real increase in manufacturing going on involves the production of money and trumped up statistics to mask the former.

Notice how the “data” no longer matters to the “market?” That’s because there is no longer a real market, when the “Fed” has taken to directly and publically manipulating the bond market, the signals and the flow of money are disturbed in ways that mask reality – which is their intention. In addition, the private central banks create money from nothing indebting the people, they use that money to buy the politicians and laws, and they use that money to power their HFT platforms, which operate on exchanges which they also own, and all this is designed to steal from people, in milliseconds, who perform actual productive work, and who in exchange for that work are given debt instruments in payment instead of actual money.

Think about how foolish it is to work for a debt instrument.

If I told you that I would pay you 10 debt contracts per hour to come clean my boats, would you do so? You know, you have to pay interest on those debt contracts you receive, LOL. Head shaking stupidity – stupid is as stupid does. The current monetary system makes no sense, it goes against natural law and therefore has a date with failure which is in progress.

And in Europe they continue to jibber jabber about “getting on the same page” to tackle the seriousness of their problem (debt saturation just like U.S.). No real plan mind you, just references to leverage and getting money somehow from somewhere to “inject” into debt saturated over leveraged banks and countries, like more of the same would actually help. It won’t, more obligations only makes the math worse, not better. Yes, bondholders taking big haircuts, that WILL help, as it means a portion of the debt will go away and the risk takers will get burned, although most of the risk takers we’re talking about simply made the money from nothing to begin with, never offering anything real to back it up. Thus the whole game is a central banker illusion.

But in the stupid central banker game, at least Europe is fractured – and that means they are BETTER OFF than the United States. Here, we are collectively too stupid, inept, and bought off to stop the insanity that is our “Fed.” While Europe has countries who are willing to draw lines to stop putting their citizens on the hook for other’s foolishness, here in the U.S. our central criminals continue to backstop the entire planet – evidently $16 trillion in swaps wasn’t nearly enough, now they are talking more. And our central bank is the only one that can get away with making trillions from nothing because we have been too complicit to take action, again on a collective basis.

What can you do? Stop supporting their game. The “markets” as you knew them no longer exist – get over it, but stop feeding the criminals. Their banks and bond markets are their power base – don’t put your debt instruments (I mean “money”) there to fuel their behavior. Don’t vote for politicians who accept money from the banks (something you may not be able to know effectively as they can get money to them in other ways). Don’t work in any capacity that fuels their behavior (easier said than done, but I made the transition and so can you).

So, while Europe is a mess, the U.S. is screwed because we’re backstopping them and we are too inept to do anything about it. You can act individually, let your conscious be your guide and remember that your life’s karma can be either positive or negative for the future of humanity.