Thursday, December 15, 2011

Morning Update/ Market Thread 12/15 - Painting the Box Edition...

Good Morning,

Equity markets are considerably higher this morning, the media is hyping a fraudulent Jobless Claims number but the futures have been ramping all night long, they did not just ramp on supposedly “good” economic data. The dollar is slightly weaker, bonds are slightly lower, oil is slightly higher, gold & silver are close to even, and food commodities are slightly higher and still squatting on that neckline.

The Jobless Claims are THE major headline on CNN, “Unemployment Claims at Lowest Level Since ’08.” Supposedly the number came in at 366,000, which is almost to the break even point of 350,000. To which I can only point to the unadjusted data for the week, and I’ll leave it to you to guess how much “seasonal adjustment” is required to make that number happen:
“The total number of people claiming benefits in all programs for the week ending November 26 was 7,449,507, an increase of 874,670 from the previous week.

They claim, however, that the advance number of Initial Claims fell by 95,506 for the past week, but the week prior they rose by 151,000, which means that over the past two weeks the unadjusted Initial Claims rose by more than 55,000 and yet the reported number has fallen by more than 30,000! Here’s Econostupid:
Back to back declines of 19,000 in initial jobless claims are signaling sudden strength in the labor market. Claims in the December 10 week came in at 366,000, far below expectations for 390,000 and compared to 385,000 in the prior week (revised 4,000 higher). The 366,000 level is the lowest since May 2008. The four-week average is down 6,500 to 387,750 for the lowest level since July 2008. The average, in a convincing sign of strength, has been down in 10 of the last 12 weeks.

Continuing claims, in data for the December 3 week, rose 4,000 to 3.603 million, but the four-week average is down 5,000 to 3.666 million which is another recovery best. The unemployment rate for insured workers is unchanged at 2.9 percent.

Though shortened weeks and special factors during the holidays often cloud this report, the Labor Department cites no difficulties with the data. The data point to a strong upward pivot underway in the jobs market and will build expectations for a strongly improved December employment report.

Yep, it sure is hard to get right during the holiday season… and maybe it’s also hard to get right during the election season too… just sayin’.

Data, when not tampered, tends to be consistent and without conflicting with other data. Yet this morning we get more conflicting data – a negative report on Industrial Production and a positive report from the New York “Fed” on Manufacturing. This data used to be mostly consistent, but in the past year or so has become obviously far less consistent and that tells me that it’s not to be trusted – again no data from self-interested narcissists should be trusted… EVER.

To wit the Empire State Manufacturing Index supposedly rose from the flat level of .61 all the way to 9.53. Here’s Econoplicit:
The pace of activity in the New York region's manufacturing sector is picking up briskly this month, to 9.53 for the Empire State index vs little change in November, at 0.61, and a prior run of monthly contraction that goes back to June. New orders are up to 5.10 this month vs minus 2.07 in November with shipments especially strong at 20.87. Manufacturers in the region added to their workforces in the month with the employment index at 2.33 vs minus 3.66 in the prior month. The six-month outlook for general business conditions has really picked up, to 52.33 vs 39.02 in November and 6.74 in October.

Negatives in the report include a contraction in unfilled orders and a rise for input prices. Otherwise this report is a positive and offers an early indication of strength for the nation's manufacturing sector this month.

And then you can contrast that supposed strength against overall Industrial Production which fell from the prior .7% rise to -.2%:
Industrial production weakened in November-largely on a decline in auto assemblies although manufacturing was down in general. Industrial production declined 0.2 percent after surging 0.7 percent in October. November's figure was significantly below consensus expectations for a 0.2 percent increase. By major components, manufacturing dropped 0.4 percent after gaining 0.5 percent the prior month. For November, utilities output advanced 0.2 percent while mining edged up 0.1 percent.

Manufacturing was pulled down largely by a 3.4 percent drop in output for motor vehicles and parts, following a 3.4 percent jump in October. Excluding autos, manufacturing still slipped 0.2 percent, following a 0.3 percent rise the prior month.

On a seasonally adjusted year-on-year basis, overall industrial production was up 3.7 percent in November, compared to 4.3 percent the month before.

Overall capacity utilization eased to 77.8 percent from the recovery's high of 78.0 percent in October. Analysts had called for 77.8 percent for November.

Although November's manufacturing number is disappointing, it may be temporary as this morning's release for Empire State manufacturing showed an unexpectedly strong number for December. More data on manufacturing will be posted at 10:00 a.m. ET for Philly Fed manufacturing for December.

Truthfully, who cares? We manufacture so little that it’s nothing but a national embarrassment, especially if you were to strip out the manufacturing and exporting of weaponry which makes it shameful.

Besides weapons and cheeseburgers, here's what we're really good at producing:

The PPI rose in November to a supposed +.3% from the prior -.3% (LOL, just look at the chart above). Oil did rise during the month, but food commodities fell, so again I don’t really trust the justifications served up by ‘plicit or the Bureau of Lies and Seasonal adjustments (BLS):
Producer price inflation picked up in November but it was due to food, not energy. Producer prices rebounded 0.3 percent after falling 0.3 percent in October. Analysts had expected a 0.2 percent rise in November.

Turning to major components, energy rose 0.1 percent, following a 1.4 percent drop in October. Leading this increase was a 9.4-percent advance in home heating oil prices. Gasoline actually dipped 0.1 percent, following a 2.4 percent decrease in October. Food cost inflation spiked to a 1.0 percent gain after decelerating to a 0.1 percent rise in October. Over half of the November advance can be attributed to the index for fresh and dry vegetables, which rose 11.5 percent.

At the core level, the PPI gained a modest 0.1 percent, following no change in October. For the core, upside pressure came from passenger cars (0.6 percent) and pharmaceuticals (up 0.9 percent) with a decline in prices for light trucks (down 0.2 percent) softening the overall core.

For the overall PPI, the year-ago rate in November was 5.9 percent versus October's 6.1 percent (seasonally adjusted). The core rate in November firmed to 2.9 percent from 2.8 percent in October. On a not seasonally adjusted basis for November, the year-ago headline PPI was up 5.7 percent versus 5.9 percent in October. The core was up 2.9 percent on an NSA year-ago basis, compared to 2.8 percent in October.

Of course PPI leads CPI, but both are dramatically underreported.

The TIC data for October took a huge tumble deep into negative territory. That kind of throws a little cold water on the capital flight coming over to the U.S., that is if you believe any of the numbers which I clearly do not. The truth, I think, is that TRILLIONS are flowing from the coffers of the United States to banks and countries overseas and all of that activity is not to be seen in any “TIC” report (nowhere actually). So, we feed them, then the 1% in Europe wealthy and savvy enough to flee with their wealth do. America is no “safe” harbor however, that is all as phony as the data emanating from under the control of American narcissists.

Still, look at the Net Flows and you’ll see that flows went from +$65 Billion all the way down to -$48.8 Billion:
TIC December 2011

Meanwhile the Bloomberg (more self-interest) “Consumer Comfort Index” rose to -49.9, LOL, obviously a very UNcomfortable level, but watch Econo spin that one:
Consumer confidence in the U.S. rose last week to the highest level in two months, a sign that job gains may be lifting sentiment during the holiday shopping season. The Bloomberg Consumer Comfort Index improved to minus 49.9 in the period ended December 11 from minus 50.3 the prior week.

Two of the three components of the weekly comfort index improved. The measure of Americans' views of the current state of the economy rose to minus 87.9 last week from minus 89.7 in the prior period, and the buying climate index increased to minus 51.8 from minus 52.6. The gauge of personal finances declined to minus 10 from minus 8.5.

Indeed, there are signs of one track improving in a two-track consumer sector defined by having a full-time job or not. Confidence among consumers with a full-time job rose to minus 32, the highest level since July, from minus 37.6 the prior week. Sentiment declined for Americans who are unemployed and for those with part-time jobs.

Dang, if I didn’t know better, I would almost think we weren’t really in the middle of another Great Depression! To all of which I call bullshit, and am frankly getting very tired of the lies, spin, and outright fraud. Glad to see the “Protestor” make it onto Time’s Person of the Year… hopefully next year it with be the “Revolutionary.”

I, Nathan Martin, no longer consent to the lies.