Thursday, December 22, 2011

Morning Update/ Market Thread 12/22 - Snow Job Edition…

Good Morning,

Welcome to winter… in more ways than one. It’s definitely snowing Euros, and that pushed trumped markets higher for the manipulators overseas, while the grand master manipulators back home managed to fudge data and push equity futures higher as well. However, the dollar is flat and bonds are higher which does not support higher prices in equities. Oil, meanwhile, is still gumming up the global economy, while for today gold and silver take a little break, and food commodities are mixed.

The almost final Q3 “final” GDP revision pushed supposed “growth” down from 2.0% to 1.8%. It will be revised lower again with the annual adjustments which will have to consider how the NAR lied about existing home sales. By the way, when an already existing home is sold, is that really something that should be counted in the nation’s “productivity?” Especially when said sale is financed with more debt? Yep, just one reason why our GDP is vastly overstated. Here’s Econoshouldknowbetter:
Economic growth for the third quarter was more sluggish than previously believed and the change in the component mix will have economists rethinking their forecasts for the fourth quarter. The Commerce Department for its third estimate for third quarter GDP growth nudged its number down to 1.8 percent annualized growth from the prior estimate of 2.0 percent annualized. Market expectations were for overall GDP growth to be unrevised.

The downward revision primarily was due a smaller decline in inventories and also to less robust growth in personal consumption.

Final sales of domestic product were revised down to 3.2 percent from the second estimate of 3.6 percent. Final sales to domestic purchasers were down to 2.7 percent from the prior estimate of 3.0 percent annualized.

On a year-ago basis, GDP is up 1.5 percent, compared to 1.6 percent in the second quarter.

Economy-wide inflation revised up marginally to 2.6 percent from the second estimate of 2.5 percent. Analysts had called for an unrevised 2.5 percent.

This morning's economic news was mixed as GDP growth for Q3 was revised down while the latest initial jobless claims number came in unexpectedly down and lower than expected. Many traders saw the combination as a wash as equity futures were little changed. While technically the change in the component mix (from final sales to inventories) should lead to downward revisions to fourth quarter GDP forecasts, more current data (notably the recent declines in jobless claims) might suggest an upward revision.

What nonsense. Completely a pretend figure.

And while we’re on the subject of GDP, I want to once again point out how ridiculous it is for anyone, especially economists who should know better, to talk about Debt to GDP comparisons! Completely a worthless metric! Comparing supposed “productivity” to debt is like comparing your neighborhood’s productivity to your own personal debt! What do they have to do with one another? Absolutely NOTHING. Debt to income is what matters, and nations stopped talking about that a long time ago (because we’re bankrupt, and no, money/debt printing does not make you “unbankrupt”).

And since they snow us with bullshit about supposed “productivity,” I feel compelled to respond with that Robert Kennedy Quote:
“Too much and too long, we seem to have surrendered community excellence and community values in the mere accumulation of material things. Our gross national product...if we should judge the United States of America by that - counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for those who break them. It counts the destruction of our redwoods and the loss of our natural wonder in chaotic sprawl. It counts napalm and the cost of a nuclear warhead, and armored cars for police who fight riots in our streets. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children.

Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it tells us everything about America except why we are proud that we are Americans.”
― Robert F. Kennedy

Just as a sidebar, Corporate Profits were downgraded .3% in the third quarter to go along with the downgrade in GDP.

Speaking of snow jobs, the Weekly Jobless Claims number supposedly fell by a whopping 2,000 to 364,000. This is completely not believable, and is still well above the breakeven threshold of 350k:
Layoffs are on a steady decline in what is good news for the jobs market and for the December employment report. Initial claims fell for a third week in a row, down 4,000 to a much lower-than-expected level of 364,000 (prior week revised to 368,000 for a 17,000 decline). The four-week average is also down for a third week in a row and down for six of the last seven, declining 8,000 to 380,250 which is the lowest level of the recovery.

Continuing claims in data for the December 10 week fell 79,000 to 3.546 million, also the lowest level of the recovery. The unemployment rate for insured workers, down one tenth to 2.8 percent, is also at a recovery low.

The holidays, with its shortened weeks and extreme effects, are always a tough to gauge weekly jobless claims data, but the trend is clearly lower in what should be good news for the markets and which should continue to build expectations for a strong gain in December payrolls.

And with the prior week revised higher, the snow job says it decreased by 4,000, not the 2,000 it really did, thus a 100% overstatement of the actual week to week change. If they want to compare revised numbers, then they must wait until the next report – comparing apples to oranges falls into the fraud category in my book.

Just out from Zillow, according to them home values in the United States lost $700 billion in 2011, this is down from the $1.1 trillion in 2010. Still, this is a huge figure that directly impacts the wealth and solvency of Americans. Note that we’re so far into the depression at this point, that the numbers mathematically must start to diminish. In other words, once your home has lost half its value, then the dollar amount of losing the next 50% is far less than the first 50%. I think the same thing is happening to the weekly jobless claims. Once businesses layoff all they can, and a big percentage of them go out of business, then there are simply fewer workers to layoff, and thus the numbers eventually must begin to diminish as the economy gets smaller. And it is smaller despite the phony GDP measurement which really measures debt money production, not real productivity.

The Chicago Fed National Activity Index deepened into negative territory. What, they didn’t get the election year trump up the statistics memo?
Growth indications are slowing in the national activity index which fell to minus 0.37 in November from a revised minus 0.11 in October (negative indicates below trend growth). Employment is a positive in the report but is being offset by a downturn in production. Housing is still heavily negative with sales, orders & inventories neutral. The index's three-month average is at minus 0.24 (prior revised).

So, tell me how the national index is negative at the same time the individual “Fed” regions report positive numbers? Again, this is one of the key tests of fraud… data in a non-fraud environment will be consistent, while data in a fraudulent and manipulated system is inconsistent.

Consumer Sentiment supposedly rose from 67.7 to 69.9, beating estimates of 68.0. I say, “ba humbug,” instead of the usual “bullshit” just to be in phase with the season. Here’s Econosnow:
Consumer sentiment continues to extend its improvement, to 69.9 in December from 64.1 in November and from 67.7 at mid month. The reading implies a very strong 72.1 over the last two weeks which points to momentum for January. The bulk of the gain is centered in expectations, at 63.6 in December for a more than eight point monthly gain that points further to momentum in the new year. The assessment of current conditions, likely held down by bad news out of Europe, rose only two points in the month to 79.6.

One likely positive for sentiment is improvement in the jobs market as well as the stock market which has been on the recovery. Another positive may be gasoline prices which, despite $100 oil, are on the decline. One-year inflation expectations eased one tenth in the month to 3.1 percent with five-year expectations unchanged at 2.7 percent. The Dow is moving to morning highs following this report. The December consumer confidence report from the Conference Board, which in November surged, will be posted on Tuesday.

Forget the snow, this is all bullshit too.

The self-interested FHFA says that the Home Price Index fell .2% in October, this is down from the .9% reported in September (revised all the way down to .4%), and is well below expectations of positive .3%. Gee, more snow:
Housing is back under downward price pressure. According to the FHFA, house prices in October declined 0.2 percent after gaining 0.4 percent in September (originally up 0.9 percent) and dipping 0.2 percent in August. The October decrease came in lower than analysts' forecast for a 0.3 percent rise.

On a year-on-year basis, the FHFA HPI is down 2.8 percent versus down 2.7 percent in September.

Six of the nine Census Divisions showed declines in October, led by a 1.0 percent decrease for the New England region. On the upside, the largest gain was a 1.9 percent boost for the East South Central.

Just how deep is the snow when prior “positive” reports are more than cut in half? Pretty darn deep.

Supposed “Leading Indicators” fell from .9% to .5%, but his was higher than the .3% expected by the complicit elite. Here’s Econosnow:
The index of leading economic indicators rose a very solid 0.5 percent in November following October's 0.9 percent surge. The leading positive is the rate spread which reflects the Federal Reserve's zero interest rate policy. The second positive is building permits which appear to be building steam in what is very good news for the construction sector. Consumer expectations are a big positive in the month and judging from this morning's consumer sentiment report look to be a big positive for December. Another positive that's likely to extend through this month is the November improvement in jobless claims which gave the fifth strongest contribution to the month's 0.5 percent gain.

A decline in the factory workweek is the largest in the short list of negatives, and perhaps one that will reverse this month given early indications of strength in last week's Empire State and Philly Fed reports. A speeding up in vendor deliveries is the second largest negative.

This report is very solid and points, as the Conference Board says, to easing risk of an economic downturn. Other readings include 0.1 percent gains for both the coincident and lagging indexes.

Again, complete bologna. A big part of this index is the movement in equities. With trillions thrown into bond and equity markets, equity prices are WAY overstated. That means any result out of a measurement that uses said manipulated market is also just a reflection of the manipulation. This is very dangerous as it is misleading, not “leading.” Those who don’t understand this fail to see the underlying reality that is Kondratieff Winter. Yes, it’s snowing all right.

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