Saturday, January 8, 2011

The American Dream…

The American Dream - Part 1:

The American Dream - Part 2:

Weekend Open Thread...

Friday, January 7, 2011

Morning Update/ Market Thread 1/7

Good Morning,

Equity futures fell sharply on the Employment Situation Report, but have bounced back to roughly even prior to the open. The dollar is down slightly, bonds are roughly flat after rising on the report, oil is higher, and gold is close to break-even.

The headline number came in considerably less than expected at 103,000, with a private payroll of 113,000 (180k expected), and the headline (trumped up) rate falling to 9.4%. Below is the entire BLS report:

Employment December

Here’s Econoday’s take on the report:
Today's report was mixed with payroll jobs underperforming and the unemployment rate unexpectedly dropping. Unfortunately, the payroll number is more credible and the rate decline is likely an aberration. Overall payroll employment in December gained 103,000, following a revised 71,000 rise in November and a 210,000 boost in October. The December advance came in significantly below analysts' estimate for a 160,000 gain. However, the October and November revisions were up net 70,000. Private sector payrolls increased 113,000 in December, following a 79,000 advance the month before. The consensus expected an 180,000 boost.

For the latest month, strength was in private service-providing jobs which rose 115,000 after an 84,000 increase in November. Good-producing jobs declined 2,000, following a 5,000 decrease in November. In December, manufacturing grew 10,000; construction fell 16,000; and mining rose 3,000. Government jobs fell 10,000, following an 8,000 dip in November.

Within private services for December, leisure and hospitality increased by 47,000 while health care rose 36,000. Also, professional & business services gained 7,000 and were led by temp hiring, up 16,000.

The drop in government jobs was led by a 20,000 fall in local government, with non-education declining 12,000. Federal employment increased 10,000 while state government jobs were unchanged.

Wage inflation remains anemic. Average hourly earnings in December edged up 0.1 percent, following no change the previous month. The December number matched the market median forecast for a 0.1 percent increase. The average workweek for all workers was unchanged at 34.3 hours, equaling expectations.

On a year-ago basis, overall payroll job growth improved to up 0.9 percent in December from up 0.7 percent the prior month.

Turning to the household survey, the unemployment rate unexpectedly fell to 9.4 percent from 9.8 percent in November. Analysts had called for 9.7 percent. The rate declined in part due to a notable drop in the labor force, suggesting the unemployment rate will rebound when discouraged workers return.

Today's report clearly is disappointing and takes some wind out of the sails of the consumer sector. While many indicators have been strengthening, the lack of improved momentum in the labor market will likely constrain overall resurgence for the economy. On the news, equity futures eased, the dollar dipped, and interest rates slipped.

As they mentioned, the Household Survey data produced a very large drop in the rate, falling from 9.8% to 9.4%. This part of the report was better than expected but once again is being fudged lower with large reductions in the size of the workforce – the “participation rate” dropped by .2%, which is a very large drop. The population of the United States is now over 310 million, and is growing at a rate of 1%. That means that 3.1 million jobs must be created each year just to keep up with that growth, that’s 258,000 jobs each month. Anything less than that means that the economy is net losing jobs, which we still are.

The number of “discouraged” workers increased dramatically in this report, rising by 389,000 in just one month!

As expected, the Birth/Death model adjustment was very close to last year’s, adding 24,000 artificial jobs:

Fooling with the size of the workforce produces many distortions in the report. When we go and look at the “Alternative Measures” table, we find that U-6 (the measurement most closely resembling true unemployment) actually ROSE from 16.3% to 16.6% when not seasonally adjusted, but FELL from 17.0% to 16.7% with those adjustments.

Note, however, that U-3 fell in both categories. That is just one result of simply saying that the workforce is shrinking because there are so many “discouraged” workers and so we just won’t count them anymore!

That’s nice, and it gives the media something to fool the masses with, a “low” and “improving” 9.4% rate! Party time, massive hiring is coming this year! (Suckers!)

According to ShadowStats, true unemployment is over 22%:

Our economy is marketing driven. It must be all good all the time or it just won’t sell. We’re all hucksters now, we don’t care about making or doing something well or innovative, all we care about is that the numbers keep growing and as a society we’ll do anything to make it appear that it is – even if it isn’t. Thus we are a mass delusional society, one that history is going to spank severely for our complacency.

Consumer Credit is released at 3:00 Eastern.

The market looks to me like a marathoner who is about to fall down just before reaching the finish line. The internals are getting worse as the market moves higher, not better. Divergences are historic in size and across all time frames. Yet we know that the market isn’t real, there are POMOs every single day to keep the illusion of growth alive. This illusion is going to end, I can guarantee you that, I just cannot tell you exactly when. If you are an “investor,” a part of your job before letting go of your hard earned cash is to perform due diligence. If you do that for most equity and debt market investments today, I believe that you will find FRAUD that underlies most and thus valuations are extreme when the fraud is removed. Owning something based on a fraudulent value simply is a sure way to get bit eventually. It’s sad, but it’s the state of America today – top to bottom, all levels of government, and in corporate America too, especially the entire financial sector and particularly in any company that is really a financial in disguise, like GM and GE.

Marketing and fraud, right on down the line:

Thursday, January 6, 2011

Morning Update/ Market Thread 1/6

Good Morning,

Equity futures rose overnight but fell back to just above level on release of the Weekly Jobless Claims Report. The dollar is slightly higher, bonds are slightly higher, while most commodities including oil and gold are lower.

The Monster Employment Index fell during the month of December to 130 from November’s 134. That is the opposite of what the ADP data showed yesterday, here’s Econoday’s short take:

The Monster employment index fell four to 130 to indicate slowing volume of online recruitment in December. The report notes state and local government hiring continues to slow.

As I noted yesterday, the government is now leading the layoff trend, they are certainly not adding workers and with Republicans now under pressure to control the deficit large hiring is nowhere to be seen despite the media hype.

Meanwhile this week’s Jobless Claims prove that last week’s report was an anomaly… but we already knew that because the unadjusted numbers rose significantly last week as they did once again this week! Last week’s report came in at 388,000 (revised higher again) and the adjusted headline number came in at 409,000 this week, putting the figure back above the psychological 400k milestone. Remember, any figure over 350k shows that jobs are being lost, heck, we’re still not even breaking even despite all the hype. And the unadjusted claims rose by 52,038 in the past week, bringing the total up to 577,279! How in the world they are able to adjust out nearly 170,000 claims is beyond me. Here’s Econospin trying to convince themselves that’s everything’s okay:

Jobless claims haven't been too bumpy this holiday period, moving convincingly lower. Claims did rise to 409,000 in the January 1 week yet follow the prior week's 391,000 for the second best reading of the recovery (prior week revised from 388,000). The four-week average is telling the story, down 3,500 in the week for a 410,750 level that is down nearly 20,000 from a month ago.

Continuing claims also continue to move lower, down 47,000 in data for the December 25 week to 4.103 million. The four-week average of 4.123 million is trending about 100,000 lower from a month ago. The unemployment rate for insured workers is unchanged at 3.3 percent.

Jobless claims data, not to mention ADP's big call, are signaling solid strength for tomorrow's big employment report.

Delusional is all I can say regarding their comments if they actually believe their own drivel.

And how does Bloomberg spin this news? Why into a positive headline, of course; “Fewer Jobless Claims Filed in U.S. Over Past Month as Labor Market Revives.” LOL, note how they took a negative report and spun it into a positive by incorporating last week’s rogue data? Hell, all the data is rogue, this week is even worse.

Change? Here’s your change nearly three years after we learned that Goldman was selling bad debts while simultaneously betting against the very “investments” they were selling:

Goldman Sachs Says It May Sell, Hedge Facebook Stake

Jan. 6 (Bloomberg) -- Goldman Sachs Group Inc. clients considering whether to buy shares in closely held Facebook Inc. should take heed: Wall Street’s most profitable securities firm could unload its own holdings without letting them know.

In the last sentence of a one-page investment profile sent to private wealth clients, the firm explains: “GS Group may at any time further reduce its exposure to its investment in Facebook (through hedging arrangements, sales or otherwise), without notice to the fund or investors in the fund.”

Now that’s CHANGE you can believe in! A lousy note at the end of an investment profile… no kidding, buyer beware. My take is that anyone buying anything whatsoever from Goldman Sachs is suffering from a serious case of failing to do their due diligence. And the same goes for buying any equity in the current “market.”

Not to worry, state revenue for 2009, the Census Bureau reported, only fell by a measly 31%! I’m sure that 2010 was much better right? I just received notice that the tax value on my home fell by about 8% for 2011, so I’m sure governments will be collecting more this year! Ooops…

McHugh is running an Elliott Wave count showing we are possibly very near completion of the end of wave 5 at this time. One way or the other we are long overdue for a serious correction and I believe one will begin soon. I do note, however, that bonds have still not reached their strong support zone, and further declines in bonds can help to levitate equities. And don’t forget, a POMO a day keeps the correction at bay!

Wednesday, January 5, 2011

Morning Update/ Market Thread 1/5

Good Morning,

Equity futures fell overnight and are struggling to get back to even on an overly optimistic ADP Private Payrolls report. The dollar is much stronger, bonds are weaker, oil and gold are both adding onto yesterday’s large losses.

I keep seeing and hearing how the economy is improving, the economy is improving! But if that’s truly the case, then when is the liquidity going to be pulled? When do we stop POMOing every single day? Not to mention when and what happens if interest rates return to even middle-run historic levels? Uh-huh. The patient, I’m sorry to report, is still in critical condition living only on life support. Pull the plug on the support and then we’ll see what condition the patient truly is in. Mark assets to market and the patient dies instantly. The rest is simply talking about what color the flowers are going to be at the funeral. When this patient dies, it will most certainly not be unexpected, so if you haven’t got your grieving out of the way, you are behind those who understand how this cancer has metastasized.

The hypocritical Mortgage Banker’s Association says that Purchase Applications fell .8% in the prior week. Remember, they no longer report base numbers but we know that applications are very near all-time historic lows… still. Here’s Econoday:
Purchase applications slipped 0.8 percent in the December 31 week, only slightly offsetting a 3.1 percent gain in the prior week. Despite the prior week's strong gain, purchase applications were mixed during December, offering no better than flat indications for home buying activity. Refinancing applications rose 3.9 percent in the latest week vs a 7.2 percent drop the week before. The composite index rose 2.3 percent vs a 3.9 percent decline in the prior week. The average 30-year mortgage is back near five percent, up nine basis points to 4.93 percent.

The Challenger Job-Cut Report came in at 32,004 for the month of December, this is down from November’s 48,711. Remember, this is for the month of December, and it is for corporate layoff announcements only, not governmental. The private sector has been slashing jobs for at least three years, the government stepped in and overextended themselves and now it is the government that is in must contract mode, and we’re seeing that in the jobs numbers. Here’s Econospin:
Fewer layoffs are being announced, in fact the fewest since June 2000 according to Challenger's count which fell to 32,004 in December vs November's 48,711. The drop confirms improvement underway in jobless claims where fewer are receiving benefits. Whether fewer layoffs, however, are corresponding to new hiring will be answered in Friday's employment report.

It is the ADP report that sets market expectations for Friday’s report. It is notoriously wrong, just flash back to the past couple of months where ADP was overly optimistic and it incorrectly set market expectations higher. For December ADP is claiming that 297,000 Private Jobs were created, a leap above the 93,000 that were supposedly created in November. This caused a huge ramp in the futures, a large rise in the dollar, and a large drop in the price of bonds. Here’s Econoday:
ADP is calling for a gigantic 297,000 surge for December private payrolls, a gain that is far outside high-end expectations. The dollar is moving higher as are interest rates in reaction to the estimate.

What no spin? No “the economy is saved?” Very disappointing, I know they can spin better than that! Personally, in years of watching these reports I have found that the ADP report just doesn’t equal what the government propagates so I’ve always been puzzled when the market reacts to this report. When guessing what the Bureau of Labor Statistics will do I find it more helpful to look at the size of the prior year’s Birth/Death Model adjustments for a guide – however, keep in mind that last month they announced changes to this model. But if this December is anything like last year’s, there will be a medium sized addition due to this very incorrect model that they used last year to add 25,000 phantom jobs. Last month was a negative month in which they made corrections, and note that the large corrective month comes next when the numbers for January are reported - January will likely disappoint:

Thus I would expect that December’s report will indeed show improvement and that the number may be fairly close to the consensus number which is looking to see 140,000 Private Payroll Jobs added. Of course that number is meaningless as well, but it’s what we have.

The Non-Manufacturing ISM is released at 10:00 Eastern this morning.

There were many hammer candlesticks created by yesterday’s market action including a large top-like hammer on the XLF and an inverted hammer on the VIX. In a non-POMO market those would need to be taken seriously as a possible reversal indicator, but in this holographic market I certainly wouldn’t bet the farm on one actually occurring. Prices are still rising in what appears to be a wave 5 formation, part of a large rising wedge, divergences aplenty.

RIP Gerry Rafferty, age 63:

Tuesday, January 4, 2011

Morning Update/ Market Thread 1/4 – The Banks Own it All…

Good Morning,

Equity futures are slightly higher this morning still advancing within the rising wedge that most likely contains wave C:

Still as divergent and overbought as ever. Note that the stochastic is descending against rising price and that the RSI is divergent from the prior high. Of course none of that matters in the face of billions every single day in POMO as there is this week. Keep in mind, however, that the first week of January has a tradition of being strongly bullish as a setup to later declines.

Factory Orders are released at 10:00 Eastern this morning while Motor Vehicle Sales will be released throughout the day.

The dollar is roughly flat this morning but oil and gold are under pressure, gold appears to have put in a small double-top in the $1,430 area and may need to consolidate to get over what is most assuredly attempts by the banksters to cap it least their ill deeds be seen in full living color – they won’t be, there are obviously no adults present to keep the bankers in check.

Proof? Try this trial balloon:
Obama Said to Consider Daley for Top White House Post

Jan. 3 (Bloomberg) -- President Barack Obama is considering naming William Daley, a JPMorgan Chase & Co. executive and former U.S. Commerce secretary, to a high-level White House post, possibly as his chief of staff, people familiar with the matter said.

Such a move, which is still under discussion and which White House officials wouldn’t confirm, would bring a Washington veteran -- and someone with strong business ties -- into the administration as Obama enters the second half of his term. The president is faced with a Republican majority in the House of Representatives and is trying to accelerate the U.S. economic recovery while addressing the budget deficit.

Daley, 62, who typically responds to questions, didn’t return two messages seeking comment left on his cell phone yesterday or a phone call to his office and an e-mail sent to him today. White House officials declined to discuss the matter.

“I’m not going to comment on personnel speculation,” White House spokesman Robert Gibbs said in an e-mail.

As he remakes his staff at the midway point of his presidency, Obama also is seeking to address complaints from some executives that the Democratic administration is anti- business. Daley is JPMorgan’s Midwest chairman and the bank’s head of corporate responsibility.

That’s right… let’s put a JPMorgan executive in as the Chief of Staff, Obama’s right hand man. Now tell me that Obama’s not completely owned by the banks.

As far as being anti-business, this Administration is anti-business only in their socialist attempts to put down the discontent that would surely otherwise have bankers swinging from lamp posts should Emergency Unemployment benefits and food stamps for 42 million Americans not be preventing soup kitchen lines that would put the Great Depression to shame in their scale. What the people have yet to figure out is that he is very pro BANK, it is the puppet master banks who are sticking other corporations with their socialist agenda, that is how they keep the revolution down.

JPMorgan’s “bank’s head of corporate responsibility?” Ha, ha, now that’s a good JOKE. I’m sure that this position is all about covering up the ongoing shell games, hiding their accounting gimmicks, and convincing people that black is really white as they commit one fraud upon the people after another. Simultaneously, they are spending millions on slick advertising on the boob tube to numb people’s minds to the fact that JPMorgan is world’s largest holder of derivatives and basically own the government, a feat accomplished by simply printing money from nothing and using that money to buy and to twist the law. The same money is what gets officials elected at the national level, without it an adult politician cannot rise. This is why the only way left to fix it is for the people to rise up.

Note Daley’s transition from government to bank and then back to government. Our government and banking system have become one in the same. Don’t believe it still? Here comes the "cure" for Forclosurgate:
Reuters article:

The attorney-general group expects to reach five separate agreements with the five largest servicers, the news agency said, quoting Miller, who heads the multi-state probe.

Miller could not be immediately reached for comment by Reuters outside regular U.S. business hours.

The other three large servicers are Citigroup Inc (C.N), Wells Fargo & Co (WFC.N) and Ally Financial Inc.

The group has had at least one face-to-face meeting with representatives from all five of the largest banks and will reach individual settlements rather than a global agreement with the servicers, Bloomberg reported.

Mortgage servicers have come under fire in recent months for abuses of the foreclosure process.

All 50 state AGs formed a joint probe in October to investigate the use of "robo-signers" in foreclosure proceedings.

Ally Financial, Bank of America, Citigroup, JPMorgan and Wells Fargo could not be immediately reached for comment by Reuters outside regular U.S. business hours.

And there you have it. The rule of law is first ignored, and then when exposed to the light of day it is bought and paid for when an “agreement” is reached which will undoubtedly provide money to the complaining states and will ex post facto create a new law that makes their FRAUD legal just like it never happened. And the best part for them is that the money they are using to “agree” comes from nothing whatsoever – no productive effort on their part. That’s because they STOLE the PEOPLE’S right to own their own money system.

Yet as this five year chart of the XLF shows, the market knows what the financials are really up to. In fact, despite all the hype and all the trillions spent to keep them on life support, they have STILL failed to exceed even a 38.2% retrace of the decline since the '07 top. The poorest performing sector there is, again despite the hype. That is because the system is saturated with debt and it has yet to be unsaturated, all efforts to date are simply to hide, not to truly change anything:

And as tired as I am writing about their endless illegal shenanigans, I know that STILL they are losing it and they will lose control, it is already lost. I know that because mathematically their con game simply no longer works, it requires larger and larger sums. All money printing schemes end eventually and they end badly, especially for the people when they do. The people have needed to find their spirit, but so far have been placated with lies and cheap goods stolen from overseas.

Monday, January 3, 2011

Morning Update/ Market Thread 1/3

Good Morning,

Welcome to the first trading day of 2011! The first week of the New Year is typically bullish, so don’t be surprised to see further rallying within wave 5 up. Wave 5 should be nearing completion within the next couple of weeks in order to remain in proportion to waves 1 through 4.

Equity futures are higher this morning with bonds significantly lower (higher interest rates), the dollar is slightly higher, oil is setting new recent highs above $92 a barrel, while gold is higher too, pressing $1,420 an ounce.

There was another very small movement in the McClelland Oscillator on Friday meaning that odds are high a large price move is occurring today or tomorrow. Also note that the Bollinger bands are necking down against price in several of the indices as well as the VIX. That usually presages a large directional move as well. Also of interest in regards to the Bollingers is that the SPX closed right on the upper Bollinger in the monthly timeframe.

At 10:00 Eastern this morning the Manufacturing ISM and Construction Spending are released. The rest of the week will be fairly steady as well, culminating in the Employment Situation Report this Friday.

My take on the markets for this year is that should the “Fed” be able to keep the liquidity to the market artificially pumped up, then higher stock prices will be WORSE for the REAL economy than would lower stock prices! We’re already seeing skyrocketing commodities, oil and gas are shooting higher, and that’s absolutely going to destroy the quantity of REAL consumer goods that can be purchased. Thus reality, in my opinion, is once again exactly the opposite of the “conventional” wisdom espoused by the “Fed.” Should they stop owning the markets, then prices will fall and that’s exactly what will allow the economy to eventually move forward. Should they not abandon the money pumping route immediately then the economy will be in, and is already in, very grave danger.

Interest rates moving up is normally a sign that a new positive economic cycle has begun. I believe that in this case it is not a positive sign, it is a negative sign. The “Fed” is pumping money into the system to keep rates low… rising rates works against them, they have trillions in short term debts to roll. So do consumers and businesses. That makes what happens to rates very important in this debt saturated economy. Should rates continue to rise, then housing prices will also remain under increasing pressure as well.

This makes the TLT and TNX charts important to watch again. TLT (the 20 year bond fund) has made a dramatic move lower over the past couple of months. People like Bill Gross are saying that there is further movement to come, and this weekend Marc Faber said it was flat out “suicidal” to own long term bonds.

That makes what happens next in the bond world very important. Below is a weekly chart of TLT, you can see that price is heading back down to support once again that is in the 87 to 90 region. Should price break below that region, that will be our clue that much higher rates are on the way:

Again, I want to emphasize that a rising stock market at this juncture is NOT healthy for the economy. Wages will not keep up with continued price pressure, and those who are on fixed incomes will be in grave danger.

The route taken is and has been a choice. The decision makers are all located at the “Fed,” they are the private banks. They are acting in THEIR best interest, not yours. It’s quite obvious to me that they will continue on the path they are on until they blow themselves up and take all of us with them. We’re idiots for not removing them from power a long time ago. This year and the immediate years that follow are going to bring great upheaval be it with an initially rising stock market or with a falling stock market. The path will be determined not by us, but by those special interests. The ultimate destination, however, is a mathematical certainty – that destination is the destruction of our currency and it is our money system that underlies all of the economy and markets.