Saturday, January 15, 2011

Weekend Open Thread...

Friday, January 14, 2011

Morning Update/ Market Thread 1/14

Good Morning,

Another lower open this morning with the dollar and bonds roughly level, oil and gold are both lower. It was interesting yesterday to see the dollar plunge and to have oil and gold both move lower as well, something to keep an eye on. I believe this was due to the high inflation read with the PPI yesterday, meaning that high inflation will pressure the “Fed” and their continued QE.

The PPI (producer prices) leads the CPI (consumer prices). This morning the CPI also came in hotter than expected, rising .5% in December, up from .1% in November. Of course a lot of the increase has to do with the hot money pushing up the price of oil, and thus when you remove energy from the equation the “core” rate rose “only” .1%. Keep in mind that this number is one of the most highly manipulated numbers our government produces, failing to capture true inflation:
Headline and core CPI inflation seemed to be on different tracks in December as energy jacked up the overall number while core inflation remains modest. The CPI in December jumped 0.5 percent, following a modest 0.1 percent rise the month before. Analysts had projected a 0.4 percent boost for the latest month. Excluding food and energy, CPI inflation came in at 0.1 percent, equaling the rise for November and matching expectations.

By major components, energy jumped 4.6 percent, following a 0.2 percent rise in November. Gasoline spiked a monthly 8.5 percent, following a 0.7 percent increase the prior month. Food price inflation actually slowed to 0.1 percent from 0.2 percent in November.

As in recent months, shelter helped keep the core rate soft. The index for shelter rose 0.1 percent for the third month in a row. The rent index rose 0.2 percent while the index for owners' equivalent rent increased 0.1 percent. Motor vehicles also helped the core. The index for new vehicles was unchanged in December while the used cars and trucks index fell 0.1 percent, its fourth consecutive decline. Also falling in December were the indexes for recreation, communication, and household furnishings and operations.

Year-on-year, overall CPI inflation rose to 1.4 (seasonally adjusted) from 1.1 percent in November. The core rate, however, eased 0.6 percent from 0.7 percent. On an unadjusted year-ago basis, the headline number was up 1.5 percent in December while the core was up 0.8 percent.

Essentially, headline inflation is seeing upward pressure from higher oil prices. While there has been no consistent upward pattern for food prices, there could be higher numbers in coming months from stronger transportation and production costs. Commodities prices have been notably higher recently.

But core inflation is soft due to weak housing and heavy competition among retailers. In coming months, the Fed likely is going to have to address this issue of two track inflation between headline and core numbers.

Right, this report fails to capture food inflation. Bad government data only extinguishes confidence, it is imperative that our system of reporting economic data be overhauled as I outlined in Freedom’s Vision.

Retail Sales is another data series that is riddled with error. They are measured in dollars and thus in error due to the errors in measuring the CPI, even when “corrected.” They are also subject to substitution bias, that is when businesses close, it fails to account for the lost sales and instead measures only sales at stores that have been open for one year or longer. It would be easy to simply capture total sales from all stores, but that’s not how it’s measured… therefore in times of economic contraction this error is large, as it is now. In this report, Retail Sales supposedly grew by .6% in December, that is down from November’s .8% and it is less than consensus for another miss. For what it’s worth, here’s Econoday:
Retail sales looked good at the headline level for December but there were signs of fatigue by consumers after ringing up the cash registers so loudly in November. Overall retail sales in December rose 0.6 percent after jumping 0.8 percent the month before. Although healthy, the December figure fell short of the consensus forecast for a 0.8 percent boost. Excluding autos, sales were not quite as strong, rising 0.5 percent, following a 1.0 percent surge in November. Analysts had called for a 0.7 percent gain. However, higher gasoline prices played a role behind face value strength. Sales excluding autos and gasoline rose a moderate 0.4 percent after a 0.6 percent increase in November.

Notable components include motor vehicles, up 1.1 percent after a 0.2 percent rise in November. There was a significant swing in general merchandise (which includes department stores). This component fell 0.7 percent in December after jumping 1.1 percent the month before.

Overall retail sales on a year-ago basis in December improved to 7.9 percent from 7.5 percent the previous month. Excluding motor vehicles, sales rose to a year-ago 6.7 percent from 6.4 percent in November.

The bottom line is that consumers front loaded holiday purchases (broadly defined core sales) in November and some softening in December is not surprising. But the softness was modest as sales were still healthy in December even after discounting some price effects. Consumers with jobs are now pulling their weight keeping the recovery going.

On the news, equities were little changed.
In this report it is obvious how destroying the value of our money creates the ILLUSION of growth… gasoline sales, that are measured in dollars and not gallons, rose to help this index gain. If, however, you were to remove that cost that ripples through the entire system, then sales measured in dollars would not show the apparent growth that’s there. Again, by incorrectly measuring statistics, we are only fooling ourselves and creating a false market and false economy. This report is weak even with the induced errors, I guarantee you that it would be negative if you removed them.

Industrial Production is another data series affected by inflation as output is again falsely measured in dollars instead of actual output. In this report it is again energy, but in the form of utilities, that makes it appear stronger than it actually is. The headline number “grew” .8%, this is an increase from November’s .4%, and is above the .5% consensuses. The utilization figure is more reliable and is still at depression era levels, coming in up, but only at 76%. That is a horrid level, a healthy number should be 85% or more, and it’s quite obvious that we won’t be anywhere near that level for years:
The manufacturing sector continues to lead the recovery based on December data-but not quite as strongly as suggested by the headline for industrial production. Industrial production posted a healthy 0.8 percent gain, following a 0.3 percent rebound in November. The December figure came in higher than analysts' estimate for 0.5 percent. However, the boost was led by a monthly 4.3 percent surge in utilities output, following a 1.5 percent increase in November. Utilities were up on atypically cold weather.

Nonetheless, manufacturing increased a healthy 0.4 percent after a 0.3 percent rise in November. The latest was softened by a 0.2 percent dip in motor vehicle output. Excluding autos, manufacturing advanced 0.5 percent after a 0.6 percent boost in November. So, manufacturing is still on a significant uptrend. With motor vehicle sales somewhat strong, auto assemblies are likely to pick back up soon.

For the remaining major industry group, mining rebounded 0.4 percent after declining 0.7 percent in November.

Overall capacity utilization continued to improve, rising to 76.0 percent in December from 75.0 percent in November. December's figure beat expectations for 75.6 percent.

The bottom line is that while the utilities component has been volatile and led to swings in the headline production number, manufacturing is on a moderately healthy uptrend.

Is auto production strong or not? We keep hearing how well sales are going yet report after report is mentioning that autos are not as strong as expected. Autos, in my opinion, are still in bubble price territory, risen there by creative financing in the very same manner that housing was fluffed into a bubble. Car prices need to come down and financing for them needs to be better matched to income with more substantial down payments and shorter financing periods. Regarding overall production, let’s face it… we simply do not produce much of anything anymore, and that will bite us hard in the end. Our manufacturing capital continues to flee overseas leaving our labor market gutted and doomed to produce only financially engineered paper products. But it’s nice to have our children with college degrees making our coffee for us, isn’t it?

Consumer Sentiment came in much weaker than expected… again. Last month it was at a pathetic 74.5 reading, and for this month it fell to 72.7 against a consensus that was looking for it to rise to 75.0. Hey, you can’t fool all of the people all of the time… especially when they are unemployed or flipping burgers with their $40,000 a year education. Stocks are higher on the release... Welcome to Walmart, would you like fries with that?

Business Inventories are released at 10 Eastern.

The momentum indicators in the market continue to look tired. Divergences are again growing in the daily RSI and Stochastic indicators, producing lower highs while price goes on to produce higher highs:

There’s a large degree correction coming, but it may take a while longer to get rolling.

Thursday, January 13, 2011

Morning Update/ Market Thread 1/13

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Thomas Jefferson, (Attributed)

Good Morning,

Equity futures are slightly lower this morning with the dollar plunging, bonds lower, oil and gold roughly flat.

Regarding Obama’s speech last night, my thought is that talk is not only cheap, but when facing the harsh reality of bad math, rhetoric that fails to address the math is counter-productive and is exactly what leads to those “other” events. It is action, not happy rhetoric that matters when facing tangible threats. Bring on the deeds, otherwise zip it. Americans are being robbed of their money, of their property, of their food, of their liberty. We need a leader with GUTS to stand up to the banks – let me know when you’re ready.

Weekly Jobless Claims rose from 409,000 to 445,000, a 36,000 one week increase. Consensus was looking for a decrease to only 405k. This huge miss and increase back into the 450k zone throws tons of cold water on the massaged numbers that came out over the holiday weeks. Yet, in a delusional haze, the Labor Department and Econoday say that the “special factors” are in this report… Large doses of Thorazine, Stat!
In data blurred by special factors, initial claims surged to 445,000 in the January 8 for the worst result since October. The week-to-week rise, at 35,000, is the largest since July (prior week revised 1,000 higher to 410,000). The four-week average offers the best handle on the data, up 5,500 to 416,500 which is still nearly 10,000 lower than the month-ago comparison, a comparison that does hint at improvement for monthly payrolls.

Now the special factors. The Labor Department believes the week's surge reflects administrative backlog built up during the shortened weeks of the holidays. They also note that many claimants postponed filing until the New Year, a move that will increase their benefits.

Continuing claims fell a very steep 248,000 to 3.879 million in data for the January 1 week. There's no explanation offered for this change. The unemployment rate for insured workers fell two tenths to 3.1 percent.

One week's data is only one week's data and in this case very hazy data. Nevertheless this report, however skewed, will awaken talk of unexpected deterioration in the jobs market. Next week's report will be unusually important.

Remember, job destruction is occurring with any number above 350k. Unadjusted claims rose by a whopping 191,686! The headline number for this same week in 2010, one year ago, was 470k… that’s a decrease of only 25,000 following trillions more thrown at the banks. Trillions that could have been used to clear out our debt saturated condition that would have led to real job production, not just trumped up numbers and a trumped up phony “market.” If you ask me, forget about the fluoride in the water, what we really need as a population are anti-psychotics to help us with our economic mass-psychosis!

Psychosis is the only way I can explain jubilation at running a nearly $40 billion a month trade deficit:
We got a nice surprise on the trade front despite the recent run up in oil prices. The overall U.S. trade deficit in November shrank slightly to $38.3 billion from a revised $38.4 billion gap the month before (original estimate of $38.7 billion). The November deficit was much less negative than market expectations for a $41.0 billion shortfall. A combination of factors led to the improvement. Exports rose 0.8 percent, following a 3.0 percent jump in October. Imports rebounded a modest 0.6 percent after declining 0.8 percent in October.

The narrowing of the trade deficit was primarily in the nonpetroleum goods gap which eased to $30.3 billion from $30.8 billion in October. The services surplus also edged higher. The petroleum differential widened to $20.1 billion from $18.9 billion the month before.

By end-use categories, the increase in goods exports was led by a $1.0 billion gain in consumer goods with foods, feeds & beverages up $0.6 billion. Also rising were capital goods. The automotive category dipped $0.6 billion.

The rebound in goods imports was led by a $1.9 billion boost in industrial supplies-largely oil imports. Foods, feeds & beverages rose $0.2 billion while capital goods rebounded $1.0 billion. Imports of autos and consumer goods declined $0.4 billion and $0.9 billion, respectively.

Today's report is good news for manufacturers which are seeing continued gains in exports. We are likely to see economists nudge up their estimate for fourth quarter GDP due to the favorable trade numbers for December.

There was little initial market reaction. Partially offsetting the good news on trade was an unexpected jump in initial jobless claims.

Horrid is how I would describe a situation in which sales measured in falling and worth less dollars are falling, and in which the cost of oil is rising. This is the worst of all words, brought to you courtesy of the narcissistic bastards pulling the strings at the “Fed.” Again, the rhetoric is NEEDED, and it is needed to get on point fast as food riots break out over the globe and real people DIE! Riots are now happening in Argentina with deaths occurring over gasoline riots. Think that can’t happen here? Think again, they are coming unless we reel the banksters in.

The PPI numbers are rising and are simply too high already. Any inflation whatsoever is completely unsustainable over time, yet the “Fed” profits from it so they treat it as if it is good and try to create it. It’s not good, it’s destructive. REAL growth is fine when kept under control, but PRICE growth through constant monetary expansion only leads to massive problems and the eventual destruction of confidence in the money system. Lucky us, we’re going to live through the destruction and change of our current system, not to mention the “other events” that history says accompany such upheaval:
The Fed may be in a quandary soon if not already. While core inflation is still tame, headline inflation is running higher than expected. And unemployment is not coming down as hoped. But focusing on today's inflation numbers, the overall PPI inflation rate remained on the hot side in December with a 1.1 percent boost after jumping 0.8 percent in November. The December boost topped the consensus forecast for a 0.9 percent increase. At the core level, the PPI rate slowed to 0.2 percent a 0.3 percent rebound the prior month. Analysts expected a 0.2 percent rise.

By components, food prices gained 0.8 percent, after a 1.0 percent jump in November. The energy component continued a strong upward trend, surging 3.7 percent in December after rising 2.1 percent the prior month. Within energy, gasoline spiked 6.4 percent after jumping 4.7 percent in November. The core was kept somewhat soft in part by a 0.4 percent decline in prices for passenger cars.

For the overall PPI, the year-on-year rate increased to 4.1 percent from 3.5 percent in November (seasonally adjusted). The core rate firmed to 1.4 percent from 1.3 the prior month. On a not seasonally adjusted basis for December, the year-ago the headline PPI was up 4.0 percent while the core was up 1.3 percent.

There was little market reaction. Also out at the same time, initial unemployment claims unexpectedly jumped while the international trade deficit was smaller than forecast. Today's PPI numbers will heat up the debate at the Fed during the end of month FOMC meeting as inflation pressures are rising while unemployment remains high. And it is not just energy that is a concern as food prices are being pressured by higher commodities prices.

That’s right, high inflation and high unemployment – welcome to debt saturation and money printing which is the exact wrong way to handle the saturation problem.

So, everyone’s convinced that we’ll soon see QE3 followed shortly thereafter by QE10! Really? Are we going to be QEing and POMOing when the CPI passes 10%? What happens to the “market” when that stops?

I’m not saying it’s going to stop, I’m saying that the idiots still have choices – sure, they can create high or hyper-inflation if they so choose or even by accident, but this will be devastating to our population, to our economy, and to businesses in the longer run. You simply cannot get out of an impossible math situation by ignoring it! Not talking about it WON’T WORK!

So, wave 5 up is going to run headlong into tough decisions. In the meantime we continue to POMO more than $100 billion a month. Is the economy getting better? If the honest answer is yes, then they better pull the support. But we know the truth… it’s all fluff. Pull the support and the “market” goes boom. Thus we are now damned if we do and we are damned if we don’t – a position brought to you by WHO controls the production of YOUR money! Want it not to happen to your kids and future generations? Change that one part of the equation and get our nation out of the business of paying private individuals for the use of our own money. That means NO MORE NATIONAL DEBT!

And if you think that the Jefferson quote at the top of this update is hype, consider the ongoing destruction of our money and the current price of gold which the majority thought was crazy talk just a few short years ago – inflation! While at the same time property values continue to deflate and honest hard working citizens continue to lose their jobs and their homes! Yes, their property is being stolen by the banks who made money from absolutely nothing and are repossessing properties by the millions – properties that if they did not control the production of money they would have no legal claim to! The money system and the property of the United States belongs to its people, not to a few private individual bankers!

Here are the sickening statistics for 2010 foreclosures:
1 million homes repossessed in 2010

NEW YORK (CNNMoney) -- Foreclosures were at a record high in 2010, and more than 1 million people lost their homes, even as notices started leveling off during the end year.

In total, there were nearly 2.9 million foreclosure notices filed during the year, according to report released Thursday by RealtyTrac. That was a record high, but just 1.7% above 2009.

It most certainly would have been higher had notices not plunged in November and December as banks halted tens of thousands of foreclosures in the face of the robo-signing scandal.

"Total properties receiving foreclosure filings would have easily exceeded 3 million in 2010 had it not been for the fourth quarter drop in foreclosure activity," said James Saccacio, RealtyTrac's CEO. "Many of the foreclosure proceedings that were stopped in late 2010 -- which we estimate may be as high as a quarter million -- will likely be re-started and add to [foreclosure] numbers in early 2011."

That’s one million families just in the past year that lost their homes! And, there were nearly three times as many families who were put into the foreclosure process! Think about the STRESS that puts on those families! It’s a wonder, a miracle to me, that there is not far more violence occurring. It is the LACK OF REAL AND MEANINGFUL RHETORIC that’s to blame. We are one screwed up country and we are still in deep denial.

Wednesday, January 12, 2011

Morning Update/ Market Thread 1/12

Good Morning,

Equity futures are higher this morning with bonds lower, the dollar lower, oil higher ($91.62), and gold lower ($1,380). Don’t forget that small movement in the McClellan Oscillator on Monday, yesterday’s move was not large enough and thus a large move today is likely.

The Treasury will release the latest POMO schedule at 2:00 Eastern today.

The still worthless and still near all-time historic lows MBA Purchase Index fell another 3.7% in the past week, here’s Econoday:
Purchase applications fell a steep 3.7 percent in the January 7 week, a dip that threatens to sink what has been no better than a flat trend. Week-to-week adjustments on the data, however, are severe given the shortened prior week. The four-week average for the purchase index is down 1.0 percent. Refinance applications rose 4.9 percent in the week with 30-year mortgages averaging 4.78 percent, down four basis points in the week.

The housing market is still a mess, and don’t forget that we are in a temporary lull in Option-Arm reset activity until about March when resets launch into a peak. Bad timing for higher mortgage rates as all those people must either pay way higher monthly payments or refinance their homes that are most likely deeply underwater:

That will pressure upper-end home prices which in-turn will pressure banks and overall consumption.

This doesn’t phase Goldman Sachs, however, where analysts there must see nothing but POMO and HFT trading from now until the next coming of Jesus! They just issued their forecast stating that they expect U.S. stocks to rise 18% this year and that the bond market will “do okay.” Maybe, but then again maybe historic divergences and extreme overvaluation catch up to the market? With Goldman you never know whether or not you are being set up for distribution, but in this case that’s exactly what I think their latest marketing disguised as a “forecast” is all about. Made, not unexpectedly, during wave 5…

Both Import and Export Prices rose an unconscionable amount in December – Exports rose .7%, while Imports rose 1.1% for the month, pushing year over year Export Prices up 6.5% and Import Prices up 4.8%! While I believe these figures are understated, they are catastrophically high and completely unsustainable. Compare those to income figures and you’ll see that this cannot last for long. It is strictly a monetary phenomena, one that pressures the middle class as well as business margins. Here’s Econoday’s summary:
Inflation pressures for input prices are tangible but easing based on December import and export prices. Import prices rose 1.1 percent vs November's revised 1.5 percent rise (plus 1.3 percent first reported). The year-on-year rate is climbing, now at plus 4.8 percent. Prices of imported foods, feeds & beverages eased to plus 1.3 percent from November's plus 2.5 percent with industrial supplies at plus 2.8 percent vs plus 3.5 percent. These rates are significant yet there's little sign the increases are being passed through to final purchasers: import prices for consumer goods are unchanged while import prices for capital goods are up only 0.1 percent, the third straight 0.1 percent increase.

The export side likewise shows no significant pressure at the final goods level with consumer goods up 0.2 percent, down from November's 0.4 percent increase, and capital goods up only 0.1 percent. Exports of foods, feeds & beverages rose 0.7 percent, sizable but well below gains of 5.9 percent, 2.4 percent, and 2.0 percent in prior months. Year-on-year rates do show pressure, at plus 6.5 percent for total export prices and at plus 5.1 percent for non-agricultural prices for the largest increase since 1987.

Despite some negative details, today's report generally shows an easing in price pressures during December and points to no surprises for tomorrow's report on producer prices or Friday's report on consumer prices.

“Largest increase since 1987…” Hmmm, nothing bad happened that year did it? …As I watch the dollar dive…

Oh yeah, I forgot that Europe is saved! You know, since Japan and China are lending money to Portugal and all of their bond market sales are now likewise rigged, just like here in the United Fraudulent but Bankrupt States. But that truth-speak is incendiary, isn’t it? So maybe we just shouldn’t talk about it, right? I guess I shouldn’t even mention that the IMF is once again talking about raising their own self-imposed phony bailout limits, just like Congress must once again talk about raising our debt limits. Funny thing that if you follow both money trails that they lead to the same people in the same banks, and that the money in all cases comes from the same taxpayers. But I guess pointing that out would be inflammatory too. And in a quick conversation with a neighbor yesterday I had the joy of listening to him recite verbatim from the media how it’s a shame that the rhetoric “caused” that Jared kid to shoot up all those people.

By the way, where's all the media attention regarding the Omaha, Nebraska High School Vice Principal who was shot and killed by a 17 year old who also shot the school's Principal? I guess that was just caused by the "rhetoric" too.

Meanwhile the media barely discussed how Illinois just raised taxes by a historic amount on its citizens, and I’ll bet my neighbor is completely unaware of that fact, or the fact that a very large percentage of those taxes are needed to pay interest to the private banks who are very inappropriately, in my opinion, financing public debt:

Illinois lawmakers pass massive tax hikes

NEW YORK (CNNMoney) -- Illinois lawmakers on Wednesday approved major personal and corporate income tax hikes to bring the state's budget back from the financial abyss.

The state is facing a $13 billion budget deficit that must be resolved by the end of the fiscal year on June 30. This includes $6 billion in unpaid bills to social service agencies, schools, contractors and others. In addition, the state's pension plan is severely underfunded.

To address these shortfalls, the Illinois House and Senate approved:
Temporarily raising the personal income tax rate to 5%, from 3%.

Temporarily hiking corporate income taxes to 7%, from 4.8%.

Imposing a moratorium on new programs with spending growth capped at 2% per year, with the exception of increased school aid of more than $700 million.

The House postponed a vote on increasing the tobacco tax to $1.99 per pack, up from 98 cents. And lawmakers defeated a proposal to borrow $8.75 billion to clear the current stack of unpaid bills.

The state's Senate also approved a measure allowing the state to borrow $3.7 billion for the fiscal 2011 pension payment. The House approved this debt issuance last May.

Democratic lawmakers were racing to pass the tax hikes before the newly elected legislators are seated later Wednesday. Republicans, who gained ground in the November election, are firmly opposed to hiking taxes, preferring instead to cut spending.

The fiscal package remained in flux until the end. To gain support, Democrats scaled back the personal income tax spike to 66%, down from an initial proposal of 75%, and also reduced the jump in the corporate tax rate, which was originally set to rise to 8.4%.

The tax hikes, steep as they are, won't eliminate the state's deficit, since they are only expected to raise about $7 billion. Complicating matters is the defeat of the bond measure to cover the unpaid bills.

Uh huh… Historic tax increases – note that income taxes are going up from 3% to 5%! That’s a two-thirds increase, and it will barely cover half of their deficit! Now that’s bad math! And the truth is that by now having some of the highest taxes in the world, Illinois is going to drive away capital like nobody’s business – as in capital flight. This will make their income projections just plain old fashioned wrong, they will come up far short of their projections as jobs, money, and people continue to flee Illinois.

Sadly Washington State is not too far behind – we are $4.6 billion in the hole, more math that simply is impossible to fix within current frameworks. And note that the “FED” has said in very plain terms that they have no intention of helping the states. In fact, Ben Bernanke said that it’s simply not their business to help the states. But boy can they help the banks! DUH, that’s because the “FED” is nothing but a front for the private banks – and if people think that they are going to print even more money to bail out non-banks, then they simply don’t understand WHO the “Fed” is. Sure, Congress can bail out the states, but then we have even more massive federal deficits for which interest must be paid… to the private banks. See WHO is in the no lose position and WHO is in the no win position?

Boy we must like that position because no one is doing anything about it… SHHHHH, stop all that inflammatory rhetoric!

But I do believe in the power of positive thinking! Optimism is a necessary ingredient to moving forward. However, when confronting physics and math, there are certain realities that cannot be ignored least you get yourself into gigantic trouble. For example, you may stand on your rooftop flapping your arms in the belief that you can jump off and fly like a bird! However, that blind optimism might just get you into trouble, a very fitting analogy to buying today’s stock “market.”

Tuesday, January 11, 2011

Morning Update/ Market Thread 1/11/11

Good Morning,

My that’s a lot of ones in today’s date! Equity futures are going to open higher than yesterday’s high with bonds lower, the dollar slightly lower, oil and gold higher.

There was a small movement in the McClellan Oscillator again yesterday which means a large directional move is likely to occur today or tomorrow.

There is little in the way of economic data today, however the NFIB (National Federation of Independent Businesses) released its small business survey this morning for January and the results are very interesting with the primary index dropping from 93.2 to 92.6 – even Econoday admits these readings are still recessionary (data based upon NFIB small business survey):
The small business optimism index fell six tenths to 92.6 reflecting continued uncertainty over the economy's future. The reading, for the 36th straight month, is consistent with recession. Weak sales remain the top problem for small businesses which are still not hiring. In a positive, small businesses do see better sales in the coming months.

Do they? In fact, small businesses number one problem area of this report is sales! The biggest hit to the index comes from fewer businesses who expect the economy to improve, and the second largest hit comes from… wait for it… earnings trends! And which direction are small business earnings trending at this juncture? Down.

Take a look at the following NFIB report on page 7, there you will find earnings information. Actual sales are lower and they are reporting price pressure which is affecting their bottom line. This is the same thing we’re seeing across the board – margin compression. The margin compression we're seeing is a direct result of money printing. Remember, sales can go up in dollar terms, but when printing money input costs will rise more quickly than sales measured in dollars. Here’s the entire report – you will find a bounce off the March ’09 lows, but you will clearly see that business conditions are not anywhere near back to prior levels, nor is small business optimism:

Small Business Survey NFIB

Portugal has a debt problem (duh, just like the rest of Europe). Rates blow out, they can no longer finance their debts conventionally. China steps in and says they’ll buy Portugal’s debts (with their freshly printed Yuan)… as if debt is what Portugal needs (note that printing money and buying debt gives China an element of control over Portugal and even the entire Euro region). Now Japan, a thoroughly and completely bankrupt nation, has announced that they too are going to step up to bailout Portugal by buying up their debt! How does a bankrupt nation do such a thing? Simply by printing more Yen, that’s how. It’s okay for them, because in this nutty juncture in history, the Yen, as bankrupt as it is, has been gaining value despite the Japanese own attempts to destroy its value!

As if any of this will last… it won’t. The entire Euro region is bankrupt, the United States is bankrupt, Japan is bankrupt. We can all trade debt around all we want, but in the end there is simply not enough income to service it. Pretend will only get you so far and there is no doubt that currencies the world over are weakening very quickly now. Yes, you need to be prepared for the system to break down, it’s inevitable that there will be major changes to global money structure. History shows that those changes will be turbulent.

The market is looking very weak, especially internally where more and more divergences are appearing. Yesterday the NDX made a new high, yet the number of stocks above their 30 day average fell. These weakening internals are all a sign of an approaching top.

As I look at the Elliott Wave structure it appears to me that we may have just finished a small degree 4th wave (d), and means that wave 5 (e) higher is next. If this count is correct, this should be the last push of the larger wave 5, and thus the coming top could be a major degree high. While there are other possibilities, I would not bet against this count – heck, I wouldn’t bet in this trumped up market with YOUR money, much less my own because the odds are worse than gambling at the local casino – in the current market the mob runs the entire show, skimming and stealing every step of the way. The “Fed,” by the way are not cops by any stretch of the imagination, they are the mobsters.

Monday, January 10, 2011

Morning Update/ Market Thread 1/10

Good Morning,

Equity futures are lower this morning with the dollar flat, bonds higher, oil higher, and gold flat. Oil now has pressure on it due to the Trans Alaskan pipeline closure as well as problems with a Canadian oil sands processing facility – both evidently may take some time to repair.

There is no economic data today and it is light until the end of the week when we get a look at the government’s cooked PPI and CPI data.

Congresswoman Giffords shooting this weekend was certainly a tragedy – sad. But this is exactly the type of thing that I mean when I say that “other” events follow financial crisis. “Huh?” You say. Let me connect the dots…

The right blames the left, the left blames the right. Morons like Paul Krugman and many others blame the “rhetoric.” The rhetoric from Congress, the rhetoric from bloggers like me, the rhetoric from right wing radio… and thus, they claim, that if we only calm down the rhetoric and just stop talking about all our problems so passionately then surely things like this would never happen… right?

And thus once again we can’t discuss the real roots of the problem and why the rhetoric is so lively at this juncture in history to begin with! It’s lively because there is pressure on everyone and all levels of government. That pressure should have never happened and it is the result of greedy private banks who stole the people’s right to control the production of money. The people are thus distracted by petty politics as the pawns get manipulated by the chess masters who reside mainly at the top 5 too big to fail banks.

As Gerald Celente likes to say, “desperate people do desperate things.” Remember the guy who flew his plane into the IRS building?

And this shooting is just one link in a very long chain of events. Greed bubbles lead to financial crisis which place great pressure on the members of society – people lose their jobs, their homes, their sense of identity and purpose. Can’t talk about it, though, least someone do something radical. And I’m not saying this boy wasn’t completely screwed up in his mind… but what I’m saying is that the anti-rhetoric rhetoric is also delusional. We need to talk about the issues, but we need to talk about the ROOTS of the issue and not just the symptoms. If you treat only the symptoms without treating the root problems, then you will be forever treating symptoms.

And so financial crisis leads to pressures of all sorts both internal and external to a country. Externally we are seeing great pressures mounting as a result of DEBT, FRAUD, and manipulation. These pressures eventually turn into currency wars, trade wars, and then shooting wars. The currency wars are ongoing and we are beginning to see trade wars. Brazil just offered a warning:
Brazil Warns Trade War Looming

Brazil has warned that the world is on course for a full-blown “trade war” as it stepped up its rhetoric against exchange rate manipulation.

Guido Mantega, finance minister, told the Financial Times that Brazil was preparing new measures to prevent further appreciation of its currency, the real, and would raise the issue of exchange-rate manipulation at the World Trade Organisation and other global bodies. He said the US and China were among the worst offenders.

“This is a currency war that is turning into a trade war,” Mr Mantega said in his first exclusive interview since Dilma Rousseff, Brazil’s new president, took office on January 1. His comments follow interventions in currency markets by Brazil, Chile and Peru last week and recent sharp rises in the Australian dollar, the Swiss franc and other currencies amid an exodus of investment from the sluggish economies of the US and Europe.

Gee, isn’t that exactly what I’ve been saying would happen and is the chain of events? Sounds like Mr. Mantega is feeling those pressures and understands the chain of events that follow.

But when you remove the bankers and cleanse yourself of the debt and fraud they produce, then you have a chance at regaining prosperity… if you, however, cede to the mobster pressures to take on more DEBT, then you have troubles. Note that Iceland has now already returned back to economic expansion after they told the bankers to pound sand:
Iceland offers risky temptation for Ireland as recession ends

Iceland has finally emerged from deep recession after allowing its currency to plunge and washing its hands of private bank debt, prompting an intense the debate over whether Ireland might suffer less damage if adopted the same strategy.

Iceland's budget deficit will be 6.3pc this year, and soon in surplus: Ireland's will be 12pc (32pc with bank bail-outs) and not much better next year.

The pain has been distributed very differently. Irish unemployment has reached 14.1pc, and is still rising. Iceland's peaked at 9.7pc and has since fallen to 7.3pc.

Iceland's president, Olafur Grimsson, irritated EU officials last month when he said his country was recovering faster because it had refused to bail out creditors – mostly foreigners.

"The difference is that in Iceland we allowed the banks to fail. These were private banks and we didn't pump money into them in order to keep them going; the state should not shoulder the responsibility," he said.

And there you have it. Every nation in the world should do the same – tell the bankers to pound sand. That is the only way to fix the root of the problem.

There’s a lot of pressures mounting in the world today, the common denominator is that the bankers have created debt-backed money to the point of global saturation. Once saturated and interest rates at zero, the only course left is to flat out print money. That doesn’t do anything positive, it only makes the pressures worse in the long run. The U.S. is printing, Europe is printing, China is printing, Japan is printing, the entire debt saturated world is printing. And that means that “other” events are going to continue to gather steam and pace. The depth and pace of events will be directly correlated to how bad the underlying math is. It is the underlying math that places pressure on real people – their incomes are not enough to service their debts as the same people are responsible for their personal debts, corporate debts, and governmental debts across all levels of government (city, county, state, federal). The debt cannot possibly ever be repaid and thus major change and major events are coming. Want that change to come with the least amount of violence? Change WHO controls the production of money.

It is significant that this weekend states are pressuring banks regarding foreclosuregate and the effects of their fraud on state pension plans. Those plans are in BIG trouble, they are riddled with fraudulent investments and still carried at far more than real market value.
States press banks on foreclosures: update

Can we shame the biggest banks into finding a conscience?

It sounds like a long shot, but New York City Comptroller John Liu is willing to give it a try.

Liu leads a group of public pension fund managers in five states who released a letter Sunday demanding the banks investigate their mortgage and foreclosure practices.

The letters went to Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C). Liu's group includes state retirement funds in Connecticut, Illinois, North Carolina and Oregon and has $432 billion in assets.

The campaign is nothing if not well timed. On Friday, bank stocks tumbled after a Massachusetts court ruled two 2007 foreclosures invalid on the grounds the banks couldn't prove they owned the mortgages. One justice blasted Wells and U.S. Bancorp (USB) for their "utter carelessness" in handling homeownership documents.

"The banks' boards cannot continue to pretend the foreclosure mess is the result of technical glitches and paperwork errors," Liu said.

Mr. Liu has that last line exactly correct. However, the banks most certainly have no shame and thus cannot be shamed into compliance with the law. If you want compliance with the law, you must enforce the law or do business with someone else. Unfortunately, the banksters are subverting the rule of law and have completely bought off the political system. Again, we twist our way back around to those “other” events that history proves are necessary to bring about real and meaningful change.

Pressure? Try this:
California budget: $25 billion dilemma for Jerry Brown

NEW YORK (CNNMoney) -- After years of cutting billions and billions in spending, California has to do it again.

The Golden State and its new governor, Jerry Brown, are facing a $25 billion shortfall that must be addressed by June 30.

"The year ahead will demand courage and sacrifice," Brown said in his inaugural address on Jan. 3. "Choices have to be made and difficult decisions taken. It is a tough budget for tough times."

Brown, who also served as California's governor in the 1970s and 1980s, will lay out his plan to address the budget crisis on Monday. Few details have emerged, though the governor on Friday outlined $7 million in savings.

Among other cuts, Brown is slashing his own office's spending by 25% or $4.5 million. This includes getting rid of the Office of the First Lady, though he named his wife, Anne Gust Brown, as an unpaid adviser. He is also eliminating an education advisory office that cost $1.9 million a year.

But those are just a drop in the bucket.

Not only must the state close a $6 billion gap before the new fiscal year begins on July 1, the governor and lawmakers must wrestle with a $19 billion deficit for fiscal 2011-12. The larger shortfall was created by $10 billion in planned spending increases and a $9 billion drop in revenues due to expiring personal income tax, sales tax and vehicle licensing fee provisions. (Another blow to state budgets: Build America bonds end)

A decade of spending cuts
California has endured a decade of spending cuts, said Jean Ross, executive director of the California Budget Project, a fiscal and policy analysis group.

The state's fiscal troubles largely stem from its heavy reliance on personal income taxes. This revenue stream dries up when recessions hit and unemployment soars.

Now that’s pressure. It is caused by the math of debt which simply doesn’t work. It is impossible math, Gerry Brown stands NO CHANCE of balancing that budget, it will only get worse from this point on as they are far beyond the mathematical tipping point. And Bernanke has said that the “Fed” (private banks) have no intention of helping the states out. But yet the private banks who Bernanke represents will have no choice but to bail the states out least the chain of events strangle them. What will eventually happen is that the states will be under extreme pressure and will be forced to lash out without relief. There is only one thing Brown can do in the mean time, and that is to create a state bank, refinance the state’s debts and in so doing remove the private bank’s stranglehold on the state. That is only a partial solution, however, in the end the people of the United States will not prosper until the private banks and their debts are removed from government.

As far as the markets go, we are obviously in some sort of correction mode now, this morning the most recent uptrend line has finally broken as you can see on this 30 minute chart of the SPX:

The larger rising wedge bottom boundary is still very much in tact, currently the bottom of the wedge is in the 1236 area. A break of that line will signal a larger change of direction.

Sunday, January 9, 2011

Naomi Wolf – The End of America: Letter of Warning To A Young Patriot

Naomi wrote the book and gave the following talk in late 2007. I think it’s worth reviewing at this stage keeping in mind events that have occurred since her talk. Pay particular attention to what she says about the time that she will stop speaking out, and how others may already be stepping back from their previous openness...

Note that during her talk she identifies despots of the past, but fails to identify the current despot(s) in the ongoing shift towards fascism. Actually she does mention “the profit incentive,” but does not directly connect the underlying money and control issues and WHO controls them – that is where you will find the world’s current despots.