Friday, February 4, 2011

Weekend Open Thread...





Morning Update/ Market Thread 2/4 – Disinformation Edition

Good Morning,

Equity futures are roughly flat this morning following the completely trumped up Employment Report for January – disinformation at its finest. The dollar is up, oil is roughly flat, gold is down slightly, and most food commodities are down slightly. There was a very small movement in the McClellan Oscillator yesterday, expect a large directional move today or Monday.

I’ll get to the Employment Report in a second, but first let’s clear out the disinformation created by the “Fed” Chairman, Ben Bernanke, yesterday in his speech. He took complete credit for creating a higher stock market… oh yeah, no lying about that. But then he turned around and denied that his policies had anything to do with higher food prices around the globe, and certainly had no hand in creating the violence in Egypt! As they say, “Denial isn’t just a river in Egypt.”

To be clear, food inflation is massively high. Yesterday I pointed to a study showing that overall global food prices rose by 3.4% in January… that gain is in just one month! And I think it may be understated as many food commodities have increased at rates far greater than that. That gain was the seventh month in a row of gains, and if you annualize that figure it works out to a whopping 40.8% inflation rate in the price of food!

Imagine that you live in a country where it requires 40% of your earnings just to feed yourself. At that rate it won’t be long before you are literally starving. Bernanke’s malfeasance is beyond compare. He is a danger to this country and to the entire planet. But the genesis of his malfeasance, of course, lies in the Federal Reserve Act which mistakenly gave the private banks the power to create and control the money of the United States, which morphed into the control of the world’s reserve currency. The greatest crime against humanity ever.

So, with people now wising up and pinning the blame where it belongs, on the “Fed,” can their money printing continue for long? What happens if it is stopped? My take is that should it really stop, the markets would deflate showing instantly how much hot air they are made of. But they can’t stop because that would expose them for what they are. That would jeopardize their power and control which is what the ability to print money is all about.

Power and control… watch, and you will see that every action the “Fed” takes is about retaining and promoting their power. And the world will thus suffer greatly until that power is returned to the people where it rightly belongs.

The headline disinformation Employment Report numbers came in at only 36,000 Nonfarm Payroll jobs, a huge miss from the 150,000 expected, and is indeed lower than the 136,000 reported for December (and revised even lower, of course). As I mentioned on Wednesday, the phony Birth/ Death model corrections in this month would throw off those who failed to compensate.

But the miss and disastrous numbers are spun into disinformation when the media, politicians, and “Fed” get to tout the supposed 9.0% Unemployment headline, a vast one month “improvement” from December’s 9.4%. And what a trumped up sad sack of lies that 9.0% number is.

First let’s hear Econoday’s take:
Highlights
Today's employment report is about as mixed as you can get. Payroll jobs are disappointingly anemic while the unemployment rate unexpectedly fell sharply. Overall payroll employment in January posted a minimal 36,000 increase, following a revised 121,000 gain in December and a 93,000 advance in November. The January boost fell short of analysts' estimate for a 140,000 gain. The November and December revisions were down net 4,000. The private sector barely did little better than overall as private nonfarm payrolls increased 50,000 in January, down from a 121,000 boost the prior month. The consensus expected a 150,000 gain.

For the latest month, private service-providing jobs rose 32,000 after a 146,000 increase in December. Good-producing jobs rebounded 18,000, following a 7,000 decrease in December. Manufacturing is showing a boost in momentum as jobs jumped 49,000 after a 14,000 gain the month before. Construction likely was damped by adverse weather, falling 32,000 in January, following a 17,000 decline the prior month. Mining edged up 1,000 in January. Government jobs fell 14,000, following an 18,000 drop in December.

Wage gains improved in the latest month. Average hourly earnings in January rose 0.4 percent, following a 0.1 percent uptick the prior month. The January figure topped the market median estimate for a 0.2 percent increase. Most likely, the rise in earnings was due to the jump in manufacturing employment-in a high wage sector. The average workweek for all workers posted at 34.2 hours, compared to analysts' forecast for 34.3 hours.

On a year-ago basis, overall payroll job growth rose to up 0.8 percent in January from up 0.7 percent in December.

Turning to the household survey, the unemployment rate fell to 9.0 percent from December's unexpectedly low 9.4 percent. The market median estimate was for 9.5 percent. The drop was largely due to a drop in the labor force but household employment rose moderately.

Today's report is baffling, given it contrasts so much with recent surveys showing gains in employment. Severe winter weather may have played a role in delaying hiring. The boost in manufacturing employment is encouraging and likely portends a general strengthening in demand for labor.



Baffling indeed. Trumped up is the sad reality, I believe NONE OF IT. That includes the supposed .4% Average hourly earnings increase in just one month, yesterday’s Labor Costs report put the lie to that, clearly showing that labor costs are falling.

Here’s the entire report, the usual suspects are to blame for the trumped up numbers once again:
Employment January 2011

Right off the bat, the following paragraph tells you why the rate fell to 9.0% - it is due to 300,000+ more people who are no longer counted as unemployed:
In January, 2.8 million persons were marginally attached to the labor force, up from 2.5 million a year earlier. (These data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. (See table A-16.)

Would you like fries with that?
Yeah, let’s take a look at table A-16:



Note on that table that the numbers are given in thousands. That means that the number of people Not in the Workforce jumped in the past year by 2.3 million!! That’s exactly how you trump up the numbers to make them look better than they are. And they put the lie to the notion that any jobs whatsoever have been created, they are in fact being lost at an astonishing rate. This manipulation of the data all by itself hides 191,000 workers per month who are not counted in the headline U-3 number.



When we take a look at the “Alternate” Table, we find that all the seasonally adjusted number declined, while all the not seasonally adjusted numbers rose sharply. Non seasonally adjusted U-3 spiked from 9.1% all the way to 9.8%!! That’s +.7% in a month that reported a .4% decrease. Sick.

Unadjusted U-6 jumped to 17.3% from 16.6%.

Now let’s look at the sick and twisted Birth/ Death model. As expected there was a large negative correction for January, but not as large as last years’ correction:



Next month this number should turn into a small positive number, and thus we can look for their reported Nonfarm Payrolls number to improve over January. This distortion is not based in reality at all. When the economy is destroying jobs, as it is doing now, small businesses are closing, not being created. By inducing this error, it only gives the people a path through which number games can be played. In my judgment, the less playing with numbers they do not know, the better.

Of course generating real employment data is as easy as compiling a data base from all the states, as each state collects payroll taxes. Thus the actual numbers can be easily known, but that is not what the “Employment Report” is about. No, they choose to use data collection methods straight from the 1950s, a telephone survey.

If you don’t like the data, then you simply obscure the data, and then when it gets to looking really bad for the team, then you outright manipulate it.

What is being hidden? The fact that our society is saturated with debt and that once saturation occurs there is a direct correlation between attempts to create more debt and higher unemployment! Let me say that again, “stimulation” by injecting debt works when the money is sovereign and not all credit money. But once the money system becomes debt – right now 100% of our dollars are credit dollars, 0% are sovereign - then forcing more debt into the system leads to fewer employees and lower REAL economic activity!

Our economic data is now nearly 100% false fluff, as are our “markets.”

“Growth” is only occurring in dollar terms. Said another way, the only thing that is growing is our production of money and thus the price of the things we need. When you grow the supply of money without the corresponding economic activity, then the excess money seeks out places to go. Now it’s found its way into food, energy, and into the “markets.”

POMO and Quantitative Easing is nothing but a disinformation trail to hide the money creation and WHO it is that profits from it. These are “rob Peter to pay Paul” schemes. By creating artificial demand to buy up bonds, the “Fed” is simply buying down interest rates, thus masking over the amount of money actually spent on interest. I contend that the true amount spent on interest expense EXCEEDS our entire nation’s Federal income.

But watch the bond market as the long bond has broken down out of a wave 4 bearish flag – wave 5 down is underway now:



And if you want to see an example of a HISTORIC divergence, take a look at the plunging Baltic Dry Index compared to the S&P 500:





Now that is a shocking divergence! It is the result of money printing and using those dollars to not only buy up bonds, but by doing so it frees up hot money to seek more leveraged paper returns. This creates a gigantic disconnect between the REAL WORLD and the PAPER WORLD. The paper world is accounting fraud, mark-to-fantasy, Alice in Wonderland. While in the real world people starve and revolution turns violent.

Thursday, February 3, 2011

Morning Update/ Market Thread 2/3

Good Morning,

Equity futures are lower so far this morning, at least until today’s POMO arrives. Speaking of which, Zero Hedge calculated that due to redemptions and POMO that the net effect would be to add approximately $20 Billion in liquidity, JUST TODAY. Yeah, that’s nuts… and it’s producing starvation and bloodshed the world over. Sorry to say, but that’s become America’s greatest export. Yet this morning the dollar is zooming, bonds are resting on support, oil is up slightly, gold is up a little, and food commodities are mostly higher again.

Catastrophic food prices are finally getting attention in the mainstream. They are higher now than when food riots broke out in 2007/ 2008:
World food prices hit record high

London (CNN) -- World food prices rose to an all-time high in January, according to the UN's Food and Agriculture Organization (FAO).

The FAO's Food Price Index measures the cost of a basket of basic food supplies -- sugar, cereals, dairy, oils and fats and meat -- across the globe.

The index rose by 3.4% in January -- the seventh monthly increase in a row -- to its highest level since records began in 1990.

The cost of sugar, cereals, dairy and oils and fats all went up last month, while meat prices remained steady.

FAO economist Abdolreza Abbassian said high prices were likely to persist in the months to come.

Rising commodities costs are one of the major factors behind a growing wave of civil unrest across the Middle East and North Africa.

"High food prices are of major concern especially for low-income food deficit countries that may face problems financing food imports, and for poor households which spend a large share of their income on food," said Abbassian.

Last week at the World Economic Forum in Davos, Switzerland, economist Nouriel Roubini warned that rapidly rising food prices posed a serious threat to global stability.

"What has happened in Tunisia and is happening right now in Egypt, but also the riots in Morocco, Algeria, Pakistan, are related not only to high unemployment rates and to income and wealth inequality, but also to the very sharp rise in food and commodity prices," he told CNN.

Of course they fail to pin the blame where it belongs, namely on the “Fed” and world central bankers. At least they didn’t pin it on the weather as they usually do.

I’ve never pointed this out before, but I have often been disturbed by the trend… Take a look at that article from CNN; every single paragraph is only one sentence! This has become the norm in the mainstream, it’s as if we’ve dumbed everything down to the absolute minimum that the masses can absorb. Apparently it’s just another part of the problem, somewhere in the chain of cause and effect.

That chain has been intentionally obscured, so let me spell it out: Private bankers – Federal Reserve Act giving the power to create and control money to private bankers – IRS created – everything is about self-interest, this turns into a society of salesmen, marketing runs perceptions and the world – rules controlling bankers go away as politicians are bought off and all laws then favor bankers – bankers invest in things that make them money, like war machines, and not in things that help society like education – bankers buy up industry and export it overseas as they have no allegiance – bankers bought up the media and control what you read and see - bankers create inflation to keep their Ponzi scheme going, the exponential math has saturated the world with debt and now they are printing more and more money in an attempt to create inflation which drives their profits while starving those on the bottom.

It’s a difficult trail to see for most people, but the bottom line is that what’s most important is WHO controls the production of money. Yes, it absolutely affects the minds of the masses. Massive distortions of markets and reality, the disinformation begins with the name “Federal Reserve Bank,” where they are not Federal, they don’t possess reserves, and they’re not even a bank. The disinformation runs rampant from there.

Our economic statistics are a huge part of the disinformation. Weekly Jobless claims are being reported for last week at “only” 415,000. This is down from the prior week’s 454k (revised up of course), and is below consensus which was looking for 425k. Here’s Econoday, let’s blame the weather:
Highlights
A weather-related pile up of claims in the South unwound in the January 29 week which saw initial claims fall a very steep 42,000 to 415,000 (prior week revised 3,000 higher to 457,000). Alabama, Georgia, North Carolina and South Carolina posted some the biggest declines after the four states posted big increases in the prior week due to snow effects. Distortions always put the emphasis on the four-week average which, unfortunately, is signaling trouble for tomorrow's monthly employment report. The four-week average is up 1,000 to 430,500 to show a roughly 15,000 rise from a month ago.

Other data show dip back for continuing claims, down 84,000 to 3.925 million in the January 22 week, with the unemployment rate for insured workers down one tenth to 3.1 percent. Total workers receiving claims fell a little more than 112,000 to 9.29 million in lagging data for the January 15 week.

This week's very severe weather is certain to distort next week's claims data. But next week's report will be, by comparison, no more than a curiosity compared to tomorrow's release of the January employment report. Markets showed no significant reaction to today's results.



Wild swings in the data is a warning sign that the data is being tampered. I’ve seen this occur in other data, like the MBA statistics, and once it gets too wild the trend is to obscure so that you can’t see what’s going on behind the numbers and you certainly can’t reproduce them. This is why transparency is so important, it’s a paramount step in obtaining checks and balances. The “Fed” being the worst example of the lack of checks and balances on the planet.

Nonfarm Productivity supposedly rose by 2.6% in the 4th quarter. This is another statistic that has shown very large growth over the past few years, and yet it is completely FALSE. This is because productivity is not measured in the number of widgets produced, it is measured in dollars – and man, do we ever know how to produce dollars!

Yet those dollars are not making it into the hands of the workers, as we already know. Labor Costs FELL .6%! What’s that tell you about other statistics that show wages increasing? They are indeed false, nothing but a lie.
Highlights
Businesses are still keeping a rein on labor costs, resulting in productivity gains. Nonfarm business productivity rose an annualized 2.6 percent in the fourth quarter after gaining 2.4 percent in the prior quarter. The consensus had forecast a 2.0 percent advance. This gain in productivity reflects increases of 4.5 percent annualized in output in the nonfarm business sector and 1.8 percent in hours worked. Unit labor costs edged down an annualized 0.6 percent in the fourth quarter, following a dip of 0.1 percent in the third quarter. The market median forecast was for no change in labor costs.

Year-ago productivity numbers are weighed down by weakness in output in mid-2010 and the dropping of robust numbers in late 2009/early 2010 in the calculation. Year-on-year, productivity was up 1.7 percent in the fourth quarter-down from 2.6 percent in the third quarter. Year-ago unit labor costs lost ground with an annualized minus 0.2 percent from minus 1.1 percent in the prior period.

The economy continues to improve in terms of output as businesses through the fourth quarter made the most of the workers already on payrolls. At some point, however, businesses will have to boost hours and hiring to grow.

“Lies, Damn Lies, and Statistics…”

The field of economics is so full of bullshit I’m surprised that most economic “experts” can even see their watches to keep track of time. What we really have is money pumping and no wage increase. Where’s all that money going? How about the markets and overseas? Distortion piled upon distortion.

Factory Orders and the non-Manufacturing ISM will be released at 10 Eastern this morning – I can’t wait to see more economic statistics measured in something as pliable as the dollar!

The Egyptian riots sure turned violent at the flip of a switch. All the despots who profit from control are happy to incite violence into that situation as the last thing they want is a peaceful revolution that makes taking back control by the people look as easy as just showing up! Revolution has never been that easy, countries with freedoms are free because their people had to fight for it! Like anything else in life, when freedom is taken for granted, you will fail to appreciate it and can lose it.

The violence created in Cairo is a good lesson in what happens when peaceful people gather for important change. They are infiltrated with agent provocateurs – this comes right out of the Despot/ CIA handbook on revolution put downs, item number five, I believe.

Hey, let’s talk about what’s left of the “markets.” Historic sized divergences that have gone on for months and months and continue to grow. Yesterday the Transports sank like a stone despite an Industrial Index that was higher. The small caps in the Russell 2000 are also still in a downtrend. The market is telling us that all is not right – as readers here are well aware.

Risk is everywhere. If you wanted to create a breeding ground for Black Swans, I don’t think a person could do a better job if they tried. Disinformation, accounting fraud, insolvency, massive distortions, lies and deceit are everywhere.

Yes, it’s coming to a head sooner than later.

Wednesday, February 2, 2011

Morning Update/ Market Thread 2/2

Good Morning,

Equity futures are down this morning, correcting yesterday’s schizoid parabolic run. The dollar is higher, having not quite made it all the way down to support yet, bonds are higher, oil is higher, gold is lower, and food commodities are zooming. Rice nearly hit lock limit up for the second day in a row yesterday, this morning corn is breaking out to new highs, while most other food commodities are rising strongly as well… ahh, the seeds of revolution… planted, of course, by Ben Bernanke and his banker boys.

The ridiculous MBA Purchase Applications Index rose a silly supposed 9.5% in the prior week – organizations and entities that can profit from economic data should not be allowed to disseminate it. A kid with a crayon could do a far better job, and at least he wouldn’t be biased. At least they admit it’s just noise:
Highlights
Flat is the best description for the housing sector right now. Mortgage applications did surge in the January 28 week but the comparison, the Mortgage Bankers Association notes, is against a shortened holiday week. MBA's look at the two weeks together shows purchase applications flat and refinance applications down 5%. Mortgage rates are steady and still historically low, at 4.81 percent for 30-year loans.

The “Challenger” Job-Cut Report rose in January to 38,519 from December’s 32,004. Always on the lookout for something positive to spin, this is a better number than for January’s in recent history, so we’ll talk about that:
Highlights
Challenger reports the fewest layoff announcements, 38,519, for any January since its series began in 1993. Challenger also counts hiring intentions which are strong at 29,492 and led by retail's 10,925. The latter compares with only 600 in January last year. This report points to strength for Friday's jobs report. ADP's estimate for private payrolls will be posted at 8:15 a.m. ET.

ADP’s Private Payrolls report showed a decline from 297,000 phony jobs to 187,000 phony jobs. This report is as worthless as the day is long. Still, people with very low wattage bulbs use this data to set their expectations – note how badly they missed versus the BLS last month (again), and how they now armed with hindsight lower last month’s GUESS by 50,000:
Highlights
ADP's count of U.S. private payrolls slowed in January to plus 187,000 from a downwardly revised 247,000 in December (297,000 first reported). ADP missed badly in December, forecasting strength in what turned out to be weak results. Markets are showing no significant reaction to today's report.

The current Bloomberg consensus numbers for Friday’s report are for 150,000 private payrolls jobs and the headline rate to increase from 9.4% to 9.5%.

January is the month in which the “Birth/ Death” model gets corrected. Those who are not factoring this in will be disappointed – just look at the size of last January’s correction, it was massive:



Money and Markets published a good chart this morning showing how weak the Employment Population Ratio is with this “recovery” versus prior recessions. This is how the BLS creates a trumped up low headline rate, it shows severe stress on our population:



Yesterday the VIX closed back inside of its Bollinger bands, thus a market buy signal was given with that indicator. There are some patterns developing that may be terminating top patterns. The NDX has created what appears to be an expanding megaphone, while the other indices are etching out a more ascending and expanding wedge. We’ll see if they hold any water with POMO starvation rules in effect.

Surprisingly, some bearish type articles ( a glimpse of reality) are making it into the mainstream. Here are two that surprise me to see them admitted:
Interest on national debt: 'Skyrocketing' costs ahead

NEW YORK (CNNMoney) -- Interest payments on the national debt could total $5.5 trillion over the next decade, or about 79% of the new debt estimated to accrue between 2012 and 2021.
And that's the optimistic scenario.

"Interest payments on the debt are poised to skyrocket over the next decade," the nonpartisan Congressional Budget Office wrote in its most recent budget outlook report.

The CBO -- and everyone else for that matter -- assumes that interest rates will rise. Just how quickly is the question. The CBO assumes a gradual rise, and projects that the 10-year Treasury rate won't hit 5% before 2015, up from an average of 3.2% today.

The real worst scenario, however, will be much worse than that. The exponential bad math will assure that. In reality, if we count the money used to artificially buy down interest rates, we are already spending ALL of our nation’s income just to pay INTEREST on our debts! Should the “Fed” stop QE and other support programs, our interest expense will skyrocket. Thus our currency is in a death spiral that cannot be stopped within their central banker self-profit narcissistic paradigm.

Here’s another one that leaked into the mainstream consciousness, parroting Bill Still’s latest video that I posted yesterday:
Iceland Shows Ireland Did ‘Wrong Things’ Saving Banks

“Iceland did the right thing by making sure its payment systems continued to function while creditors, not the taxpayers, shouldered the losses of banks,” says Nobel laureate Joseph Stiglitz, an economics professor at Columbia University in New York. “Ireland’s done all the wrong things, on the other hand. That’s probably the worst model.”

Ireland guaranteed all the liabilities of its banks when they ran into trouble and has been injecting capital -- 46 billion euros ($64 billion) so far -- to prop them up. That brought the country to the brink of ruin, forcing it to accept a rescue package from the European Union in December.

All countries should tell the central bankers to pound sand – the entire globe will be far better off without them.

And now more blood is flowing in Egypt as protests there turn violent. Mubarak has yet to do what the people have told him to do, and should this drag on much longer it is likely to get very ugly. Again, the seeds of this violence are planted by our own central bankers, we are to blame for not taking care of our business and showing them the inside of a jail cell. That will come given time.

The price spiral created in food commodities is running unabated. Below is a chart showing rice and corn futures, both making new highs as I type:



That trajectory cannot be maintained for long without more violence occurring.

The dollar index is weighted 57% against the worthless Euro. The race to the bottom monetarily is in full throttle mode. The dollar index will not tell you that, instead the trajectory of food commodities and precious metals tells you all you need to know.

Tuesday, February 1, 2011

Bill Still - Ireland

Bill Still and Karl Denninger encourage Ireland to tell the Central Bankers to Pound Sand! I add my own voice to the chorus calling for Ireland to produce their own sovereign money and free the people of Ireland from the debts generated by bankers who did so for their own personal gain.

I would further add that should Ireland correctly take Bill’s advice, then they need to work on checks and balances to ensure that the power of money creation remains in the people’s hands and also that the quantity of money be kept under control for the very long haul. If they do those things, they will enjoy a prosperous future – best of luck, the rest of the world is awaiting their example.

Morning Update/ Market Thread 2/1

Good Morning,

Equity futures are sneaking higher again this morning, but divergences among the indexes are in place and getting stronger. Bonds are lower, nearing the bottom of their recent range. Oil has pulled back a little, yesterday Brent Crude exceeded $100 a barrel. Gold is up slightly this morning, copper set a new all-time high and the disinformation on Bloomberg calls it due to “growth.” Yeah, growth in the supply of phony dollars. Meanwhile, rice is also setting new recent highs, corn is higher and close to breaking out, and most other food commodities are higher as well.

The dollar is down this morning and is approaching very important support in the 76.70 area, as can be seen on the following weekly chart:



Should that area fail to provide support, then on the monthly chart you can see that this triangle appears to be a pennant, the technical target if this pennant breaks down is roughly 27! However, keep in mind that the dollar is NOT a measure of real worth, it is a relative index to other currencies who are also trying to destroy their own value – thus TA may not be that effective when working on this chart. Still, support here needs to hold or it could slide quickly:



Motor Vehicle Sales will be released throughout the day, the Manufacturing ISM and Construction Spending will be released at 10 Eastern this morning and will be reported within the Daily Market Thread below this post.

The VIX closed yesterday still above the upper Bollinger Band, thus no market buy signal for now, we are still under the effect of the recent VIX market sell signal as well as a Hindenburg Omen.

While the SPX and DOW Industrials have retraced nearly 78.6% of their respective declines, the story is a far different one in the other indices. The Emerging Markets and the DOW Transports have both only retraced about 23.6% of their declines. The Russell 2000 has retraced 61.8% of its recent decline, but is established in a downtrend with lower lows and lower highs, and has only retraced 38.2% overall. This type of weakness in the more volatile and risk filled small caps is typical of tops as investors get conservative and favor the large caps.

Of course we have monetary pumping occurring daily, thus we have copper hitting highs while at the same time shipping indexes are falling. The Transports failing to make new highs here is a signpost warning that all is not right. UPS, however, did beat on earnings with shipments higher over the 4th quarter and that may help to lift the Transports today. They have a long way to go, however, to make a collective new high.

I spent a sickening 15 minutes or so watching CNBC yesterday. Nauseating how disconnected from reality the supposed “expert” guests are. One after the other parading to shill their latest wares. Not to worry about Egypt or the price of oil, it will all be contained. In that short stomach turning 15 minutes of pain, I watched a consensus occur that it was another buy the dip opportunity. None of the guests could pin the revolutions on the real cause and thus their conclusions, in my opinion, are massively flawed. But when you have something to sell, your vision and your judgment becomes slanted. What I see on the television is so slanted... well, hurl.

Food commodities are pushed higher by our money pumping. This pressures already debt saturated marginal people and economically marginal countries. There absolutely is the risk of contagion as there is no sign our “fed” intends to let up on the money printing. Just this morning Jordan’s King replaced his government under pressure – more cronies bite the sand. Change is most definitely coming to the entire globe and to the United States, this is the math of debt expressing itself and it won’t stop until the debt is cleared in one way or the other. Sure, the Bernak can POMO from here to the moon, however, it is not without consequence. The stock market failing to correct and assume some semblance of normal pricing is a WARNING that bigger and badder “other events” are on the way. The very best thing for the globe at this juncture is for the “Fed” to be removed from the power to create money. The “Fed” must be dismantled, it cannot be allowed to exist in its present form where private individuals own shares of private banks who in turn own shares of the “Reserve Banks” who in turn own the office of the “Fed” Chairman. That cannot be allowed to continue, ending it is the most important thing that can be done for the entire world, and for humanity in general. It doesn’t matter WHAT backs the money, what matters is WHO is in control of producing it and maintaining its quantity.

In California, new Governor Jerry Brown, is suggesting massive tax increases and is putting it to a vote of the people urging them to vote higher taxes upon themselves. The alternative, he says, is more massive dismantling of government. I know for a fact that Mr. Brown evaluated a State Chartered Bank, but he has failed to act, and instead is remaining inside the Central Banker box where austerity is the only answer. In my opinion, if you are going to stay inside the stupid and pathetic Central Banker box, then dismantling government is by far the preferred option. Debt saturated people cannot be helped by higher taxes.

Monday, January 31, 2011

Morning Update/ Market Thread 1/31

Good Morning,

Equity futures are higher this morning as the dollar continues its journey down to it’s major support line at 76.70ish… only about one more point to go. Bonds are lower as they consolidate in a sideways range that looks like a wave 4 lower to me, but ultimately may not prove to be. Oil is roughly flat, gold is lower, and food commodities are higher, very near recent highs.

Events in Egypt, and the sniff of revolution in many other countries, is exactly the type of thing I have been expecting when I say that “other events” are coming. These “other” events are rooted in our flawed money system and WHO controls its production. Now that events are picking up steam, we must ask ourselves, “What’s next?”

If you recall, I wrote article after article explaining that the debt saturation condition has not gone away and that therefore the underlying bad math of debt would continue to express itself. So far I see no relief from that, only attempts to ram even more debt down the throats of debt saturated people throughout the world. Remember, it requires income to service debt, poor countries therefore, can carry much less debt than higher income nations. Their margins shrinking, when our “Fed” pours hot money into the global market, that money seeks return wherever it can, and it has leached into our food.

The mainstream blames the weather in _______ for rising _______ (grain) prices, but in fact it’s quite obvious that prices are zooming more in concert with POMO than with the weather as it is all grains that are rising, not just a crop or two. Yes, bad policies like subsidizing ethanol also add pressure to prices. There most certainly could be more than enough food to feed the world, were it not for WHO is profiting from the production of the world’s reserve currency.

So, the question is what happens in Egypt once Mubarak is gone? What happens in Tunisia, in Jordan, in Libya, in Saudi Arabia, in Syria, in India, etc.? Will revolution in those countries bring about lower food prices? The answer, of course, is no. Just as TARP didn’t solve our economic problems, revolution won’t help those who are starving on the margins. Well, maybe it will help them a little… to the extent that despots like Mubarak have been stealing from the people for decades.

Mubarak lived a lavish life while at the same time indebting the people of his nation to the bankers of the globe. In effect he was robbing their productive capacity for himself and leaving them with the debt.

What kills me is that people in America and in most of the “developed” world don’t understand that this same exact looting is taking place here! The only difference here is that you get to cast a phony ballot for Democrat/Republican… but at the same time the private bankers are living a lavish life off of your productive efforts while indebting you beyond any hope of ever being out of debt! Americans are living a in a dream all right, and I will reiterate that “other” events are going to continue to circle the globe until they smack Americans right upside their unaware heads.

Because we are so unable to collectively look through the disinformation and deceit, I don’t think Americans will be pouring out onto the streets Egyptian style anytime soon. That’s not the way modern America rolls. The way we roll is that events around the globe will pressure us and pressure us, backing us up against the wall. And because we have this hidden hierarchy of power in this nation, it takes stress upon them for us to take action – that or a profit opportunity for them. They are masters of deflection and thus I believe America is more likely to eventually get involved in/ create a global war before the American people rise up to truly fix the roots of the problem.

Karma being the bitch that it is, will likely find America, and the elite who run it, losing massively in the end. Eventually the people of the world will wise up, it is painful to watch however. In the meantime we have a figurehead teleprompter reading President whose speech writers need at least one week’s lead time, so if any events inside of than lead time occur, they put Hillary out front because at least she’s capable of putting up a semi-intelligent sounding facade on the fly. Embarrassing. And the world is not unaware that it was America who put the despots in power in the first place.

And so as the people take power in these countries, what will their new governments look like, and how will they act to their former captives here in America? Remember, they will still be hungry, and if QE continues they will be getting even more hungry in the future. Other events are still coming, these are only the opening act.

The disinformation media is touting the Personal Income and Outlays data this morning claiming that us “consumers” are really opening our wallets! LOL, it would be funny if weren’t so sad. Income stayed roughly the same, rising .4% month over month and supposedly 3.8% year over year. Do I believe that incomes are rising? NO. The population is rising and the quantity of money is temporarily rising, but any supposed growth here is not real. Wall Street bonuses are the only “wages” I see increasing, they are falling for everyone else. And “Consumer” spending supposedly is rising by .7% month over month, and by 4.1% year over year… again, a monetary necessity as food and energy prices leap. Low to no wage growth coupled with rising expenses does not make for an economic boom, it makes for a monetary boom, stress, and hunger. But let’s not talk about that, here’s Econospin:
Highlights
Both income and spending continued to advance at the consumer level in December. Not surprisingly, headline inflation was hotter while the core rate remained subdued. Personal income in December rose 0.4 percent, following a 0.5 percent gain in November. Analysts projected a 0.4 percent increase. However, the wages & salaries component was soft, rising 0.1 percent after increasing 0.6 percent in November.

Consumer spending for the latest month was boosted by auto sales and higher gasoline prices. Personal consumption expenditures posted a sizeable 0.7 percent gain, following a 0.3 percent increase in November. For the latest month, strength was led by nondurables, up 1.5 percent (including gasoline), with durables gaining 0.7 percent. Services advanced 0.4 percent for the month. But spending was strong even after discounting price effects. Real spending jumped 0.4 percent in December after a 0.2 percent rise the month before.

Year on year, personal income for December came in at up 3.9 percent, compared to 3.8 percent in November. PCEs growth slipped to 3.8 percent from 4.1 percent in November.

On the inflation front, the PCE price index jumped 0.3 percent, following a 0.1 percent uptick in November. The core rate came in unchanged after edging up 0.1 percent in November. On a year-ago basis, headline PCE prices are up 1.2 percent, compared to 1.1 percent in November. Core inflation eased to 0.7 percent year-on-year versus 0.8 percent in November.

On average, consumers are seeing moderately healthy income gains support strong gains in spending. The latest report shows the consumer very much supporting recovery.

What nonsense, but that’s the party line, isn’t it? Again, spending far outstrips income, and in our basket-case media and nation that is trumpeted as a good thing. People starve, revolution happens at the margins, and we fail to see it coming or account for its cause. Yes, we are going to get smacked very hard, it’s coming very soon.

The Chicago PMI is released just before 10 Eastern this morning, and will be reported inside of the Daily Thread. This is a very busy week for economic data, culminating in Friday’s Employment report for January.

The VIX zoomed more than 24% on Friday and closed above the upper Bollinger band. This sets up a potential market buy signal once it closes back inside of those bands, which may happen today. Once it does, it doesn’t mean that the market will bounce right away, it may simply indicate that a corrective bounce is coming:



Emerging markets are breaking down. In fact, on a logarithmic chart it has broken a two year uptrend (but not yet on a non-logarithmic chart). This is a huge warning flag for all the markets. Additionally, Friday’s move deepened the DOW Theory non-confirmation as the Transports and Russell now appear to be in downtrends, making lower highs and lower lows. This very much is the action that you expect to see at major tops. Of course the question becomes can the selling pressure overcome the billions being thrown at the market? Indeed, it will occur at some point, is now the time, or do we continue with the Zimbabwe stock market and food commodity melt up? Just remember WHO it is that produces our money and what their interests are, and then get ready. Do not be caught by surprise, if/when food begins to skyrocket or become limited in supply, it’s best to be ahead of the rush, and the rush could very well be right around the corner.

How does America run into food supply problems? Because a vicious spiral in food prices has been created (by guess who). As food prices rise, countries on the margin get affected. The people demand action, and their politicians do what they can which is nothing real. What they can do, however, is attempt to control prices. So, let’s say that India invokes a price control on say wheat – “no person may sell wheat for more than $100 a bushel (or whatever)!” Farmers of wheat, whose cost of operating (fuel), living, and eating for themselves is still spiraling upwards, however, when they can no longer grow wheat for a profit at that price, they will simply stop growing wheat. And what happens to the price of wheat? The spiral continues, but now there are shortages. This spiral is in motion, watch it.

Again, the spiral won’t stop until all the money pumping stops. But the money pumping won’t stop because that means that Wall Street bonuses must fall and the elites will suffer. Who controls the production of money? Get ready if you are not.