Friday, March 4, 2011

Weekend Open Thread...

Morning Update/ Market Thread 3/4

Good Morning,

Equity futures are near even just prior to the open on a Headline Employment rate that fell to 8.9%, and Nonfarm Payrolls that supposedly increased by 192,000. The dollar is dropping steeply again this morning falling further beneath major support, bonds are flat to slightly higher, oil is higher near new highs, gold is higher, silver is near new highs, most food commodities are higher. Corn is also near a new high, its daily chart is below, just look at the trajectory in the past eight months – up a staggering 122%!

…And corn’s certainly not alone when it comes to food commodities – the entire complex is way up.

The IMF of course, comprised of the world’s central criminals, says that high food prices are here to stay. This is due, of course, not to their money pumping – oh no – according to them it's entirely due to higher demand – hey, just “get used to it:”
Consumers Should Get Used to Higher Food Prices, IMF

March 4 (Bloomberg) -- Consumers should get used to paying more for food, after prices rose to a record, because farmers will take years to expand production enough to meet demand and drive down costs, the International Monetary Fund said.

People in developing countries are becoming richer and eating more meat and dairy, meaning more grain for livestock feed and land for grazing animals, Thomas Helbling, an adviser for the IMF’s research department, and economist Shaun Roache wrote in an article. Rising demand for biofuels and bad weather also tightened supply, they said.

“Rising food prices may be here to stay,” Helbling and Roache wrote in the article published in the agency’s Finance & Development magazine. “The main reasons for rising demand for food reflect structural changes in the global economy that will not be reversed.”

The world food price index tracked by the United Nations rose to a record in February. Food inflation fueled political unrest across North Africa and the Middle East that toppled leaders in Tunisia and Egypt, the largest wheat importer.

“Over time, supply growth can be expected to respond to higher prices, as it has in previous decades, easing pressure on food markets, but this will take time counted in years, rather than months,” the IMF’s Helbling and Roache said.

Riiigght… the story line is that higher demand has caused the price of corn to rise 122% in just eight months! Quite the disinformation – this is yet another example of how a planted story such as this puts false ideas into people’s heads. Yes, there may be a grain of truth to the supply/demand equation, but skyrocketing commodities are mostly due to central banker money pumping, plain and simple. Food commodities are rising in the exact same way that tulips did back in the year 1637 – too much money by hot money speculators.
And the disinformation is full steam ahead in the Employment Situation Report from the BLS where the rate is still trending down despite employment not close to keeping up with population growth. For your reading pleasure, the entire report is included below:

Employment March 2011

Here’s Econoday’s spin:
After several months of stagnant growth, the economy finally posted a respectively healthy gain in payroll jobs for February. Also, the unemployment rate unexpected slipped further. Overall payroll employment in February grew by 192,000, following a revised 63,000 rise in January and a 152,000 gain in December. The February advance came in marginally lower than the updated consensus forecast for a 200,000 gain (180,000 prior to Thursday's jobless claims report). The December and January revisions were up net 58,000. Private nonfarm payrolls were somewhat stronger, increasing 222,000 in February, following a 68,000 boost in January. Analysts had projected a 190,000 advance in the latest month.

By major sectors, the goods-producing numbers look good, showing a 70,000 jump, following a 35,000 rise in January. For the latest month, manufacturing jobs advanced 33,000 after a 53,000 boost in January. Even better, only 1,000 of the February gain in manufacturing was for motor vehicles. Construction employment increased 33,000 in February, following a 22,000 decline the prior month. Mining rose 4,000 in February.

Private service-providing jobs jumped 152,000 after a 33,000 increase in January. The latest was led by a gain of 47,000 in professional and business services with 16,000 coming from temp help. Health care employment continued to increase in February, expanding by 34,000. Transportation and warehousing employment increased by 22,000 in February, with half of that gain in truck transportation. On the downside, employment in retail trade slipped 8,000-possibly due to adverse winter weather.

Government jobs fell 30,000, following a 5,000 dip in January.

A disappointment in today's report was in earnings. Wage pressures eased in February as average hourly earnings were flat in February, following a 0.4 percent jump the previous month. The February number fell short of the consensus forecast for a 0.2 percent increase. However, given that February followed a very strong January, the latest number is not worrisome. The average workweek for all workers printed at 34.2 hours, compared to the market median forecast for 34.3 hours and prior month level of 34.2 hours.

On a year-ago basis, overall payroll job growth improved to up 1.0 percent in February from up 0.8 percent the prior month.

Turning to the household survey, the unemployment rate edged down to 8.9 percent from 9.0 percent in January. Analysts had expected 9.1 percent.

Today's report is quite encouraging in that a real boost in payroll employment helps to pump up the recovery as the jobs gain will support more consumer spending. The drop in the unemployment rate looks good statistically and politically but is a bit of a quandary as most economists have been expecting a surge in the labor force as discouraged workers return to the job hunt.

On the news, equities initially firmed but then eased slightly. Treasuries were little changed. Overall, the report was net as expected.

The rate in the household survey is expected to go up because analysts know that if the economy is really creating jobs, then the number of people counted in the labor force should rise causing the unemployment rate to rise temporarily – at least that is the thinking. But that’s not happening for a number of reasons, not the least of which is that people with MBA’s don’t really want to work at McDonalds – and neither do people who used to have real family living wages.

Note how wages continue to be under pressure and how that does not square with other forms of disinformation regarding wages. Let’s see, corn up 122% in eight months, wages going nowhere… oh yeah, that’s quite the economic recovery there, why I’m sure it has nothing to do with the money pumping whatsoever… And just look at the reaction of the dollar in this weekly chart as it clearly breaks a long term rising trend line:

Turning back to the BLS disinformation, U-6, the measurement most similar to how unemployment used to be measured is still nearly 17%:

John Williams at Shadow Stats puts it closer to 22%:

Meanwhile the completely phony “Birth/Death” model went from subtracting 339,000 jobs in their annual correction last month to adding 112,000 jobs this month. That is a 451,000 swing from one month to the next with just this model, and note how the adjustments this year are growing substantially over last year. This is nothing but manipulation of the data, plain and simple:

Along comes the reinstatement of Mark-to-Fantasy accounting, TARP, FNM trillions, FRE trillions, then one bailout after another, then QE1, QE2, etc, and what this did was to turn our economy into a corpocracy where large corporations are able to privatize their profits and socialize their losses. This shifted the RISK from the private sector onto the public sector. So, first we had employment falling in the public sector and now we have employment falling in the public sector – not that falling employment in the public sector isn’t a good thing, it is, but it still pressures the real economy while its happening. Below is a chart showing Government Employment from 1939 to present where .gov went from 4 million employees all the way to 22.2 million – that’s a 555% increase, far greater than the increase in the size of the population which slightly more than doubled in the same time:

But since 2009, the government has been shedding jobs as the impossible math of debt has saturated government on all levels:

How high will oil and food prices go? How long before Americans rise up to put a stop to it?

You know, last night on the local news I watched a report about FRAUD by those in the Seattle area who convert their “food stamps” into cash by trading their cards to “dealers” who give them 50 cents on the dollar so that they have drug money or whatever. The news painted these poor and desperate people as if they were the biggest criminals in the history of the world. They talked about the cards and how they are not secure, etc., etc., bullshit. Not surprisingly, the government agency who oversees the cards refused to talk about it (there’s transparency for you).

But of course the entire time I’m reminded of the fact that it is JPMorgan who created the cards, and who “won” a government contract to administer the program. And I’m reminded that the states and the federal government are playing accounting games with the program because there is actually almost no money in the program compared to what they are spending, and that the money is simply being created from nothing by private banks like JPM who then simply add debt and interest onto the people after doing exactly nothing, and after giving up exactly nothing.

If you want to see the biggest criminals in the history of the planet, they are not the ones giving 50 cents on the dollar for food stamps. Oh my, but we are one messed up society.

Thursday, March 3, 2011

Morning Update/ Market Thread 3/3

Good Morning,

Equity futures are higher this morning as the dollar sinks further, bonds fall, oil and gold are down slightly while the rotation of hot money moves back into food commodities.

Under the current set of conditions, it’s requiring a falling dollar in order to keep equities elevated. This morning, European Central Bank President, Trichet, said that he is considering raising interest rates as early as next month to help quell the pressure on oil and other commodities. But let me ask him this… what happens when money pours out of the bubbled up bond market, where will that money go to find returns?

So, the corner the central debt masters have painted themselves into is one that is impossible to escape. Many have tried throughout history, but it is always proven that in the end all debts are repaid, with interest, in one way or the other. Currently we’re using inflation which means that instead of higher taxes making payments on loans, you are paying for the interest every time you fill up your car, eat, heat your home, or buy clothes. Creating inflation as they are is just another “rob Peter to pay Paul” scam.

And the economic disinformation is just thick. Palpable.

Productivity and Costs were released this morning and they make it clear that the data is manipulated and warped. For Q4 2010, it was reported that Productivity increased a whopping 2.6% quarter to quarter (10.4% annualized), and yet Unit Labor Costs fell .6%! Here’s the lie in the data… Productivity comes from dollar measured GDP. When a banker makes a loan it is counted as productivity. Huge increases in productivity are simply not true, and I note that productivity was falling while deflation was occurring. Here’s Econoday:
Despite downward revisions to fourth quarter GDP, productivity was unrevised for the same period. Nonfarm business productivity rose an annualized 2.6 percent, matching market expectations. The third quarter boost of 2.4 percent was nudged down to 2.3 percent. Unit labor costs also were unrevised at an annualized 0.6 percent dip, coming in marginally lower than analysts' estimate of a 0.3 percent slip. Third quarter costs were revised up slightly to a gain of 0.1 percent from the previous estimate of an annualized decrease of 0.1 percent.

While quarterly annualized figures have improved recently, year-ago productivity numbers continued to be weighed down by weakness in output in mid-2010. Year-on-year, productivity was up 1.9 percent in the fourth quarter-down from 2.9 percent in the third quarter. Year-ago unit labor costs worsened slightly with an annualized minus 0.1 percent in the fourth quarter from minus 1.0 percent in the previous quarter.

Overall, the productivity and cost numbers have been favorable toward corporate profits as companies have squeezed more out of workers not laid off during the recent downturn. However, many economists doubt this pattern can continue and firms soon will have to boost hiring to maintain output and revenue gains.

Today's release had no market impact but an unexpected drop in initial jobless claims lifted both equity futures and Treasury yields. The drop in claims is boosting expectations for a nice gain in payroll employment in Friday's employment situation report.

Yes, there has been some productivity improvement as technology takes over and as jobs are slashed, but that “improvement” is not on the order reflected by the huge gains reported. Corporate profits are up not just due to squeezing workers, they are up mainly due to accounting fraud and severe money pumping that feeds those at the top of the chain while starving those on the bottom. Literally:

There are your productive workers right there. Remember when the first of the month meant workers getting a paycheck? Not anymore, the rush is now on to spend the first of the month food stamps. And did you see the graph showing the growth in food stamps? That’s some economic recovery there, oh yeah employment must be skyrocketing with the number of people on food stamps growing exponentially.

But that’s exactly what you’re being shoveled, that employment is getting better. But in fact, there are now 1.5 million LESS workers this year than last. Are you being told that, or are the statistics being massaged in order to convince you it’s okay to spend? What exactly are you hearing from the mainstream media?

Expectations regarding this Friday’s Employment Situation Report are being raised. This morning the Monster Employment Report (a joke) came in at 129, up from 122. Does that impress you? Do you know that Monster simply looks at online job boards and such to come up with an index number? Hmmm… gee, I wonder if more people are looking for jobs/ workers online than they used to? In fact, I could build an argument that a stronger Monster report actually means the economy is worse, as employers move away from traditional, more expensive, job search activity to online. Just another reason not to make decisions based on data from companies or organizations who profit from the dissemination of data in their own industry.

Weekly Jobless Claims fell from 391,000 the week prior to 368,000 this past week. This data is trending down, but again it has been YEARS, not weeks with data well above the 350k mark that is considered demarcation between real job growth or not. Here’s the cheerleading:
In clear data pointing strongly to month-to-month acceleration for payroll gains, initial jobless fell a substantial 20,000 in the February 26 week on top of a 25,000 decline in the prior week. The number of claims, at 368,000, is the third sub 400,000 reading in the last four weeks (note the February 19 week was revised 3,000 lower to 388,000). The four-week average, down 12,750 to 388,500, is the first sub 400,000 reading of the recovery. Importantly, the Labor Department reports no special factors clouding the data.

Continuing claims are likewise moving lower, down 59,000 in data for the February 19 week to 3.774 million which is also a recovery low. The four-week average is down 40,000 to 3.864 million with the unemployment rate for insured workers slipping one tenth to 3.0 percent.

Money is moving out of the Treasury market in immediate reaction to this report which will shift expectations toward the high end for tomorrow's employment report.

So again, if employment is getting better, why is the number of people on food stamps skyrocketing? And if employment is getting better, why does the “Fed” need to pump billions into the markets every single day? And if employment is getting better, when do they stop the pumping and start raising interest rates to a normal range? And what happens if they do?

Guess what? It’s not going to happen, because the math is impossible. If it does, then interest expense across the board is going to increase and lay bare the lie, as skyrocketing commodity prices are already doing.

Meanwhile the banks in China are openly proclaiming their intent to make it easy for other countries to enact financial transactions denominated in Yuan rather than in the Dollar. And I note that the dollar is sinking below what was a major support area, despite “good” economic data. Why would the dollar weaken on “good” data?

No, the better the supposed data gets, the bigger the lie becomes. At some point the world will be asking why do they continue to pump money and hold interest rates at zero with Brent at $115 barrel, people starving, and the world in revolution?

Again, stop measuring data in devalued dollars, and you will see a completely different picture. The media bit that the “Fed” has been successful will end soon, but it will likely end with “other events” masking their true failures. Solutions to the impossible math DO exist! But they do not exist as long as we are unwilling to change out WHO controls the production of the PEOPLE’S money.

Wednesday, March 2, 2011

Morning Update/ Market Thread 3/2

Good Morning,

Equity futures are close to even following yesterday’s very negative rout. That powerful down stroke had the look of the beginning of wave 3 down, however, since it did not produce new closing lows except in the Transports, it still could be a wave b movement within a corrective uptrend – we need to see more action to judge which is happening. In the mean time, the dollar is breaking key support, bonds are lower, oil is higher (NYMEX now well above $100 a barrel, Brent now above $115), gold and silver are breaking out to new highs, while most food commodities are consolidating.

Yesterday it was reported that the Manufacturing ISM rose, but that Construction Spending fell. Bernanke flapped his criminal lips again, finally mentioning that commodity inflation will at some point, but certainly not now, LOL, begin to impact the economy. Wow. We really need to jail that guy and to end the “Fed” entirely before he gets the globe into WWIII – starving people world wide should be enough. But of course it is those who truly own the “Fed” who are really to blame, that is where the focus belongs – the rest is just distractions.

The very conflicted Mortgage Bankers released Purchase Application data with Purchase Applications falling 6.1% in the past week, and Refinance Activity falling 6.5%. Here’s Econoday:
After recovering two weeks of declines, both purchase and refinancing applications fell back steeply in the February 25 week. Purchase applications fell 6.1 percent with refinancing applications down 6.5 percent. The shortened Presidents' Day week clouds the data but the decline in purchase applications, which fell 3.5 percent when unadjusted for calendar and seasonal effects, nevertheless adds to the building run of negatives out of the housing sector. The decline also hit during a week when rates moved steeply lower, down 16 basis points for 30-year fixed mortgages to an average 4.84 percent.

The TNX (ten year) is consolidating just above 3.4%, and looks like it wants to move higher to me:

Bill Gross was also pontificating again just yesterday that rates are unsustainably low.

The Challenger Job-Cut Report rose steeply in the past month, rising from January’s 38,519 to 50,702, mostly public sector layoff announcements:
A surge in layoff announcements out of the government/non-profit group pushed Challenger's February count to 50,702, up from January's 38,519 for the largest total since March last year. Yet outside of the government/non-profit group, which accounted for 16,380 of the total, layoff announcements remain subdued.

The ADP Employment Report seems to think employment is ticking up. Remember, this report is notoriously out of synch with the Department of Labor, but it does set expectations for this Friday’s Employment Situation Report:
ADP estimates February's private payrolls rose 217,000. Compared to the revised 189,000 estimate in January, ADP's data points to modest month-to-month growth for the private payrolls reading of Friday's jobs report.

The consensus for this Friday’s number is that nonfarm payrolls will jump from January’s 38,000 all the way to 180,000! That could actually happen, as the phony Birth/Death model will be adding jobs for February instead of subtracting them as it did in the correction month of January:

Note that there is over a 400,000 swing from what was used last month to what they used February a year ago. Thus the number is not likely to disappoint this Friday in my opinion – of course that’s just trumped up false reporting.

The Bernank speaks again at 10 Eastern this morning – oh boy, can’t wait to be manipulated some more.

Meanwhile the dollar is plunging below key support:

This is signaling potentially a big move down. Should that occur, it will pressure oil and all commodities higher still. Then again, the pressure created by higher commodities may finally pressure central banking criminals enough that they finally stop their hot money injections? Naw, never happen. It won’t stop until the people make them stop or the economy just falls flat on its ass.

Oil goes parabolic:

Silver and Gold go parabolic:

The SPX’s move yesterday forced price back below that large rising wedge’s lower boundary and bearishly engulfed the past two day’s candles:

Still, it did not close below the prior low, that’s what we’ll need to conclude that wave 3 down is underway.

The Transports, however, did close below the prior low, that’s now two new lower lows in a row for the Transports, clearly now established in the beginning of a downtrend:

The dollar falling sharply is definitely something to watch. A falling dollar produces a tricky backdrop for both equities and the economy. It hurts most people badly as their expenses rise, and will eventually hurt earnings as they have less disposable real income. The central banker impossible math is continuing to express itself, events are looking to me to be picking up pace… Bernanke, yeah, it's time for a new wizard.

Tuesday, March 1, 2011

Morning Update/ Market Thread 3/1

Good Morning,

I am out of town today. Expect data on Motor Vehicle Sales throughout the day, the Manufacturing ISM and Construction Spending will be released at 10 Eastern.

Please keep the conversation going by joining the Market Thread below, thanks.

Monday, February 28, 2011

Morning Update/ Market Thread 2/28

Good Morning,

Equities are shooting higher overnight as the dollar plummets down and has landed directly upon long term support. Bonds are roughly flat, oil rose to the $100 mark and has since fallen back, gold is slightly higher, and most food commodities are slightly lower.

Below is a 60 minute chart showing how the dollar plummeted down to exactly touch long term support, bounced, and then collapsed again. This is a critical juncture for the dollar. Should it break this level, then massive pressure will mount on the “Fed” and our politicians to act. Should it fall rapidly we may see a melt-up of commodities which would further pressure those on the margins:

Personal Income and Outlays were reported for January. According to Bloomberg, “Purchases increased 0.2 percent, the smallest gain since June and half the median forecast of economists surveyed… Incomes climbed more than projected, reflecting the tax-cut compromise reached by President Barack Obama and Congressional Republicans in December, and inflation remained below the Federal Reserve’s long-term forecast.”

Although spending is not accelerating as expected, according to this report, “real” wages increased a whopping 1.0% in January, and are now up 4.6% year over year. That is simply astonishing and complete, dare I say, bullshit. Just like GDP and many other statistics, they take a dollar figure and adjust it for inflation (calculated their way) to make it “real.”

This report claims that the “core” price index rose by only .1% in January, .8% year over year, which of course is complete fantasy. To say that the data is disconnecting from reality is quite the understatement. And speaking of disconnected from reality, here’s Econoday parroting the consumer centric spin:
Income growth jumped in January but spending slowed considerably. Inflation remains on two tracks with headline numbers outpacing the core. Personal income in January increased 1.0 percent, following a 0.4 percent gain the month before. The latest figure came in higher than the consensus estimate of 0.4 percent. Wages & salaries, however, grew a moderate 0.3 percent after gaining at the same pace in December.

As in December, consumer spending for the latest month was led by auto sales and higher gasoline prices. Personal consumption expenditures increased a modest 0.2 percent, following a 0.5 percent advance in December.

For January, strength was led by nondurables, up 0.9 percent (including gasoline), with durables advancing 0.4 percent. Services spending was flat for the latest month. Notably, inflation eroded the gain in overall spending as chained dollar purchases fell 0.1 percent in January after a 0.3 percent boost the month before.

On the inflation front, the PCE price index posted a 0.3 percent rise, matching the gain in December. The core rate was not as strong but still warmed up a bit with a 0.1 percent rise, compared to no change in December. On a year-ago basis, headline PCE prices are up 1.2 percent in January-the same rate as in December. Core inflation held steady at 0.8 percent year-on-year versus in December.

Year on year, personal income for January was up 4.6 percent, compared to 3.8 percent in December. PCEs growth improved to 4.0 percent from 3.9 percent in December.

Income is up, which is good, but spending has slowed. To date, the easing in spending growth is not worrisome given that it is coming off strong months. However, moving forward, healthier gains in wages & salaries are going to be needed to keep spending ahead of what appears to be building headline inflation.

Again, bad data leads to massive misallocations, and this report is a giant pool of disinformation.

And speaking of disinformation, the Chicago “Fed” releases the PMI Index at 9:45 Eastern this morning.

While the data is disconnected from reality our “Fed” continues to buy up debt – print money from nothing. Doing so lessens the burden placed on the member banks, and thus frees them up to leverage up. And leverage up they have, to new Mark-to-Fantasy wild extremes. Indeed, their hot money rotation has run up food and energy like there is no tomorrow, and this has set off riots and revolutions around the globe. Historic and quite the sight to see. What is most amazing is our failure as a nation to accept our role in creating the havoc, and in starving those whose incomes go substantially to obtaining food.

This violence has now spread to Oman where oil refineries are under pressure. Of course Saudi Arabia jumps forth once again and claims that they can make up for their oil production too, no problem. This is yet another outright lie and more disinformation.

In Ireland Fine Gael toppled decades of central banker controlled politicians. Enda Kenny, the newly elected Prime Minister, is already calling on the central banks to renegotiate the terms of recent central banker money from nothing never ending enslavement rob the people blind loans.

Mr. Kenny, with all due respect, this is the wrong approach. There should be no negotiating and there should simply be no loans. Tell the central bankers to pound sand, leave the Euro, and produce your own sovereign money! You will never be a free nation until you do so. No, holding elections does not make you free.

The end of month and beginning of month is a time that typically sees buying in equities that produces an upwards bias. This is more true with the daily billions being pumped into the system. But we’re at an inflection point in the markets with the dollar at long term support. Continued pumping may cause the dollar to break down further – the fallout will get even more dangerous if it does.

The math is impossible and it is now pressuring all levels of government in the U.S., and despot regimes the world over. The correlation between the money pumping and mispriced markets is clear and can be seen in the chart below comparing the size of the "Fed's" balance sheet to the S&P:

Welcome to the modern "fundamental" condition of the market. It's a fairly heavy week for economic disinformation reports, the Employment Situation comes this Friday.