Friday, April 1, 2011

Weekend Open Thread...

Morning Update/ Market Thread 4/1 – Somebody’s a Fool Edition…

Good Morning,

Headline Employment numbers are 216,000 supposed jobs added in March, and the rate fell to 8.8 laughable percent. Equities are higher, the dollar is spiking higher, the Yen is making a large move lower, oil has jumped to a new high above $107 a barrel, gold and silver are lower, while most food commodities are higher after large gains yesterday (corn and oats are up considerably).

There was a small movement in the McClelland Oscillator yesterday meaning that today’s move can be expected to be large.

Ever since the G7 intervened in the currency markets to keep a lid on the Yen, the Yen has been falling and overnight into this morning has fallen considerably. The markets have correlated to this action, with markets rising as the Yen falls, and visa versa. The amount of money added by the Japanese and other nations was huge – amounting to more hot money with nothing better to do than to jack up the cost of living for humans on the planet. The response has been for the moronic central bankers to meet any and all hiccups with massive money printing. Thus everything “grows” in terms of dollars… except your wages, of course. The hot money accumulates around the globe just like cesium 137, only with a much shorter half-life requiring never ending and larger infusions to keep the appearance of “growth” continuing.

As if sky high oil prices in the face of falling demand and record inventories wasn’t enough, Hershey’s just announced that they are raising their candy prices 9.7% across the board! Oh the humanity! That’s it, I’m taking to the streets! In all seriousness, think about that – it is a huge jump and is absolutely reflective of the central banker’s policies.

More and more people are waking up to the horrid reality in Japan. Articles suggesting that the world’s largest concrete pumpers are enroute to Japan from Germany and the U.S. have led people to believe that they may be finally planning on building a sarcophagus. Yet, on the other hand, other experts believe that it won’t be possible to build one until the fuel is cooled and that may take years if not decades! While we don’t have enough information to know for sure, it is my belief that some type of containment MUST be accomplished soon. The situation is DIRE and very difficult – here’s another update from Arnie Gunderson that you must see regarding the fuel pool of reactor 4:

Fairewinds Associates

Sorry to those who think that you can somehow salvage this situation and just keep everything cool, but that looks impossible in my judgment. Every day without containment brings with it higher risk, and more radioactive particles into the environment, more radioactive particles into the water systems of the world which works its way up food chain. Containing these reactors needs to be humanity’s number one focus at the present time, they represent enormous risk.

Let’s now turn to the Employment Situation Report for March. Below is the entire report from the BLS:
Employment Situation March 2011

And just so you know what the spin is, here is Econoday:
The employment picture may not be robust yet but at least it appears to have moved up one or two notches. Payroll employment has sustained somewhat stronger gains, the unemployment rate is still below 9 percent. However, wage growth is lagging and anemic. Overall payroll employment in March gained 216,000, following a revised 194,000 increase in February and a 68,000 rise in January. The March boost came in higher than the consensus forecast for a 200,000 increase. The January and February revisions were up net 7,000. Private nonfarm payrolls posted a 230,000 increase in March, following a 240,000 rise in February. Analysts had projected a 190,000 boost for March.

The earnings picture in March is disappointing as average hourly earnings were flat, matching February. The latest posted lower than the market estimate for a 0.2 percent gain. The average workweek for all workers was 34.3 hours, equaling analysts' forecast.

Turning to the household survey, the unemployment rate edged down to 8.8 percent in March from 8.9 percent the month before.

Today's report is mixed. The job numbers are moderately good-for this recovery. But they are still soft relative to typical recoveries. And average hourly earnings point to sluggishness in the labor market. While job numbers topped expectations, the wage figure probably put the overall report at about expectations. The labor market is improving net, but very slowly.

Note that in the face of rising price inflation here is yet another report stating that wages are flat. One reason it is flat is that the employment picture is not really improving as all the shills would have you believe – let’s examine the report, keeping in mind that it requires at least 250,000 jobs each month just to keep up with population growth.

While the numbers are at least more stable than the previous cliff dive, this report is very misleading in a number of ways. Those not in the labor force have increased by more than 1.5 million in the past year, rising from 83.499 million, to 85.977 million. That alone more than wipes clean any supposed job creation over the past year.

Turning to the Alternate measurement tables, there is progress being shown here, with seasonally adjusted U-6 falling to 15.7%, and unadjusted falling to 16.2%:

Turning to the Birth/ Death model adjustments, we find many supposed jobs added, and the numbers this phony adjustment is adding are growing larger over time:

This report added 117,000 jobs via this model, compared to an 81,000 addition in March of last year – that’s 36,000 more than last year! And so far this year, it has added 139,000 MORE jobs this year than last!

It’s the same old story – if you can’t wow them with reality, then dazzle them with bullshit.

But here’s the real conundrum – if the economy is really improving then why are we still pouring trillions into it? And in the hologram known as the stock market, why is bad news always good news because it means more hot money, but good news is always good news too? It’s because there is simply far too much hot money out there, and the criminals have captured the markets, our politics, our rule of law, everything. Total capture has occurred, and as I stated yesterday it is very dangerous to humanity.

Turning to other economic data, most of what’s been reported this week is showing accelerating deterioration. Just released is the March Manufacturing ISM that just fell from 61.4 to 61.2. Construction spending in February was just reported to have fallen 1.4%, which is an acceleration downward from January’s -.7% print. This decline was almost 5 times worse than the expected .3% decline.

It may be April Fool's Day and the BLS may be able to fool some of the people some of the time... and you know the rest.

Thursday, March 31, 2011

Morning Update/ Market Thread 3/31 – Leadership Vacuum is Dangerous Edition…

Good Morning,

Equity futures are slightly lower this morning prior to the open. The dollar is sinking, bonds are rising, while equities seem to be correlating to the movement of the Japanese Yen – as the Yen moves lower (with massive intervention) the market moves higher, and visa versa. Today the Yen is stronger. Silver and gold are strong, rising close to new records, but food commodities are slightly lower.

Oil, however, is doing a moon shot! This comes on the heels of yesterday’s announcement that we are awash in oil – the highest Cushing reserves in history… so much oil that we are almost out of places to store it! And gasoline demand is plunging – proof that demand is being destroyed as the price of oil rises. And “expert” after “expert” in the media talks and talks about the high price of oil, yet NO ONE, especially the President of the United States, correlates the price of oil to the insane actions of the “Fed.”

The President the other night was shamed into finally giving a speech on his actions in Libya. Then, over the past two nights he has been doing interviews with NBC where he doesn’t go off script and is talking up all our success. While he’s talking about rebel success, the rebel forces are getting spanked as Gadafi’s men abandon targetable tanks and get into private trucks that make it impossible for pilots to tell which side they are on. Gadafi’s trained military is using simple tactics like flanking maneuvers across the desert to pinch the rebels into crossfire. The rebels have now lost nearly all the ground they supposedly gained, and now are at risk of losing major cities.

So much for our wonderful “humanitarian” progress in Libya – as if that was ever our real intention to begin with. No, what Obama is doing at every single turn is DANGEROUS. In his speech he stated that we are attacking despite not having any “interest” in doing so other than to avoid the “bloody images” that would surely ensue. He also stated that there was no plan to have U.S. personnel on the ground – yet now it is being reported that CIA “trainers” are on the ground working with the rebels.

His actions in Libya are dangerous because he is picking sides in an internal fight without consulting others in our political system as he is required to prior to going to war. Thus he is playing God – and those are the actions of a Despot. Despots always portray themselves as “saviors.” It is also dangerous because there is no strategy, exit or otherwise going in. How do we know that whatever government that follows will be any better than Gadafi’s? We don’t, and in fact it could be worse – yes, that is most certainly possible as whenever there is a leadership vacuum, despots are certain to be close by.

And yet isn’t it funny that we are only “humanitarian” to the point of involvement in countries that have oil? The very same mass killing of civilians is completely overlooked and not even discussed in countries that DO BUSINESS (oil and/ or military) with the United States. Thus, the proclaimed moral high ground is false.

Libya absolutely has the potential to snowball on us in the exact wrong direction. Our failure to hold Obama to long established standards will be very costly to America in the end, mark my words on this subject.

Inside our own country Obama has failed to hold anyone accountable for their actions - this is because he is beholden to the banker's money, a puppet. As are both Democrats and Republicans who play tit for tat on the deck of the Titanic while stuffing the pockets of bankers with your hard earned money.

Now, let’s talk about the leadership vacuum in regards to the nuclear situation in Japan where it is blatantly obvious that yet another energy special interest corporation is running the disaster in their own self-interests instead of the interests of humanity. Radioactive particles are flowing out of those plants at a very high level. They are making their way all over the globe, and now radioactive iodine and cesium have been found in MILK in both Washington State and in California!

Here’s the thing – allowing radiation to not be contained for days, weeks, and even longer puts massive amounts of these particles into the environment where they build up and up over time. Then the cow eats the grass or grain, and the next thing you know dairy products are contaminated. Same with our farmlands. And when it rains, particles that were in the atmosphere are deposited on anything the rain touches. Feel like a walk in the rain? Can I offer you a fresh glass of milk? And sorry media, there is NO safe level of ingestion for these particles. And what happens to our food supply if they continue to dilly dally for months?

Again, here is Arnie Gunderson of FairwindsAssociates giving a calm and rational update on the current situation. He is absolutely credible, has been in the industry for years and was involved in managing the Three Mile Island situation after it happened.

Update on Fukushima: Discussion of High Level Radiation Releases and the Previous "Worse Case Senario" from Fairewinds Associates

Mr. Gunderson should be given a Japanese translator and sent to Japan to act as the official spokesperson of the situation. He, and others, should be running the show in Japan, not Tokyo Electric officials who are making decisions on behalf of their corporation.

Remember, it was Obama who said that we should not worry, that radiation will NOT reach the United States! Remember that? And here it is, not only in the environment, but in the food.

No, our President, if he was any leader at all should have already been far more forceful on this situation. He should demand that TEPCO be removed from control of the situation and that outside experts be allowed to take over and make decisions that favor humanity. Finally, now that it’s in our food they are finally talking about containment – something that should have been the priority from day one. But our President, as well as officials in Japan, are beholden to special interests. The same thing happened in the BP incident.

The current system where the private banks pretend to be the “Fed,” make money from nothing and use it to buy all the branches of government and make laws that favor them is not only wrong, but it is absolutely dangerous to humanity and our very existence!

Let that sink in… it is not hyperbole – it is reality.

Forget the markets and the trumped up economic data… we have far more serious issues at hand.

Wednesday, March 30, 2011

Morning Update/ Market Thread 3/30 – Liquifaction Ain’t no Satisfaction Edition…

Good Morning,

Despite the worst nuclear accident in history occurring in Japan, the Nikkei Index rose 2.6% overnight. The news there is going from horrible to horrific as we learn more about the details of the condition of the nuclear plants at Fukushima. Intervention in the markets by adding liquidity is masking the reality of the situation. It’s the exact same phenomena that is occurring in the U.S. markets – again yesterday we have horrid economic data in terms of home prices (recoveries never occur without the housing market recovering too) and falling Consumer Confidence, yet the reality of the situation is papered over… resulting in dramatically rising prices… which leads to LOWER Consumer Confidence as real people have LESS disposable money.

Yet on the release of the bad data yesterday our stock market began a most unnatural climb straight up and is still going all through the evening hours to gap higher this morning. Is it real? No, it’s not real, it’s liquidity to the max… liquidity that is finding its way into all the wrong places while not making it into the pockets of the Citizens who now have been denigrated in importance to “Consumer.” This vernacular is now mainstream, just listen to your own President refer to you in that manner.

When liquidity froze up in 2008, it occurred because the banks were insolvent when marking their assets to reality. When allowed to mark them to fantasy, then everyone could pretend solvency existed again. Those trillions sent into the banks? That was nothing but robbery – but that “liquidity” is still finding its way into the price of most things “Consumers” need. This is the exact opposite of what needed to occur to produce a REAL recovery. The “Consumer” is still saturated with debt, primarily from buying homes, cars, education, and healthcare that are too expensive because the central bankers made them that way to begin with through the application of their never ending impossible math “growth” mantra.

Should even a portion of that money have gone to pay down the debt to remove the debt saturated condition, then we would be having a far different, way more positive discussion today. That didn’t happen, and is not likely to happen due to WHO it is that produces and controls the money. The private banks cannot look past their own self-interests (bonus maximization) to see that in the end even they would have been better off if they used that money to liquefy from the bottom up, instead of from the top where it just sits at the top spinning prices to the moon.

A rising stock market will only “feel good” as a marketing tool for a short time – and that time is just about up. If it continues to rise unabated, then commodity prices will rise with it, and the majority of people will simply wind up with less and less, while the minority of people wind up with more and more. That moves our nation higher and higher on the despot scale – and there is a point on that scale at which the people will rise up and remove those who have unjustly profited on the backs of the majority.

Liquifaction Ain’t no Satisfaction.

Oh yeah, and the banks are still insolvent, our nation is still insolvent, and regardless of how much money is thrown into the markets, the game of private banks creating never ending bigger numbers is almost over.

The conflicted, ridiculous, hideous, pathetic, and hypocritical Mortgage Banker’s Association (yeah, I like those reprehensible bankers that much) reported that the Purchase Index fell 1.7% in the past week with the Refinance Index falling 10.1%... just as the wave of expensive usurious Jumbo Option-ARM loans begin to reset in earnest (promoted, of course, by the MBA weasels):
The Mortgage Bankers Association reports a 1.7 percent decline in purchase application volume in the March 25 week, ending what was otherwise a solid month compared to February. The month-to-month rise in purchase applications together with strength in Monday's pending home sales report and an easy comparison with very weak existing home sales for February point to strength for the March existing home sales report. The rise in rates during the week, up 12 basis points for the average 30-year mortgage to 4.92 percent, pulled down refinance applications by 10.1 percent.

As the MBA’s ship sinks, the banks throw more and more “liquidity” into the boat. They aren’t even smart enough to see that they are drowning not only the consumers, but also themselves in the end.

The Challenger Job-Cut report showed fewer mass layoff announcements for the month of March, falling from 50,702 to 41,528:
Challenger's layoff count fell to 41,528 in March vs 50,702 in February and 67,611 in March last year. Aerospace/defense, retail, and autos all saw significant month-to-month declines in layoff announcements, while telecommunications and media both saw increases. Quarterly layoff announcements come to 130,749 for the lowest first-quarter total since 1995.

This report together with the easing underway in jobless claims confirm that businesses are no longer cutting their workforces. But are they building them up? ADP's payroll estimate at 8:15 ET today will offer clues for March.

Baloney to Econoday once again. The mass layoff phase of the collapse has already largely occurred, it can’t occur forever. The ADP report is about as accurate as animal sacrifices to forecast the weather.

According to ADP, Private Payrolls rose less in the month of March than they did in February, rising by 201,000 versus 217,000 respectively. Our economy is absolutely not creating any jobs, it is STILL losing jobs especially relative to our population growth. We have shed 7.5 million jobs since the peak in 2007.

The Consensus for Friday’s Employment Report is that we added 200,000 nonfarm payroll jobs in March, up from 192k in February. Looking at the fantastical “Birth/ Death Model,” March is a month with a middle-of-the-road addition to payrolls from this calculation – but the trend is that the additions are getting larger year over year (nonsensical). So, we’re likely to be dazzled with bull, while the reality is that real job growth has died on the debt saturated, drowning in liquidity vine:

I want to keep talking about the situation in Japan because I believe that what’s happening there is critical to humanity. TEPCO has been absolutely incompetent in their handling of the disaster, a disaster that was largely of their own making. The CEO cannot handle the pressure of the circumstances and has been hospitalized while the Chairman has taken over. Bad information and rumors have been the norm due to the lack of meaningful real information. But the damage has been obvious to me, and radiation in huge amounts doesn’t just grow on trees, so the conclusion in my mind has always been that the reactors had been breached, that a melt-down was in fact in progress, and that there is simply no way that humans can perform the repair work necessary to stop criticality from continuing. If you can’t stand that opinion coming from me, here’s someone with some unbiased credibility on the subject:

I’m sorry, but it’s already too late – the area surrounding the reactor is already contaminated and yet the contamination continues with no meaningful effort to contain it still. The result is that the area surrounding the plants is already a wasteland and will be uninhabitable for decades, maybe even centuries.

And what we are learning about how nuclear waste is handled here in the U.S. is simply frightening. Spent fuel is simply piled high into reactor cooling pools that now hold up to seven times their design capacity. The potential fallout from these pools is a far greater threat than even a nuclear bomb should the worse occur. Yes, that should scare us, and we should absolutely use this event to reevaluate what it is we’re doing, and what we’re not doing. My real fear is that we will fail to take action and that the politicians will allow the special interests to overrule common sense.

The markets? They are BROKEN. They are not real. They are to the point where they are inflicting pain instead of performing their natural functions. This will all be undone in time, but for now the liquidity is still flowing like a flooded river Nile. I note that the time since the last Hindenburg Omen has now expired, and that the McClellan Oscillator is positive once again. Bravo, great job, I hope everyone enjoys the ride – it’s already wild.

Tuesday, March 29, 2011

Morning Update/ Market Thread 3/29 - Mony, Mony Edition...

Good Morning,

Equity futures are higher after yesterday’s pre-close tumble. The dollar, lower all night, has jumped into the higher category this morning as the Yen continues to fall in value – it would seem that the intervention into the Yen is working for now, although I note that currency intervention is almost always undone in the end. Bonds are lower, oil is lower again, and so are most other commodities including gold, silver, and most food commodities. It would seem that the multiple “Fed” officials publically downplaying QE for now is working to dampen the hot money flow… again, for now.

I keep receiving questions about inflation and deflation regarding the actions of the “Fed” and how much control they actually possess to affect inflation. There are those who think that the “Fed” cannot induce inflation that is sustainable, and there are those who believe that we’re experiencing “stagflation” – that is a stagnant economy coupled with rising prices. Here’s what I think…

The inflation/ deflation debate is very muddled and confused because most people don’t understand what is “money.” In fact, we don’t really have money in the United States, we pass around loans from the private banks – these are called “notes,” just look at the top of any bill in your wallet. A loan, such as the notes in your wallet, come into being as someone’s liability, they are debt and they carry interest payable to the private banks who create them. But a funny thing happened to this terrific (if you’re a central banker) debt money system – debt saturation occurred where there were no longer anymore qualified patsies to assume even more debts… the people were saturated, local governments were saturated, and now our national level government is saturated – the whole world is saturated with more debt than income can service. Thus their required never-ending growth ended.

What’s a central banker, whose bonuses are in trouble, to do? Lower interest rates, remove fractional lending limits, and then lower them again and again. But then the whole world becomes saturated even at zero. So then, with only one tool left, the central banks simply begin printing under the guise of “Quantitative Easing.”

Up until QE began, overall the debt saturation of CREDIT money was creating powerful deflationary forces. But QE is a process that adds money that is not credit into the system… thus temporarily holding the deflation at bay. Yes, Bernanke is correct that a motivated enough central banker can always create inflation – in this case it took unbelievable quantities of printing to do it, and not just QE either, the issue is confused with the use and creation of other types of leverage, especially the use of derivatives that function as if they are “money” allowing the creators to assume positions greater than the actual money they possess.

Let’s say that a business has inventory and they sell their inventory only to cash customers. One day they decide that they might spur more sales if they extend credit to customers, and so allow customers to take their inventory on credit. Guess what, that business just created credit dollars! They are not a bank, but their act of lending out inventory for later payment is just one form of credit creation.

Derivatives allow people and corporations to assume positions against both tangible and non-tangible things – they work to expand and to amplify the underlying thing that is being derived. In effect, derivatives work like another form of money so that now we must consider Real Money (of which there is little), Credit Money (of which there is a ton and we are all saturated), and Derivative Money (of which there are ten tons, which is largely unregulated and untracked being created by anyone and everyone).

So, to get a true handle on inflation and deflation, we must be able to know how much total money is in the system – real money + credit money + derivative money. This is not knowable under today’s system because we let derivative money get completely out of control. And then it is vastly complicated because our borders with regard to the flow of all three is open and other agents around the globe also create derivative and credit money and it mixes and flows.

Both credit and derivatives are TEMPORARY instruments! Real money is not temporary!

It is credit money and derivative money that set the foundation for DEFLATION... but not until saturation occurs! Prior to credit and derivative money saturation, the addition of credit and/ or derivatives is inflationary.

Let’s look back in time. During the “roaring twenties” we were on a supposed gold standard, but the “Fed” had been created and thus credit money was flying fast and loose, created by the private banks who had stolen the money creation powers from the people. Stocks were massively purchased on “Margin” which is either a form of credit, or a form of derivative, take your pick – but the net result was that debt saturation was reached. At that time there was a mix of real money, credit money, and margin. Prior to saturation there was temporary inflation, which after saturation was followed by deflation – and the “Fed” at the time was not willing to do what was necessary to keep inflation going.

Since that time, real money was methodically replaced with credit money. When credit saturation began to reoccur, derivatives came on the scene and kept the overall expansion of the three types of money going. Prices rose and inflation was very prevalent over the past few decades, picking up more and more steam. Then bubbles began to form – a big one in technology stocks burst in the year 2000. Okay, lower interest rates to let more credit money in, and loosen up the laws to let more and more derivative money in. “Growth” occurred pushing home prices and stocks into a bubble until the FASB finally demanded that the banks mark their “assets” to a current market price. And just like that, those bubbles burst.

Then the banks used their money creation powers to blackmail the public and the FASB to get mark-to-fantasy accounting reinstated and to get all regulators off their backs. Total capture had then occurred, but saturation was not, and is not cured as the banks have subverted the rule of law which demands that insolvent companies go through the bankruptcy process. They have not, and thus the over credit saturation condition remains.

In comes a concerted Bernanke who is bent on creating enough QE (which is real money by the way – and is permanent, unlike credit money) and he prints and prints to unbelievable quantities, most of which is used to replace BONDS which is his attempt to buy down interest rates to keep the debt saturated condition and insolvency from showing.

But all that money being added doesn’t go just to pay down debt – oh no, our debts (credit money) are still growing, especially at the Federal level. It takes the load off the bankers and allows them to throw hot money around all over the place. They buy up all the strategic businesses they can – they own the media, the military industrial complex, the stock and commodity exchanges, they own and invest via High Frequency Trading Machines and thus basically fix the price of anything and everything.

Again, the world’s central bankers are all now doing the same, and thus knowing the overall money in the system is not just difficult, I would contend that it is impossible.

The issue of inflation/ deflation is also now confused with very bad data. Price data simply does not match up with reality, and the disconnect is getting larger over time. This is due, I believe, to the fact that the overall quantity of the three types of “money” is growing on an exponential slope, and thus efforts to mask the true effects on price also must get more severe.

So, for me there are very powerful deflationary forces underlying credit money and derivative money, but the “Fed” is replacing that money with real money via QE and various other methods both known, and I believe unknown.

I believe that without being able to correctly measure the true quantity of money that it is impossible to maintain equilibrium on the part of the “Fed.” They are blindly guessing and there are time lag effects that complicate the balancing act they are attempting. I therefore think that we see waves of deflation and inflation as they induce oscillations back and forth, but that the overall trajectory is inflation – that is their desire.

Inflation = impossible math. It simply is not possible to have a stable environment with never ending rising prices. For that to occur, the quantity of all monies must rise and rise and rise until the quantity of money is so great that it simply holds no value. The growth is not linear, it is exponential and we are on a rapidly rising slope of exponential money growth. That means that it is not stagflation, for the REAL economy is not stagnant, it is dying on the debt saturated vine. And while there are waves of deflation, the overall trajectory is inflationary. The end game is that our money is worthless and must be replaced.

Once we can wrap our minds around the inevitable, then maybe we can look at trying to create a better way forward for the next time. To accomplish that, we must understand what “money” is; we must understand that what backs money is not nearly as important as WHO controls its production; we must understand that “money” is a human construct – there is no natural automatic correcting device, that is bunk, but there are limits to growth that nature will impose.

Competition in money is not a good thing, nor is it a panacea – we have real world examples throughout history and it simply doesn’t work either. It enriches those WHO create their currency, but the competition inevitably breaks down into a money creation race to the bottom – as is occurring now world-wide.

Yes, it is possible for man to create a stable money system! In my opinion, it must be a common currency – and it should be backed by the only thing that truly matters – the productive efforts of humans and a legitimate rule of law. We must be able to correctly monitor the total quantity of money, and we must use that knowledge to target exactly ZERO percent overall price inflation – the only mathematically sustainable target there is over time. This does NOT mean that all credit money must go away – fractional reserve banking is NOT the cause of the world’s problems! Letting fractional reserve banking run amok is the problem – and thus there has to be a separation of special interests and politics. There is absolutely NO REASON for a nation to have a national debt – not when the money system works to the benefit of the people at large, instead of just a few specially self-privileged individuals. It is possible to have free markets and yet keep the quantity of money under control. Competition can and does work, but like any man-made game there must be rules and the rules of the game must be enforced.

We’ll discuss today’s economic data, including the Case-Shiller Home Price Index and Consumer Confidence inside of today’s daily thread.

Meanwhile, events in Japan continue to worsen. Plutonium has been found outside of the plant. The media, corporations, and politicians in Japan, however, are downplaying the risks still. They are also manipulating the information presented in the media – for example, articles on the working condition of those trying to salvage the reactors has been shaved down to nearly nothing (Case of Disappearing Articles). A dead man was found face up in a parking lot 5 miles away from the reactor and was so radiated that his remains could not be handled – yet, it was “likely the tsunami that killed him.” Riiiggghhhht – because water always makes people glow in the dark.

They are still making like maybe the reactors have been breached and maybe they haven’t… Riiiigggghhhht, like all that radiation is just spontaneously created. “Just imagine if there were holes,” LOL, it would be outright funny if the incompetence wasn’t so serious. Oh, and maybe it wasn’t so great pouring water all over everything as now the radiation is going everywhere the water goes – duh.

Tokyo power should be removed from the premises and replaced with outside experts who have the freedom to make decisions on behalf of humanity, not on behalf of a piece of paper called a corporation. A knowledgeable outside person should be appointed to act as a public spokesperson in order to keep the public informed.

The U.S. absolutely needs to be reviewing and bring our own reactors up to date – but all of this starts with the separation of special interests and government. There simply can be no meaningful regulation when special interests are allowed to finance campaigns and to appoint insiders into political and other government positions. The ROOT of all these problems is the same! Once you allow private individuals to control the production of your money, then they use that money to subvert the rule of law and any checks and balances that may have existed. The rule of law cannot and will not be reinstated until we change out WHO it is that controls the production of money.

Monday, March 28, 2011

Morning Update/ Market Thread 3/28 - Draggin’ the Line Edition…

Good Morning,

Equity futures are slightly higher this morning, with the dollar slightly higher, bonds a little lower; oil, gold, and silver all significantly lower; and most food commodities are lower as well.

Oil and gold look like they may have put in a small double-top, while the food commodities are carving out what looks like a potentially large Head & Shoulder’s pattern. If so, we are working on the right shoulder now. This formation is clear even without my drawing, below are the daily charts for rice and wheat:

The stock market’s rise off the March 2009 lows is now two years old. In that two years, the “Fed” has produced more money and shoveled it at the markets than at any time in modern history. They literally own such a large percentage of it that the concept of a “free” market is long gone. Of course they don’t carry the stocks on their balance sheet… no, they let the very same primary dealers who literally own the “Fed” do that. Portfolios are marked to fantasy, shell corporations are made to spin off the bad debts, accounting frauds of all types are foisted to divert the eye, all designed to market a new reality to you.

The spin is that the financials are healthy and making profits (yeah right) sufficient enough to justify record bonuses for those making the paper engineering go. For now, it would appear that they are defying gravity. Bonds (debt instruments) are at the heart of their paper empire – these are the instruments from which “money” springs seemingly eternal. Are there not limits on how much of this paper can be created? Yes! Anyone with more than two neurons will shout – it requires income to service debt – unless you can simply print money!

And print we are! So now we are forced to ask are there no limits to the amount of “money” that can be printed? And to that, again, anyone with two or more neurons will shout, “YES! Of course!” That limit will be reached when the quantity of money is so great that people lose confidence in it and refuse to hold it for more than a very short time period. That time period is getting shorter and shorter, and thus the confidence is already eroding.

But at some point the people are going to grow weary of all the bullish talk and façade… if it’s so bullish, then why must we continue to prop up the markets? The answer, of course, is due to the impossible math created by the bond market – the very heart of our money system, the way it was created by the private banks who call themselves the “Fed.” At some point interest rates should begin to rise – that will cause the value of bonds to fall. One trick that will probably be attempted will be to change the laws and attempt to convince you that you should now “invest” your retirement money in bonds… just as they are about to burst with rising rates. I don’t put this past them at all, in fact this is exactly what they did when they convinced everyone to abandon their pension plans and to “invest” in their ERISA 401k’s. The net result has been a disaster for most Americans, and so too would be the net result of forcing retirement money into the bond market.

The charade of money printing is on full display this morning with the release of the Personal Income and Expenditures. Incomes are supposedly rising, but honestly I don’t see how that claim can be made with a straight face. And even with wage exaggeration and price under-reporting, the difference between any supposed wage increase and the cost of goods is glaring enough that even Econospin can’t ignore it:
For the latest month, consumers went on a bit of a spending spree-although a big part of it was on autos and gasoline. Income also was up nicely though an important issue is that it lagged inflation. Personal income in February advanced 0.3 percent, following a 1.2 percent advance the prior month. February's number fell short of analysts' forecast for 0.4 percent. Wages & salaries gained a moderately healthy 0.3 percent, matching the rise in January.

Again, consumer spending in February was led by auto sales and higher gasoline prices. Personal consumption expenditures jumped 0.7 percent, following a 0.3 percent rise in January. The latest figure beat the median forecast for a 0.6 percent gain.

For PCEs in February, strength was led by durables, up 1.6 percent, after a 0.3 percent rise in January. For the latest month, nondurables (includes gasoline) jumped 1.4 percent, following a 1.0 percent rise in January. Services spending nudged up 0.2 percent after no change the month before. Despite some erosion from inflation, real purchases were up as chained dollar purchases advanced 0.3 percent in February after no change the prior month.

On the inflation front, the PCE price index increased a notably warm 0.4 percent, topping the 0.3 percent boost in January. The core rate gained 0.2 percent in February, matching the prior month's pace and equaling expectations. On a year-ago basis, headline PCE prices are up 1.6 percent in February-up notably from 1.2 percent the month before. Core inflation nudged up to a 0.9 percent year-on-year pace versus 0.8 percent in January.

Year on year, personal income for February was up 5.1 percent, compared to 4.9 percent in January. PCEs growth improved to 4.1 percent from 3.9 percent the month before.

The consumer sector is doing fine other than the worry about inflation eroding spending power. Income and spending numbers have been a little volatile lately but over the last two months both have been relatively strong. But for the consumer sector to keep contributing to lifting the recovery, inflation is going to have to soften and/or income will need to pick up the pace-which is not likely until employment strengthens. It's not rocket science, but economists will be tracking oil prices and employment to judge the pending health of the recovery.
Oh no, it’s definitely not rocket science – more like voodoo meant to distract you.

Pending Home Sales are released at 10 Eastern this morning. Consumer Confidence comes tomorrow, and the rest of the week is fairly busy culminating with the Employment Situation Report this Friday which is April fool’s day – a somehow fitting day for major economic releases.

Missed by many is that the Census Bureau reported home vacancy rates shot up from an already horrific 12.1% to more than 13% last year… and home prices are supposed to start going up again when? True, home prices will rise again… sometime – just not now.

Meanwhile we open up another war front. The middle-east at large is in complete disarray, the sands are shifting very quickly. We are involved with no idea of the outcome or consequences.

This having no idea of the outcome or consequences seems to be our motto, especially when it comes to pushing the boundaries of energy. The parallels between the nuclear situation in Japan and the BP Gulf oil spill are striking – yet no one in the mainstream is talking about them. From my perspective the handling of both incidents are rife with corporate self-interest that towers above humanity casting a shadow over the very progression of mankind. TEPCO should have been removed from the situation in Japan a long time ago – and to those who are downplaying the significance of this event, your hubris will be spanked in the end – we must pay attention to the political/ corporate/ human interest aspect of these crisis. Ignoring or downplaying the significance of these events will only lead to worse outcomes in the future.