Arnie Gunderson - Important Fukushima Update...

Fukushima - One Step Forward and Four Steps Back as Each Unit Challenged by New Problems

Weekend Open Thread...

*Note: Due to a Blogger (Google) problem, my update for Thursday is missing and I was unable to post one Friday.

Morning Update/ Market Thread 5/12 - Squeezing the Turnip Edition…

Good Morning,

Equity futures are lower again prior to the open, with the dollar continuing its bounce higher, bonds continuing higher, and oil, gold, silver, and most food commodities receiving further smack down treatment.

China announced they are tightening up bank reserve requirements again, this time by .5%, which is adding pressure to the commodity trade in addition to the usual CME and banker manipulations. The increased oil margin requirement is a good example of how political pressure begins to bear down on the market once prices begin to affect sentiment (and yesterday the CME DOUBLED the trading limits on oil and gas as a part of the slam down).

The obfuscation from the media, of course, is to pin the blame on anything and everything but the excess money policies of the fantasy “Fed.” It’s always one of the never ending profit opportunities, errr, I mean WARS that’s to blame, or it’s the fantasy “recovery” bolstering demand, but never is it the “Fed.” Well, here’s where all the lies are laid bare…

Yesterday there was yet another large build of oil inventory, taking it to the highest levels EVER, including during the last crisis when demand crashed.



Gasoline demand is DOWN, and refineries are producing gasoline at very low refinery utilization rates. So, if inventories are at record highs, and demand is falling, why is the price so high? And there’s the lie right there. There is no economic recovery, the storyline of burgeoning demand and falling supply is FALSE, at least at this juncture in time. And that is proof that it is a monetary phenomenon.

Below is an updated chart of base money versus oil price – again, note that the sudden and dramatic rise in hot money has led to the mirror image in oil price since the debt saturated crash in 2007/2008:



Now, further proof to the lie is found by comparing the Baltic Dry Shipping Index to the price of commodities. In general, as the price of commodities rise, the cost of shipping also rises IF the rising price is due to an increase in demand:



In this case, however, you can see the continued collapse in shipping rates while commodity prices zoomed. Again, this is proof of a monetary phenomenon, and proof that we’re not talking about real demand.

Same goes for the stock market! Below is the BDI versus the SPX – if the move in stocks is real, where’s the real demand? It’s not there, because it’s not real, it’s monetary:



That disconnect between the BDI and SPX is HISTORIC. And that makes sense, doesn’t it, as the money debasement is also historic. Below is a chart showing the timing of the Base Money ramp with the latest ramp in equities:



It’s no accident that they are coincident – our economy grew as debt was added over the years, but then we reached saturation and the economy collapsed, as in free fall. Then came the money printing, and now we are experiencing the fluff – the saturated condition remains, the debt service remains, but the fluff is keeping prices high.

And all this adds up to pressure. The reality, of course, is that the middle-class squeeze is in full swing and high energy and food prices are just one part of that blood out of a turnip squeeze.

Another large part of the squeeze is coming from health care costs:

Your family's health care costs: $19,393

NEW YORK (CNNMoney) -- Health care costs for a family of four rose again in 2011, with employees paying a much larger share of the rising expenses, according to a new industry report Wednesday.

American families who are insured through their jobs average health care costs of $19,393 this year, up 7.3%, or $1,319 from last year, according to independent actuarial and health care consulting firm Milliman Inc.

More significantly, employers are making workers shoulder an even bigger share of total health care expenses.

Of the $1,319 annual increase, workers' out-of-pocket costs this year rose 9.2%. That was more than the 6.6% increase the prior year.

Payroll deductions for insurance coverage rose 9.3% this year, also more than the year before.

However, employers' share of workers' health care costs fell 6% in 2010, compared to 8% the year prior.

So, not only are healthcare costs rising, but corporations are winning the battle to push even more of the costs off on the employees. This expense is becoming a huge percentage of total income, keep in mind that the last officially reported median income was a little over $45,000. Thus total healthcare costs are approaching HALF of income – if the employer is paying half of that, then the employee is paying a quarter of their income just on healthcare.

This is yet another example of impossible math in progress – healthcare costs simply cannot continue to rise and for us to still have a functioning economy. Costs here are yet another bubble created by the fast and loose monetary situation. Add up the cost of bubble taxes, bubble home ownership, bubble auto prices, bubble healthcare, bubble energy, and bubble food costs then you will clearly see that massive pain is already in progress for those on the margins right here in this country, not just in other parts of the globe.

Weekly Jobless Claims are adding to the impossible math with yet another week well above the 400k level. Coming in at 434,000, this is down 40k from the prior 474k (revised higher, of course, to 478k). I note that without seasonal adjustments, the raw figure was down only half that amount. While Econopray is hopeful, this is another horrid reminder that the economy continues to shed jobs and that the supposed “recovery” is nothing but a monetary hoax:

Highlights
In what is a big relief for the jobs outlook, initial claims fell back sharply as hoped following a giant special-factor spike in the prior week. Initial claims fell 44,000 in the May 7 week to 434,000 with the prior week revised to 478,000. Despite the decline, the current level is significantly above March with the four-week average continuing to rise, up 4,000 to 436,750 for a very significant 40,000 increase from the month-ago comparison. Claims thankfully came down in the latest week but further declines will be needed in the weeks ahead before confidence in job growth can build.

Keep that dream alive, Prozac saturated turnip. Evidently you enjoy the squeeze.

The PPI continues to rise, and the rise is accelerating. In April, the PPI rose .8% (9.6% annualized), compared to March’s .7% uptick. Gee, doesn’t that feel good? And this is the trumped up version of reality. Here’s more Econohope, expressing their ‘core’ belief in obfuscation:

Highlights
Producer price inflation at the headline level continues to run hot while the core is more moderate. Nonetheless, the core has been a little warmer in recent months. Overall PPI inflation in April increased 0.8 percent, following a 0.7 percent jump in March. April's figure topped analysts' estimate for a 0.6 percent rise. Energy increased 2.5 percent after a 2.6 percent advance in March. The main culprit was gasoline which rose 3.6 percent in April, following a 5.7 percent surge the month before. However, food also added to the latest PPI jump, rebounding 0.3 percent after a 0.2 percent dip in March. At the core level, PPI growth held steady at 0.3 percent, coming in higher than the median forecast for 0.2 percent. Upward pressure at the core was led by passenger cars and light trucks.

It’s all contained… that’s why they are raising margin requirements and smashing the outsiders in the commodity space (while simultaneously printing money like mad).

Speaking of hot money, the Treasury just released their latest POMO schedule – “only” $93 billion more in the next month, the lowest yet of QE2! And even that isn’t enough to keep everything moving higher. But I’m sure the perfect trading insiders were well positioned in advance.

Speaking of insider trading, RAJ was convicted on all counts. To me this is nothing other than finding a few scapegoats to keep appearances up. RAJ obviously was not a true insider – he may have been acting like one, though, and obviously he did not have the insider handshake. Meanwhile, quarter after quarter, the real insiders continue to spew disinformation while bringing home the HFT bacon with perfect trading performances.

So, if the PPI rises .8% in the same month that Retail Sales rose a supposed .5%, did Retail Sales really rise at all? My answer is NO, they didn’t! Real Retail Sales are negative, as in fewer real items sold – end of discussion.

Well, not entirely the end… you see, Retail Sales are trumped on the high side at the same time inflation numbers are trumped on the low side.

Markets? What are the master manipulators up to?

Ouch, that squeeze sure hurts...

Morning Update/ Market Thread 5/11 - Losing our Religion Edition…

Good Morning,

Equity futures are down slightly this morning prior to the open, the dollar is higher, bonds are flat, oil is lower, gold is lower, silver is lower, and most food commodities are slightly higher.

The hypocritical shills at the MBA released their gutter bound Purchase Applications Index which supposedly grew by 6.7%, and the Refinance Index rose by a whopping 9.0% in the past week if you can believe that – in case you can’t tell, I don’t. Here’s Econoshill going along with the charade, however, I will note that it is spring and I do expect purchases to rise due to seasonality, but the wild swings found here are purely fiction, a result of people who have given up on reality in exchange for a few bucks – they have exchanged their morality for paper fluff and false prestige:

Highlights
Falling rates are giving a boost to mortgage applications according to the Mortgage Bankers Association whose composite index jumped 8.2 percent in the May 6 week. Mortgage applications rose for both purchases, up 6.7 percent, and refinancing, up 9.0 percent. The purchase index has gained about 1/2 percent over the past four weeks which points to badly needed improvement for home sales. Thirty-year mortgage rates, at 4.67 percent in the latest week, have fallen more than 30 basis points over the past month.

Just as a reminder, we are now in the phase where Option-Arm loans are resetting in mass.



This will cause massive pressure on upper-end homes and prices as people are faced with resetting mortgage payments. If they cannot afford those higher payments, or if their home is upside down (most who took these loans are), then it will be difficult, if not impossible, for them to refinance. Look for upper-end inventory to build throughout the year and to pressure prices and banks. Don’t worry about the banks, of course, they will simply shed their wickedly worthless paper off on the public who is still largely unaware that the “Fed” IS the banks and only looks after their interests, not yours.

The International Trade Data is showing a widening between what we export and import, the gap grew from -$45.8 Billion in February to -$48.2 Billion in March, largely on the back of rising oil prices. High oil prices eventually rise the price of everything, even our trade deficits. Of course since we’re running still massive deficits, we need to pay for it somehow, and that would mean more debt via bond/Treasury sales, and/or more printing. In this space we lost our way a long time ago, exporting far less than we import, and not really paying for any of it. Can you imagine working to produce products to sell to a country who returns you only financial engineering for decade upon decade?

Highlights
The U.S. trade deficit worsened notably, largely on higher oil prices. But there are some positives in the report as well as negatives. The overall U.S. trade deficit in March expanded to $48.2 billion from a revised $45.4 billion gap in February. The March deficit came in worse than analysts' estimate for a $47.7 billion shortfall. Exports jumped 4.6 percent, following a 1.5 percent decline the previous month. Imports rebounded 4.9 percent after dropping 1.9 percent in February.

The widening of the trade deficit was led by the petroleum gap which grew to $31.3 billion from $25.5 billion in February. The nonpetroleum goods shortfall shrank to $29.8 billion from $32.8 billion the prior month. The services surplus expanded somewhat to $13.9 billion from $13.7 billion in February.

Looking at end use categories for goods, the increase in imports was led by a $7.7 billion jump in industrial supplies with $3.6 billion from oil imports. Auto imports rose $2.1 billion while capital goods ex autos gained $1.6 billion. Foods, feeds & beverages were essentially unchanged. However, consumer goods imports dipped $2.0 billion.

By end-use categories, the boost in improvement in exports was led by a $2.5 billion jump in industrial supplies, followed by automotive exports, rising $1.6 billion. Also increasing were consumer goods, up $0.7 billion, and foods, feeds & beverages, up $0.6 billion.

On a not seasonally adjusted basis, the March figures show surpluses, in billions of dollars, with Hong Kong $2.7 ($2.5 for February), Australia $1.1 ($1.4), Singapore $0.9 ($0.8), and Egypt $0.4 ($0.5). Deficits were recorded, in billions of dollars, with China $18.1 ($18.8), OPEC $10.8 ($9.4), European Union $9.0 ($6.9), Mexico $6.2 ($5.3), Japan $6.1 ($5.2), Germany $4.6 ($3.3), Venezuela $3.0 ($2.1), Canada $2.8 ($3.0), Ireland $2.6 ($2.6), Nigeria $2.5 ($2.5), Korea $0.6 ($0.8), and Taiwan $0.6 ($0.9).

The direction of the trade gap was not a surprise but the impact of higher oil prices was more than expected. However, the good news is that exports are back up and sharply. Export gains were broad based, likely benefiting from a soft dollar and moderately healthy economic growth overseas. Manufacturers should be happy about the export numbers. However, the growing oil gap is a drain on U.S. consumers, businesses, and the economy. And the slippage in imports of consumer goods indicates that businesses may be notching down their forecasts for economic growth the remainder of this year.

This is just another measurement that is made in Dollars. And this points out the fantasy of money printing to inflate away debts. Note that the more you print, the larger this deficit gets because oil and other real things are priced in dollars… thus the debt is growing faster because you printed, which is the exact opposite of what you are told will happen by people who simply have been brainwashed with the “Fed’s” B.S..

Let me say that again to make it clear – printing does NOT reduce your debts, it increases them! If you don’t believe that, then take a look at the U.S. debt since the time “QE” began and report back.

No, we have lost our way. The introduction of the “Federal Reserve Act” in 1913 was the beginning of a very slippery slope. Initially the introduction of debt backed money created a boom, but now we are totally saturated with debt, our collective incomes completely incapable of ever paying it back.

This moral decline accelerated greatly with the removal of Usury Laws. Taking advantage of people via the production of money has always been a sin and always will be. The production of money is the most powerful right that exists, it is as powerful as all of human imagination. That power rightfully belongs to everyone, not a few individuals who have wrongfully staked their claim to that power.

The people of Europe are being sold down the river, while paper is being created by the central bankers to mask it over – paper that enslaves future generations. The impossible math there is staring everyone there point-blank in the eyes. The people of Europe need to send the central bankers packing, but their money is corrupting the politicians and their political systems as it is here in the United States.

Keep an eye not only on Europe, but also on Japan. The media ignored disaster there is certainly not over, and in fact there are several risks that are further threatening Fukushima. The real news there is only deteriorating, the contamination is far worse than let on, it is spread far further than let on, and there is still a risk that this could get worse.

The markets and our banking system are nothing but fraud, completely controlled by the same people. The whole shebang is coming down and “other events” are coming. That’s what happens when people lose their way…

Morning Update/ Market Thread 5/10 - Sweet Little Lies Edition…

Good Morning,

Equity futures are higher this morning prior to the open. The dollar is higher and bonds are close to even, gold and silver are higher, and most food commodities are higher as well, with the price of wheat soaring.

Last night they raised the margin requirement for oil, and the result so far is a decline of about a buck and a half with the price still well above the $101 level. While this is clearly manipulation of that market, my take is that margin and the use of derivatives was way out of control and it is way past time to reel in the speculation in commodities. The use of margin and derivatives is an act that actually creates a temporary form of money – there are very few legitimate reasons to allow this, and when it comes to commodities I think the rule should be that you must be ready and prepared to actually take delivery of the commodity or else you have no business “investing” in it. Bringing in outside players is not price discovery, it is speculation. The flip side of being willing to take delivery is that the exchanges should be required to ensure that there is physical commodity that’s available to be delivered – again, if not, then the person at that end of the contract has no business playing either.

The Small Business Optimism Index fell yet again with only one segment of the index rising, but many, including employment, falling. Here is Econohugebusinessshills:

Highlights
The nation's economic recovery is not centered in small business where, in contrast to big business, growth is no better than marginal, according to the National Federation of Independent Business. NFIB's April index of small business optimism slipped for a second straight month, down seven tenths to 91.2 in what the report says reflects the "anemic" pace of economic recovery. The report notes the sample's hiring plans, which are limited, are not consistent with the solid payroll gains of the April employment report. This mismatch, according to the NFIB, suggests that the bulk of new hiring is happening in larger firms.

What economic recovery? They must mean money printing recovery?

The NFIB writes one of the very few 'with it' reports, the commentary in this month’s release is very good and worth a read. Again, only one of the areas surveyed improved, and most worsened. The index has fallen every month this year so far:

Small Business Economic Trends May

Import and Export Prices in April came in still white hot although not quite as hot as March… IMPORT prices rose 1.1% on the month, but 9.6% on the year, versus 1.5% and 9.5% respectively. EXPORT prices rose 2.2% on the month (26.4% annualized), but 11.1% on the year, versus 2.7% and 9.7% respectively.

Note that while the month to month increase while still HUGE is down somewhat from the month prior, but the year over year figures are accelerating and in what I think is very dangerous territory – as in famine, wars, etc., that kind of dangerous. But not to worry, we can spin giant numbers like that just as easily as we manufacture money:

Highlights
Import and export price data show inflationary pressures moving into what are still however subdued consumer prices. Import prices for consumer goods rose 0.4 percent in April extending what is an upward monthly trend though the year-on-year rate, at plus 0.6 percent, has just begun to rise into positive ground. Export prices for consumer goods, also up 0.4 percent in the month, have been showing more tangible pressure with the year-on-year rate at plus 3.2 percent.

The rise in prices for consumer goods reflect, to a degree, pass through of high energy prices. Import prices for petroleum rose another 7.2 percent in April for a year-on-year rate of plus 37 percent. High food prices are also a factor, up 0.6 percent on the export side for agricultural products for a year-on-year rate of plus 35 percent.

Headline numbers show a 2.2 percent rise for import prices, a severe increase that pushes the year-on-year rate into the double digits at plus 11.1 percent. Export prices rose a heavy 1.1 percent in the month for a year-on-year rate that is nearly in the double digits at plus 9.6 percent. Today's data will likely raise talk of non-core pressure in this week's producer and consumer price reports.

Talk about economic obfuscation, it’s a wonder this field has any credence whatsoever.

Morning Update/ Market Thread 5/9- Seems like a Dream has Got the Public Hypnotized Edition…

Good Morning,

Equity futures are up slightly at the open this morning, the dollar is up again, bonds are flat, oil is higher and challenging $100 from below, gold and silver are strongly higher, and most food commodities are higher as well.

No significant economic data today, and the rest of the week is fairly light with the highlight being PPI, CPI, and International Trade.

I see exactly no beef, all I see is fluff and a public that has been totally hypnotized with disinformation. Not one shred of evidence to support the Bin Laden storyline (sorry, but that video released this weekend is a joke), no one is investigating an obviously tampered Birth Certificate presented by our President, and meanwhile the truly important stories drop from everyone’s attention, like the fact that we’re brewing another war in Libya, trying to brew one in Pakistan, and we’re still ignoring the fallout from Fukushima.

The business media is definitely all fluff – I watched a report that centered upon the question, “Was the ‘investment’ the American public made in GM the best public investment ever?”

Gee, and I’m not being led anywhere by the way they framed that question, am I? Of course they roll out the happy idiots who have no remorse at taking fluff money to shill a mindless storyline. Not one person even hinted what would have happened had they been allowed to fail – like the possibility that new companies would have been allowed to start up and bring truly innovative products to market. Alternatives are not allowed to be discussed when shilling is in progress.

Just like people who see alternatives to the storyline being offered by our politicians are ridiculed in the press for having alternative opinions or for even, heaven to Betsy, asking for proof of ridiculous assertions. It’s stunning to me the wide acceptance of the storyline when it is accompanied by absolutely no proof and completely unbelievable assertions. In fact I believe there are several assertions in the official storyline that are outright lies – a couple are even physical impossibilities like the timeline presented to test and compare his DNA. Again, they have made this a matter of faith, like religion, but I must remain agnostic until convinced otherwise. Actually I lean more to disbelief as the evidence and reality do not match the storyline.

Yet no reporter questions, for they know that if they do they will have no job in order to feed their family and to keep them in the lavish lifestyle which they are now accustomed to. For those who feed the storyline Kool-Aid are rewarded, while those who question it are passed off as whack-jobs.

Thankfully in Japan the Prime Minister ordered CHUBU Electric to shutter the most vulnerable nuclear plant in Japan – Hamaoka. This is a step in the right direction, and it’s still unfathomable to me the way our own government is ignoring the risks. Again, it’s a sign that total government capture has occurred by the special interests.

Greece was downgraded once again – Europe is simply a debt saturated mess where few wish to acknowledge reality. The central bankers made it known that they expect “collateral” for their worthless money loans, and fortunately it looks like they are being told to pound sand. Finally talk of “restructuring” is occurring, just don’t call it “default” though because that might sound bad and we can’t handle that because it would mean that something might have to be done about the criminality of the way the central bankers are acting.

Turning back to the U.S., let’s talk about the long term market situation. While the hot money printing, HFT, and market manipulation has propelled equities to new fluff heights, there is a long term glaring non-confirmation now in place. That was set up when the Transports closed last week at a new all-time closing high, but the Industrials are still more than 1,450 points away from its new all-time high:

TRANSPORTS:


INDUSTRIALS:


Yes, they can simply gun the Industrials higher to erase that situation, but I want you to consider that the current crop of POMO money is about to run out – and they are talking somewhat hawkish about QE3. As you buy a rising market to buy it still higher, the cost to do so gets progressively more expensive - this means that each injection to maintain that trajectory must get larger. If they delay QE3, then the market will likely stumble and this stumble may occur prior to this confirmation. Big non-confirmations like this are often seen at major tops, so this is one to watch over the next few weeks and months.

Since we’re looking back to the 2007 peaks, I just want to point out the XLF… it STILL has failed to break even a 38.2% retrace making it STILL the worst performing sector of them all. All those trillions, all the taking off their balance sheets of toxic waste, all that mark-to-fantasy accounting, all those perfect HFT trading rob you blind quarters… all of that, and yet they still are hugely divergent from the rest of the market:



So, the storyline goes that we’re supposed to believe, and not even question, an obviously tampered birth certificate, an obviously fabricated Bin Laden storyline, and a stock market built upon money printing and manipulation where the Financials trail far behind, and where our economy still is not producing positive jobs (but the storyline says it is), where housing is still in the gutter, and where oil prices rise (and fall) wildly despite record high inventories and falling demand. Sorry, but I have to ask, “Where’s the beef?”