Saturday, June 11, 2011

Weekend Open Thread...

Friday, June 10, 2011

Morning Update/ Market Thread 6/10 - Where’s the next hit Edition…

Good Morning,

Equities are substantially lower this morning, the dollar is stronger, bonds are higher, oil is falling but still above $100 a barrel, gold & silver are tumbling, and most food commodities are lower.

While I’m on the subject of the food commodities, I want to point out that corn broke up and out of a bullish inverse Head & Shoulders pattern yesterday:

While corn is breaking out higher, the other food commodities look to me to be building an upright H&S pattern that may produce a bearish outcome. Corn is obviously benefiting from its new roll as a government subsidized worse than worthless fuel, and has for the moment garnered the attention of the dwindling hot money.

Speaking of hot money, the supposed last POMO schedule covering the last 14 days of the month will be released this afternoon. Still no word on more heroin for the addict, so the addict is wilting at just the thought of stopping its drug injections.

Speaking of drug heads, NATO leadership came right out yesterday and said that Gadhafi is a legitimate target. This is directly against the Geneva Convention and centuries of precedence regarding the protections of heads of states. It indicates to me the further progression of the breakdown of the rule of law, and also the power that the printing press contains to create a world dominating power that feels invincible against in kind retaliation. Perhaps we’re invincible, but then again, maybe we’re not…

Speaking of the opposite of invincible, I would say that is a spot on description of both our economy and our markets. Bernanke and the private “Fed” are wearing no clothes and everyone knows it. Shockingly 45% of Americans in a recent poll said they believe the nation is on the verge of a Great Depression. I think they’re all nuts! Don’t they know that we’ve been in a Great Depression for the best part of a decade already?

Import and Export prices are sky high, but may be about to turn the corner as the drug addict’s crack is about to run out – at least until the next stick-up so that they can get more. Both Import and Export prices rose .2% in May, this is down considerably from the prior month advances, but is largely due to the price of oil plateauing. Still, year over year export prices are accelerating, now up 12.5% versus April’s 11.1% - Gee, Econohay doesn’t even mention that one:
Inflation pressure from imports is easing, reflecting the dip back from the April peak in oil prices. Import prices rose only 0.2 percent in May, by far the smallest increase of the last nine months. Prices for petroleum imports fell 0.4 percent for the first decrease also in nine months. Pressure, though very modest, does appear for finished goods with import prices of consumer goods rising 0.3 percent, which extends a seven-month trend, and import prices of capital goods rising 0.2 percent.

The export side also shows a 0.2 percent headline rise which is by far the smallest increase in 10 months. For the first time in 10 months, prices of agricultural exports fell, down 2.0 percent.

Commodity-based inflation pressures, whether prices of oil-related imports or agricultural-related exports, may have already peaked which is good news for policy makers who have to keep their eye on inflation as they try to stimulate demand. Today's report points to little trouble for next week's producer and consumer price reports.

Well then, I guess that with only 12.5% export inflation we’re in desperate need of another fix.

Meanwhile, the Chinese kettle is calling the American pot black when the Chinese Rating Agency says the following:
"In our opinion, the United States has already been defaulting," Guan Jianzhong, president of Dagong Global Credit Rating Co. Ltd., the only Chinese agency that gives sovereign ratings, was quoted by the Global Times saying.
Washington had already defaulted on its loans by allowing the dollar to weaken against other currencies -- eroding the wealth of creditors including China, Guan said.

How true! And gee, they must be reading the Economic Edge as I made that exact statement, oh, about two years ago. Welcome to reality.

However, the Chinese are even worse than the Americans when it comes to money printing. They have created a massive bubble themselves and have contributed greatly to the devaluation of global fiat and the formation of damaging bubbles. To me the whole world is throwing rocks inside of their glass house facades… and it’s going to work out as well as it sounds.

Don’t look now, but the Russell 2000 small caps are forming what appears to be a H&S top. It’s sitting at the neckline now, a trip below this level will put that formation in play. Below is a one year daily chart showing this:

The other indices are not quite there yet, but remember that the small caps tend to lead both on the way up and on the way down.

Thursday, June 9, 2011

Morning Update/ Market Thread 6/9

Good Morning,

Equity futures are close to even prior to the open this morning, with the dollar higher, bonds higher, oil higher, gold & silver higher, and food commodities also higher.

Jobless Claims continue to be a disaster in this debt saturated environment, coming in at 427,000, up from 422k, on expectations of a decline to 418k. Naturally the prior week was revised higher, as always. Here’s EconoLSD:
Initial jobless claims aren't coming down but they're stable and at lower levels than they were a month ago. Initial claims came in at 427,000 in the June 4 week vs a revised 426,000 in the prior week and 429,000 the week before that. The four-week average of 424,000 is down 2,750 in the week and is down nearly 15,000 from a month ago.

Continuing claims in data for the May 28 week fell 71,000 to 3.676 million with the unemployment rate for insured workers ticking down one tenth to 2.9 percent.

There are no special factors in this report which is mildly positive for the economic outlook. It would be nice if claims were under 400,000 as they were in March but it's the June to May comparison that's most important right now and this report offers an early indication of improvement.

Huh? “Mildly positive for the economic outlook?” Oh boy… that’s some powerful hallucinogenic someone’s taking.

I hate to sound like a broken record, but it’s been week after week for YEARS now that this economy has been shedding jobs. Any number above 350k is a losing jobs proposition in this report and there has not been a number that low in over four years – 400k is a psychological number but meaningless and is still a job shedding proposition.

And now that it’s been proven that first debt pumping, and then money printing don’t work to create more jobs, austerity is now coming into vogue again. Of course austerity is just the other side of the private central banker false choice paradigm. And austerity is coming to the unemployed as the Federal emergency program is winding down and now the states are beginning to shorten their benefit periods. So, we may begin to see these numbers come down, if only because people will not be eligible to file claims. Here’s an article explaining some of this:
Unemployment benefits fading away

NEW YORK (CNNMoney) -- Even though the nation's jobless rate is on the rise, millions of people could see their unemployment checks stop coming at the end of the year.

Nearly all Americans who find themselves out of work starting next month will likely receive only 26 weeks of state unemployment checks -- at most.

Why? Because the deadline to file for extended federal benefits expires at the end of the year.

"Most people who lose their jobs after July 1... won't be eligible for federal unemployment benefits," said George Wentworth, senior staff attorney at the National Employment Law Project.

And as Washington prepares to pull back, a growing number of states are cutting their share of benefits. South Carolina is poised to become the fourth state this year to reduce state benefits to 20 weeks, while Arkansas and Illinois have shorn one week off their unemployment insurance coverage.

Earlier this week, President Obama broached the idea of extending the federal safety net in detailing steps Congress has taken to help unemployed Americans and the overall economy. His comments came just a few days after the government reported surprisingly weak employment growth for May, when the jobless rate rose again to 9.1%.

"One of the things that I'm going to be interested in exploring with the members of both parties in Congress is how do we continue some of these policies to make sure that we get this recovery up and running in a robust way," Obama said Tuesday.

Jobless discouraged by weak economy
To help the jobless get by during the downturn, Congress extended federal unemployment benefits in 2008 to a maximum of 73 weeks. However, those looking for work have to periodically file for additional benefits to qualify for the full 73 weeks. The deadline to file for those extensions is Jan. 3, 2012.

To help the jobless get by during the downturn, Congress extended federal unemployment benefits in 2008 to a maximum of 73 weeks. However, those looking for work have to periodically file for additional benefits to qualify for the full 73 weeks. The deadline to file for those extensions is Jan. 3, 2012.

At the moment, Congress not thinking much about unemployment insurance. Lawmakers are wrestling with raising the debt ceiling and how to cut the budget -- not spend more.

And therein lies the rub – the government wants to “help,” however they need to spend less, not more. This type of convoluted situation is a product of the impossible math created by the glaring flaw in our nation that allowed private individuals to control the production of money, to profit from it, and then allowed them to use that money to capture government. Trillions for them, morsels for everyone else, to be followed by austerity.

Hey, at least our International Trade numbers came down in April falling $4.5 billion or about 9.3% (!)… which is actually good in the long term, but shows weakness in the short term as auto imports and oil collapsed during that month. Here’s Econodope explaining why every bad data point is actually good:
The trade deficit shrank more than expected in April, largely on a dip in oil prices. The April trade gap shrank to $43.7 billion from a revised $46.8 billion in March (originally $48.2 billion). The shortfall was less negative than the median forecast for $49.0 billion. Exports rose 1.3 percent after jumping 4.9 percent in March. Imports slipped 0.4 percent after gaining 4.2 percent the prior month.

The improvement in the trade deficit was led by the petroleum gap which narrowed to $26.1 billion from $30.2 billion in March. The nonpetroleum goods differential expanded to $31.2 billion from $30.2 billion the month before. The services surplus grew to $14.4 billion from $14.3 billion in March.

Looking at end use categories for goods, exports increased 1.6 percent while imports dipped 0.5 percent in April. The boost in exports was led by a $2.0 billion gain in industrial supplies, with increases also seen in capital goods excluding autos (up $1.2 billion) and consumer goods (up $0.3 billion). Auto exports fell $0.8 billion while food, feeds & beverages dipped $0.2 billion.

The decline in goods imports was led by a $2.8 billion drop in auto exports with industrial supplies falling $1.5 billion. Consumer goods imports rose $2.1 billion, capital goods ex autos increased $0.6 billion, and foods, feeds & beverages advanced $0.4 billion.

On a not seasonally adjusted basis, the April figures show surpluses, in billions of dollars, with Hong Kong $2.6 ($2.7 for March), Singapore $1.2 ($0.9), Australia $1.1 ($1.1), and Egypt $0.5 ($0.4). Deficits were recorded, in billions of dollars, with China $21.6 ($18.1), OPEC $9.6 ($10.8), European Union $7.5 ($9.0), Mexico $5.5 ($6.2), Germany $3.8 ($4.6), Japan $3.6 ($6.1), Ireland $3.0 ($2.6), Venezuela $2.8 ($3.0), Nigeria $2.5 ($2.5), Canada $2.5 ($2.6), Taiwan $1.2 ($0.6) and Korea $1.0 ($0.6).

The latest trade number is technically favorable (in GDP accounting) toward GDP but part of the improvement likely was due to lower imports from Japan which actually constrained U.S. output, especially for autos (meaning a net negative effect on Q2 GDP). However, the downward revision to March should add to Q1 GDP.

…And the GDP forecasting blather continues unabated as if it has any basis in reality and we’re all going to sit on pins and needles waiting to hear how the number is massaged to be positive when in fact it’s actually negative.

In Japan they are now finding tea leaves that are contaminated more than 100 miles from the Fukushima plant. For the first time it was suggested by the Japanese government that they may consider closing down all 54 of their nuclear power plants and possibly as early as next year. I highly doubt they can accomplish that, but at least they are thinking in the right direction – finally. Note that yesterday the Swiss Cabinet called for closing down all five of their nuclear plants as they follow the lead of Germany.

The markets are in a very oversold state, it has been four days now with zero percent of stocks over their ten day average. Rallies usually follow that circumstance so I won’t be surprised by some sort of bounce soon. Still, one must consider that this dip has been pretty mild so far… my read is that the banks are beginning to melt under the thought that QE is actually going to come to an end. The market kind of believes it, but not really – thus the shallow descent. However, at some point more QE will either come to the rescue or it won’t.

Many people are comparing this dip to last year’s dip about the same time. The problem with that thinking is that last year it was the announcement of QE2 that stopped the bleeding… so you have to ask yourself is that going to happen this time too? My answer is that I think they probably will, but that things may have to deteriorate further in order for them to justify it. So, gambling in these markets boils down to whether or not the private central bankers have the ability/ will to continue printing money to fuel their further manipulations. No thanks, I won’t even offer a guess as it’s their casino and I prefer to stay out of casinos and I don’t play state sponsored lotteries either.

Wednesday, June 8, 2011

Morning Update/ Market Thread 6/8 - You Really Got Me Edition...

Good Morning,

Equity futures are solidly lower this morning following yesterday’s speech by Bernanke that failed to mention more QE is on the way, and thus we are to experience a wave of deflation until we cry “Uncle” and then accept more devaluing of our money which will surely come later, if not sooner (not that I believe they will really stop, their QE actions will just go underground). The dollar is higher as a result, bonds are also higher, oil is lower, silver & gold are lower, and food commodities are mixed.

The still worthless, conflicted, and hypocritical Mortgage Banker’s Association released Purchase Applications for the prior week… down again, this time by a supposed 4.4%, but Refinancing activity supposedly rose by 1.3%. Here’s Econohope:
The volume of mortgage applications to purchase a home fell 4.4 percent in the June 3 week, a week that closes out a flat month of May and starts June off on a weak note. Purchase volumes aren't going to be boosting expectations for home sales. Unlike purchase volumes, applications for refinancing have been on the climb and relative to purchase volumes are at their highest point since the beginning of the year. The refinance index rose 1.3 percent in the week and is getting a solid boost from low mortgage rates, at 4.54 percent for 30-year loans for the lowest level since November.

Remember, there are a huge number of Option-Arm loans resetting and that number increases throughout the year. The real problem is that most of those mortgage holders are underwater and therefore cannot refinance.

The “Fed’s” Beige Book comes out this afternoon to baffle us with more of their economic disinformation. But that comes after the petroleum report which I’m sure will show even more demand destruction and record oil inventories.

Now that the players are getting the idea that QE3 is not on the way immediately, the drug addicts are melting down. Here’s one now, crying for “reform,” which to him means more, more, and still more:
Jamie Dimon gripes to Bernanke

NEW YORK (CNNMoney) -- JPMorgan Chase CEO Jamie Dimon is still griping about financial reform, and this time, he took his complaints straight to the top official at the Federal Reserve.

"I don't personally buy the argument that because it was a financial crisis it has to take a long time coming out," Dimon said in a Q&A session following a speech by Ben Bernanke at the International Monetary Conference in Atlanta Tuesday.

Dimon blames financial reform for stifling growth. He gave the Fed Chairman a laundry list of ways regulators have already cracked down on the banking system, after the Dodd-Frank financial reforms were passed last year.

"Most of the bad actors are gone," "off-balance-sheet businesses are virtually obliterated," "money market funds are far more transparent" and "most very exotic derivatives are gone," he said.

Bernanke: Jobs still weak
Dimon, who is known for his vocal opposition of many of the Dodd-Frank reforms, said he fears those reforms may be hindering, rather than helping, the recovery.

"Has anyone bothered to study the cumulative effect of all these things?" he asked Bernanke. "Is this holding us back at this point?"

Gee Jamie, have you bothered to think about the cumulative effects of permeating the world with your money from nothing debt? This whining comes from a drug addict who belongs in jail - definitely the narcissist of the decade.

Below Arnie Gunderson hits the nail on the head regarding the revolving door between industry (special interest) and regulators and how that helped lead to disaster at Fukushima. He also points out that there is nowhere to run, and that “Hot radioactive particles in Seattle are at 50 percent of levels seen in Tokyo,” and that those particles are charged and therefore “Latch onto lung tissue.”

So, how are you feeling now about the way your government, and the government of Japan have reacted to this crisis?

Tuesday, June 7, 2011

Morning Update/ Market Thread 6/7

Good Morning,

Stock futures are higher prior to the open, with the dollar significantly lower, bonds lower, oil slightly lower, gold & silver slightly higher, and food commodities are mixed.

There is no meaningful economic data again this morning, “Consumer” Credit will be released this afternoon.

Yesterday the markets finished with the major indices in an oversold condition below the bottom Bollinger bands, and with zero percent of stocks above their 10 day moving average. That makes a bounce sometime soon fairly likely, but of course we can’t be sure what is on the agenda of those who own the exchanges, own the HFT machines, and produce money from nothing while charging the people interest on that production.

Obama’s Chief Economic Advisor, Austin Goolsbee, resigned today to head back to the classroom. What, a little pressure and he folds like a cheap suit? Yeah, yeah, he did a great job with a bad situation… NOT. Another missed opportunity to the do the right thing, but Goolsbee is just another spineless man who did not possess the courage to operate outside of the central banker captured, yet failed, paradigm.

Their real effect on the economy is summed up in the following (I think) very relevant article that only partially describes the stress placed upon today’s workforce:
Economy makes people sick, literally

NEW YORK (CNNMoney) -- In 2009, the stress caused by the recession sent Katie Pfledderer to the hospital.

Her income as an advertising executive was cut by 20% and her workload increased. To make ends meet, she had to take an additional part-time job, but the strain was more than she could bear.

"I was tired all the time and then one morning I started crying and I couldn't breathe."

Pfledderer suffered a panic attack and was taken to the emergency room. She said she had been living in fear of losing her job in the midst of the Great Recession. "It was constant concern about what's going to happen next," the 28-year-old account executive said.

As the recovery sputters, many Americans, like Pfledderer, continue to struggle in the face of sluggish job growth and falling home prices -- and that's taking a toll on their overall well being.

Thirty-five percent of middle class Americans said they or someone in their household has experienced a physical symptom of stress related to the economy, according to a recent report by First Command Financial Services, a financial service provider.

Most common were anxiety, changes in weight, sleeplessness, low energy and irritability. "These are health conditions that we want people to be aware of," said Kathryn Power, director of the Center for Mental Health Services, a division of U.S. Department of Health and Human Services.

Power said that at the start of the recession there was a sharp uptick in the number of calls to the Center's suicide hotline. "About 30% of the calls we get are related to economic distress," she said. "They were having emotional difficulties because of fear of their financial situation, fear they would lose their job, lose their home."

Speaking of how our economy damages health, the Fukushima disaster is being dragged into the light slowly but surely. All three reactors fully melted down. Plutonium exists outside of the Fukushima plant’s ground. Radiation levels inside of Tokyo are very high in spots and the government is working hard to cover that fact up. The future sickness and suffering due to their miscues will be epic, and the proper steps to truly contain the radiation further are still not taking place, thus putting us all at risk.

Monday, June 6, 2011

Morning Update/ Market Thread 6/6

Good Morning,

Equity futures are close to even this morning, with the dollar higher, bonds lower, oil lower, gold slightly off, silver higher, and most food commodities lower.

There is no meaningful economic data today, and in fact very little meaningful the entire week ahead. That’ll make the market moves interesting as people are left to ponder rapidly weakening data and whether or not more “stimulus” is on the way.

My take is that without more, the economy will quickly give way to deflation. How far will they let it go before the next round of even more massive intervention is the only question, and that’s a question that we can only guess at, so why bother? From my perspective the markets are completely broken, completely captured and thus playing at this juncture is absolutely worse than gambling, it’s only feeding the sharks.

Still, observing the markets contains value as far as keeping awareness of the situation around us. On that basis I note that the SPX on Friday descended right to the bottom of the May down channel. It needs to bounce here or that channel will be broken, and so will the April lows:

When the Nasdaq produces outside inverted hammers like the one on Friday, it draws my attention as it is a possible reversal indication:

That said, if prices slide below that hammer today then it’s a bearish sign, and that makes the action today important in assessing the decline so far which has actually been very mild and may just be a correction within the ongoing money printing uptrend. Time will tell.

Meanwhile, the Japan situation is only getting worse – their situation is dire and the admissions of the disaster and possible future risks are slowing coming to light. The problems at Fukushima were not just tsunami related, the problems began from the earthquake. We have many plants that are just as vulnerable here, and Arnie Gunderson addresses emergency preparedness in his latest video which is worth a listen:

White House & NRC Recommend 50 Mile Fukushima Evacuation, Yet Insist US Safe With Only 10

Our inaction in this regard is just another example of corporate capture and that capture clearly jeopardizes all our safety. Again, these problems are all interrelated, as the captured economy is feeding the money producers at everyone’s expense. This is a situation that is not sustainable and therefore change on a major scale is coming – hopefully sooner than later.