Saturday, June 25, 2011

Weekend Open Thread...

Friday, June 24, 2011

Morning Update/ Market Thread 6/24 – Still No Adults Edition…

Good Morning,

Equities are close to even this morning after being down earlier. The dollar is higher, with oil falling to just above $91 a barrel, gold and silver fading too, and most food commodities rising slightly.

The dollar is approaching key down slopping overhead resistance again. Yesterday it rose right into it and retreated right on queue:

The Yen is getting close to breaking out of its sideways move and also needs to be watched closely.

As I watch the actions of the United States, the central bankers, the Japanese, and the Europeans I am left to just shake my head and wonder if there are any adults left in this world whatsoever? It seems to me that the globe is being run by a bunch of precocious teens who know absolutely nothing about reality – certainly they never learned even the most basic math.

Release oil out of the strategic reserve into record high levels of inventory and falling demand. Okay, boy, am I impressed. I could go on and on about how that is only 16 hours of world consumption, but I see through their games. That’s why I prefer to view such immature actions simply as manipulation to drive the markets in their preferred direction, and to make a political statement so as to look like the clowns are actually “doing something.”

Then we get version 1,238 of the same old play, this one is definitely a Greek tragedy. Again, no adults, just immature narcissists fighting over how they will split up and rob the productive efforts of the people. Sickening.

As far as I can see, no one in a position of power is willing to even admit reality… Well, there is one, unfortunately Mr. Farage doesn’t reside in America:

Note the reaction of others when confronted openly about reality. Nothing. It’ just like talking to a stone wall.

Meanwhile our completely trumped up statistics show a .1% improvement in GDP from 1.8% to 1.9% supposed “growth.” This is the third revision for Q1, 2.0 was the consensus of idiots. Complete baloney, the only thing that’s actually growing is the supply of digital money and the private “Fed’s” balance sheet. Here’s Econoday for anyone who still cares to read the spin:
The economy in the first quarter was marginally stronger than previously believed as the Commerce Department's third estimate for GDP growth was nudged up to 1.9 percent annualized from the prior estimate of 1.8 percent. The consensus called for 1.9 percent growth.

Final sales of domestic product were unrevised at an annualized 0.6 percent. Final sales to domestic purchasers were revised down to 0.4 percent from the earlier estimate of 0.7 percent annualized. The lower estimate for final sales to domestic purchasers was from lower numbers for investment in equipment & software and government purchases. PCEs growth was unrevised overall.

Economy-wide inflation was incrementally higher with the GDP price index rising 2.0 percent, compared to the earlier estimate of 1.9 percent. Analysts expected 1.9 percent.

What irrelevant bull.

The Durable Goods report came in plus 1.9% in May, most of which was aircraft orders which is about the only thing of value still made in America – although I note that at the Paris airshow that EADS (Airbus) is outselling Boeing by about 4 to 1 this year. Again, money printing equals higher costs, those higher costs translate into “higher sales,” and thus apparent growth is created. Of course the problem with apparent growth is that wages don’t keep up, and thus eventually only the wealthy have the money to fly or even to eat. Here’s the spin the way the narcissists see it:
Manufacturing may not be as weak as suggested by recent manufacturing surveys. New factory orders for durables in May rebounded 1.9 percent, following a revised 2.7 percent decline the month before (previously estimated at down 3.6 percent). May's figure came in higher than analysts' projection for a 1.5 percent gain. New durables orders excluding transportation also made a comeback, increasing 0.6 percent after a 0.4 percent drop in April.

For the latest month, gains were broad-based by industry. Transportation led the way with a monthly 5.8 percent jump, following a 9.4 percent drop in April. The swing in both months was largely nondefense aircraft (Boeing) which surged 36.5 percent in May after a 29.0 percent fall the month before. Defense aircraft rebounded 5.5 percent after a 0.4 percent dip. However, the auto industry appears to still be suffering from supply shortages. Motor vehicles edged up only 0.6 percent, following a 5.3 percent fall in April.

Also seeing gains in May were primary metals, up 1.8 percent; machinery, up 1.2 percent; computers & electronics, up 0.4 percent; and electrical equipment, up 3.2 percent. Fabricated metals were flat while "other durables" slipped 0.8 percent.

Business investment is improving in coming months as new orders for nondefense capital goods excluding aircraft also rebounded, by 1.6 percent after dipping 0.8 percent in April. Shipments for this series rose 1.4 percent, following a 1.5 percent decline the month before.

Today's report is good news for manufacturing and the economy. Yes, durables orders are volatile but the gains were widespread and were not dependent on a rebound in autos. Once supply disruptions are addressed, autos will add to underlying strength in coming months.

Sorry, but this same old tripe is just getting old.

Thursday, June 23, 2011

Morning Update/ Market Thread 6/23 - Paint it Red Edition…

Good Morning,

Well, Trichet says risk signals “Red” as crisis threatens banks, so that coupled with a significantly down market add up to our central banker manipulated market theme of the day. The dollar is screaming higher, Euro lower, bonds higher, oil down significantly to the $91 level, gold and silver are taking hits, as are most food commodities.

Trichet Says Risk Signals ‘Red’ as Crisis Threatens Banks

June 23 (Bloomberg) -- European Central Bank President Jean-Claude Trichet said risk signals for financial stability in the euro area are flashing “red” as the debt crisis threatens to infect banks.

“On a personal basis I would say ‘yes, it is red’,” Trichet said late yesterday in Frankfurt after a meeting of the European Systemic Risk Board, referring to the group’s planned “dashboard” to monitor risks. “The message of the board is that” the link between debt problems and banks “is the most serious threat to financial stability in the European Union.”

In other words, no hint of more stimulus from Bernanke yesterday and thus those who own the banks, and own the exchanges, and own the HFT machines are going to continue with the deflation trade until they get what they want – more drugs for the addicts. Of course the addicts are also the pushers – they broke the cardinal sin of pushers everywhere… don’t get addicted to the product!

Of course their debt saturated condition has created structural unemployment and the numbers out this morning for last week are just like Groundhog day… going on four years now of structural weakness and they still haven’t admitted that the only way to truly stimulate the economy is to do the exact opposite of what they are, and that means working to unsaturate. Of course that assumes they care which is probably a bad assumption. Here’s Econoday, take a look at the revision for last week, twice as large as usual:
It's an uncertain jobless report for the June 18 week though the headline news isn't good showing a 9,000 rise in initial claims to a higher-than-expected 429,000. The Labor Department had to estimate results for six states, which is a sizable number, due to what it says are "technology issues" which must mean computer problems. Hopefully, the department erred to the high side and the total will come down with next week's revision. But revision is another negative in today's with the prior week revised 6,000 higher to 420,000.

A look at month-ago change, which offers a gauge for the monthly employment report, is also mixed. The 429,000 level is 15,000 higher than the May 14 week, a sampling comparison for the household survey which generates the unemployment rate. But a look at the four-week averages for the same weeks is a positive, showing a nearly 15,000 improvement to 426,250 in the latest week.

Among other data, there's little change in the June 11 count for continuing claims, at 3.710 million, and no change in the unemployment rate for insured workers, at 2.9 percent.

There's little initial reaction but this report won't be a positive for today's financial markets. And it's also a disappointment that initial claims aren't moving lower and seem stubbornly above 400,000, in fact they've been over 400,000 now for 11 straight weeks.

Not that 400k is anything but a psychological number… it’s been four years of over 350k, and that means that jobs have been continually shed during that time – there was never any “recovery,” there was only money printing that created apparent “growth” in their trumped up statistics.

While I’m on the subject of trumped up statistics, it is being suggested that they monkey with the inflation statistics again. This would be done for the same reasons it has been done in the past, in order to “save” money paid out in programs tied to inflation. This perversion causes a huge disconnect between almost all of the statistics and reality. The disconnect is already so large that it’s simply intolerable, the thought of making that disconnect larger still is simply revolting:
Change To Inflation Measurement On Table As Part Of Budget Talks -Aides

WASHINGTON -(Dow Jones)- Lawmakers are considering changing how the Consumer Price Index is calculated, a move that could save perhaps $220 billion and represent significant progress in the ongoing federal debt ceiling and deficit reduction talks.

According to congressional aides familiar with the discussions, the proposal would shift how the Consumer Price Index is calculated to reflect how people tend to change spending patterns when prices increase. For example, consumers tend to drive less when gas prices increase dramatically.

Such a move is widely seen by economists as resulting in a slower rise in inflation. That would impact an array of federal programs that are linked to CPI including the Social Security program and income tax brackets set by the federal government.

The proposal could lower federal spending by around $220 billion over the next decade, based on calculations by last year's White House deficit commission, which recommended the change as part of its final report.

According to two congressional aides familiar with the budget negotiations, the shift is being "seriously discussed" as part of the ongoing talks to strike a budget deal, that would be used to ease the passage of a required increase in the country's debt limit.

Those talks involve Democratic and Republican lawmakers from both chambers and are led by Vice President Joe Biden. The group held its latest meeting Tuesday as they strive to reach the broad outlines of a compromise on federal spending by the end of the month.

In a press conference that took place before the meeting, House Majority Leader Eric Cantor (R., Va.) declined to comment on the specific proposal, other than to say that "a lot of things are on the table." But asked whether the proposal would be interpreted as a tax increase and therefore a non-starter for Republicans, Cantor said it could be seen as both impacting tax rates and benefits paid out by the federal government.

In other words, the impossible math is “forcing” them to consider doing crazy things… anything but the right things. You know, things that would actually benefit the people they are supposed to represent. And that’s because they are representatives alright, they represent the special interests who get them elected, they certainly don’t represent you and me. And there’s your representative government for you.

The soon to be extinct middle-class meanwhile wallows in the aftermath of their conflicted actions. The private “Fed” of course set up this dynamic and politicians are completely unwilling to even discuss changing what really needs to be changed. The Chicago “Fed” numbers came in negative again this morning, once again highlighting the failure that is private central banking – negative .37 and note that the prior month was revised downward too:
A positive swing in production-related indicators made for improvement in the Chicago Fed national activity index which comes in at minus 0.37 for May vs a revised minus 0.56 for April. Production, which brought down the April reading by 0.16, added 0.05 to May's headline.

But now the negatives. The drag from employment increased to minus 0.04 from minus 0.02 while consumption & housing subtracted 0.36, a heavy negative though a little less heavy than the minus 0.40 of the prior month.

The index's three-month average deepened to minus 0.19 from April's revised minus 0.15, which of course is a negative. A possible negative is the outlook for the June report where early indications on production are unusually negative and which point to an unwanted swing for what was May's biggest plus.

New Home Sales are released at 10 Eastern this morning.

The VIX is back over the 200 dma, and the market is clearly still inside of the downtrend that began in May. Those who believe that QE can end to no effect are simply high, or are shills distributing their dramatically overvalued shares to you. Don’t worry, it’s all just another manipulation designed to get the private central bankers what they want – more of your productive life energy.

Wednesday, June 22, 2011

Morning Update/ Market Thread 6/22 - Running with the Devil Edition…

Good Morning,

Not much action to report ahead of the FOMC whipsaw to come at 12:30 Eastern… so, while we wait to be manipulated by that group of narcissists the dollar is slightly higher, bonds are higher, oil is higher, gold is passing $1,550 again to the upside, silver is also higher, and food commodities are mixed.

Yesterday Existing Home Sales reportedly fell from 5.05 million to only 4.81 million. Hello, it’s springtime, sales are supposed to be rising, not falling… and this is yet another depression era print with home sales down, get this, 15.3% year over year. Not to worry, the National Association of Realtors thinks this is the bottom… just like the last 50 times they thought it was the bottom:
The housing slide deepens with existing home sales falling 3.8 percent in May to a 4.81 million annual rate. The year-on-year rate deepens to minus 15.3 percent from April's minus 13.8 percent. Supply on the market, at 3.72 million, is falling but not enough relative to the decline in sales as months supply rose to 9.3 months vs April's 9.0 months.

The glass half full shows a rise in prices, up 3.4 percent for the median to $166,500 and up 2.0 percent for the average to $214,400. But the heavy supply doesn't point to much pricing power in the months ahead. Another plus is that sales of single-family homes, the central component in the report, fell at a slower rate of minus 3.2 percent vs minus 8.1 percent for the much smaller condo category. Also, heavy weather may have played a role as the month's contraction is deepest in the Midwest.

The National Association of Realtors is definitely looking at the bright side and is actually spilling the beans on next week's pending home sales data saying the report, though based on incomplete data, will show "solid gains." The NAR believes, and hopefully they're right, that May will prove to be the year's bottom for the housing sector. New home sales, which had been especially weak though improving in the last couple of reports, will be posted on Thursday.

NAR is another great example of a conflicted special interest who has no business reporting on important economic data pertaining to their own industry. They have already been caught red handed manipulating sales data to make the market appear better than it actually is, but of course the special interests have the money and thus nothing has changed because they have captured our government and regulators.

Here it is almost July, and we are getting close to the peak in Option-Arm resets – in fact the peak is just a couple months away:

My take is that a bottom in housing prices is no longer that far away… they now could bottom within the next year to 18 months. Remember who it is that is saying that. No, the impossible math of debt has not been fixed, and until it is the market will have difficulty moving forward, but a significant weight is about to be lifted so the next round of QE may actually produce house price inflation – I would not bet against it.

While I’m not waiving the “All Clear” flag yet by any means, I am saying that with this next wave of deflation that buying real estate into the fear this time will be appropriate… as long as it pencils out. It’s really only appropriate to own income producing property and enough to live comfortably and safely upon. Otherwise real estate should not be considered an “investment” as it is actually a liability that requires cash out of your pocket. I will say this, that here in the northwest it is still very difficult to get rental property to number out, and it absolutely must before I would consider owning more.

The corrupt and hypocritical Mortgage Banker’s Association, another fine special interest group, says that Purchase Applications fell 2.8% this week, while Refinancing Applications fell 7.2%. While a 7%+ move in one week is still completely unbelievable, it is only half of last week’s move. I personally cannot believe we let clowns such as the MBA utter a single word about the economy in public – completely corrupt, but here’s the “data:”
The number of mortgage applications fell in the June 17 week cutting into but not reversing very strong gains in the prior week. The index tracking purchase applications fell 2.8 percent with refinancing applications down 7.2 percent, which in combination pulled the composite index down 5.9 percent. Behind the pull back, at least in part, are the week's slightly higher rates, at 4.57 percent for 30-year loans for a six basis point rise in the week.

Whatever… see the Option-Arm chart above.

The FHFA House Price Index will be released at 10 Eastern this morning and will be reported inside of our Daily Thread.

Question? Who is the dumb one? The “Fed” clowns who are never right and manipulate the globe, or those who wait to parse and hang on their every ill conceived word? And, if a dollar falls in the forest, how much harder will you have to work to afford a pitchfork? Thoughts to ponder…

Tuesday, June 21, 2011

Morning Update/ Market Thread 6/21 - Clunk, clink, clunk goes the can Edition…

Good Morning,

Equity futures are continuing higher this morning following Friday’s VIX market buy signal – a short term signal. The dollar is down, bonds are flat, oil is higher, gold & silver are higher, and food commodities are also higher.

Note how the market has a somewhat self-regulating feature in that commodities zoom with the hot money stimulus and eventually work to cap profits. This definitely robs the people of their discretionary money. We keep waiting for the bond market to discipline the equity market, but with the “Fed” buying up bonds that discipline is being enforced in other ways… eventually. We hit a high, pulled back, and now may be starting another run… will it continue? Tough to tell, but for it to continue over a longer duration it will need more fuel or it will peter out.

You can see how the dollar impacted this move if you look at how it came right to the top of the upper downtrend line and then turned back down off it. Again, when it breaks this range we’ll have a better idea of what the next wave is going to look like:

Take a look at how the VIX responded following the return to inside of the Bollinger band range:

The Russell 2000 still looks like a Head & Shoulder’s top to me, we may be bouncing off the neckline now to form a right shoulder:

The NDX may also be building a similar pattern.

Underpinning the fundamentals, of course, is macroeconomic debt saturation. It’s everywhere and it’s exactly what’s plaguing Greece and really all of Europe as well (and most of the world as well). This is producing symptoms of stress that you can see everywhere. The stress pops up here, then pops up there, and the “Fed” and their IMF and other central bank cronies go around trying to put out the brush fires while simultaneously keeping their failing scheme in motion. The latest stress is really in the credit markets again where interbank lending occurs. This can be seen in the SHIBOR rates. Below is a weekly chart of SHIBOR, you can see the stress building, and it’s building quickly:

Existing Home Sales are released at 10 Eastern today, we’ll cover it inside the Daily Thread. Tomorrow is FOMC manipulate you day.

Speaking of existing homes and brush fires… the HUD is implementing a $1 billion program today to help distressed homeowners who have taken a hit to their income in certain states – Washington state is one. They are offering no interest loans up to $50k… get yours today! Seriously, if you are in distress, you should look into it, here’s a link to an article describing it: $1 Billion in Homeowner Aid Offered

Of course that program is just another sad Band-Aid that in reality is just another back door bailout of the banks designed to keep liquidity flowing through them for a little while longer, all the while preventing what needs to happen from really happening. Clunk, clink, clunk goes the can…

Monday, June 20, 2011

Morning Update/ Market Thread 6/20 - Burning Ring of Fire Edition…

Good Morning,

Equity futures are lower this morning, with the dollar higher over the weekend but falling sharply just prior to the open, bonds are doing likewise, oil was lower but is rising, gold & silver are staying level, while food commodities are continuing their correction lower.

There is no economic data today and it is a light week ahead with Home Sales data, the final trumped revision of Q1 GDP, and of course we get to sit on pins and needles to listen to the latest tripe coming from the “Fed’s” private lips as they release their FOMC meeting minutes and then hold a press conference to tell us how they are devaluing our money further, thus robbing our productive efforts – can’t wait.

Funny that they are willing to hold a phony press conference, but yet the real government is working hard to repress information to the public. You know, little things like experts saying that the amount of radiation from Fukushima is going to be 20 times worse than Chernobyl. Or that the infant mortality rate in the United States is jumping, up 35% in the northwest it was just announced but ignored by the mainstream – experts pin the cause on Fukushima radiation.

Experts also are warning that Fukushima corium is eating its way through the concrete pad beneath the reactors and that the Japanese need to be building an underground dam to prevent the spread of radiation into the ground water and into the ocean – but that is being ignored by TEPCO, and the government, long overcome with special interest pressure, does not press for action and thus the radiation continues to spill out uncontained.

A Frenchman has been posting videos of radiation readings around Japan for months now… one of his films went viral and the day following all of his YouTube videos have been taken down.

Here in the United States we already have one nuclear power plant completely underwater with the Missouri River flooding, two more are now threatened. It has been reported by the alternative media that our own government has issued a news blackout regarding these incidents and potential threats they represent.

Also blacked out here in the United States, a New Hampshire man committed self-immolation this weekend by setting himself on fire on the steps of a county courthouse, he did not survive, and our media is not reporting this. He wrote a 15 page missive basically slamming the breakdown of the rule of law in this country. He was a Marine with 21 years of service – you can read about it here: NH MAN BURNS SELF AT COURTHOUSE IN PROTEST

The fiat fire continues to burn around the world with violence resulting all over the middle east, and protests occurring in Europe. The on again, off again re-“bailout” of Greece is quite the circus to watch. The IMF (same old private bankers who anointed themselves) want to create money from nothing to both lend and to buy up the infrastructure, including airports and highways if you can believe that, and I’m sure you can because you’re reading here. Of course this is just completely turning over your sovereignty to a bunch of thug criminals dressed in suits.

And thus the beat goes on with no meaningful real solutions in sight. Should Greece continue to resist banker efforts, and I sure hope they do, then as their bonds default it will ripple through the banks and another financial freeze will be very likely to occur, this time with money hesitant to flow into debt saturated countries and the dominos will topple from there – as they should. They should because without clearing out the debt saturated condition, there will be little or no economic prosperity for any but those who create the debt money.

On Friday the VIX closed just below the upper boundary of the Bollinger band. This produced a market buy signal, but remember that it can take awhile for the market to respond - or it could happen right away or not at all depending on the will of the crooked casino owners (of course):