Saturday, July 9, 2011

Weekend Open Thread...

Friday, July 8, 2011

Morning Update/ Market Thread 7/8 - What Employment Edition...

Good Morning,

Equity futures plummeted on the Employment Situation release with headline numbers far worse than expectations, coming in at only 18,000 supposed nonfarm payroll and the headline rate spun for mass media consumption rising to 9.2%. Once again this report is way off the expectations set by the notoriously bad ADP Report that came out just yesterday. The reality, of course, is far worse and we’ll dive into that in just a minute. The immediate reaction sent the dollar lower, bonds way higher, oil lower, gold & silver higher still, and most food commodities are slightly higher.

Take a look at the 5 minute short term chart of the dollar, and you’ll see that once again it fell just off of overhead resistance. I would not be surprised to see it reverse and break that triangle higher today, we’ll see:

The expectation for the Employment Report was that there would be 105,000 nonfarm payroll jobs added, and that the rate would fall to 9.0%, not rise. Of course the truth is far worse as the economy continues to shed jobs like crazy and reports like this continue to expose the lies from the administration and from “economists” for what they are – complete nonsense. Before I jump into the spin, here’s Econospin doing their part to convince you to please, oh please, keep the Ponzi scheme going – least they wind up being included in the BLS’s numbers:
Today's employment report is abysmal. We have had two months in a row of essentially no growth. Nonfarm payroll employment in June slowed to a crawl with an 18,000 gain, following a revised 25,000 rise in May, and revised 217,000 in April. The market median forecast was for a 105,000 boost. Also, the April and May revisions were down net 44,000. Once again, the government sector held down payroll numbers as private nonfarm payrolls outpaced the total with an increase of 57,000 in June, following a 73,000 advance in May. Analysts had projected a 125,000 gain in June.

Most major industries were little changed. Goods-producing jobs edged up 4,000, following a 3,000 rise in May. Manufacturing jobs rebounded 6,000 after a 2,000 dip in May. However, construction declined 9,000 after decreasing 4,000. Mining advanced 8,000, following 9,000 gain the prior month.

Growth in private service-providing jobs slowed to a rise of 53,000 after a 70,000 increase the prior month. Leading the increase in June was leisure & hospitality, up 34,000 with professional & technical services, up 24,000. Health care continued to trend upward with a 14,000 boost. On the downside, standouts were educational services, down 17,400; financial activities, down 15,000; and temp help, down 12,000.

The government sector shed another 39,000, following a 48,000 drop in May. This latest decrease was led by local government but declines were also seen at state and federal levels.

Average hourly earnings also slowed June, coming in at no change, following a 0.3 percent rise the prior month. The consensus forecast was for a 0.2 percent increase. The average workweek for all workers in June slipped to 34.3 hours from 34.4 the month before. The June figure came in lower than the market projection for 34.4 hours.

On a year-ago basis, overall payroll jobs in June improved to a still soft 0.8 percent from 0.6 percent the previous month.

From the household survey, the unemployment rate edged up to 9.2 percent from 9.1 percent in May. The consensus expected 9.0 percent.

The June jobs report reinvigorates the argument that the economy is in a soft patch. While a number of indicators have picked up strength, employment is key for the consumer sector to add to economic growth. On the news, equity futures dipped significantly, bond prices firmed, and crude oil declined.

Pretty hard for them to spin that one. Note the revisions lower to the previous months, and also that earnings are falling as well. Price inflation in the things you need while earnings are falling. Terrific economy, and I’ve been telling you why that’s happening, and I’m going to tell it like it is once again, but first here’s the entire report…

Employment June 2011

Let’s start uncovering the lies starting with the advertised rate of “only” 9.2%. First of all, even by their own convoluted methods, the teen unemployment rate is 24.5%. When we turn to the “alternate” tables (where we get much closer to reality) we find that U-6 unemployment jumped in June a full percentage point(!) from 15.4% to 16.4% not seasonally adjusted, but still jumping from 15.8% to 16.2% even with seasonally adjustments:

Now let’s talk about the phony “Birth/ Death Model” adjustments. This number manipulation devise added a whopping 131,000 supposed jobs in June, surprisingly the exact same number this model added in June of last year. While that’s a pile of wishful manipulation, it breaks the trend where they grow the number by telling an even bigger lie than they told last year:

While this number can’t be just subtracted from the headline number it is clear that without this phony model that the economy is still shedding thousands upon thousands of jobs. A lot of those jobs are governmental jobs, heck, just yesterday the state of Minnesota shut down completely idling thousands of state workers who not only are losing pay, but also currently have no benefits either. This as Minnesota has an impossible $5 billion hole in their budget, this is just slightly smaller than Washington State, here in my home state. And this highlights the reality that is DEBT SATURATION. Once the economy is saturated with debt, then adding more debt only works to burden the economy with higher interest payments and thus IT CANNOT SUPPORT AS MANY JOBS.

This means that all the supposed experts are WRONG. They are wrong and cannot wrap their minds around debt saturation because their livings are corrupted by special interest money. But since my living is not corrupted in such a manner, I can show you the following chart comparing Base Money to the Mean Duration of Unemployment and you can draw your own conclusion – I think it is self-evident:

Just yesterday the “Fed” released their M2 money supply figures that zoomed up a whopping $76.1 billion in just the past week! This is up sharply and is a huge one week figure. Since all money in this country is created as an obligation (generally in the phony bond market), it all carries interest with it, and thus places an even greater anchor around the neck of employment.

Below you can see in the M1 Multiplier what effect adding more debt has upon the way money goes through the economy... or in this case how it fails to ripple through the economy:

Again, prior to the debt saturation point, adding debt works to stimulate the economy – after debt saturation adding debt does the exact opposite. You can see that on the following chart of the Employment Population Ratio which rose in waves leading up to the year 1999, but then has declined ever since. Hey, where is the supposed recovery?

Of course I’m not the only one pointing out the lies, John Williams at Shadow Stats also tries to paint a picture of reality by tracking employment the way it was tracked prior to the current manipulations, according to him real unemployment is pushing 23%:

As sad as these statistics are, they pale in comparison to what’s happening in and around Fukushima, Japan. The lies being told there were whoppers of historic proportions, but they are now being exposed… finally. Things like ordering irradiated TEPCO workers to stand in front of television cameras and pretend to be just ordinary citizens, ordered to lie about how nice life is and has been in the Fukushima area while failing to identify themselves as employees who were told directly to lie to the Japanese people and to the world. That’s just the tip of the iceberg, there is far more occurring than I can possibly cover here. I suggest that you stay informed on this subject, we generally discuss it every day inside of our Daily Thread.

Thursday, July 7, 2011

Morning Update/ Market Thread 7/7

Good Morning,

Equity futures rose sharply on the ADP Employment Report this morning, yet the dollar is up, bonds are down, oil is up and looking to retest $100 from below, gold & silver are higher, and food commodities are mixed.

Again today the dollar is testing the upper limit of the descending wedge, and it is moving in the oppostie direction expected for a rising equity and commodity market today. When it breaks this triangle and the boundary of that descending wedge then we'll have a good clue as to the medium term direction for stocks:

The ADP Report came in at 157,000, a sizable jump in private payroll data for June over May’s 38,000. While the ADP report does have a positive correlation with the Employment Situation Report that comes out tomorrow, it also has large misses yet is used to set expectations for Friday’s report.

The consensus for tomorrow’s report is for 110,000 nonfarm jobs, and 125,000 private payroll jobs. Each month in the past year has produced larger “Birth/ Death Model” additions, and in June of last year that model added 131,000 phantom jobs, so it’s certainly possible to create enough fictional digits to claim job creation when in fact there is none, and has been none for the past decade.

Weekly Jobless claims came in at 418,000 for the past week, this is down from the prior 428K (revised higher of course), but obviously still well above the psychological 400k mark yet again… and again… and again. Month after month, year after year of job shedding in the real world, yet here’s Econohope:
Incremental improvement is the conclusion for weekly claims data, headlined by a 14,000 decline for initial claims in the July 2 week to 418,000. The improvement is offset slightly by an upward revision of 4,000 in the prior week to 432,000. Results for an unusually large number of six states had to be estimated due to the July 4 holiday while Minnesota shows a 2,500 rise related to the state's government shutdown. The four-week average is down 3,000 to 424,750 yet, over the last several weeks, shows little change from levels in June.

Continuing claims for the June 25 week fell 43,000 to 3.681 million. Continuing claims have been slowly trending lower with the four-week average of 3.705 million down about 20,000 from the month-ago comparison. The unemployment rate for insured workers is down one tenth to 2.9 percent.

Initial claims have been steady at a stubbornly high level above 400,000 which doesn't point to robust results for tomorrow's employment report. Yet this report is a slight positive for the economic outlook and also helps to confirm strength in today's ADP report.

Amazing how long they can keep the positive façade on employment, here’s a reality check:

Please. We’ll know the true bottom is in when Econoday stops calling the bottom. Also, again I read in the Puget Sound Business Journal an article today calling a(nother) bottom in the real estate market – this comes only two days after another one of their articles describes how quickly price is still falling. Again, it’s hard to believe the fantasy created by the media that surrounds the captured commerce in this country. Obviously everything revolves around the corporation and the health thereof, not around the people and their economic or other wellbeing. This capture is definitely a huge part of the problem, most people’s reality is being spun by media whose interest is their own profit.

Wednesday, July 6, 2011

Morning Update/ Market Thread 7/6

Good Morning,

Equity futures are lower this morning with the dollar higher, bonds higher, oil higher, gold & silver significantly higher, and most food commodities lower.

Note the nice bounce in the dollar right off support. Again, the break of this triangle will tell us the mid-term direction to come:

The conflicted Mortgage Banker’s Association reported Purchase Applications supposedly rose by 4.8% in the past week, but that Refinancing Activity fell by an unbelievable 9.2% in just the past week alone. No, I don’t believe swings of that size are real, they are a product of the MBA’s conflicted and convoluted reporting techniques. Here’s Econogullible:
Up 4.8 percent in the July 1 week, the purchase index ended a soft month on an up note. The gain came despite a big rise in mortgage rates that the Mortgage Bankers Association attributes to strong economic data late last week together with the end of QE2. Rates jumped in the week led by a 23 basis point rise in the average 30-year mortgage to 4.69 percent. Refinancing activity dipped sharply on the rise in rates with the refinancing index down 9.2 percent.

Whatever, anything the MBA says regarding their own industry is not believable and is not to be taken seriously.

The Challenger Job-Cut Report shows an increase in mass layoff announcements, rising from 37,135 in May, to 41,432 in June, an increase of 11.5% in the month:
Layoff intentions remain subdued according to Challenger's count which comes in at 41,432 in June vs 37,135 in May and vs 39,358 in June last year. At 10,176, layoffs in June were heaviest in the government/non-profit category.

The non-manufacturing ISM is released at 10 Eastern this morning.

Tuesday, July 5, 2011

Morning Update/ Market Thread 7/5 - Not so Independent Edition…

Good Morning,

I hope everyone had a happy Independence day!

Equity futures are down slightly this morning, the dollar is higher, bonds are higher, oil is higher, gold & silver are significantly higher with gold so far refusing to fall beneath the $1,500 an ounce mark, and most food commodities are also higher.

The dollar has been forming a very clear triangle, and today it is bouncing off lower support. Again, the direction of break from this triangle will tell us what the next trend for equities and commodities will likely be:

Last week’s bounce in equities was very bullish with the weekly candle erasing the past two weeks of decline, and placing the major averages above their respective 50dma’s once again. That said, they are also over their upper Bollinger bands and in overbought territory. Also remember that the full version of QE2 is now officially over and the continuing version of QE3 does not have the same horsepower behind it (that we know of).

Factory Orders are released at 10 Eastern this morning. The rest of the week is fairly light data wise, but the Employment Situation Report for July is released Friday morning.

Below is a chart from Martin Weiss showing the Greek 5 year default risk still climbing even after the second “bailout.”

Of course it was no bailout at all, what is was is the exact same thing as throwing a drowning man a big chunk of concrete – gee, thanks for the help! Part of their bizarre attempt to kick the can was to force “rollovers” of big portions of their previous debts whether agreed to or not by those holding said debt… and that, is what is otherwise known as a default. Amazingly, the ratings agencies picked up on this not so little fact, that you can’t just change the terms of a contract unilaterally without deserving a default rating.

It’s still amazing to me that after all this time we collectively still can’t acknowledge the reality of the situation and then truly deal with it. The impossible math is glaringly obvious to even the most casual observer. What this says is that we are pressing on regardless because of special interest capture of government. It is complete and it is total. Proof of that is to even consider for one moment appointing Jamie Dimon, the CEO of JPMorgan, to head the Treasury Department. If they do that, then the shift to corpocracy/ kleptocracy will be complete. There’s really only one step worse, and that would be someone like Dimon assuming the role of President – not that he isn’t effectively already in that role.

And the tragic truth of the matter is that these sick narcissist figures like Dimon are literally destroying many, many lives, both economically and physically. The tragedy that is Fukushima is yet another example of special interest capture that is literally going to cost thousands upon thousands of lives. The cover-up and lies emanating from Japan are tsunami-like in proportion. The NRC is complicit and will never do the right thing until forced.

I hope everyone realizes that you are not living the “Independence” that is being spun at you. Be careful WHO and what you pledge your allegiance to.