Saturday, September 3, 2011

Weekend Open Thread...

Friday, September 2, 2011

Morning Update/ Market Thread 9/2 - Lack of Labor Day Edition…

Good Morning,

Since the Emperor has already been shown to be wearing no clothes, further proof of that fact supports the need for more of the same? Uh, okay.

Stocks were already diving overnight, but then tumbled on the release of the Employment Situation Report which produced headline numbers of ZERO Nonfarm Payroll jobs, while the rate stayed at a supposed 9.1%. Of course we know better, the true numbers rival the Great Depression numbers, those falling for the massaging of the numbers are simply central banker dupes.

In addition to stocks plunging, bonds are zooming, the dollar is down, oil is down, both gold & silver are zooming, and food commodities are lower. Again, this action shows the truth (except for the bond market), in that this is a monetary phenomena… it is there that you find the root of the unemployment.

Don’t be fooled by the talk of gold backed money, remember the “Roaring Twenties?” They roared despite being on a gold standard at the time. What really matters is not WHAT backs your money, but rather WHO controls its production.

Can you see the following conversation?

“Gee, Mr. President, what number for NFP would be the right number to sell your special interest proposed ‘jobs package’ without causing unnecessary alarm amongst our contributors?”

“Uh, well, how about zero?”

“Oh snap! Good choice, Mr. President. I’ll get the boys right on that!”

Of course they aren’t even bright enough to come up with something convincing. A zero, EXACTLY, number? Come on, do they think we are all stupid and no one knows how to do math? Look, the odds of producing that number dead on are extremely long if you are in fact using any form of scientific method to gather your data. To me this joke of a number is further proof that none of it is real anymore. Sorry, but while I was born at night, it wasn’t last night. Some advice for the clowns… next time at least fake it a little more cleverly.

Here’s Econogullible’s spin:
Apparently, the recent federal debt ceiling debate fiasco and stock market decline spooked businesses to put a hold on hiring. Payroll jobs were unchanged in August, following a revised 85,000 increase in July, and revised 20,000 in June. The market consensus (updated Thursday afternoon) called for a 60,000 increase for the latest month. Revisions for June and July were down net 58,000. As in recent months, private sector employment was a little less weak since government jobs pulled down the total. Private nonfarm payrolls edged up 17,000 in August, following a 156,000 gain in July and 75,000 increase in June. The August figure came in sharply lower than the median estimate for a 75,000 increase.

In the private sector, goods-producing jobs edged down while service-providing jobs rose modestly. Goods-producing jobs slipped 3,000, following a 52,000 rise in July. Manufacturing jobs dipped 3,000 after a 36,000 boost the month before. Construction employment declined 5,000 after increasing 7,000. Mining expanded 6,000, following an 8,000 gain in July.

The public sector continued to contract as government employment fell 17,000, following a 71,000 drop in July.

Earnings growth fell back from the auto-sector induced jump in July. Average hourly earnings slipped 0.1 percent after jumping 0.5 percent in July. The market median estimate was for a 0.2 percent increase. The average workweek for all workers in August edged down to 34.2 hours from 34.3 in July. The consensus had called for 34.3 hours.

From the household survey, the unemployment rate posted at 9.1 percent, equaling the prior month and expectations.

Today's report clearly shows that momentum in the labor market has stalled. The curiosity is that while hiring has come to a standstill, layoffs have not picked up. Still, today's news is not good news for the economy and places more emphasis on the importance of President Barack Obama's upcoming plan for job creation and on whether the Fed will engage in QE3. The odds of another round of quantitative easing just went up.

Uh, huh. Catch that last part? Guarantee you that pretend conversation above is not that far off the mark. Are you scared enough yet to support more pathetic special interest rob you policies? Disgusting to watch the charade.

Here’s the entire phony report from the BLS which, when the fall of Rome occurs, will hopefully be replaced with a real agency that works in reality instead of political kabuki land:
Employment August 2011

When looking under the hood of this report, there is nothing but troubling numbers to be found. For example, in just one month the number of part time workers rose by 400,000. In order to produce zero job growth then, that must mean that 400,000 full-time jobs no longer exist, right? Oh, and last month’s number were revised sharply lower too. And that’s the truth about what’s happening, discourage workers are no longer counted, and those that still have jobs have either taken large pay cuts or are working part-time. The true statistics are being masked by manipulating who is counted in what category. The truth can be seen clearly in the following three charts which I’m surprised the “Fed” still makes available. The first one is the Civilian Employment Population Ratio – it clearly shows that all the fluff jobs created by financial engineering are now gone, as in all of them. Take a look at the time frame of expansion, and then how contraction coincides with reaching the debt saturation point:

The second chart shows the Mean Duration of Unemployment. Unbelievable that this chart doesn’t receive more attention. Again, the creation of debt via all forms of financial engineering works to add jobs until the debt saturation point is reached, but from that point forward the addition of more debt works to destroy jobs and real productivity:

And finally, despite the fact that our population has doubled since WWII, today we employ fewer people total in Manufacturing than we did in the year 1942!

Sick. And if you like that, then keep supporting the current paradigm until you, too, are either no longer employed or become “under-employed.”

Turning back to the BLS’s report, we see on the “Alternate Table” that U-6 unemployment, the one most closely resembling numbers of the past, remains stubbornly above 16%, with the seasonally adjusted number rising from 16.1% to 16.2%:

The phony “Birth/Death Model” created another 87,000 phony and nonexistent jobs:

Amazing that with all their “models” that ZERO would be their overall number. Yeah, that’s the ticket.

Shadow Stats knows what's real and what's not. Note that his number is still trending up while .gov numbers are trending down. He believes real unemployment is closer to 23% than it is to 9%.

Since we’re discussing things that aren’t real, might as well look at the “markets.” Below is a four hour chart showing a large rising wedge. The Elliott wavers are thinking that may be a wave 4, if the bottom boundary is broken then wave 5 down will likely be underway:

Please, oh please, won’t you give me some more QE? Of course this is clearly showing the root problem of WHO it is that’s in control of producing the money. The private banks are currently in control, so all forms of bailout benefit them while leaving the vast majority of others in the dirt. This will not change until the people take back control of that privilege that rightly belongs to everyone equally. That’s the root of the problem, just so that we can get down to what’s really wrong.

Thursday, September 1, 2011

Morning Update/ Market Thread 9/1 - Sailing into the Mystic Edition…

Good Morning,

Equity futures are flat to down slightly this morning with the dollar rising a considerable amount, bonds are up a little, oil is hanging out at the still hurt locker level of $88.80 a barrel, gold’s hanging out at $1,825, silver is flat, and food commodities are also close to even.

The market is entering pretty stiff resistance in and just above the current area. On the SPX Daily chart below you can see that we are now at the 50% retrace level, approaching a rapidly descending upper Bollinger Band, just beneath an also down slopping 50DMA, and also just beneath a major long-term upslope line:

Weekly Jobless Claims once again remain stubbornly above 400k, coming in at 409,000, this is down from 417k last week, of course revised higher to 421k. In short, nothing to see but an ongoing depression here – just remember the old saying about it being a recession to those who have jobs, but to those who don’t it definitely feels like a depression:
Initial jobless claims are trending sideways pointing to no significant improvement in the labor market. Initial claims did fall 12,000 in the August 27 week to 409,000, but the improvement is offset in part by a 4,000 upward revision to the prior week to 421,000 which is the highest level since mid July. Showing no improvement from a month ago is the four-week average which at 410,250 is up for the second week in a row and compares against 408,250 at month end July.

Continuing claims fell a slight 18,000 in data for the August 20 week to 3.735 million with the four-week average, down 3,000 to 3.726 million, trending flat for the last two months. The unemployment rate for insured workers is unchanged for the third week at 3.0 percent.

The Labor Department said there were no special factors in the latest report and specifically said there was no impact from the strike at telecom provider Verizon. For tomorrow's employment report, this report is unlikely to narrow expectations which range widely from a small contraction to a moderate gain.

Second quarter Productivity was revised downward to -.7%, while at the same time Labor Costs rose 3.3%, the worst of both. Of course I believe that actual productivity is far, far lower than reported, that’s because inflation is underreported, thus making productivity that’s measured in dollars artificially high. Also GDP counts the production of debt, financial engineering, as being “productive,” so it’s all complete mystic nonsense, and really that’s the giant disconnect from reality that has become the “economy.” At anyrate, most people can’t deal with the reality, and so they speak in the Mystic without realizing it. Oh, speaking of which, here’s Econoday actually not pumping for a change:
As expected, second quarter productivity was revised down while unit labor costs were revised up slightly. Nonfarm productivity fell an annualized 0.7 percent, compared to the original estimate of a 0.3 percent dip and a 0.6 percent decrease in the first quarter. The consensus forecast called for a 0.5 percent decrease for the second quarter revision. Unit labor costs rose a revised 3.3 percent in the second quarter, compared to the initial 2.2 percent and first quarter's 6.2 percent. The drop in productivity reflected a revised more sluggish rise in output of 1.3 percent, compared to the initial estimate 1.8 percent and a first quarter rise of 0.9 percent annualized. Hours worked were unrevised up 2.0 percent.

Compensation grew an annualized 2.7 percent in the second quarter (originally 1.9 percent), following a 5.6 percent jump in the first quarter.

Year-on-year, productivity was up 0.7 percent in the second quarter-down from 1.2 percent in the first quarter. Year-ago unit labor costs came in at up 1.9 percent in the second quarter, compared to a rise 1.4 percent in the prior period.

Today's revisions are a reminder that the economy is soft (sluggish output) and that businesses likely see labor as expensive, reducing the incentive to hire.

The Manufacturing ISM and Construction Spending for August are released at 10:00 Eastern. I expect these to be not pretty, we’ll see, please join us in the Daily Thread as we head into the Mystic for a discussion on their release.

Wednesday, August 31, 2011

Morning Update/ Market Thread 8/31 - Clear the Debt or Wallow Edition…

Good Morning,

End of month dreams and QE fantasy are my versions of what is responsible for the hyper-manic-inflate-at-any-cost moronic mentality, which of course, has led to a fluffy higher feel not-so-good queasy kind of “market.” Along with the queasy fantasy of higher stocks (for the time being), the dollar is lower, bonds are higher (watch out), oil is slightly lower, gold slightly lower, silver is higher, and food commodities are flat this morning but still high enough to make one choke.

Oh sure, the media says the data is great! That’s why the stock market ramped all night long and into the morning, yeah, that’s the ticket… it was the ADP report, yeah… no, wait, it was the rumor of another bailout, yeah, that’s the ticket…

Hello, “Consumer” Confidence crashed yesterday, as in cratered for the month of August. It plunged from the last already depression era read of 55.9 (1985 = 100 on this scale), all the way down to only 44.5. For those who do math, that’s a 20% one month plunge to depths reserved for times of great fear and anxiety – a dim outlook of the future is definitely there. And guess what? Retail Sales follow Consumer Confidence fairly closely. Not that I believe the Retail Sales Index, but I do believe they track one another, and so take a look at this chart showing the two together. Look closely, and you’ll see that when consumer confidence falls, so too do sales:

Don't panic, but August is a cliff month, and as more economic reports come out for that month, I think the picture is going to be pretty ugly, even with trumped up data.

It was reported this morning that Canada’s Q2 GDP turned negative for the first time in two years, also not a good sign for the trend.

The completely hypocritical and morally reprehensible Mortgage Banker’s Association reported that Purchase Applications supposedly rose by .9% in the prior week, but that Refinancing Activity fell by a whopping 12.2 crazy % in just one week. Whatever, these guys are clowns, their reports belong in the trash, and you will almost always be better off by doing the exact opposite of what they suggest. Here’s Econocomplicit:
Rates are coming down but points paid are going up which the Mortgage Bankers Association says is pulling down volume of refinancing applications which fell 12.2 percent in the August 26 week. A plus is that the purchase index ended three weeks of heavy decline though with only a mild 0.9 percent gain. Rates are near 10-month lows, at 4.32 percent for 30-year lows for a seven basis point decline in the week. Points for 30-year loans increased to 1.30 from 0.88 (including origination fee) for 80 percent loan-to-value ratio loans.

Turning to Employment, the first report out for August is the Challenger Job-Cut Report which actually showed improvement, falling from 66,414 to 51,114. This report has not, however, correlated well with the actual Employment Report which comes out Friday, but it’s still used to set expectations for the clown brigade:
In what may be good news for Friday's employment report, layoff announcements slowed in August to 51,114 from July's 66,414. These data are not seasonally adjusted which clouds month-to-month assessments which are especially sensitive to seasonal change. But a look at year-on-year rates of change shows a slower rate of deterioration this month, to 47% against August 2010's level of 34,768 from 59% against July 2010's 41,676.

The report makes special note that announcements of government layoffs, centered in the military, are the heaviest of any sector this month. Challenger, Gray & Christmas, an outplacement firm that compiles the report, warns that federal layoffs, tied to the need to lower the deficit, are likely to remain heavy this year and through the next several years.

The semi-worthless ADP Report also is used to set expectations, and they are saying that Nonfarm Payrolls fell from 114,000 in July to 91,000 in August, of course July was revised down, and this report was way off the mark last month. I’m not 100% sure, but I suspect this report is a part of the manipulate the markets, profit from HFT swings, rob ordinary people blind, scheme that the Wall Street boys run on the public. I don’t trust this data, and I don’t trust them – hence I say I would rather give my money to a known convicted felon than these guys, at least with the felon the pretense is gone:
ADP is calling for a 91,000 rise in private payrolls for August, down from a revised total of 109,000 in July. Expectations for Friday's non-farm payroll headline are plus 67,000 which would be lower than July's 117,000. Markets are showing no significant initial reaction to today's report.


Chicago PMI and Factory Orders are set to come out just after the open.

Macroeconomic Debt Saturation is the diagnosis. The cause of the disease is giving private individuals the power to produce money from nothing, then allowing them to corrupt all systems with it.

The cure is certainly not more “stimulus,” nor is it more “quantitative easing” which the private crooks at Goldman and JPMorgan are calling for. No, the cure is to remove the debt saturated condition and if you don’t want it to return, then you must also remove the crooks. Japan did not learn that lesson, and there they sit, wallowing in an economic and nuclear wasteland. Wallowing in their own waste, literally.

Wallowing in our own waste is the good/optimistic version of what’s in our future if we fail to clean out the debt along with the roots of the problem.

Until we put the clowns to bed, put on your nuclear rose colored glasses and get real, because it’s easy come for the fluff, and soon it’ll be easy fluff go.

Tuesday, August 30, 2011

Morning Update/ Market Thread 8/30 - Roller Coaster, Hope You’re Enjoying the Ride Edition…

Good Morning,

Equity futures are rolling lower this morning with both the dollar and bonds rising to erase yesterday’s moves. Oil is lower, gold is on the up ramp as is silver, while food commodities are free falling into the gap up that was created yesterday! Wee, isn’t this fun?

Yeah, if you’re 8 years old it’s real exciting and you want to experience those emotional highs and lows again – what fun! But to call these “markets,” or to claim that feeding your money into them is “investing” is a long, long stretch from my point of view. We are so far away from the concept of investing that it’s hardly recognizable.

When one invests, for real, they are providing capital for someone else to use in a productive manner. You know, old fashioned things likes real goods and services that create real jobs. Not today. Today “investing” goes like that roller coaster ride for most Americans, but not if you’re Warren Buffett. No, no… Warren does something entirely different – he uses his money to buy his way into face time with the President where he suggests that he’d be happy to provide a few billion to help shore up an insolvent and worthless bank if only the good people will guarantee his “investment” and provide a guaranteed return of hundreds of millions.

Quite the contrast, no? And it’s certainly not the first time that he’s used the taxpayer to his benefit. That type of inequity is a marker – it signifies that “other events” are going to be fueled and that major league change is enroute.

Consumer Confidence is released at 10:00 Eastern, we’ll report that depression era read inside of today’s Daily Thread.

This morning the Case-Shiller quarter 2 report for the month of June came out. This report is somewhat better than May’s, especially in the 10 city figures, but if you take the time to read the report you’ll find that the National Index year over year number is still negative by a whopping 5.9%! That’s a ton of price movement in the downward direction, don’t let the happy talk fool you. Here’s Econofool:
Home prices were trending flat in June with Case-Shiller's adjusted composite 10 index, which is a three-month average, holding unchanged for a second straight month (prior month revised from plus 0.1 percent). The composite 20 index edged 0.1 percent lower for a second straight month with 11 of the 20 cities showing declines in June. Seasonality is at play during spring and summer which is a strong time for home sales and, in what is a mild positive, seasonality is also at play this year as well. Unadjusted data show 1.1 percent gains for both the composite 10 and composite 20 indexes during June following 1.0 percent gains for both in May.

In contrast to month-to-month comparisons, year-on-year comparisons are less affected by seasonality with the adjusted composite 10 down 3.9 percent vs minus 3.8 percent for the unadjusted composite 10. The composite 20 shows deeper contraction at an adjusted minus 4.6 percent and an unadjusted minus 4.5. The trends for the report's year-on-year rates have been flat to slightly negative.

Weak home prices remain yet another negative for the American consumer whose foremost battle however is with the soft jobs market. Watch for comments on housing in today's FOMC minutes followed by construction spending data on Thursday.

Now, do yourself a favor and compare that mild assessment with what you read on pages 1 & 2 of the actual report… That’s where you’ll read about the National Index and places line Minneapolis and Portland that are down 10%+ in the past year alone:

Case-Shiller June 2011

WEE! Nice roller coaster on that chart! Must be another great “investment.” Oh yeah, we’ve all seen the real estate price roller coaster by now, so I won’t show it again – I think that young boy’s reaction on the down stroke says it all.

But remember, I think a very large anchor is about to be removed from the housing market, that is the Option-ARM resets are at peak right now and from this point forward their drag on the market will lessen rapidly:

Just remember, do not get up until the roller coaster has come to a complete stop!

In all seriousness, this probably will not mark the bottom of the market as the market has tended to lag about 6 to 9 months behind both the Subprime and Option-ARM waves, so be careful in making assumptions.

Hope you’re enjoying the ride!

Monday, August 29, 2011

Morning Update/ Market Thread 8/29 - Alien Wars. Private Banker vs. Politician Edition…

Good Morning,

Equity futures have been fluffed all weekend long on the back of a dollar that is threatening to break down out of its range, bonds are significantly lower, oil – of course – is therefore higher, gold and silver are back slightly, and food commodities are skyrocketing with nearly every one breaking higher out of its range, many are close to new highs (very dry gulp).

Obviously what’s happening is not sustainable. Every time equities try to mount a comeback it’s on the back of our money. You can see energy, precious metals, and food ratchet higher every time. On pullbacks they just sit and wait for the next wave higher. That’s the end game, if you run that trend out over time… its game over. The game being that private bankers are profiting from, and controlling the production of, your money.

One need only watch the news to see the pressure of the impossible math laying the foundation for those many “other events.” Those events are going to continue to gather pace as the pressures on the population mount.

The economic data continues to diverge further from reality, the most distortive being the way that our inflation figures have been manipulated. That affects almost all the other calculations. This morning it’s Personal Income and Outlays which understate the amount of inflation and tend to overstate the rate of income growth. Even with these miscalculations and divergence from reality, it is still obvious that incomes are failing to keep pace with the inflation:
In July, the consumer made a nice comeback in terms of income growth and spending. PCE inflation, however, was on the warm side. Personal income in July rose a moderately healthy 0.3 percent after rising 0.2 percent in June. The July advance matched the consensus for a 0.3 percent increase. Wages & salaries grew a little more robust 0.4 percent, following a bump up of 0.1 percent the month before.

Consumer spending rebounded a sharp 0.8 percent after slipping 0.1 percent in June. The latest number came in significantly higher than expectations for a 0.4 percent boost. By components, durables jumped 1.9 percent after declining 1.1 percent in June. Clearly, motor vehicle sales are up as the supply constraint related parts shortages from Japan is easing. Nondurables increased 0.7 percent, following a 0.5 percent decrease in June. Services rose 0.7 percent after nudging up 0.1 percent in June.

On the inflation front, the headline PCE price index jumped 0.4 percent, following a 0.1 percent decrease in June. The primary reason was energy costs with food also contributing. The core rate posted a 0.2 percent gain, matching the June pace and equaling expectations.

Year-on-year, headline prices are up 2.8 percent, compared to 2.6 percent in June. The core is up 1.6 percent on a year-ago basis, firming from the 1.4 percent pace in June.

Inflation and taxes did outpace income with real disposable income edging down 0.1 percent after a 0.3 percent boost in June. However, spending clearly beat inflation as real PCEs advance a sharp 0.5 percent in July, following no change the prior month.

On the news, equity futures rose, focusing on healthy spending. The bottom line is that the consumer sector is not down and out but actually adding to economic growth. Of course, the strength is coming from those with jobs and job growth would add to momentum.

Again, the data is disconnected from reality, but the Econoday commentary is even more so.

Pending Home Sales are released at 10:00 Eastern. It’s a pretty busy week for economic data that culminates in the August Employment Report this Friday.

Notice how Bernanke is laying the blame of the problem on the politicians? Friday he basically threw up his hands and said it’s up to them to straighten out the mess, of course implying that they’re the problem. And they are, primarily in the fact that they failed when they turned over their money powers to a few individuals. This was the ultimate corruption, that one corrupt act changed everything on the planet. And modern politicians who fail to correct it are equally complicit. So in that regard I agree, but I see them as special interests in crime together, both are culpable, but nothing will change until the power to create money is returned to its rightful owners, the people.

“Other events,” therefore, will continue to run. Between now and the coming climax, you will continue to be distracted and spun. Playing the blame game is just one way that they will both attempt to manipulate your thinking and emotions. But in the battle between these two alien forces, it is the politicians who can win at any point they find the will. It’s up to the other events to force them to find that will.

Bad things can happen when special interests are allowed to take control with no checks or balances in place. Producing money from nothing is the ultimate corruptor because that money can be used to buy away those checks and balances. That’s what happened with our money, and that’s why we have macroeconomic debt saturation, i.e. impossible math.

Some of the energy companies have become so influential that they, too, have permeated the regulatory agencies and warped rules so far in their favor that they have pushed the limits of physical reality. Our own NRC is an agency that has completely lost touch with reality – that is clearly seen in the way they are ignoring and twisting the reality that is Fukushima, and in the way they are failing to take any meaningful action here in the United States. Clearly it is run by “champions” of the nuclear industry, they are focused solely on the growth of the industry, and that focus is at the exclusion of safety. Here’s Arnie Gunderson simply telling the painful reality of the spent fuel pool condition, which the NRC claims are in great shape:

Newly Released TEPCO Data Proves Fairewinds Assertions of Significant Fuel Pool Failures at Fukushima Daiichi