Saturday, September 17, 2011

Weekend Open Thread...

Friday, September 16, 2011

Market Thread 9/16

Good Morning,

Have to leave early this morning, thus no update today. Please use this post as today's Daily Thread. Thank you to all who have been contributing to the conversation in my absence.

Here's a fitting tune for the "coordinated action" by the central banks (debt pushers) to "save" Europe (from the central banks):

Thursday, September 15, 2011

Morning Update/ Market Thread 9/15

Good Morning,

Quick update today, just the facts as I have limited time prior to the boat show.

CPI came in hotter than expected. Remember yesterday I said that PPI leads… Econoguess said CPI may also reflect the turn down, but I say that will come later, CPI follows:
Inflation at the consumer level remained surprisingly warm in August. The consumer price index in August barely slowed to a 0.4 percent increase, following a strong 0.5 percent jump in July. The August figure exceeded the median projection for a 0.2 percent increase. Excluding food and energy, the CPI rose 0.2 percent, matching the pace the month before.

For major components, energy continued to rise with a 1.2 percent increase after rebounding 2.8 percent in July. Gasoline increased 1.9 percent, following a 4.7 percent jump in July. Food price inflation accelerated, rising 0.5 percent after jumping 0.4 percent the prior month.

Within the core, shelter and apparel were the biggest contributors to the gain. Shelter rose 0.2 percent while apparel jumped 1.1 percent with the latter likely feeling pressure from higher costs for materials. Overall, most of the core's major components posted increases, additionally including used cars and trucks, medical care, household furnishings and operations, recreation, tobacco, and personal care. The new vehicles index, unchanged for the second month in a row, was an exception.

Year-on-year, overall CPI inflation worsened to 3.8 percent from 3.6 percent (seasonally adjusted) in July. The core rate accelerated to 2.0 percent from 1.8 percent on a year-ago basis. On an unadjusted year-ago basis, the headline number was up 3.8 percent in August and the core was up 2.0 percent.

With today's report, the core CPI hit the upper bound of the Fed's implicit inflation target range of 1.5 to 2.0 percent. This will make it tougher for the doves in the FOMC to argue for another round of monetary ease. Equity futures fell back at the time of the release on a rise in jobless claims and a weak Empire State.

The Empire State Report is horrid:
Business conditions in the New York manufacturing region continue to contract at a steady but mild rate based on the Empire State index which, at minus 8.82 this month, shows its fourth straight negative single-digit reading. New orders, the most important leading indicator in the report, are also in the negative column for the fourth straight month at minus 8.00. Unfilled orders, at minus 7.61, are down for the third straight month. Strength in orders earlier in the year had been keeping shipments up but not any more with this reading falling convincingly into negative column at minus 12.88. Employment, which like shipments also lags orders, also fell into the negative column, to minus 5.46 this month. This report offers the first indication on August conditions in the manufacturing sector and the news is disappointing.

Jobless Claims are still horrid:
Jobless claims jumped 11,000 in the September 10 week to an unexpectedly high 428,000. The prior week was revised 3,000 higher to 417,000. The Labor Department isn't citing any effect from Hurricane Irene though last week the department said they did see the possibility of the small upward revision to the September 3 week. Though there's no special factors for the September 10 week, the week was shortened by the Labor Day holiday which may be creating some noise. But a look at the four-week average isn't encouraging, up 4,000 to 419,500 for the fourth straight gain with the level more than 15,000 higher than the month-ago comparison.

Continuing claims for the September 3 week fell 12,000 to 3.726 million with the four-week average up 1,000 to 3.741 million. The unemployment rate for insured workers is unchanged for the fifth straight week at 3.0 percent.

This report will likely lower the initial outlook for the September employment report and, especially given the string of other unwelcome economic news this morning, is likely to weigh on the stock market.

Industrial Production is weakening, and Capacity Utilization is still in depression territory even after years of real contraction:
After a strong July, manufacturing slowed significantly in August but remained positive. However, a continuing rebound in auto assemblies kept the manufacturing gain strong. Overall industrial production in in August rose 0.2 percent, following a 0.9 percent jump the month before (no revision). The August number came in a little higher than the market median forecast for a 0.1 percent uptick.

By major industry, manufacturing remained strong with a 0.5 percent rise after a robust 0.6 percent gain in July (no revision). The auto component advanced another 1.7 percent after a rebound of 4.5 percent in July. Outside of autos, manufacturing is still healthy. Excluding motor vehicles, manufacturing rose 0.4 percent, following a 0.3 percent increase the prior month.

In other major sectors, utilities output fell back 3.0 percent after surging 2.8 percent in July on atypically hot weather. Mining output grew 1.2 percent after increasing 1.1 percent in July.

On a year-on-year basis, overall industrial production was up 3.4 percent in August, matching the pace in July.

Overall capacity utilization in August edged up to 77.4 percent from 77.3 percent the prior month (originally 77.5). The August rate posted slightly lower than analysts' estimate for 77.5 percent.

Despite the negativism in various manufacturing surveys, national production numbers continue to look good-especially for manufacturing. On the news, equity futures rose modestly.

The Philly Fed Survey is released at 10:00 Eastern.

Have a great day, get real, stay real!

Wednesday, September 14, 2011

Morning Update/ Market Thread 9/14 - Americans in Deep Edition...

Good Morning,

Equity futures are higher this morning despite the continued flow of negative data. The dollar, of course, has to be lower for this to occur, bonds are also slightly lower, oil is lower, gold & silver are both slightly lower, and most food commodities are only slightly more palatable at this morning’s level.

The still very much conflicted Mortgage Banker’s Association reported their still not believable American’s in Deeper Purchase Applications for the shortened prior holiday week. Purchase Applications, according to them and their adjustments, were up a whopping 7%, and Refinancing activity rose 6%. Not believable, sorry… not even in the slightest little bit do I believe that. Here’s Econogullible:
In a shortened September 9 week that included Labor Day, the purchase index shot 7.0 percent higher with the refinance index up 6.0 percent. Mortgage bankers were busy in the week as interest rates came down with the average 30-year mortgage falling six basis points to an extremely low 4.17 percent. But the purchase index, which before this week had been long lifeless, will have to extend its gains in the upcoming weeks before it signals strength in the underlying housing market. Next data on the housing sector will be the home builders' housing market index on Monday.

With macroeconomic debt saturation, Americans are in deep all right. The “Fed’s” overproduction and then manipulation of credit flows has helped to feed waves of inflation and deflation. Lately, the data has been pointing to inflation with a skyrocketing money supply, and now the inflation data, as trumped-up as it is, is pointing to inflation rounding the corner and heading back down. Here’s the PPI data, remember that the PPI leads the CPI, so it will take awhile for the wave to get going:
Inflation eased in August at the producer level despite a surge in food prices. Producer prices in August were unchanged percent after rebounding 0.2 percent in July. The August figure was marginally higher than the consensus forecast for a 0.1 percent decline. By major components, energy fell 1.0 percent after dipping 0.6 percent the month before. Gasoline dropped 1.0 percent, following a 2.8 percent decrease in July. Food costs, in contrast, surged 1.1 percent after jumping 0.6 percent the month before.

At the core level, PPI inflation slowed to a 0.1 percent pace after accelerating to 0.4 percent in July. Analysts had projected an increase of 0.2 percent. Weakness in the core included declines in prices for passenger cars (down 0.4 percent) and computers (down 2.6 percent). On the upside, the leader was tires (up 1.4 percent) which contributed over twenty percent of the August increase in the core. Higher prices for radio and television communication equipment also contributed to the rise in the finished core index.

For the overall PPI, the year-ago pace in August came in at 6.5 percent, compared to 7.2 percent in July (seasonally adjusted). The core rate in July held steady at 2.5 percent on a year-ago basis (seasonally adjusted). On a not seasonally adjusted basis for August, the year-ago headline PPI was up 6.5 percent while the core was up 2.5 percent.

Inflation is slowing at the producer level and this portends well for tomorrow's CPI. The Fed will need good inflation numbers before enacting another round of monetary easing.

The “Fed” is almost always out of synch with the waves – this produces the same effect as Pilot Induced Oscillation. Because there is a time lag with their stimulus, if it really was going to work at all, they need to add the stimulus well BEFORE the next wave of deflation begins to show up. Once it shows up, sorry, too late and thus the cycle is fed out of phase by them and grows larger instead of smaller. Of course along the way they managed to saturate the entire globe, and thus their games will be coming to an end soon.

Retail Sales for August missed expectations by coming in at 0.0% versus the prior still weak .5%. Remember, this data is completely unreal as it fails miserably to correct for the devaluation of our money and also suffers from survivor bias. Still, here’s Econoday playing along:
Retail sales in August came in softer than expected. By type of sales, numbers were about evenly mixed. Overall retail sales in August slowed to flat (no change) after rising 0.3 percent in July (originally up 0.5 percent). The August figure was below the market median estimate for a 0.2 percent boost.

Excluding autos, edged up 0.1 percent, following a 0.3 percent rise in July (originally 0.5 percent). The consensus had called for a 0.3 percent increase. Gasoline sales rose 0.3 percent after jumping 0.9 percent in July. Sales excluding autos and gasoline in August increased 0.1 percent, following a 0.2 percent rise in July.

Leading the increase were electronics & appliance stores and sporting goods, hobby & book stores. Tugging down, the notables were miscellaneous store retailers and also clothing stores.

Outside of autos and gasoline, sales were mixed. Leading the increase were electronics & appliance stores (up 0.5 percent) and sporting goods, hobby & book stores (up 2.4 percent). Tugging down, the notables were miscellaneous store retailers (down 2.2 percent) and also clothing stores (down 0.7 percent).

Retail sales on a year-ago basis in August came in at 7.2 percent, compared to 8.3 percent in July. Excluding motor vehicles, sales were up 7.3 percent on a year-on-year basis, compared to 8.4 percent the month before.

Clearly, the August retail sales numbers are somewhat disappointing. Hurricane Irene likely dampened sales a bit on the East Coast and we will need to see September numbers for further evaluation. Still, it looks like the consumer is being more cautious after the political circus over the debt ceiling legislation and retrenchment in equities.

On the initial release, equity futures eased.

The boat show is going great, a load of fun, many great leads, contacts, and opportunities coming out of it already, and still most of the week to go.

I’ll leave you for today with a graphic representation of America in Deep…

America Is A Country In Debt:

While politicians bicker about debt ceilings and government spending, American families suffer under an increasingly hefty debt load.

American Family Consumer Debt Facts

Tuesday, September 13, 2011

Morning Update/ Market Thread 9/13 - Helplessly Hoping Edition…

Good Morning,

Equity futures are close to even this morning after being down overnight. The dollar is flat, bonds are down slightly, oil is higher, gold & silver are higher, and food commodities slightly lower.

The market and the economy continue to rely on manipulations, false rumors, money injections, paper clips, balsa wood, and whatever else the central bankers can come up with to attempt to fool people into believing they have the impossible math under control. They don’t. They certainly don’t in Europe where the nonsense of China bailing out Italy is just another formerly prosecutable offense of manipulation, but in today’s world is not only ignored but championed by our former regulators.

Below you can see how prices yesterday fell out of the flag/ channel, but then “miraculously” recovered just before the close:

Hey, I’ve got a rumor for you… the markets aren’t “free” and they’re not really “markets” either.

Oh wait, that’s not a rumor, that’s fact, sorry.

On one hand Obama says “this recession” is terrible… then on the other we hear how things are improving and that we’re in “recovery.” Sad, the manipulation looks to me an awful lot like an abusive father manipulating a child. But the NFIB Small Business Optimism Index continues to expose the lies for what they are. Here’s Econoalwaysapositiveside:
Confidence among small businesses fell for the sixth straight month, down 1.8 points in August to 88.1. The top problem is sales where more firms are currently in a downtrend than an uptrend which in turn is hurting earnings. Expectations for future sales are also in decline. Only five percent of the sample say it's a good time to expand. On the positive side, more firms plan to create new jobs over the next three months and more are reporting unfilled job openings.

Of course the NFIB itself doesn’t pull any punches stating, “Confidence in the future of the economy crashed in August…”

That’s all you need to know, but the NFIB is one of the few truth telling organizations out there so their report is definitely worth a read. Be sure to look at the cover and how low each segment is, and how far they dropped in August:

NFIB Small Business Confidence August

Import and Export Prices continue to be hot as a pistol, even by our false measurements that fail to adjust properly for the true devaluation of our money. Import prices fell .4%, but export prices rose .5%, giving us year over year readings of 9.6% for Export Prices and 13% for Import Prices. Hey, where’s that 2% inflation the “Fed” keeps yammering about? Here’s Econofool:
A monthly decline in prices of imported petroleum products pulled total import prices 0.4 percent lower in August, results that should firm consensus expectations for mild readings in tomorrow's producer price report and Thursday's report on consumer prices. Prices for petroleum imports fell 2.1 percent in August which fed through to a 0.9 percent decline for industrial supplies. Year-on-year rates eased slightly in the month, to plus 13.0 percent for total import prices and to plus 43.5 percent for petroleum products. Importantly, price pressures for finished products remain mute, up 0.1 percent for capital goods to a year-on-year rate of plus 1.4 percent and up 0.3 percent for ex-auto consumer goods to a plus 2.0 percent year-on-year rate.

On the export side, a rise in agricultural prices pushed total export prices up 0.5 percent. Agricultural prices rose 2.2 percent in the month. Year-on-year rates are little changed at plus 9.6 percent for total export prices and at plus 23.9 percent for agricultural prices. Export prices for capital goods were unchanged for a year-on-year rate of plus 1.3 percent while consumer goods ex-autos rose 0.2 percent for a year-on-year rate of plus 5.9 percent which, in an isolated sign of price pressure at the finished goods level, is up from 5.7 percent in July for a new record.

Gee, are new records in this data a good thing?

This weekend someone in the Open Thread posted a chart showing the rise in educational debt. Not only another bubble, but abuse of the populace that speaks to the prior articles I wrote on the subject of universities sticking it to the students who wind up debt slaves, while Wall Street "engineers" profits in grotesque endowment funds that are not used for their intended purposes:

Helplessly hoping college students too.

Back to the Boat Show, again come on by if you can!

Monday, September 12, 2011

Morning Update/ Market Thread 9/12 - Running on Empty Edition…

Good Morning,

Markets are lower again this morning with Europe leading the way in the mess department – for now (it will be our turn again soon). The dollar rallied but then gave it back to be basically flat, bonds did the same thing as the dollar, oil is flat, gold & silver are down, and food commodities are down slightly.

There’s nothing on the economic calendar today, but the rest of the week is busy with inflation, manufacturing, and regional “Fed” data. Oh, and if the “Consumer” still matters, we’ll see Consumer Sentiment later too. Which reminds me… remember when the manufacturing data was important, decades ago now? Well, when that data was slipping, and slipping, and then still slipping some more – the media and pundits decided it didn’t matter anymore because the “new economy” was based on service. That’s right, service for “Consumers” was the new economy, but now I guess that doesn’t even matter anymore because the new new economy is all about financial engineering, fraud, and pretending that real change isn’t needed. “Consumer Sentiment” doesn’t matter in the new new world (where private central bankers take & make).

The market has broken beneath the large flag that has formed over the past few weeks:

The target on the flag, as if it matters in this HFT Holographic “market,” is just above 1,000 on the S&P.

I’ll be attempting to sell real products at the Seattle Boats Afloat Show all week and thru next weekend, those products will be financed without bankers and will create jobs right here – what a concept. My updates will be very short, but I’ll at least get a Daily Thread started for everyone before I set off in the morning. Hope everyone has a great week, and hope that you all got real because the new new economy is running on empty…