Saturday, September 24, 2011

Weekend Open Thread...

Friday, September 23, 2011

Morning Update/ Market Thread 9/23 - Breakdown Edition…

Good Morning,

Equities are lower this morning adding to yesterday’s rout. The dollar is lower, bonds are even higher still (as if that's possible), oil is down, gold & silver are breaking down, and food commodities are also lower.

There’s no significant economic data today, so let’s take a look at yesterday’s breakdown…

All the major indices were hit hard, with many making new closing lows below the August lows, such as the Transports:

That’s a clear flag on the Transports, bearish. The Industrials got close to a new closing low but the late day bounce kept it above 10,719 – a close below there today will produce a minor degree DOW Theory sell confirmation:

The SPX is in the same condition as the DOW, very close to closing below the August lows, but obviously breaking down from more of a flag formation:

The BKX and XLF showed how hard the financials got hit. They closed well below the bottom Bollinger band, so expect them to float back to at least that band today.

Funny listening to CNBS yesterday… an ad kept repeating about how smart this investment company is and how strongly they recommend Emerging Markets over the developed world. Of course I was looking at the EEM breakdown even more strongly than the developed markets, they are simply way more volatile and they are certainly not immune to the problems associated with global debt saturation:

This morning the VIX is still above the upper Bollinger, it may take a little time to turn it up and to turn the rest down. Regardless, the market experienced a significant technical breakdown. The SPX flag pattern is targeting about 1,000, although there is pretty strong support at 1,050 and at 1,020.

When I zoom out to a two year chart, I can’t help but see a large potential H&S pattern. This is a very typical topping pattern – the left shoulder is clear, as is the head. The neckline may be just above the 1,000 area and that looks like where we are headed. If this pattern plays out, it may need time for the right shoulder to develop, so we may not drop below that neckline for some time. In fact, the left shoulder took the best part of a year to form. The rule on these patterns is that the larger they are time wise, the more reliable the pattern is. This one has not yet made the right shoulder, so is supposition so far:

Hope everyone has a good weekend! Those who are real can sleep well…

Thursday, September 22, 2011

Morning Update/ Market Thread 9/22 - “Twisting” to the Winds of Change Edition…

Good Morning,

Equity markets are still plummeting following Berspankme’s “Twist” and admission that the economy has “considerable downside risk.” The dollar is substantially higher and is breaking through important overhead resistance, the long bond market has gone wild, oil is plummeting, gold & silver are plunging, as are food commodities.

Remember that with “QE” and now with “Twist,” all the markets are not real, they are not free. What they are is 100% false, 100% manipulated. This type of action is exactly why I’ve been advising people to get real and stay real. Key support in the markets is now broken, the sideways flag of the past five weeks is now clearly broken to the downside and the flag target is down in the 1,000ish area on the S&P:

While the move in the long bond is something to behold, again, it is not real. In fact, with the “Fed” now buying and twisting the entire market, there is no way to really know what is real in this space. Desperate people do desperate things is what comes to mind. And I can guarantee you that what they tell you they are doing publically is just the tip of the iceberg – Yes, I am saying that they are outright lying and fraudulently covering up their trail, they have been for quite some time as the numbers simply don’t add up.

Below is a ten year chart of TLT, the 20 year bond fund. It topped in late 2008, and then collapsed into 2009. With “QE” and all the intervention into the bond market, it has not only regained that peak, but is now far beyond it. I can guarantee you that this is NOT sustainable. Eventually all the money printing and “Twisting” will come to an end, and when it does, this market will collapse into at least the normal range for rates. That said, however, as long as the current criminals remain in power, this is their base and they will protect it at all costs:

And soooo, I’ve been talking for quite some time about the “other events” that are in progress, I think we are about to see more of them, and more significant events. If you have already gotten real, then you know that the paper markets no longer directly affect you. But don’t be complacent because their collapse WILL affect you in other ways – you still need to be careful not to get caught up in those “other events” that are accelerating in pace and scope.

Still, as I look through the media I see very little of meaning… people are still way off the root causes of the impossible math and debt saturation. It is the job, then, of those “other events” to do the cleansing that an ordinary wave of deflation cannot accomplish. Look for this cleansing, it is coming, you can feel it getting closer now as what is being tried by those in power increasingly smacks of desperation.

Weekly Jobless Claims missed expectations once again, coming in at 423,000 with the prior week revised higher yet again, of course. Once macroeconomic debt saturation has set in, there is only one way to create REAL jobs (versus made up phony statistical ones), and that is to remove debt. The more debt you remove, the more jobs that will be able to be supported by the real economy. Of course removing debt is not easy, that’s why I wrote Freedom’s Vision, to offer a blueprint. Here’s Econoclueless on the Jobless Claims:
Fewer Americans applied for initial jobless claims in the September 17 week though today's report is mixed. The week-to-week change, at minus 9,000, is a good indication but the 423,000 level is 3,000 higher than the Econoday consensus and reflects a 4,000 upward revision to the prior week to 432,000. Another negative is the fifth straight rise in the four-week average, though the latest gain is minimal to 421,000 vs a revised 420,500 in the prior week. Still, a look back to mid-August shows the four-week average at 403,500 in a comparison that points to trouble for the September employment report.

Continuing claims, in data for the September 10 week, fell 28,000 to 3.727 million with the four-week average down 7,000 to 3.742 million. The unemployment rate for insured workers, at 3.0 percent, is unchanged for the six straight week.

The Labor Department reports no special factors in either the current week or in the upward revision to the prior week when the East coast was cleaning up from Hurricane Irene. Markets, where risk-aversion is very heavy right now, aren't getting any lift from today's report.

LOL, the markets “aren’t getting any lift from today’s report?” That’s the best they can do? Mind numbing drivel from the people in the economics field – they simply do not understand what is happening.

Buckle up, the fraud is going to come out, but it is not going to leave willingly. Risk is everywhere, you must find something real or some real activity in which to participate with your money or you will eventually be stripped of what you now consider an asset. The winds of change are in the air.

Wednesday, September 21, 2011

Morning Update/ Market Thread 9/21 - Doing the Twist Alright…

Good Morning,

Stock futures are mixed this morning with tech leading and transports lagging. The dollar is higher, bonds are slightly higher, oil is slightly higher, gold is down a sliver, while silver is up, and food commodities are a mixed can of veggies.

The hypocritical Mortgage Bankers Association says that Purchase Application fell 4.7% in the past week, but that Refinancing activity increased 2.2%. At least we don’t have phony double-digit one week moves, here’s Econoday:
The purchase index fell 4.7 percent in the September 16 week to end a brief run of improvement. On a four-week basis, the purchase index is down 1/2 percent in a reading that doesn't point to strength in underlying home sales. The refinance index rose 2.2 percent in the week with the four-week average down 3.9 percent. The average rate for 30-year fixed mortgages with conforming loan balances ($417,500 or less) is unchanged at 4.29 percent with jumbo loan balances ($417,500 or more) down two basis points to 4.55 percent.

Existing Home Sales are released at 10:00 Eastern, followed by Bernanke flapping his nonsensical lips about the “Twist” at 2:15 Eastern. Remember that home sales are now transitioning to the back side of the Option-ARM reset curve, a heavy anchor that is now in the process of getting lighter.

Again, for those who are being fooled by this “Twist” operation, please wake up and smell the coffee. Think about the math… you cannot have something for nothing, you cannot take from short yields to suppress the long end without losing control of the short end. Math. That’s why I say that “Twist” will NOT be net neutral, they MUST backfill that which they take from the short end, and that means more money printing – period.

Should they not backfill the short end, then you would see the money aggregates begin to collapse – they cannot let that happen, even though at some point it MUST happen.

Once again for anyone who hasn’t read this before… We have experienced Macroeconomic debt saturation. Adding more debt into that situation beyond the saturation point only works to drag down the economy which must service all the principal and interest. Servicing all that debt is what kills monetary velocity – the money simply circles back around to the bank. Past the saturation point new debt is used to service old debt, and there is not enough income left over to create real growth or real jobs.

Below is the chart of the Base Money versus the Mean Duration of Unemployment. This relationship will not change until the debt is cleared back below the saturation point:

Those closest to the production of money win, while those farther from it lose. CNN finally did an article showing the effect this has had on the middle-class over the past decade. I wrote an entire chapter on it in my book called “The Middle-Class Squeeze,” and here is the chart depicting it after the fact:
A rough 10 years for the middle class

NEW YORK (CNNMoney) -- It's official. The first decade of the 21st century will go down in the history books as a step back for the American middle class.

Last week, the government made gloomy headlines when it released the latest census report showing the poverty rate rose to a 17-year high. A whopping 46.2 million people (or 15.1% of the U.S. population) live in poverty and 49.9 million live without health insurance.

But the data also gave the first glimpse of what happened to middle-class incomes in the first decade of the millennium. While the earnings of middle-income Americans have barely budged since the mid 1970s, the new data showed that from 2000 to 2010, they actually regressed.

For American households in the middle of the pay scale, income fell to $49,445 last year, when adjusted for inflation, a level not seen since 1996.

And over the 10-year period, their income is down 7%.

"Economists talk about the lost decade in Japan. Well, with these 2010 data, we can confirm the lost decade for the American middle class," said Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities.

Keep in mind that they are using FALSE government statistics to correct for inflation. Real inflation is multiples of reported inflation, and therefore the real effect of the middle-class squeeze is even more dramatic than that chart depicts. Lost decade? Get ready for more. Get real, stay real. Get involved in things not built around paper fluff.

Here’s Arnie Gunderson with more solid information on the Fukushima disaster and the way in which these reactors are designed with vulnerabilities which leave many around the world exposed to these dangers:

Hey, anytime your government is backing up private central bankers who refer to themselves as a branch of the government - when in fact they are not Federal, they possess NO reserves, and they are not even a bank – and now they are talking about the “Twist?” Oh yeah, it’s twisted all right, don’t be fooled by their slight of hand tricks, keep your eye on the ball, and don’t let them twist reality into something it’s not!

Tuesday, September 20, 2011

Morning Update/ Market Thread 9/20 - Bye Bye American Pie Edition...

Good Morning,

Equity futures are higher this morning… why? Well, let’s see… ummm… Italy was downgraded. Ummm… rates are blowing out all over Europe. Ummm… the possibility of more theft from the people and injections into the banks is lifting those animal spirits and feeding an HFT frenzy in front of the Central Criminal announcing that he’s doing the “twist” tomorrow? Yeah, that would be it – and the markets have not yet figured out that doing the “twist” is just the latest euphemism for printing money. It will amount to the same exact thing as “Quantitative Easing” only with one more step involved to throw you off the trail of common sense, thus the “twist.”

And thus we have the opposite of yesterday, with the dollar down, Euro up, bonds down, oil up (slightly), gold up, silver flat, and food commodities higher. Actually several of the major commodities, like oil, are bouncing off support, a break of which would be quite bearish.

This morning Housing Starts for the month of August came in substantially lower, falling from July’s 604,000 (revised lower) to 571,000. Housing starts fell off a cliff and went splat on the plateau below, this is right in the range of that plateau. Permits did rise, but they have done so before and not all will turn into completions in this environment, here’s econohope:
The housing starts report for August was mixed as starts dipped while permits rose moderately. Housing starts declined 5.0 percent in August, following a 2.3 percent decrease in July. The August annualized pace of 0.571 million units posted lower than the median projection for 0.592 million units and is down 5.8 percent on a year-ago basis. The dip in August was led by a 13.5 percent fall in the multifamily component, following a 7.2 percent gain in July. The single-family component edged down 1.4 percent after a 5.8 percent decrease the month before.

By region, the fall in starts was led by a 29.1 percent plunge in the Northeast.

However, a rebound in permits suggests that some of the weakness in starts was weather related as Hurricane Irene likely weighed on new groundbreaking. In contrast, housing permits rebounded 3.2 percent, following a 2.6 percent contraction in July. Permit issuance is less affected by weather since they issued indoors. The August pace of 0.620 million units annualized printed above analysts' expectation for 0.590 million. Permits in August are up 7.8 percent on a year-ago basis.

On the news, equity futures edged down while rates were little changed.

The FOMC announcement will come tomorrow, failure to announce “the twist” will be negative as it’s getting baked into the pie. This will appear innocuous and will be ignored by the media and most people who are not paying attention. A large percentage of those who are paying attention will also be fooled into thinking it is a simple shift out the yield curve. It will not be. Keep your eye on the ball – what will happen is they will “twist” short term debt into long term debt to drive down yields on the long end, but THEY MUST backfill that on the short end otherwise short rates would spike. That won’t happen because they will be QE’ing with their left hand while they are talking about what they are doing with their right hand.

Palm, Simulation, Switch, Misdirection!

When it comes to the “twist,” watch the left hand if you can (you can’t because they refuse to open their books). Thus you need to get and stay real until they are removed from the stage.

California is finally making a move cut out the criminal enterprise from their state. Creating a state chartered bank is definitely the right thing to do, everyone should be supporting this movement as Bill Still suggests in the video below:

Monday, September 19, 2011

Morning Update/ Market Thread 9/19 - Old Man Market Edition…

Good Morning,

Stocks are tumbling this morning with the dollar higher, Euro lower, bonds higher, oil is down, gold & silver are down, and food commodities are falling in the midst of an obvious correction.

$3 trillion in cuts on the backs of the wealthy doesn’t exactly sound like it would produce a roaring stock market, so low and behold some more of the fluff is removed. Damned if they do, damned if they don’t is the exact situation debt saturation produces. What matters is WHO controls the production of money. As long as the private central banks are in control the situation will remain impossible, backed by impossible math.

The economic data is pretty slim this week, primarily housing data and the FOMC clowns utter their nonsense on Wednesday while their minions on Wall Street wait with baited breath. This morning the Housing Market Index fell from the deep depression level of only 15 to 14. Plop. Thud.

Don’t worry though, on my commute back and forth to the boat show this past week I keep being reassured by the National Association of Realtors (NAR) that they have our back and are in there fighting for us! LOL, like those cheerleading monkeys weren’t and aren’t a huge complicit part of the problem. They were, and they still are.

The market never did move out of that nasty looking flag, and in fact just produced a lower high which now looks an awful lot like a Head & Shoulder’s pattern. Should we break below the bottom of that flag/ pattern, we may be in for quite the ride ahead shortly: