Saturday, October 1, 2011

Weekend Open Thread...

Friday, September 30, 2011

Market Thread 9/30

I'm out of town this morning and will be unable to post an update for today. Please use this thread for daily comments and news sharing. Thank you.

Thursday, September 29, 2011

Morning Update/ Market Thread 9/29 - Inflation/ Deflation Debate Debunk Edition…

Good Morning,

Equity futures are higher this morning, with the dollar lower, bonds twisting lower for the fourth day in a row, oil higher, gold & silver higher, and food commodities mixed.

Our third and “final” look at Q2 GDP came in higher than expected, adjusted from +1.0% to 1.3% on the 1.2% expectation. Again, this is all nonsense as our GDP is vastly overstated. In fact even what they call “final,” isn’t really final, as it will be adjusted once more next year. Tiresome debunking the continuous flow of disinformation statistics – this one suffers mostly from counting credit creation as growth, as well as understating inflation which also overstates growth. For what it’s worth, here’s econocomplicit:
Economic growth for the second quarter ended up stronger than previously estimated but remained anemic. The Commerce Department's final estimate for second quarter GDP growth was bumped up to a rise of 1.3 percent annualized, compared to the prior estimate of 1.0 percent annualized and to first quarter growth of 0.4 percent. The median market forecast called for a 1.2 percent annualized gain.

Final sales of domestic product were revised to an annualized 1.6 percent from the previous estimate of 1.2 percent. Final sales to domestic purchasers were revised up to 1.3 percent from the second estimate of 1.1 percent annualized. By components, the most notable upward revisions were to nonresidential structures, PCEs, and exports.

Economy-wide inflation was revised up incrementally to 2.5 percent annualized, compared to the previous estimate of 2.4 percent and the first quarter rise of 2.5 percent. Analysts had projected a no revision number of 2.4 percent.

Overall, economic growth was very sluggish during the first half of 2011. More recent monthly data are very mixed but net suggest marginal strengthening at best for the third quarter.

Speaking of trumped data, Jobless Claims suddenly fell back below the 400k mark down to 391,000. Of course the prior week was revised higher, this time by 5k. Here’s Econoguess:
It turns out Hurricane Irene may have elevated jobless claims all along. At least that's what the Labor Department is suddenly hinting at, attributing a giant 37,000 decline in initial claims in the September 24 week to state offices catching up with hurricane-related data. A Labor Department official also told Market News International that end-of-quarter factors are also coming into play as offices catch up on their work. Adjustment problems tied to calendar shifts may also be at play.

Initial claims totaled 391,000 in the week, far below Econoday's consensus for 420,000. The prior week is revised 5,000 higher to 428,000. The latest week is the first sub 400,000 reading since early August and is the lowest since early April. The four-week average is down 5,250 to 417,000 from a revised 422.25 in the prior week to end five straight weeks of increases. Still the average is roughly 5,000 higher than the month-ago comparison which isn't a positive signal for the monthly employment report.

Continuing claims, in data for the September 17 week, fell 20,000 to 3.729 million with the four-week average down 5,000 to 3.743 million. The month-ago comparison is mildly positive showing a nearly 15,000 decrease. The unemployment rate for insured workers is unchanged for a seventh week at 3.0 percent.

Stock futures are rising sharply in reaction to this report as well perhaps to the upward revision to second-quarter GDP which came out at the same time. But there's plenty of surprising noise in today's claims report which may limit its impact on the markets and on expectations for next week's employment report.

“Surprising noise in today’s claims report…” Yes, it’s okay to call it what it is… manipulation. Remember, any number above 350k is a jobs losing proposition, we’ve been shedding jobs for years now without pause.

Pending Home Sales are released at 10:00 Eastern.

Yesterday the Shanghai stock market along with copper price both simultaneously hit new two year lows. Over the past 10 years or so, the Shanghai market and our SPX have moved pretty much together. When they diverge from one another, the other usually plays catch-up. Prior to the late 2007/2008 decline, the Shanghai led the way, a big gap developed and then the SPX crashed. A pretty similar gap has developed now, a three year chart is seen below:

There’s no doubt that China got overheated and that “growth” (money creation) is now slowing. Because a large percentage of China’s business is American centric, they do tend to follow one another.

Yesterday a guest posted some thoughtful comments on the Daily Market Thread. He points out that the central banks create and then feed BOTH inflation and then deflation, using the inflationary leg as the set up to trap people in debt, and then the deflationary leg to strip them of the real assets. This is definitely true, central banks have intentionally caused deflation and used it to their advantage for centuries – JPMorgan famously did this, but I also think this is presently the case as well.

All the central bank has to do is tighten the supply of money, and those in debt wind up turning over real assets to the banks. Thusly the banks profit on the ride up, and then they profit again on the way down gathering assets to inflate again on their next cycle. If I were a narcissistic central banker, this would sound like good sport, and I would encourage others to debate all day long which is coming next, inflation or deflation.

Like I’ve always maintained, there are going to be waves of both, but since private individuals control the production of money, the overall trend will be more and more money until confidence in the money system is completely gone. We are losing confidence now, I would maintain that confidence in our money is too high, and that the system is closer to collapse than the vast majority of people know.

It is the deflationary wave that keeps the system going longer – the more it is fought, the shorter the life of the currency, the sooner those who control its production will lose their power. The central banks are under pressure now, they are walking a tightrope that is not attached at the end to which they are progressing.

My point is that there is no point in arguing inflation or deflation. There is both, and both work to the people’s disadvantage as long as private bankers are in charge. Focus your positive energy on them, withdraw your support of their schemes and their puppet politicians, their negative karma will bite them soon enough.

Wednesday, September 28, 2011

Morning Update/ Market Thread 9/28 - U.S. is Worse Off than Europe Edition…

Good Morning,

Equity futures are higher this morning, with the dollar down slightly (four days of down dollar only erased one day of dollar up), bonds are lower, oil is down slightly, gold & silver are flat, and food commodities are down slightly.

The hypocritical and morally challenged Mortgage Banker’s Association reported that Purchase Applications supposedly rose 2.1% and Refinancing Activity supposedly rose a ridiculous 11.2%. Oh right, like there are a ton of people who STILL have not refinanced to lower rates and a measly four basis point phony move by the “Fed” is causing a rush of people to refinance (insert eye roll here). While I’m sure there are some who have, I still don’t believe double digit one week moves. And by the way, anyone foolish enough to refinance every quarter point swing in rates is someone who will never be out of debt. Here’s econofool:
Last week's fall in mortgage rates, which was tied to the Fed's policy shift to longer-term Treasuries, sparked a rush into refinancing and may have also given a boost to home purchase applications, according to the Mortgage Bankers Associations. The refinancing index jumped 11.2 percent in the September 23 week while the purchase index rose 2.1 percent. The rise in purchase applications was due to a 4.9 percent rise in conventional purchase applications that offset a 0.6 percent decline in applications for government loans which MBA tied to the pending decline in FHA loan limits. The purchase index has been on the rise in recent weeks and the gains hint at welcome strength in tomorrow's pending home sales report.

The average rate for 30-year mortgages with conforming loans ($417,500 or less) fell four basis points in the week to 4.25 percent with the jumbo loans ($417,500 or more) also falling four basis points to 4.51 percent. FHA 30-year loans fell two basis points to 4.05 percent.

The Durable Goods Report for August missed expectations of a .2% rise by coming in at -.1% both with and without Transportation components. Year over year the Ex-Transportation figure fell from 9.6% to 7.8% supposed “growth.” I say supposed because Durable Goods are measured in phony and increasingly worthless dollars which are nothing but debt instruments designed to profit private central bankers. Did we make more planes, more factory equipment? Who knows? You cannot know because we do not measure the actual number of anything, we measure sales in terms of dollars and we incorrectly calculate inflation to intentionally delude ourselves. Take another Prozac and read what econotripping has to say:
Durables orders edged down in August, but after such a strong July, the pace is still healthy. New factory orders for durables in August nudged down 0.1 percent, following a 4.1 percent surge in July (previously up 4.1 percent from the factory orders report). The August dip came in a little lower than analysts' forecast for a 0.2 percent gain. Excluding transportation, durables slipped 0.1 percent after rising 0.7 percent in July (factory orders report revision).

Components were mixed. On the downside in August were primary metals, down 0.8 percent; fabricated metals, down 0.5 percent; transportation, down 0.3 percent; and "other," down 0.8 percent. On the plus side were machinery, up 0.1 percent; computers & electronics, up 1.3 percent; and electrical equipment, up 1.3 percent.

Within the important transportation component, motor vehicles fell 8.5 percent after a 10.2 percent jump in July. Nondefense aircraft increased a monthly 23.5 percent in August, following a 49.9 percent surge the month before. And defense aircraft advanced 22.5 percent after edging up 0.1 percent the month before.

Looking at private capital equipment related numbers, a big positive was a 1.1 percent rebound in nondefense capital goods excluding aircraft, following a 0.2 percent decline in July. Shipments for this series jumped 2.8 percent in August after a 0.4 percent rise the month before.

Overall, today's report indicates that despite sluggishness elsewhere in the economy, manufacturing remains on a moderate uptrend, taking into account the volatility of durables orders. While businesses may not be hiring people, it clearly looks like they are "hiring" equipment with the rise in nondefense capital goods excluding aircraft. This will be a plus for third quarter equipment investment and export components.

Sorry Econodelude, the only real increase in manufacturing going on involves the production of money and trumped up statistics to mask the former.

Notice how the “data” no longer matters to the “market?” That’s because there is no longer a real market, when the “Fed” has taken to directly and publically manipulating the bond market, the signals and the flow of money are disturbed in ways that mask reality – which is their intention. In addition, the private central banks create money from nothing indebting the people, they use that money to buy the politicians and laws, and they use that money to power their HFT platforms, which operate on exchanges which they also own, and all this is designed to steal from people, in milliseconds, who perform actual productive work, and who in exchange for that work are given debt instruments in payment instead of actual money.

Think about how foolish it is to work for a debt instrument.

If I told you that I would pay you 10 debt contracts per hour to come clean my boats, would you do so? You know, you have to pay interest on those debt contracts you receive, LOL. Head shaking stupidity – stupid is as stupid does. The current monetary system makes no sense, it goes against natural law and therefore has a date with failure which is in progress.

And in Europe they continue to jibber jabber about “getting on the same page” to tackle the seriousness of their problem (debt saturation just like U.S.). No real plan mind you, just references to leverage and getting money somehow from somewhere to “inject” into debt saturated over leveraged banks and countries, like more of the same would actually help. It won’t, more obligations only makes the math worse, not better. Yes, bondholders taking big haircuts, that WILL help, as it means a portion of the debt will go away and the risk takers will get burned, although most of the risk takers we’re talking about simply made the money from nothing to begin with, never offering anything real to back it up. Thus the whole game is a central banker illusion.

But in the stupid central banker game, at least Europe is fractured – and that means they are BETTER OFF than the United States. Here, we are collectively too stupid, inept, and bought off to stop the insanity that is our “Fed.” While Europe has countries who are willing to draw lines to stop putting their citizens on the hook for other’s foolishness, here in the U.S. our central criminals continue to backstop the entire planet – evidently $16 trillion in swaps wasn’t nearly enough, now they are talking more. And our central bank is the only one that can get away with making trillions from nothing because we have been too complicit to take action, again on a collective basis.

What can you do? Stop supporting their game. The “markets” as you knew them no longer exist – get over it, but stop feeding the criminals. Their banks and bond markets are their power base – don’t put your debt instruments (I mean “money”) there to fuel their behavior. Don’t vote for politicians who accept money from the banks (something you may not be able to know effectively as they can get money to them in other ways). Don’t work in any capacity that fuels their behavior (easier said than done, but I made the transition and so can you).

So, while Europe is a mess, the U.S. is screwed because we’re backstopping them and we are too inept to do anything about it. You can act individually, let your conscious be your guide and remember that your life’s karma can be either positive or negative for the future of humanity.

Tuesday, September 27, 2011

Morning Update/ Market Thread 9/27 - Euro TARP LOL Edition…

Good Morning,

Equity futures are doing the end of month/ quarter zoom on rumors of yet another European scheme to shuffle/ leverage paper in such a way as to fool the people into believing that they are making something from something when in fact they are simply going to make something from nothing again to keep their Ponzi going for a few more months/ days/ hours (?). Sorry, but it’s a rob you joke of giant proportions. And that our markets are reacting they way the are… well, let’s just say “buyer beware.”

The dollar is down, bonds are down, oil is up after bouncing off the $80 neckline, gold is bouncing back, silver is roaring back, while food commodities continue to starve those in the world who live on the margins.

The problem in Europe is exactly the same as it is here in the U.S., which is exactly the same as it is in Japan, and in the U.K., and in all the big banks – the condition is one of debt saturation, that is there is not enough income to service the principal and interest associated with all the debt. That has a name, it is called insolvency, which is commonly referred to as bankrupt. This is why throwing “liquidity” at an insolvency condition only works for a short while and then fails – actually makes the insolvency condition worse because it creates more obligations when what is needed is less.

For those who don’t fully understand the root cause of this condition, it is monetary – it is a function of how our money is created and by whom. It is a way different equation if your money is EARNED into being versus loaned into being. It is a way different equation when truly sovereign money is created on behalf of the people – so that it bears no interest, no future obligation, no payment of interest to private individuals. And it matters greatly WHO creates it because those who do can use it to buy their way politically – a huge disaster for the world.

There is no reason whatsoever to give private individuals the money creation power – in fact there are a ton of reasons not to. There should be no U.S. bonds or Treasuries – period. There is no need. These markets are a scam created by and for private interests. They fly in the face of the natural rule of law, and thus they will fail regardless in due time.

The S&P Case-Shiller Home Price data through July was released this morning. While S&P claims it shows “strength,” the truth is that there is no strength to be found in the report whatsoever. While they claim that month to month the 20 city is flat, year over year both the 10 and 20 city are showing price declines in the 4% range. Remember that August was a cliff month economically, and that the selling season is now over. Still, I remind everyone that the huge anchor that is the Option-ARM wave of resets has now peaked and thus a heavy weight is being lifted from the housing market as we speak – but it will take time. Here’s Econospin:
Home price trends are holding steady based on S&P Case-Shiller data that, for July's adjusted composite-20 index, show a third straight unchanged reading. Half of the 20 cities tracked show declines with eight gaining and two unchanged. Weakness is concentrated in the West including a third straight decline for Phoenix, San Diego and LA and a sixth straight decline for Las Vegas. Gainers are led by Detroit, Chicago and Washington DC.

Summer is a seasonally strong period for housing demand as seen in the unadjusted data that show a 0.9 percent rise for the composite-20 index vs June's 1.2 percent gain. But the unadjusted year-on-year rate, at minus 4.1 percent, underscores the housing sector's weakness. The minus 4.1 percent reading, though, is an improvement from minus 4.4 and minus 4.5 percent in the prior two months.

Case-Shiller data, which are three-month moving averages based on repeat transactions, offer strongly reliable indications on home prices though they do lag other home-price information including those in the existing and new home sales reports. Yesterday's new home sales report showed unusually severe monthly price contraction during August.

And for those interested in seeing the figures and charts, here’s the entire Case-Shiller report:

Case-Shiller Sep 2011

Consumer Confidence is released at 10:00 Eastern. Not that record low confidence has impacted public actions, it hasn’t. Again, that’s because the narcissists are in charge – you will note that all the bailouts center around them (the banks), and not around clearing the debts of the “consumers” (formerly known as people or citizens). Demand cannot gain traction because the PEOPLE are either debt saturated themselves, or they have no job because businesses are debt saturated, or if they work for the debt saturated government then they are getting pay cuts or are also being laid off, or if they work for the debt saturated banks they are either losing their jobs or making millions robbing from those who still have two nickels to rub together – one or the other.

“Markets?” What a joke. Get ready to be robbed one way or the other. It's all just a matter of time...

Monday, September 26, 2011

Morning Update/ Market Thread 9/26 - “Creeping Fascism” Edition…

Good Morning,

Equity futures were first manipulated up, then down, then even more up over the weekend where manipulating the tape is the rule, not the exception. The markets are not real, they are a computer controlled hologram – again, if you are not one of the money printing insiders with your own personal HFT and money to buy both sides of the political aisle, then you are simply donating to those who do if you participate in their charade they still refer to as markets. These markets are a reflection into the breakdown of the natural rule of law, and as we’ll discuss in a minute, that means that the current situation will not last. The dollar is slightly lower, bonds are lower (very little room to go even higher in my opinion), oil is lower, interesting move lower in gold & silver which I’ll discuss in a second, and food commodities are slightly higher.

Huge moves down in gold and silver have occurred in the past week. Over the weekend gold plunged all the way down to the current uptrend support line and is bouncing there, so far producing a long tailed hammer which may be a sign that buyers are stepping in here at support:

Should the current support at about $1,580 break, then the next support will be found in the $1,480 area… it is that support that represents the longer term uptrend line since early 2009. If that support were to give way, then it could be looking at a journey back down to the $1,000ish range:

Why is gold selling off? Four reasons: First is the sense that another wave of deflation is striking and that the Fed is no longer able to pull off more “stimulus”/ printing. Second is flat out manipulation of the market. Third is yet another very large margin hike – again manipulation of the market. And fourth is related to the current credit and liquidity squeeze necessitating those caught in the squeeze sell REAL things because they are trapped in other positions that are not as liquid.

To me the fundamentals have not changed – waves of deflation are expected, but in the end all deflationary waves will be resisted by those in charge of the production of money and therefore the currency in its present form will not survive. That said, the more deflation there is, the longer it will survive. As long as PRIVATE individuals and private corporations are in control of the production of money, owning physical gold and silver is simply far more REAL than participating in their holographic rob you paper games. If you get real and use deflation as a good time to do so, then you can let them have fun playing with themselves in their narcissistic fantasy world while you sleep well at night. Remember that if you own it, that it’s all a relative game.

This morning the Chicago “Fed” National Activity Index was released, showing more economic weakness:
Pulled down by the weak employment report, the Chicago Fed National Activity index fell to minus 0.43 in August from plus 0.02 in July (revised from -0.06). Employment-related indicators fell to -0.08 vs July's plus 0.12, while consumption & housing weakened to -0.35 from -0.33 in July. Production-related indicators rose 0.01 in August but are down sharply from 0.26 in July. Despite the big decline in August's overall index, the three-month moving average fell only slightly to -0.28 from -0.27 in July (revised from -0.29).

Not that I trust any data from the “Fed.”

New Home Sales are released at 10:00 Eastern (not that I trust any data from the NAR). Consumer Confidence comes tomorrow, and we get conned pretty heavily the rest of the week, including the final revision of the very trumped up Q2 GDP. Remember that this week is end of month, and also end of quarter – the end/beginning of quarters tend to have more game playing involved.

Clearly highlighting the continued breakdown in the natural rule of law, the New York “Fed” recently released a Request for Proposal (RFP) looking for bids to develop an internet related “sentiment” monitoring system that would act kind of like Clif High’s Web-bots that go around in cyber space monitoring the following:

  • Track reach and spread of your messages and press releases
  • Handle crisis situations
  • Continuously monitor conversations
  • Identify and reach out to key bloggers and influencers
  • Spot emerging trends, discussions themes and topics
You can find the entire RFP with Zero Hedge’s commentary here: Here Comes FIATtackWatch: Ben "Big Brother" Bernanke Goes Watergate, Prepares To Eavesdrop On Everything Mentioning The Fed

This type of thing is happening more and more both with the central criminal bankers and with our own government which is now completely owned and controlled by the central criminal bankers. There is no real check and balance anymore, they have all be usurped by the ability of private individuals to create and control the supply of money. That ability gives those closest to it, power and control. That is what the “Federal Reserve Act” was, it was the grabbing of power and control.

Here’s THE thing… giving the power and control to a few private individuals goes directly against the natural rule of law, and therefore it cannot/ will not last. In fact, they are losing their power and control right now. Desperate people do desperate things, that’s why we’re seeing bizarre attempts to more directly control the population and to retain their power.

This is what I am now calling “Creeping Fascism.” By fascism I mean something similar to the first definition found for that term:

1. (sometimes initial capital letter) a governmental system led by a dictator having complete power, forcibly suppressing opposition and criticism, regimenting all industry, commerce, etc., and emphasizing an aggressive nationalism and often racism.
 Most references refer to Mussolini and/ or to the rise of Hitler. These “colorful” characters rose following times of severe economic upheaval. Their nations were down, and they struggled to maintain their grip on global power and control. As they were losing power and control more bizarre acts (other events) rose to the surface.

We see many bizarre events and attempts to hold onto power here in the U.S. today. We saw the events of 9/11 and the bizarre self-defeating “war on terror” as a result. Bizarre acts such as invading countries on false pretenses along with all-out campaigns to spin and control perceptions. Fascism almost always involves vilifying one particular group – for the Nazis it was the Jews, and in the current state of creeping fascism it is Arabs in general, and the boogyman “Al Qaida” specifically.

Again, since power and control are waning for the private central bankers, the acts become more and more desperate. History shows that those acts will eventually lead to significant “other events” which will at some point cause the change that is necessary to restore the natural rule of law – that means that the people in general will again be in power and control – it is the natural order of being, it is where humanity is marching when we stand back and look at the big picture progression of mankind.

While I don’t normally like Niall Ferguson’s overly smooth delivery, he brushed on the rule of law in his latest TED talk “The 6 killer apps of prosperity.” Please take the time to listen through the second half of this video, it is these 6 killer apps where he lays out the necessary ingredients for true prosperity – and I agree with his sentiment on these points, although I think I have written more clearly about the rule of law and the necessary ingredients thereof. He points to East and West Germany, as well as North and South Korea as contrasting examples of this point – one has a more natural rule of law and prospers, while the other with the unnatural rules of law, more closely resembling fascism, are mired in a dark ages type of squalor. I would also add as another example to his list the countries of Haiti versus the Dominican Republic.

Niall’s six killer apps are:

1. Competition
2. The Scientific Revolution
3. Property Rights
4. Modern Medicine
5. The Consumer Society
6. The Work Ethic

To me, Competition, Property rights, and the Work Ethic are all related to more basic tenants of the rule of law. Freedom is a basic tenant that underlies all of Niall’s concepts – this is why our Constitution is so important. But our Constitution is rooted even more deeply, it is the progression of mankind’s trials and errors to that point in humanity’s journey. The march of humanity is a journey that never ends, and our Constitution is not perfect, although it is the closest structure yet in mankind’s march to align our rules of law with those of nature.

For progress to be made in this regard, we must understand that good communication and empathy underlie and surround the rule of law – the population must not be controlled, coerced, or pressured, or the natural rule of law will not exist. This is exactly what things like this latest RFP from the New York “Fed” is – an attempt to control you and me. It is meant to make me fear writing on subjects like this, and it is meant to make you fear talking about it in open communications – it’s about control, it’s about power.

I simply refuse to cede to them my freedom, they cannot silence me, nor guide my discussion. I would implore each and everyone of you to resist this creeping fascism and to never willingly give up the freedom which rightly belongs to you. Your actions will either enable or disable their attempts to control you. Turn off their propaganda news channels, get real with your money, and support others who are real and businesses who are conducting real activities outside of their increasingly desperate central banker box.