Thursday, January 19, 2012

Morning Update/ Market Thread 1/19 - FRAUD, Deception, Depression Edition…

Equity futures continue higher this morning with billions in fraudulent “earnings” from Bank of America coupled with fraudulent economic data, they make quite the couple. The dollar is lower, bonds are lower, oil is higher of course, gold & silver are higher, and food commodities bounce a little following yesterday’s losses.

The fraudulent CPI was reported flat for December, here’s Econofraudpusher:
Highlights
Consumer price inflation was nonexistent in December at the headline and core levels. The consumer price index in December was unchanged for the second month in a row with lower energy costs playing a key role. The December figure was lower than market expectations for a 0.1 percent rise. Excluding food and energy, the CPI decelerated to a modest 0.1 percent increase after gaining 0.2 percent in November. Market expectations were for a 0.1 percent rise.

By major components, energy dipped 1.3 percent after declining 1.6 percent in November. Gasoline fell 2.0 percent, following a 2.4 percent decline in November. Food price inflation firmed to 0.2 percent after rising 0.1 percent the prior month.

Within the core, upward pressure was seen in medical care, recreation, and rent. Declines were seen in used cars & trucks, new vehicles, and apparel.

Year-on-year, overall CPI inflation posted at 3.0 percent, compared to 3.4 percent in November (seasonally adjusted). The core rate edged held steady at 2.2 percent on a year-ago basis. On an unadjusted year-ago basis, the headline number was up 3.0 percent in November versus 3.4 percent in November. The core was up 2.2 percent, matching November's rate.

The latest CPI report continues to give the Fed leeway for continued loose monetary policy. Between favorable jobless claims, housing starts & permits, and low inflation, equity futures are moderately positive.

And here’s John Williams with something a little closer to reality, try tripling the fraud number for starters:



And just look at how the data has diverged since 1980. This divergence is at the root of much of the fraud in economic reporting today. It affects all statistics that are first measured in dollars and then made “real” by correcting for supposed inflation – things like GDP, manufacturing data, retail sales, and so on.

And is there any wonder that with trillions in swap lines, phony money, and massive leverage that both Jamie Dimon and Lloyd Blankfein come out on the same day and basically tell you that markets are going higher? Gee, do they have something they want to sell you, or are they confident in their ability to print? Perhaps herein lays a clue?

M1:


There’s your real unadulterated inflation, right there. Sure, “markets” are going to go up… but not nearly as fast as your food and energy costs, so we’ll just ignore those little goodies and report “inflation” without them.

Housing Starts fell to 657,000 in December, a depression era level, from November’s 685,000, a depression era level. Here’s Econofraudpurveyor:
Highlights
New residential construction slipped in December but remains somewhat healthy after the jump the prior month. Permits are encouraging. Started declined 4.1 percent, after surging 9.1 percent in November. December's annualized pace of 0.657 million fell short of market expectations for 0.678 million units and is up 24.9 percent on a year-ago basis. The dip in the latest month was led by a 20.4 percent drop in the multifamily component, following a 23.0 percent boost in November. The single-family component advanced 4.4 percent after rising 3.0 percent the month before.

By region, the decline in starts was led by a 41.2 percent drop in the Northeast. Other regions showing decreases were the West, down 17.6 percent, and the South, 3.0 percent. The Midwest rebounded a sharp 54.8 percent. Seasonal factors are large this time of year and small unadjusted changes can lead to hefty seasonally adjusted changes.

Homebuilders remain modestly optimistic. Housing permits held steady, nudging down a mere 0.1 percent, following a 5.6 percent advance in November. The December rate of 0.679 million units annualized came in essentially equal to the consensus forecast for 0.680 million. Permits in November are up 7.8 percent on a year-ago basis.

The November ease in permits was led by a 3.7 percent decrease in multifamily permits after a 13.0 percent boost the month before. Single-family permits rose 1.8 percent, following a 1.9 percent increase in November.

Given that November was unexpectedly strong, the December dip in starts still reflects a recent and modest uptrend. And yesterday's NAHB housing market index gain adds to the view of modest upward momentum. Nonetheless, it still appears to be mainly in the multifamily component as the year-ago gain is stronger there-up 78.1 percent versus up 11.6 percent. And there is still plenty of supply for single-family homes.



Okay, “…somewhat healthy?” Really? “…modest uptrend?” Really… when the number is going down?

Why just look at that chart, you could almost spin that into an uptrend, couldn’t you? Well, let’s see you spin this piece of reality into an uptrend:

Housing Starts:


Gee, hard to see the “uptrend” there. Think I’ll stick with depression… unless you prefer ka-splat!

Weekly Jobless Claims dropped by 47,000 to 352,000 in the prior week, following the 399k report that was revised, of course, to 402k. This report is for a holiday week, but is supposed to be seasonally corrected. Personally, I think the bias and fraud inside of these reports is out of control. Still, it takes numbers under 350k to actually show job creation, so at best when taken at face value this is flat. Here’s Econocomplicit:
Highlights
A very large weekly drop in initial jobless claims offers a splashy, but not definitive, indication of rising strength in the jobs market. Initial claims fell 50,000 in the January 14 week to 352,000 for the biggest drop since September 2005 when economic expansion was in full gear (prior week revised to 402,000). But weekly data early in the year are often choppy, the result of shortened holiday weeks. The 4-week average, down 3,500, points to less strength with the level of 379,000 not convincingly lower than the mid-December level of 380,750.

Continuing claims likewise show huge improvement, down 215,000 to 3.432 million. Here the 4-week average is down 34,000 to a recovery low of 3.576 million. While declines in initial claims point to an easing in layoffs, declines in continuing claims represent a mix of new hirings and new drop outs from the jobs market. The unemployment rate for insured workers slipped one tenth to 3.2 percent.

Today's report is certain to support the stock market, though questions over holiday factors will likely limit its impact. Yet should this improvement hold in next week's report, expectations for strong monthly employment data would really begin to build.



Would you like a side of deception to go along with your fraud, sir? Perhaps a little Prozac for dessert will help with that depression?

The Philly “Fed” Survey is released at 10:00 Eastern this morning.

No, I’m sure there’s never been a better time to buy than with the markets overbought, negative divergences everywhere… “but if I don’t get in I may miss it!” Don’t forget that Dimon and Blankfein say the market is going higher, and your government says that their “markets” are a great place for your retirement money. Or perhaps I can interest you in a government job, maybe one where you are asked to possibly sacrifice your life for your oil, err, I mean country (of course little Timmy Geithner will “borrow” it to keep the government running, is that okay with you?).

WTI Crude Oil & Base Money:


Hmmm… believe what you want.

I, Nathan Martin, no longer consent to the lies.