Morning Update/ Market Thread 1/31

Good Morning,

Equity futures are higher this morning as the dollar continues its journey down to it’s major support line at 76.70ish… only about one more point to go. Bonds are lower as they consolidate in a sideways range that looks like a wave 4 lower to me, but ultimately may not prove to be. Oil is roughly flat, gold is lower, and food commodities are higher, very near recent highs.

Events in Egypt, and the sniff of revolution in many other countries, is exactly the type of thing I have been expecting when I say that “other events” are coming. These “other” events are rooted in our flawed money system and WHO controls its production. Now that events are picking up steam, we must ask ourselves, “What’s next?”

If you recall, I wrote article after article explaining that the debt saturation condition has not gone away and that therefore the underlying bad math of debt would continue to express itself. So far I see no relief from that, only attempts to ram even more debt down the throats of debt saturated people throughout the world. Remember, it requires income to service debt, poor countries therefore, can carry much less debt than higher income nations. Their margins shrinking, when our “Fed” pours hot money into the global market, that money seeks return wherever it can, and it has leached into our food.

The mainstream blames the weather in _______ for rising _______ (grain) prices, but in fact it’s quite obvious that prices are zooming more in concert with POMO than with the weather as it is all grains that are rising, not just a crop or two. Yes, bad policies like subsidizing ethanol also add pressure to prices. There most certainly could be more than enough food to feed the world, were it not for WHO is profiting from the production of the world’s reserve currency.

So, the question is what happens in Egypt once Mubarak is gone? What happens in Tunisia, in Jordan, in Libya, in Saudi Arabia, in Syria, in India, etc.? Will revolution in those countries bring about lower food prices? The answer, of course, is no. Just as TARP didn’t solve our economic problems, revolution won’t help those who are starving on the margins. Well, maybe it will help them a little… to the extent that despots like Mubarak have been stealing from the people for decades.

Mubarak lived a lavish life while at the same time indebting the people of his nation to the bankers of the globe. In effect he was robbing their productive capacity for himself and leaving them with the debt.

What kills me is that people in America and in most of the “developed” world don’t understand that this same exact looting is taking place here! The only difference here is that you get to cast a phony ballot for Democrat/Republican… but at the same time the private bankers are living a lavish life off of your productive efforts while indebting you beyond any hope of ever being out of debt! Americans are living a in a dream all right, and I will reiterate that “other” events are going to continue to circle the globe until they smack Americans right upside their unaware heads.

Because we are so unable to collectively look through the disinformation and deceit, I don’t think Americans will be pouring out onto the streets Egyptian style anytime soon. That’s not the way modern America rolls. The way we roll is that events around the globe will pressure us and pressure us, backing us up against the wall. And because we have this hidden hierarchy of power in this nation, it takes stress upon them for us to take action – that or a profit opportunity for them. They are masters of deflection and thus I believe America is more likely to eventually get involved in/ create a global war before the American people rise up to truly fix the roots of the problem.

Karma being the bitch that it is, will likely find America, and the elite who run it, losing massively in the end. Eventually the people of the world will wise up, it is painful to watch however. In the meantime we have a figurehead teleprompter reading President whose speech writers need at least one week’s lead time, so if any events inside of than lead time occur, they put Hillary out front because at least she’s capable of putting up a semi-intelligent sounding facade on the fly. Embarrassing. And the world is not unaware that it was America who put the despots in power in the first place.

And so as the people take power in these countries, what will their new governments look like, and how will they act to their former captives here in America? Remember, they will still be hungry, and if QE continues they will be getting even more hungry in the future. Other events are still coming, these are only the opening act.

The disinformation media is touting the Personal Income and Outlays data this morning claiming that us “consumers” are really opening our wallets! LOL, it would be funny if weren’t so sad. Income stayed roughly the same, rising .4% month over month and supposedly 3.8% year over year. Do I believe that incomes are rising? NO. The population is rising and the quantity of money is temporarily rising, but any supposed growth here is not real. Wall Street bonuses are the only “wages” I see increasing, they are falling for everyone else. And “Consumer” spending supposedly is rising by .7% month over month, and by 4.1% year over year… again, a monetary necessity as food and energy prices leap. Low to no wage growth coupled with rising expenses does not make for an economic boom, it makes for a monetary boom, stress, and hunger. But let’s not talk about that, here’s Econospin:
Highlights
Both income and spending continued to advance at the consumer level in December. Not surprisingly, headline inflation was hotter while the core rate remained subdued. Personal income in December rose 0.4 percent, following a 0.5 percent gain in November. Analysts projected a 0.4 percent increase. However, the wages & salaries component was soft, rising 0.1 percent after increasing 0.6 percent in November.

Consumer spending for the latest month was boosted by auto sales and higher gasoline prices. Personal consumption expenditures posted a sizeable 0.7 percent gain, following a 0.3 percent increase in November. For the latest month, strength was led by nondurables, up 1.5 percent (including gasoline), with durables gaining 0.7 percent. Services advanced 0.4 percent for the month. But spending was strong even after discounting price effects. Real spending jumped 0.4 percent in December after a 0.2 percent rise the month before.

Year on year, personal income for December came in at up 3.9 percent, compared to 3.8 percent in November. PCEs growth slipped to 3.8 percent from 4.1 percent in November.

On the inflation front, the PCE price index jumped 0.3 percent, following a 0.1 percent uptick in November. The core rate came in unchanged after edging up 0.1 percent in November. On a year-ago basis, headline PCE prices are up 1.2 percent, compared to 1.1 percent in November. Core inflation eased to 0.7 percent year-on-year versus 0.8 percent in November.

On average, consumers are seeing moderately healthy income gains support strong gains in spending. The latest report shows the consumer very much supporting recovery.

What nonsense, but that’s the party line, isn’t it? Again, spending far outstrips income, and in our basket-case media and nation that is trumpeted as a good thing. People starve, revolution happens at the margins, and we fail to see it coming or account for its cause. Yes, we are going to get smacked very hard, it’s coming very soon.

The Chicago PMI is released just before 10 Eastern this morning, and will be reported inside of the Daily Thread. This is a very busy week for economic data, culminating in Friday’s Employment report for January.

The VIX zoomed more than 24% on Friday and closed above the upper Bollinger band. This sets up a potential market buy signal once it closes back inside of those bands, which may happen today. Once it does, it doesn’t mean that the market will bounce right away, it may simply indicate that a corrective bounce is coming:



Emerging markets are breaking down. In fact, on a logarithmic chart it has broken a two year uptrend (but not yet on a non-logarithmic chart). This is a huge warning flag for all the markets. Additionally, Friday’s move deepened the DOW Theory non-confirmation as the Transports and Russell now appear to be in downtrends, making lower highs and lower lows. This very much is the action that you expect to see at major tops. Of course the question becomes can the selling pressure overcome the billions being thrown at the market? Indeed, it will occur at some point, is now the time, or do we continue with the Zimbabwe stock market and food commodity melt up? Just remember WHO it is that produces our money and what their interests are, and then get ready. Do not be caught by surprise, if/when food begins to skyrocket or become limited in supply, it’s best to be ahead of the rush, and the rush could very well be right around the corner.

How does America run into food supply problems? Because a vicious spiral in food prices has been created (by guess who). As food prices rise, countries on the margin get affected. The people demand action, and their politicians do what they can which is nothing real. What they can do, however, is attempt to control prices. So, let’s say that India invokes a price control on say wheat – “no person may sell wheat for more than $100 a bushel (or whatever)!” Farmers of wheat, whose cost of operating (fuel), living, and eating for themselves is still spiraling upwards, however, when they can no longer grow wheat for a profit at that price, they will simply stop growing wheat. And what happens to the price of wheat? The spiral continues, but now there are shortages. This spiral is in motion, watch it.

Again, the spiral won’t stop until all the money pumping stops. But the money pumping won’t stop because that means that Wall Street bonuses must fall and the elites will suffer. Who controls the production of money? Get ready if you are not.

Weekend Open Thread - Revolution Edition...



Morning Update/ Market Thread 1/28

Good Morning,

Equity futures are mixed to slightly higher before the open this morning with 4th quarter trumped up GDP coming in weaker than the consensus was expecting. The dollar is up slightly, bonds are down, oil is up, gold is down slightly, and most food commodities are roughly flat.

Quarter four GDP came in at 3.2%, this is up from Q3’s 2.6%, but is short of the 3.5% expectation. Here’s Econoday falling for and then disseminating the banker’s disinformation:
Highlights
The economy regained momentum in the final quarter of 2010-and in most of the right places. Fourth quarter GDP accelerated to a moderately healthy 3.2 percent annualized gain, following a 2.6 percent increase the prior quarter. The latest figure fell short of analysts' median forecast for a 3.5 percent boost. But the detail is stronger than the headline number.

The last quarter of 2010 was led by sharp improvement in net exports to a gap of $392.2 billion from $505.0 billion in the third quarter. Exports rose an annualized 8.5 percent while imports dropped 13.6 percent Also boosting GDP were personal consumption expenditures, up an annualized 4.4 percent; business investment in equipment & software, up 5.8 percent; and residential investment, up 3.4 percent. Nonresidential structures posted a modest rise.

Weakness was led by a sharp slowing in inventory investment to $7.2 billion from $121.4 billion in the third quarter. Government purchases slipped 0.6 percent.

The bottom line is that final sales have picked up significantly. Final sales of domestic product strengthened to a 7.1 percent increase from 0.9 percent annualized in the third quarter. Growth in real final sales to domestic purchasers (takes out net exports) picked up to 3.4 percent, following a 2.6 percent boost in the third quarter.

Year-on-year, real GDP in the fourth quarter is up 2.8 percent, compared 3.2 percent in the third quarter.

Economy-wide inflation as measured by the GDP price index softened to 0.3 percent in the fourth quarter, following a 2.1 percent increase the prior quarter. The consensus expected a 1.5 percent gain.

Today's report is clearly positive for forward momentum in the recovery despite a slightly disappointing headline number. Demand is picking up and inventories are not out of control-a very good combination. Still, growth is moderate and there are no signs of pending excessive growth.

No excessive growth? Well, if it were real, which it’s not, it would be very high growth, nearly unsustainable over just a very short number of years. But since its monetary growth and not real growth, it represents a quickening of the death of our currency. Oh boy, let’s cheer that on!

The UGLY in this report is exactly what is being touted as good! Exports rose at an 8.5% rate, while Imports fell at a 13.6% rate! That’s huge, but what, exactly, would cause something like that to occur? A booming economy? NO! Monetization and the devaluation of your dollars is what causes that. And from the other trumped up data with no transparency, the monthly TIC flows and trade data, our monthly trade deficits are still running in the $40 billion range. If these numbers are true, how come our trade deficits aren’t coming down? Oh, that’s right, because it’s all monetization and has nothing to do with actual production. And if the “consumer” is really as strong as is being touted, how come imports are falling at 13.6%!!! This entire GDP report is NOT BASED IN REALITY. It is representative of the FRAUD and DISINFORMATION in our nation, it is vastly overstated, and it is a product of WHO controls the production of money. Pure garbage.

And note how clever Obama was (his speech writers and teleprompter programmers) in calling for a doubling of our exports from 2009 to 2014. Using the rule of 72 (or 70), to double something in only five years requires approximately a tremendous 14.4% growth rate. According to this report, indeed, we’re not too far from that target! Imagine that, doubling exports in only 5 years! So, what’s really going on? They know that printing larger quantities of money devalues it. What they are saying is, “We are going to cut the value of your money in half in only five years!”

That’s exactly what the President told you just the other night. That’s how he can smugly assure you that “growth” will occur and he certainly acts as if he’s got a little secret that you don’t and thus his “confidence” in being able to, with a straight face no less, proclaim that he will double exports in only five years!

OMG! I can’t think of a faster and surer way destroy the middle-class, to jack up the cost of everything priced in dollars (hello food and energy), and to destabilize the entire globe (hello Tunisia and now Egypt and Syria).

But it’s all good when despots are overthrown, right? Did everyone catch that after Egyptian police shot a rioter and the shooting made it onto the internet that the internet in Egypt was promptly taken down? Now it's being reported that the internet in Syria has been taken down. That is one of the 10 sure signs of a despot regime, they kill communication in an attempt to stay in power. And Obama anointed this very same power to himself disguised, of course, in the name of fighting the war on “terror.” People in a highly functioning society should NEVER allow any individual such power, NEVER.

The Employment Cost Index came in steady showing a .4% quarter over quarter rise, on a 2% annual “growth” rate:
Highlights
Wage inflation is no threat to accommodation by the Federal Reserve which closely watches the employment cost index. The ECI rose a very mild and lower-than-expected 0.4 percent in the fourth quarter compared with the third quarter. Compared with fourth quarter 2009, the ECI rose 2.0 percent for the second lowest year-on-year fourth-quarter reading ever. The lowest reading ever was plus 1.4 percent in fourth-quarter 2009.

Details show 0.4 percent increases across the board for both wages & salaries and for benefits in both the civilian-worker and private-industry breakdowns. It was not, to say the least, a big pay-raise year for the American worker whose wages & salaries rose only 1.6 percent. This is the second lowest reading ever behind fourth-quarter 2009's plus 1.5 percent. Workers did get a bit bigger boost of 2.9 percent on the benefit side.

No, I don’t trust this data either and believe that in real terms people’s wages are sliding down, not going up. This data suffers from all sorts of bias and should not be considered meaningful in the real sense. Still, it shows that the Export data is monetary. We are exporting money, we have already exported most meaningful jobs. True and sustainable price inflation requires rising wages. Wages aren’t rising in America, they are rising in other parts of the world. Double exports for America, you halve the value of the money, and double the cost of buying things from other parts of the world for Americans whose wages are absolutely not keeping pace. In fact, if anything that 13.6% import figure is probably very close to what the actual inflation rate is. Think about that – it represents a 5.3 year doubling time, how sustainable is that, and what are the ramifications throughout the world?

“Consumer” Sentiment is released to us debt peons at 9:55 this morning.

The global state of debt saturation was caused by greedy bankers – period. They seized control of the ability to create money and this is their doing (although our greedy politicians let them). Now we have a doubling of food commodity prices in
only six months and riots/ revolution that is spreading quickly. Those two events are not put together enough, yet the bankers who brought it to you, like JPMorgan’s Jamie Dimon, are angry and tired of being berated, lol. His latest child-like temper tantrum comes, you’ll notice, while meeting in posh circumstance in Davos, Switzerland.

And just because nobody seems to care anymore, I want to point out what it is that’s occurring there. The world’s top bankers and financiers are meeting. What are they doing at this and other meetings? Why they are colluding, that’s what the term is for businesses who meet and develop joint strategies together and who work to price fix, which is exactly what they have done to the bond market, the stock market, commodity markets, interest rates, nearly everything. Collusion and price fixing… Those things are illegal if you do them, just so you know.

And it used to be that we, the people, had laws that prevented USURY. Remember that quaint little concept? Remember when the gangsters would lend money at a usurious 20% and then break kneecaps if the sap borrower didn’t pay? Well now that’s all legal, well, except for the kneecap part. Although many people who can no longer discharge credit cards with usurious rates in bankruptcy, and those who are losing their homes, their health, and their families, might just rather wobble than to go through banker induced slavery and debtor hell. And again, due to the lack of moral concepts, the exponential rise of debt and the killing of your money system gathers pace. You’ve been told, “exports will double.” Now you just have to be smart enough to know what that means.

Usury?

Credit card rates at record highs near 15%

NEW YORK (CNNMoney) -- Interest rates are now hovering near record highs, at an average rate of 14.72%. And if your credit is bad enough, you could even end up with a rate as high as 59.9% APR.

That's because while the CARD Act helped crack down on certain fees and requires more disclosures, it didn't cap every credit card holder's worst enemy: interest rates.

Sure, the new rules prevent banks from raising most interest rates retroactively, but there's no limit on the rates they can charge new customers.

"Rates are going up because card issuers know that once you get a card they can't raise the rates, so they're raising rates on the front end to ensure they get the revenue from that interest," said Beverly Harzog, credit card expert at Credit.com.

APRs have climbed more than 20% over the past two years and hit an all-time high of an average 14.78% in mid-November, based on weekly data CreditCards.com collects from 100 of the nation's top credit card issuers.

And there's no end in sight. While interest rate caps have been proposed -- including a proposal earlier this month from New York Congressman Maurice Hinchey that would limit rates at 15% -- none have been passed into law so far.


My oh my, talk of an interest rate cap? That’ll go nowhere as long as the private banks are in control of producing money – which in the scheme of history, and of their own doing, won’t be too much longer.

There was yet another very small movement of the McClellan Oscillator yesterday, expect a large directional move possibly today or tomorrow. I note that the McClellan has turned positive once again.

Divergences still in place, the Transports are still not confirming the Industrials – a very high risk time as even my own dollar negativity (which is longer term) has reached a very high point, and we know that nothing, except trumped up markets, moves in a straight line.

Just to keep you spatially aware, below is a long term monthly chart of the dollar. It has been descending, and appears that it wants to touch that lower rising trend line once again, now in the 76.7 range:



We’re not too far from that now, the reaction of the dollar from here will be important. And note that this index does not represent REAL movements of the dollar’s worth, it simply represents itself relative to other currencies which are also attempting to devalue themselves. Thus, for the dollar to move lower, it actual means that we’re winning the race to the bottom. With goals like doubling our exports (as measured in dollars), it’s no wonder we’ll eventually win that race. Oh wait, Zimbabwe already crossed the finish line… well, there’s always second place!

Morning Update/ Market Thread 1/27

Good Morning,

Equity futures are down only slightly following a very large Weekly Unemployment number. The dollar is down, bonds are flat, oil and gold are lower, while food commodities continue to soar.

It takes a lot of nerve to stand up in front of a nation on one day and talk about how our economy is “growing” again and how we’re going to control our runaway deficits, only to have the “Fed” confirm on the next day that they are pressing on with their $600 billion money printing campaign, AND that the treasury says our deficit is going up by another $500 billion to nearly $2 Trillion, AND that tax revenues as a percent of GDP will be the lowest since 1950!

And that last part, “as a percent of GDP” tells you everything you need to know… GDP is only rising due to money printing, financial engineering, and accounting fraud (lobbyists just got FASB to back away from Mark-to-Market again). Meanwhile tax revenues are down because the economy sucks. The economy sucks because we are saturated with debt and being robbed in the biggest heist that has ever occurred in the history of mankind. It is completely laughable that pumping up the stock market will improve the REAL economy.

Meanwhile, back at the Office of Disinformation, the DOL couldn’t find its rear with both hands. Jobless Claims soared from 404,000 to 454,000 with the consensus only 405k! That’s a 12.6% jump! Now, does anyone really believe that large of a change really occurred in one week? I sure don’t, this type of reporting is proof that the DOL is BROKEN. Here’s Econoday:
Highlights
The Labor Department is blaming snow storms in the South for a very disappointing and totally unexpected 51,000 rise in initial jobless claims to 454,000 for the January 22 week (prior week revised 1,000 lower to 403,000). But unfortunately the jump also reflects what the Labor Department calls "normal" volatility in the numbers at this time of year, which is the heaviest time for initial claims (Labor Department comments provided by Market News International).

The four-week average jumped 15,750 to 428,750 which is nearly 15,000 higher than a month ago and which suddenly points to trouble for the monthly employment report. Continuing claims also rose, up 94,000 to 3.991 million in data for the January 15 week. The unemployment rate for insured workers rose one tenth to 3.2 percent. In unadjusted data for the January 8 week, the department reports that 9.41 million people claimed unemployment benefits, down from 9.63 million in the prior week.

Heavy weather may be playing a major negative role in January economic data. Hopefully it will be just a one-time effect that will quickly reverse. Markets are showing limited reaction, at least initially, to today's report.

Riiight, it was the weather, lol! It has nothing to do with inane policy, inaccurate statistical methods, or anything like that.

In fact all of the rise as reported by the DOL is due to Seasonal Adjustments as “The advance number of actual initial claims under state programs, unadjusted, totaled 482,399 in the week ending Jan. 22, a decrease of 67,491 from the previous week.” Actual claims decreased, but due to their own adjustments the number is forced to shoot up. To much noise is being created by the DOL. My position is that allowing humans that much latitude is an invitation to manipulation. Again, we must keep these numbers in perspective; our population is growing 1% a year and we need to create many jobs just to stay even. That means that any number in this weekly report above 350k is a job losing proposition. Our economy is not creating jobs, it is losing massive numbers of them still. It is complete disinformation to claim job creation as President Obama does every time he talks.

Durable Goods Orders also put in a significant miss, falling 2.5% in December which follows a -1.5% print in November. This shows negative real growth and it is accelerating downwards. Consensus was looking for improvement to a positive 1.5% move. That didn’t happen, but again numbers like this expose the game for what it is. Durable Goods Orders are first a dollar amount… for this number to be negative in the face of a falling dollar and zooming commodities tells you that REAL Durable Goods Orders are significantly lower than even this horrid report. I know, let’s make excuses:
Highlights
Durables orders are living up to their reputation as one of the most volatile monthly series in the U.S.-and the latest report was disappointing. Durables orders in December unexpectedly dropped 2.5 percent, following a revised 0.1 percent fall the month before. Weakness was primarily in nondefense aircraft orders. Excluding transportation, new orders for durable goods were more favorable, advancing 0.5 percent after a 4.5 percent surge in November. By industry, strength was mostly in machinery with others industries generally down but after healthy gains the prior month.

By major industries, transportation fell a monthly 12.8 percent in December after declining 13.1 percent the month before. The latest decline was mainly in nondefense aircraft which plunged a monthly 99.5 percent-again, essentially Boeing orders likely falling due to delays in its Dreamliner delivery dates. Also, within transportation, motor vehicles actually increased 1.7 percent while defense aircraft & parts fell back 10.9 percent.

Outside of transportation, strength was narrowly focused with machinery jumping 10.6 percent (November in parenthesis, up 0.3 percent). Other industries were down but generally after a notable gain the month before. Primary metals fell 4.7 percent (up 13.8 percent); fabricated metals down 1.0 percent (up 2.9 percent); computers & electronics down 1.2 percent (up 6.5 percent); electrical equipment down 0.1 percent (up 8.6 percent); and all others down 1.1 percent (up 0.8) percent.

Business investment in equipment continues to show strength outside of aircraft. Nondefense capital goods orders excluding aircraft in December rose 1.4 percent after gaining 3.1 percent the prior month. Shipments for this series rose 1.7 percent, following a 1.4 percent increase in November.

Overall, the report should be considered in light of ex-transportation showing the overall trend over two or three months. Essentially, manufacturing is still on an uptrend though one not as robust as believed last month.

Aircraft are a very important part of our manufacturing base, it and military hardware are all we have left of significance, and that has been slipping away.

The Chicago Fed Index came in barely positive, but with its 3 month moving average negative by .22%. It’s important to understand what this index is saying:
Definition
The Chicago Fed National Activity Index (CFNAI) is a monthly index designed to better gauge overall economic activity and inflationary pressure. The CFNAI is a weighted average of 85 existing monthly indicators of national economic activity. It is constructed to have an average value of zero and a standard deviation of one. Since economic activity tends toward trend growth rate over time, a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend. (Federal Reserve Bank of Chicago)

Note first that this number comes from the “Fed.” Also note that it is predicated on “trend,” whatever that may be. Who says what the trend is and how it is measured? What inflation data is used to measure it? In other words, it’s a GARBAGE report, meaningless. And even with that it still is showing below trend “growth.” More disinformation and a worthless product brought to you by the people who create the money and benefit from it. In my world, economic statistics would not be allowed to be produced by those who have a direct interest in the outcomes.

Pending Home Sales are released at 10 Eastern and will be reported inside of the Daily Thread.

The market continues to show a very strong correlation to money printing. Yesterday commenter Steve posted a very pertinent chart showing the market activity since QE1 and QE2 were begun. It clearly shows that when a nation prints money and throws it at the market, the market will go up:



Investing in such a market is a huge risk. Traditional Technicals say its way overdone, and thus it is a dilemna. For me, it's not worth the risk as I am not privy to their inside information.

This effect is the same effect encountered in Zimbabwe when it had the best performing stock market on the planet… for a time. It is a looting effort. It allows the people WHO create the money to escape with what riches are left. As their looting continues, just as in Zimbabwe, real people starve. In this case our “Fed” is starving the entire world that is on the margins. And also just like Zimbabwe, when the direct money printing ends, the market will collapse. It is nothing but an empty shell being inflated by nothing real. Fraud on multiple levels, disinformation in our statistics, money printing, accounting and control fraud. It’s all FRAUD. The rule of law? Not even close.

Still, that’s just complaining, what’s an investor to do? Ask yourself, “What would a despot do?” Um, let’s see, load up the private jet with GOLD, and leave the country!? What, you don’t have a G20 sitting on the tarmac at the local airport? Well, you can at least own some gold… and that from someone who is most definitely not a gold bug, but did recommend owning gold ever since it was priced around $350 an ounce (same goes for silver).

The uptrend line on gold is currently around $1,300 an ounce, not too far from here, and yes, I think you buy the dips, but don’t go hog wild if it breaks that trendline. If it does, the first area of support on the chart will be around $1,250:



Will holding precious metals make you rich? No, but it’s really all you have, as even real estate is not safe and has large carrying expenses unless it produces a very good income. Always remember WHO owns the majority of the gold (the banks) and don’t be fooled by their rhetoric about use as a backing for a nation’s money system. What’s most important is WHO controls the quantity. It is a complete and total MYTH (Disinformation) that gold works to keep the quantity of money under control. It never has.

Watch this Alan Parson’s “Gold Bug” video in today's context with the advantage of hindsight (EU riddled with debt, nations bankrupt)… WHO wanted and created a European Union? Note the opening gala, and note who they hired to M.C. it. Interesting in light of today’s events, and an interesting choice of titles for that activity, no?

Morning Update/ Market Thread 1/26

Good Morning,

Equities are slightly higher following Obama’s misdirect-you State of the Union speech and in front of today’s FOMC disinformation announcement. The dollar is close to level, bonds are slightly lower, oil is flat, and gold is still in correction mode with food commodities continuing to impoverish those on the margins – funny how food riots and revolution by starving people in Tunisia is okay and even touted by the President… he sees it as democracy taking out despots, while I see it as a banking cabal impoverishing the world. Always glad to see a despot get the boot, but is that going to put food on Tunisian’s tables? More on the President’s speech in a moment…

Meanwhile, the unethical, corrupt, and hypocritical Mortgage Banker’s Association reported that Purchase Applications fell yet another 8.7% in the prior week, refinancing activity supposedly also fell a whopping 15.3%, pulling their composite index down 12.9%! They were already near historic lows, the MBA’s math and reporting methods are ridiculous. Here’s Econoday:
Highlights
The run of weakness in purchase applications deepened severely in the Janauary 21 week, down 8.7 percent to take the index back to its lowest point since October. Heavy weather and the shortened holiday week put the focus on the unadjusted index which fell a less severe 3.1 percent for a still substantial 20.8 percent year-on-year decline.

Refinancing activity also fell heavily, down an adjusted 15.3 percent for the lowest level since January last year. Rates are affordable but well off their lows, up three basis points in the week to 4.80 percent for 30-year mortgages.

The recent jump in rates motivated the fence sitters in December, at least for existing home sales in data released last week. But the ongoing slide in the purchase index points to a January setback.
A 20.8% year over year decline? These numbers put the lie to supposed improvement in the housing market, not to mention the economy as a whole. I think a lot of activity is based on foreclosures, many are cash deals done by investors and not by families intent on living in them. In other words, the housing market, I believe, is even worse than the numbers make it appear, which is already pathetically weak.

New Home Sales are released at 10 Eastern, and the FOMC Announcement comes at 2:15 Eastern.

Obama touted economic “growth” in his speech last night. He repeated his last year’s radical and crazy call for our nation’s exports to DOUBLE in just five years (!) and he trumpeted how with the “growth” in the past year we are well on our way to meeting that goal! I literally can’t laugh hard enough at such nonsense. There’s only one way we accomplish that goal, and that’s by cutting the value of our money in half! That’s because exports and GDP “growth” are measured in dollars. Sure, if one throws $112 billion a month, month after month into the system then we’re going to see the number of dollars “grow.” But that’s entirely different than REAL economic growth, and thus the disinformation and game playing continues.

Now, don’t get me wrong, Obama is an excellent speech giver when he has teleprompters directly in front of him. And last night’s speech sounded just like a most excellent campaign speech – long on talk, short on specifics, and EMPTY when it comes to paying for us “winning” the future. No mention of our debt saturated condition, no mention of bankrupt states, bankrupt cities, bankrupt nations around the globe, or WHO made them that way. Everything’s rosy, America is the greatest nation on the planet, and therefore we’re going to win the future, launching somehow forward from this “Sputnik” moment in time.

And just look at our shining example of maintaining the rule of law! According to him, we’re doing a terrific job of that too! Of course none of the criminals looting our country, past and present, are being prosecuted, but again, we continue to gloss over that. All happy talk in an attempt to convince the “consumers” of America that it’s okay to open your wallets and bury yourself as deeply in debt as your income can possible stand. President of Marketing should be his real title, Disinformation Minister/ Czar is his role in reality. Otherwise, it was a very fine speech - well delivered, his timing from one teleprompter to the other was excellent.

And I like positive people and positive talk about the future as much as anyone. And if we weren’t beginning from a completely impossible math situation then I’d be happy as the proverbial clam. But while we are now at least talking about what appears to be the elephant in the room, the deficit, it turns out that the elephant in the room is much, much bigger than anyone in the Administration admits, and in fact is a Trojan Elephant with the central bankers playing the part of the Greeks.

The disinformation will continue as long as the money printing can cover it up. We are not too far from losing confidence as it is, again I simply point to a doubling of food commodities in the past six months. No talk about that, gee, I wonder why that is as I watch wheat put in a new high.

There was a small movement in the McClellan Oscillator yesterday, expect a large directional move today or tomorrow. But I would not expect a large move until after the FOMC provides their “Fed” disinformation this afternoon. Interest rates at zero, and print to the moon, we have exports to double and only four years left to do it!

Morning Update/ Market Thread 1/25

Good Morning,

Stocks are lower this morning as the markets continue to display warning signs despite higher highs in the Industrials. The dollar is higher, bonds are higher, oil has descended below its uptrend line, and gold is lower along with most food commodities this morning.

The Case-Shiller 20 city Home Price Index fell in the month of November by 1.0% month over month, and is down 1.6% compared to a year prior. These numbers represent an acceleration of falling prices, however, the more narrow 10 city Index did not show the same price deceleration, at -.4%, and thus gives those looking for rainbows and Skittles something to dream about. Below is the entire S&P Case-Shiller Report, I think you will find it interesting:

Case-Shiller November

Below is the wishful spin from Econoday:
Highlights
Home-price contraction eased in November according to Case-Shiller data that show a 0.4 percent adjusted dip for the composite 10 index in November compared to a 1.0 percent drop in October (revised one tenth lower) and declines of 0.8 percent and 0.5 in the two prior months. Note that Case-Shiller data are based on a three-month average which suggests that November may have actually showed a gain. Unadjusted data, which are also watched for this report, show a steeper decline of 0.8 percent which however is still improved from October's 1.3 percent drop.

But the results aren't that encouraging, showing declines across most cities led by Detroit, Atlanta, and Chicago. Year-on-year comparisons show an adjusted 0.4 percent decline for the composite 10 index and an adjusted 1.6 percent decline for the composite 20. Further data on home prices will be released at 10:00 a.m. ET today with the FHFA house price index.

Looking at four different news sources, I see headlines that make this report seem both like an improvement and as worsening. How should it be read? In my opinion, the wider the spread of data the more accurate the picture, and thus the 20 city Index is what should be given the most credence. Regardless, home prices are still falling and those are sizable moves not to be ignored or wished away.

Home prices are going to continue to be under pressure throughout 2011 as the number of Option-ARM resets crescendos in the middle of this year.

Consumer Confidence and the FHFA Home Price Index are released at 10 Eastern this morning and will be reported within the Daily Thread. The FOMC meeting begins today, we will be duly impressed with their confidence inspiring print to infinity verbiage tomorrow at 2:15 Eastern.

Yesterday’s rally came, of course, on the back of more billions in POMO money. Can’t wait to see what the market does when that stops… and it will at some point. Volume on the advance was weak, and looked corrective in the Transports and NDX. The Transports are well off their highs, they are going to have to have use some serious POMO dollars to pump the Trannies if they wish to avoid a DOW Theory non-confirmation. Of course commodities are often a tell, and oil is now established in a down trend after breaking its uptrend line overnight, and putting in a lower low:



Despite yesterday’s rally the McClellan Oscillator remains negative. This means that the majority of stocks are in a downtrend, it is one of the key ingredients to fulfilling the Hindenburg Omen. Conditions now have a very similar feel to the top that was made in ’07, with people calling for $250 a barrel oil, $5 gasoline, and a dollar that is worthless while food riots break out around the globe. Again I am left to wonder what happens when the “Fed” has bought the entire market? Hmmm, I still don’t think this is going to end well…

Morning Update/ Market Thread 1/24 – Desperate People…

Good Morning,

Equity futures are roughly flat just prior to the open with the dollar higher, bonds higher, oil sharply lower, gold falling, and most food commodities marching still higher. Oil is very close to breaking its daily uptrend line.

There are no economic reports today, just POMO after POMO. Actually, this Wednesday will stand out due to the fact there is no POMO that day. $7 to $9 more billion is planned for today – sickening. The data will start coming tomorrow with Case-Schiller data, the House Price Index, and Consumer Confidence. The FOMC meets again this week and will announce they are leaving interest rates at zero and printing your money into oblivion on Wednesday. The first cut at Q4 GDP comes on Friday, so it should be a very interesting week, especially for the economic disinformation that is flowing like the mighty river Nile.

Speaking of economic disinformation, this week the world’s foremost dispensers of economic Kool-Aid meet in Davos:
Super-Cycle Leaves No Economy Behind as Davos Shifts to Growth

Jan. 24 (Bloomberg) -- For only the third time since the Industrial Revolution, the world may be entering a long-term growth cycle that will lift all economies simultaneously, driving bond yields and commodity prices higher.

The depth and scope of the expansion will be a focus for discussion at this week’s annual meeting of the World Economic Forum in Davos, Switzerland. Evidence of a broadening global recovery will enable U.S. Treasury Secretary Timothy F. Geithner, investor George Soros and 2,500 political, business and academic leaders to shift their emphasis away from crisis- fighting.

With the economic and investment outlooks “much better” than in recent years, “people are talking about how to get back to business as normal and what comes next,” said Jitesh Gadhia, a delegate to the conference and the London-based senior managing director at Blackstone Group LP, which runs the world’s largest buyout fund.

Goldman Sachs Group Inc., PricewaterhouseCoopers LLP and London’s Standard Chartered Bank are among the financial companies sending executives to the meeting. Their economists predict a growth spurt in coming decades led by emerging nations that will be strong enough to boost developed countries.

That’s right… global growth! The emerging nations are going to pull developed nations up by their boot-strap! Sure, why not? And maybe Santa will bring me that new Aston Martin I’ve always wanted! Vroooom!

What could go wrong with that scenario?! Let’s see, food prices double in 6 months. People starving, riots, bankrupt nations, states, cities, revolutions spreading… oh, and governments being overthrown Iceland style!

Got to love the fighting Irish who are so angry at what was the current regime for taking banker “bailouts” that sold them and their retirement plans down the river, that they are throwing them out on their rears and forcing a new election. I can guarantee you that the next government will unwind whatever damage the world bankers are currently doing to that country, appropriately so.

Just remember that desperate people do desperate things. Take a look at this morning’s news. Four police shot inside of their own Precinct offices in Detroit. Two police shot in Port Orchard, WA at the local WalMart. Three more officers shot in St. Petersburg Florida. Now we’re also learning of a bomb exploding at the Moscow airport in Russia, 31 killed and more than 100 wounded. It seems to me that there are more and more desperate people. Keep printing that money, nothing bad will happen… sure. Just remember those “other” events have roots that run deep. When the desperate people get organized, real change will come, just as it did in Tunisia. That’s why you’re likely to see attempts to break lines of communication in the future. Of course none of these events will be related to the economic disinformation and outright thievery that’s occurring and begins at the very top – at least that’s the picture painted by the bankers, politicians, and media that they own and control. No worries, look over there, the DOW rose 20 points today (shhh, don’t remind anyone that it took $9 Billion in POMO to get it, just shut up and fork over $15 for that hamburger).

Major top in the markets coming? You bet. There are signs aplenty that we are forming one right now. People are already forgetting the recent Hindenburg Omen, the VIX sell signal that occurred just four trading days ago, and no one is talking about the decline of the Transports while the Industrials continue to make new highs. That’s a setup for a potential DOW Theory non-confirmation, something that is almost always seen very near major market tops. Again this morning the Transports are sinking with the Industrials making new highs… the same thing occurred in 2007 just before the real fun began. The McClellan Oscillator is still very negative and is declining despite the rising DOW Industrials. This is showing that breadth is narrowing and it is yet another divergence in the marketplace.

How long will POMO hot money be able to create the illusion of “growth?” I don’t know for sure, but I am guessing until “other events” force those meeting this week in Davos to stop it.

Morning Update/ Market Thread 1/21

Good Morning,

Equity futures are higher this morning with the dollar down sharply, bonds lower, oil down slightly, and gold is down which does not match the fall of the dollar. Yesterday’s mid-day bounce did move food commodities sharply higher as well.

Despite the bounce yesterday, the McClellan Oscillator worsened to the -100 range showing that the majority of stocks are now in downtrends, but new 52 week highs and lows remained subdued.

There is no significant economic data released today, and it is Options Expiration with a $7 to $9 Billion POMO operation planned for today.

I’m only going to discuss one important news item today, and that is President Obama’s appointment of GE’s CURRENT CEO, Jeff Immelt, to Chair a new White House Economic Advisory Council. His appointment is meant as a replacement to outgoing Paul Volcker. Here is the CNN spin:
Obama taps GE chairman to chair new White House economic group

Washington (CNN) -- The White House will announce a new economic advisory council on Friday, one that will be headed by Jeffrey Immelt, the CEO and chairman of General Electric.

"Because we still have a long way to go to get Americans back to work and strengthen our economy, the President will announce on Friday that he will sign a new Executive Order creating a new board, the President's Council on Jobs and Competitiveness, which will have a new composition and new mission as we move to a new phase in our economic recovery," a White House statement said.

"The Council will focus on finding new ways to promote growth by investing in American business to encourage hiring, to educate and train our workers to compete globally, and to attract the best jobs and businesses to the United States."

The council replaces the old Economic Recovery Advisory Board that was headed by Former Federal Reserve Chairman Paul Volcker.

"President Obama has asked me to chair his new President's Council on Jobs and Competitiveness," Immelt said in a Washington Post op-ed piece published Friday. "I have served for the past two years on the President's Economic Recovery Advisory Board, and I look forward to leading the next phase of this effort as we transition from recovery to long-term growth.

"The president and I are committed to a candid and full dialogue among business, labor and government to help ensure that the United States has the most competitive and innovative economy in the world," he said.

"Jeff Immelt's experience at GE and his understanding of the vital role the private sector plays in creating jobs and making America competitive makes him up to the challenge of leading this new Council," President Barack Obama said in a statement. "I also want to thank my friend Paul Volcker, whose service not just during this difficult period but for decades has been invaluable to me and the American people."

Repugnant is the first word that comes to mind, “oh shit” are the next ones.

It appears to me that the special interest takeover of the United States is just about complete. Immelt took over GE from “Chainsaw” Jack Welch in the year 2000, then proceeded to run the company into a bankrupt condition largely by taking on far too much risk within GE Capital which made GE effectively a financial company who just also happens to make jet engines. They could care less about making light bulbs or appliances, they were making subprime loans like crazy to every homeowner with a heartbeat and to every rag tag airline around the globe. They got into derivatives, and when their leverage turned on them, it bankrupted the company. But instead of the rule of law (and the rule of nature) being allowed to run its course, Hank Paulson and the boys stepped in with billions to bail GE out. Today they're back to being a mark-to-fantasy Ponzi financial company reporting false profits just like the rest of the insolvent financials. In fact, just this morning (coincidentally?) GE and Immelt reported stellar profits:
General Electric posts 31% earnings jump

NEW YORK (CNNMoney) -- General Electric logged higher fourth-quarter earnings and revenue Friday that beat Wall Street's expectations, getting a boost from its finance arm and strong growth in equipment orders.

The Fairfield, Conn.-based conglomerate said its fourth-quarter earnings from continuing operations rose 31% to $3.9 billion. Earnings per share rose to 36 cents per share, up 33% from a year earlier. Analysts polled by Thomson Reuters had forecast a profit of 32 cents per share for the quarter.

Net income, including discontinued operations, was $4.5 billion, up 51% from a year earlier.

The industrial giant said its year-over-year revenue rose 1% to $41.4 billion -- the first positive growth in nine quarters. Analysts expected the company to report a 4% drop in revenue to $39.9 billion.

"GE ended 2010 with three consecutive quarters of strong earnings growth," Chairman and CEO Jeff Immelt said in a prepared statement, highlighting gains in the industrial segment, as well as strength in orders and equipment.

Orders on the rise: Fourth-quarter orders were up across the board. Overall industrial orders jumped 12% year-over-year, with a 20% surge in equipment orders and a 5% increase in service orders. Orders in energy infrastructure grew 4%. Meanwhile, the company's backlog increased by $3.1 billion to a record $175 billion.

"They have been posting solid order growth for a while now, so it's not difficult to see the company continuing to grow because of this," said Daniel Holland, an equity analyst at Morningstar.

The health care sector was another bright spot, with revenue rising 8% and profit jumping 10% in the quarter.

GE (GE, Fortune 500) manufactures products ranging from jet engines and health care technologies to light bulbs and electric cars, so the company is widely viewed as a barometer of the overall health of the economy.

"It was a team effort in terms of the overall story," said Holland. "It seems like the individual businesses are starting to make their way through the recession and are starting to turn around."

Revenue and profit at the company's energy infrastructure was also an encouraging sign, with revenue only slipping slightly and profit inching higher.

"You always want to see growth particularly out of its power generation segment," he said. "That segment is driven by electricity demand across the world, and electricity demand is linked to economic growth and activity -- so we want to see the wheels of the economy continuing to improve."

GE Capital recovering: GE Capital, the company's finance division that was hard-hit during the financial crisis, continued to improve in the fourth quarter. Net income in the unit rose to $1.1 billion from $100 million a year earlier.

"GE Capital is doing better than I think anyone would have expected a couple quarters ago, let alone two years ago when we were in the depths of the recession," said Holland. "Even in its weakest spot -- commercial real estate -- you're seeing losses lessen."

Did you catch all that? The spin in the talk and in the reporting is that orders and infrastructure grew… but that growth is anemic, especially when you consider that it is measured in dollars and that their revenue growth is WEAK. So, where did profits really come from? GE Capital whose profits jumped from $100 million to $1.1 BILLION!!! That’s a one BILLION dollar jump in financial profits in one year!! Can you say “Mark-to-Model? I thought you could. I can also say, “ACCOUNTING FRAUD.” This on the back of hot money pouring in from the “Fed.”

Remember, those closest to creation of money, particularly Ponzi money, profit the most from it. Of course Immelt loves the current hot money, no adult, no rule of law, Ponzi environment and I’m certain will do everything in his power to keep it flowing to the benefit of his FINANCIAL company along with all the other PHO Wall Streeters.

Again, I will simply point you to a doubling in the past 6 months in underlying food commodities and warn that another year of the current policies and hot money will literally produce starving Americans, not just starving people in 2nd and 3rd world countries. I cannot think of a worse pick, this President continues to show that he is a President of the special interests and NOT OF THE PEOPLE.

They sell these appointments as if they are bringing economic “expertise” in to help the economy and to create jobs, but what they are really doing is accelerating the looting and the debasement of our money. These are the same people who ran the economy into the ground, they ran their businesses into the ground, and they are the exact wrong people to be appointing. America is in BIG TROUBLE.

Did you catch that yesterday the “Fed” changed their own rules again which now makes it so that they will not allow themselves to become technically insolvent on paper? Oh the acts that desperate people will take… if you’re reading this I know that thankfully some people are paying attention.

I read a line this morning from a good article that said basically, “We’re like Tunisia, only less aware…”

Morning Update/ Market Thread 1/20

Good Morning,

Figures often beguile me, particularly when I have the arranging of them myself; in which case the remark attributed to Disraeli would often apply with justice and force: "There are three kinds of lies: lies, damned lies, and statistics."
~Mark Twain, autobiography, 1904

Yesterday’s correction continues this morning with equities down across the board, the dollar is up, bonds down, oil is sharply lower and back below $90 a barrel, while gold is falling as well - now at $1,348 which is down $21 so far.

Weekly Jobless Claims fell to 404,000 for last week from 445,000 the week prior. This is better than consensus that was looking for 420k. This series has been very volatile lately, and what has been the trend of increasing non-seasonally adjusted numbers ended with a very large drop in the raw data for this week. This, frankly, concerns me as I know that reality is not that volatile, so why is this data?

The DOL wants me to believe “The advance number of actual initial claims under state programs, unadjusted, totaled 550,594 in the week ending Jan. 15, a decrease of 212,504 from the previous week.” Huh? I’m supposed to believe that actual initial claims fell by 27.8% in one week, is that right? Sorry, I don’t believe it reflects reality, this type of reporting is beginning to look like what the Mortgage Banker’s Association does with Housing numbers. Still, note that the raw number is much larger than the reported number due to seasonal adjustments. Here’s Econoday marching ahead without question:
Highlights
Initial jobless claims swung in the other direction for the January 15 week, dropping an unexpectedly sharp 37,000 to 404,000 from a revised 441,000 the prior week. The latest decline more than offset the prior week's 30,000 boost. With recent weekly volatility, the four-week average likely provides the best insight. The average is down 4,000 to 411,750 and is down more than 14,000 from a month ago in what is good signal for the monthly payroll report.

Continuing claims claims fell for the third week, down 26,000 in data for the January 8 week to 3.861 million. The four-week average is down 53,000 to 4.006 million. The unemployment rate for insured workers is unchanged at 3.1 percent.



Just remember that despite what is propagated by The Ministry of Truth, weekly claims above 350k are still showing that jobs are being lost in the economy, not created.

Existing Home Sales, the Philadelphia Fed Index, and supposed Leading Indicators are released at 10 Eastern this morning. I will report results inside of the Daily Thread.

I found the following comments very interesting. They came from Forbes’ Annual Investing Roundtable. The first comes from Bill Gross:

I don't know if the U.S. has reached a desperate point, but it is employing instruments and vehicles and policies that smack of desperation. We are not looking at a default here, but at years of accelerating inflation, which basically robs investors and labor of their real wages and earnings. We are looking at a currency that almost certainly will depreciate relative to other, stronger currencies in developing countries that have lower levels of debt and higher growth potential. And, on the short end of the yield curve, we are looking at creditors receiving negative real interest rates for a long, long time. That, in effect, is a default. Ultimately creditors and investors are at the behest of a central bank and policymakers that will rob them of their money.

Gee, is Bill not on the Insider’s list anymore?

And this second comment comes from Marc Faber, a classic and nothing but the truth:
If you measure the stock market not in dollars but gold, it is down 80% since 1999. I no longer regard the U.S. dollar as a valid unit of account. People shouldn't value their wealth in dollars because one day, in dollars, everyone will be a billionaire.

How true. Although I note that food commodities began correcting yesterday… and interesting that corn topped out at $666, the same level at which the SPX bottomed in March of ’09… interesting. Also interesting is that the rounded low in corn was exactly half that amount at $333. I do pay attention to strange numbers like that as they do tend to stick around a long time, meaning that they often do mark significant turning points.

And more countries are trying to stem the flow of “Fed” hot money. Brazil just raised interest rates by .5% in order to keep inflation down. It’s a problem for Brazil as it makes their currency relatively strong. Again, the “Fed’s” pumping affects everyone around the globe… how much more abuse are the relatively good players going to take?

Our landlord came visiting yesterday. China’s Hu and President Obama gave a press conference that was just embarrassing from my perspective. Obama’s speech was nothing but why we were going to be good little boys for our landlord, and when Hu began to speak, he didn’t give a speech but instead turned to Obama and began asking questions like a banker would ask of someone who is asking for a loan.



This reminded me of when Bill Clinton took over the White House Press Conference. Obama is out of his element when the teleprompter is turned off. He is failing to LEAD and to take care of business that needs to be taken care of. Proof that he and our government are nothing but banker puppets came again last night… all you have to do is look at the guest list of those attending the White House dinner last night with Obama and Hu. High on the list was all of the top BANKERS. I’m sorry, but giving private banks the run of the White House with current, past, and foreign Presidents is just SICK. We need to separate our government from private special interests, until then our economy will be nothing but a fa├žade.

Equally SICK is this:
Goldman's Eileen Rominger to Join S.E.C.

The Securities and Exchange Commission has announced that Eileen Rominger, the global chief investment officer of Goldman Sachs Asset Management, has been named its director of investment management.

She is not the first GS employee to be transferred to their S.E.C. Division. How much more of this government takeover are the people going to allow? Very ill, and we are stepping further and further along that scale towards despotism.

It sure is looking more like a correction has begun, a drop in the SPX below 1,275ish will signal that one is under way. The bottom of the large rising wedge is now approximately 1250ish, we can look for support there next should 1,275 fall.



Just remember that the markets do not move in a straight line and headfakes will come in both directions. I note that the McClellan Oscillator has turned negative again.

Morning Update/ Market Thread 1/19

Good Morning,

Equity futures are lower this morning as Goldman Sachs (GS) and Wells Fargo (WFC) report weaker earnings that go along with weak economic data. However, in what is obviously a trend, the dollar is weaker breaking below support, and that is leading to oil that is now making new highs above $93 a barrel to go along with rising gold price. Bonds are lower again. Food commodities are soaring, corn continues to make new highs and has DOUBLED IN THE PAST SIX MONTHS, now rising 101% (wheat has risen 90%+, rice has risen 60%, and oats have risen 115%):



Overnight India took measures to attempt to cap food price. Many countries have tried, the harder they try, the harder they will fail. Those food inflation figures absolutely are destabilizing to the world, they are dangerous and they are lethal to real people, yet here in the United States we don’t see how our letting the “Fed” destroy the value of our money is destroying peace and prosperity throughout the globe – a tragedy. We cheer the overthrow of despot governments, but that will not help the starving people of the world… not until we change WHO produces and controls the quantity of money.

The unethical and completely hypocritical Mortgage Banker’s Association reports that it’s Home Purchase Index fell again in the last week by 1.9%. Here’s Econoday:
Highlights
Home sales aren't likely to pick up "anytime soon" is the conclusion of the Mortgage Bankers Association whose purchase index remains depressed, down 1.9 percent in the January 14 week to extend a run of weakness. Refinancing is another matter as those who already own a home seek to lock in low rates. The refinance index rose 7.7 percent in the week with the average 30-year rate at 4.77 percent vs 4.78 percent in the prior week. Housing starts will be posted today at 8:00 a.m. ET.

These indices are not to be taken seriously, but regardless they are near all-time historic lows, it is obvious that home sales are still very anemic.

Indeed, Housing Starts for December stunk up the joint again – ugly, as starts fell to a one-year low (not unexpected given the season). Starts totaled just 529,000, this figure is roughly one-third of 2006 values. This compares to 555,000 in November, and a consensus of 550k, another miss:
Highlights
Housing may be gaining forward momentum but adverse weather appears to have delayed groundbreaking. For the latest month, starts declined while permits strengthened. Housing starts in December slipped back 4.3 percent, following a 3.8 percent rebound in November. The December annualized pace of 0.529 million units fell short of the median forecast for 0.550 million units and is down 8.2 percent on a year-ago basis. The reversal in December was led by a 9.0 percent drop in single-family starts, following a 5.8 percent gain the month before. The multifamily component rebounded 17.9 percent after declining 5.0 percent in November.

By region, the December boost in starts was led by a 45.8 percent increase for the West. Declines were seen in the Midwest, down 38.4; the Northeast, down 24.7; and South, down 2.2 percent. The sharp weakness in the Midwest and Northeast indicates that snow storms played a role in damping starts.

Housing permits, in contrast, made a 16.7 percent comeback in December after declining 1.4 percent in November. Overall permits posted at an annualized rate of 0.635 million units and are down 6.8 percent on a year-ago basis. The latest boost was led by the multifamily component which was up a sharp 53.5 percent while single-family permits improved 5.5 percent.

The gain in permits may be a significant positive as it in part reflects optimism of homebuilders. December starts were relatively weak and this likely was due to atypically adverse weather for the month. Permits are much less affected by weather as homebuilders simply fill out paperwork indoors while starts depend on whether bulldozers and workers have good weather to operate. However, the Commerce Department noted that building code changes took effect on January 1 in California, Pennsylvania and New York. In turn, some of the multifamily strength likely is due to construction companies getting approval before the tighter regulations.

Today's report should be seen as a positive despite starts falling short of expectations. The big issue going forward is whether homebuilder optimism is confirmed by gains in home sales. If sales stay flat, starts will ease. But meanwhile, homebuilders have reason to be cautious and the boost in permits should be seen in that context. Optimism is up but more toward multifamily than single-family.


Note that the multi-family housing segment has been picking up lately. This is because the big players can get funding to build cheap housing for the poorer masses. Here’s an article from Bloomberg describing how the big home builders, who have access to capital markets, are the ones who have survived taking out all the small players. Thus we are left with cookie-cutter homes built quickly and on the cheap:
Biggest Builders to Gain Market Share as Demand Rises

Jan. 19 (Bloomberg) -- The biggest U.S. homebuilders are poised to benefit from a fledgling rebound in demand for new houses this year, with competitors having gone out of business during the recession and sales likely to climb from record lows.

D.R. Horton Inc., Lennar Corp. and Toll Brothers Inc. are among companies planning to boost their community counts by at least 10 percent this year after writing down property values, buying land at discounted prices and obtaining financing unavailable to smaller, closely held builders.

“It’s a definite bull tenet for the big builders,” said Ivy Zelman, chief executive officer of Cleveland-based advisory firm Zelman & Associates, who rated all homebuilders “sell” in December 2006 and now has “buy” on five of the 13 she covers. “That’s one of the reasons we’re recommending investors be long a handful of homebuilding stocks.”

The National Association of Home Builders expects new single-family home sales to rise to 405,000 this year, while Moody’s Analytics Inc. projects an increase to 540,000. The annual pace of sales averaged 319,640 for the 11 months through November, down 15 percent from a year earlier, according to Commerce Department data.

While new home inventory may be low, don’t believe for a second that there’s a new building boom on the horizon, shadow inventory of existing homes is extremely high and you can buy nice homes for far less than you can build. With material inflation, the gap between the cost to buy used versus to build can only grow, and land prices have already corrected sharply in most areas.

The fact that Wall Street is funneling money into home builders now is just more proof of the distortions they create. It’s sad to see our economy grind through consolidation to the point that a few large companies can dominate an industry. Those who have access to the easy money survive while those who don’t fail. Again, very important WHO creates that money. Oh yeah, welcome to WalMart…

Income at Goldman and WFC fell largely due to lower profits on trading. Gee, are they running out of suckers? I’ve always questioned how long the game continues after the top 5 banks own nearly all the equity. How do they make money trading at that point, trading to one another? Once the government has POMOed all their stinky debt off their hands, then what? Who can they sell their overpriced crap to? What happens when that price finally corrects? How high will food and oil prices rise when the next bailout comes? And finally, when will the people of America finally get smart and throw the bankers out on their asses?

News that Ireland is printing their own Euros without resistance from the ECB has many observers in a state of shock. Are other countries going to be permitted to do so? Definitely monetization occurring all over the place, we are seeing global food and energy inflation while at the same time the real economy continues to suffer. I think those “other events” are going to come at an ever accelerating pace now, there’s so much news I can hardly keep up.

The market action yesterday produced yet another small movement in the McClellan Oscillator, thus we can expect a large directional move today or tomorrow.

The VIX rose against higher prices yesterday, yet another divergence and it also closed back inside the range of its Bollinger bands, thus producing another market sell signal. The past two signals have been run over by POMO hot money and have thus failed, but the two prior to that did produce larger corrections that followed.

The wave count appears to be complete at this time, and the rising wedges also appear to be complete. This completion, or near completion, of what is most likely a wave 5 means that a higher order correction should follow. Obviously the technicals must fight against hot money, and thus we are likely to see that hot money avoid obviously poor buying technicals and flood to where the momentum is greatest, namely food commodities – and boy are we seeing all foodstuff spike today – sad, and shameful. I hope you guys are ready, this is a mess… the bankers are running over the people of the globe as if they have blinders on. They are blinded by their own greed…

Guest Post - Disinformation Fog Intensifies As Economic Turmoil Develops


By Giordano Bruno

Neithercorp Press – 1/18/2011

In the past few years, the concept of economic globalism has revealed itself as quite the Trojan horse; once posing as the next step in the evolution of “free market” capitalism and the savior of third world nations striving for development status, now revealed as a fiscal plague spreading delirium and destruction wherever it touches ground. There is no denying that the economies of the world are irrevocably tied to one another, but until recently, this was always thought of as a “good thing” in mainstream financial circles. Today, the great failings of engineered interdependency are painfully apparent. The EU’s many peripheral nations are dropping one after another like flies in a fog of DDT, rising economies in Asia are bloated with investment capital escaping from debt default in the West, causing impressive levels of inflation, and the U.S. is on the verge of a currency implosion as the Federal Reserve opens the floodgates of fiat in a bid to hide our system’s extreme destabilization and maintain what little international faith is left in our ability to service our rampant liabilities. Globalism has led us to disaster…

Of course, this disaster is not quite so obvious if you only follow the MSM’s version of events, or the pithy, watered down observations of mainstream economists, central bank officials, and puppet politicians. In fact, it’s difficult for the average person only mildly versed in economics to understand just what is going on! The closer we get to the edge of the ravine, the deeper the deception becomes. Most Americans feel the danger intuitively, and see the warning signs in their local communities, but clear, concise information in the midst of this ‘Gordian Knot’ of lies is difficult to come by.

Treasury Secretary Timothy Geithner claims that the Fed’s quantitative easing programs are no threat to the dollar and that our country “will not engage in devaluation”, all while commodity and energy prices skyrocket to record levels and numerous nations threaten to dump the Greenback as the world reserve currency. China claims that their inflation is manageable, releasing CPI data that is even more arbitrary and skewed as our own, while the Chinese masses grow louder in their anger over a lack of purchasing power to match exploding housing and food prices. The U.S. blames the lack of global recovery on China’s undervalued Yuan and its unfair trade imbalance. China blames the lack of global recovery on the overprinting of the dollar. Europe sits across the Atlantic hoping both China and the U.S. will keep printing and sending currency care packages to keep the EU afloat, all while claiming every three months or so that the “crisis has passed”.

So, what’s the truth in all of this?

In the following, I will attempt to dismantle the latest disinformation campaigns, explaining the most important factors surrounding the developing calamity between the world’s major economic powers in the easiest terms possible; including how these factors will directly and indirectly affect you…

Truth: Dollar Devaluation Is Occurring, Inflation Is Here

As we have covered in recent articles, widely visible inflation in the U.S. has been steadily developing for at least one and a half years. Food, energy, and metals prices across the board are soaring, and commodities actually outperformed stocks, bonds, and the dollar in 2010:

http://www.bloomberg.com/news/2011-01-01/commodities-lead-gains-as-all-assets-climb-on-recovering-economy.html

Wholesale prices (according to “official” numbers) rose 1.1% in December, following a 1.5% gain in November. These figures are diluted, to be sure, but the fact that inflation is being reported at all signals probable danger for the coming year:

http://www.marketwatch.com/story/us-wholesale-prices-up-11-in-december-2011-01-13

Grain prices surged in 2010. Corn gained nearly 60%, while soy and wheat gained around 40%. Cooking oil prices jumped 62%:

http://www.bloomberg.com/news/2011-01-12/corn-soybean-wheat-prices-surge-as-u-s-cuts-supply-outlook.html

Anyone today who denies inflation is evident in our economy is either blind, dishonest, or mentally deranged. In any case, they are not to be trusted. The question now is, is this inflation being caused by devaluing world currencies like the dollar, or a myriad of random chaotic “coincidences”…

Lie: Current Inflation Is Caused By “Global Recovery”, And “Rising Demand”

The great lie surrounding these inflationary warning signs is that they are a product of “recovery”, and increasing demand in the U.S. and developing countries. While the “demand” argument may be partly true for gold and silver’s rise, it is certainly not true for oil and grains. Global demand for goods overall is dropping off a cliff, as is evident in the Baltic Dry Index, which measures shipping and freight rates around the world. The BDI has suffered a 20% decline in the past three weeks alone:

http://www.theindonesiatoday.com/transportation-headline/6577-baltic-dry-index-fell-20.html

If shipping demand is falling around the world, then demand for goods is falling around the world. If demand for most base goods is falling, then demand is not the cause of our current price spikes. Period.

More Americans filed for consumer bankruptcy in 2010 than in any year since 2005. Keep in mind that the government’s new rules making bankruptcy filing far more difficult took effect after 2005. This means that even with harsher bankruptcy guidelines, we still saw a massive wave of filings last year. If demand is actually a substantial factor, then U.S. consumers are burying themselves in red ink in order to support it:

http://www.marketwatch.com/story/consumer-bankruptcies-rose-9-in-2010-2011-01-03

Considering that over 8 million Americans have stopped using credit cards just since Christmas 2009, I think it much more likely that consumer demand in the U.S. is flat, or, still falling, despite the claims of the MSM:

http://abcnews.go.com/Business/holiday-shopping-americans-cut-back-credit-card/story?id=12367547

Mainstream analysts are often quick to point out that annual retail sales for 2010 were up over 6%, claiming this is a sure sign of recovery. Unfortunately, in their effort to ignore inflationary factors in 2010, they forgot to consider that perhaps rising retail sales were not due to increased consumption, but INCREASING PRICES on goods we already buy daily. Black Friday and Christmas season sales were generally unimpressive compared to 2009. Black Friday sales were flat and December sales were up only 0.6%. Are Americans really buying more, or are they forced to spend more on goods they need due to inflation?

Lie: The BDI Is Falling Because Of An Expanding Shipping Fleet

A new disinfo tactic I’ve noticed in the past two weeks is the suggestion that the BDI is not falling because of decreasing demand for raw goods, but a growing fleet of idle freight vessels in an already tight market. That is to say, some analysts are suggesting that it is not demand that is falling, but the supply of ships that is growing.

While it is true that world freight fleets are to add 200 new ships, this is not to occur for another year and a half:

http://thestar.com.my/maritime/story.asp?file=/2011/1/10/maritime/7756404&sec=maritime

The BDI plummeted in 2008, and has not shown any signs of recovery since. This was not due to a new supply of ships, but directly tied to the global economic collapse. The “growing fleet” argument seems to be a distraction designed specifically because of the public’s growing awareness of the Baltic Dry Index and its implications.

Another poorly conceived argument is that the BDI is inaccurate because it does not take into account that smaller fleet vessels are seeing increased freight rates while larger ships are falling out of favor. It’s true, that if you only count the shipping frequency of smaller boats, demand appears to be rising (barely). However, I hardly see how this is a good thing. Increased demand for smaller boats means no one is shipping enough volume to make leasing a large vessel worthwhile. Smaller volume still equals smaller demand.

Lie: Food Inflation Caused By “Bad Growing Season”

It would appear that the “mystery” of exploding food prices has been solved, and according to a USDA report released this month, the culprit is “weak agricultural output” causing a diminished supply of staple grains in the U.S.:

http://www.usda.gov/oce/commodity/wasde/latest.pdf

This release was so shocking to markets because the report’s figures were so far below the USDA’s original estimates for harvest at the middle of this year, but why should we care about the USDA’s estimates? Are they not arbitrary? Why not look at the actual output for previous years compared to 2010 and get a real sense of what is happening?

If we are going to compare the crop outputs of 2010 to 2009, we should also keep in mind that 2009 was a record year for agricultural production. Did the USDA really assume that 2010 would meet or surpass such a bumper crop?

http://www.businesspundit.com/usda-crop-report-reveals-record-harvests/

Corn harvests reportedly dropped 5% compared to last year, however, 2010 was still the third largest crop on record. Soybean production was down only 1% from 2009. Cotton (not edible, but still important) was up 50% from 2009. Wheat was down less than 1% from 2009. One of the only grains affected in a substantial way in 2010 was Sorghum. The crop yield for Sorghum dropped 10% compared to 2009, but the planting area used in 2010 was 19% less than a year before, so this drop was to be expected:

http://www.farms.com/FarmsPages/Commentary/DetailedCommentary/tabid/192/Default.aspx?NewsID=37813

What does this mean? The U.S. had a GOOD year for crop output, not a bad one. And what about Russia’s summer disaster wheat crop? Are our exports picking up the slack of bad harvests overseas, causing prices to rise? Actually, warmer Russian weather in November spurred wheat production, helping alleviate the weaker summer yields:

http://www.allbusiness.com/agriculture-forestry/agriculture-agricultural/15345042-1.html

Are there dangers in world grain output due to weather? Yes, but not enough to warrant a doubling of commodity prices. The REAL concern of agriculturalists, not just in Russia but in many nations, has not been the weather, but the ever expanding costs of production itself! From fuels to fertilizers, the process of growing food is becoming more and more expensive. What is facilitating this surging cost of production? How about the one factor that no one seems to want to discuss; the devaluation of major currencies, most especially the dollar? I find it interesting that so much disinformation on supply and demand in commodities is hitting the news streams just as the Dollar and the Euro begin to unhinge. In my view, this engineered hysteria is meant to distract us from the collapse of our currency, and to create plausible scapegoats for the inevitable ill effects that devaluation will bring.

Lie: Oil Inflation Caused By Rising Demand

Same argument, different commodity. Oil output has been more than ample in light of the fact that oil consumption in almost every nation has fallen substantially in the past three years:

http://politicalcalculations.blogspot.com/2010/06/us-per-capita-oil-consumption-plummets.html

http://blogs.worldbank.org/prospects/category/tags/world-oil-demand

What about the surprise shutdown of the Alaskan pipeline this month? Is our supply in danger? No. According to the EIA (Energy Information Administration), the U.S. exports (that’s right, exports!) over 2 million barrels (2009 figures) of petroleum and petroleum byproducts a day, most of it from the Alaskan fields!

http://www.eia.doe.gov/dnav/pet/pet_move_exp_dc_NUS-Z00_mbblpd_a.htm

Apparently, Americans didn’t need that oil when the pipeline was working, so shutting it down certainly wouldn’t diminish supply here at home.

Oil is pegged to and traded in the world reserve currency; the dollar. Any devaluation in the dollar will have immediate effects on the value of oil. OPEC nations can and have been absorbing the inflationary costs, but they can only succeed in this for a short time. Eventually, the fundamental expenses will overwhelm them, and they will be forced to allow the price per barrel to take flight. That time has essentially come. Prices are likely to climb at breakneck speed in 2011, not because of demand, but because of the crumbling Greenback.

Truth: China Is Preparing To Dump The Dollar

Most economists should have seen the Chinese problem back in 2005, when their central bank started issuing Yuan denominated treasury securities called “Panda Bonds”:

http://www.emergingmarkets.org/Article/1016222/Panda-bonds-explained.html

Maybe the cute name threw mainstream pundits for a loop, or maybe they just couldn’t see the true purpose behind such a move.

China is the largest holder of U.S. debt and dollars. It is also the largest holder of forex reserves in the world. China’s coffers are bloated with savings. So then, why would the Chinese government introduce a plan to sell their own debt securities? They don’t need constant inflows of foreign cash to stay afloat like we do here. Their currency was pegged to the dollar so issuing a Yuan denominated security would have been pointless, at least in the eyes of the common investor. What did the Chinese central bank know that we didn’t?

It took some connecting of dots, but in 2008, when the ASEAN trading bloc took shape and they began to allow Yuan bonds for cross border trades, the reason was clear; China was planning to de-peg from the dollar. China was going to allow their currency to valuate. China was going to move towards a consumer based economy. China was going to drop the dollar as its reserve currency for international trade. And, eventually, China was going to dump their U.S. Treasury holdings altogether.

Why would China start preparations for this all the way back in 2005? It seems like a serious gamble, unless they KNEW what was coming in 2008. Unless they knew that the credit crisis would strike hard, that U.S. consumption would falter for years, not months, damaging Chinese exports. Unless they knew that the Federal Reserve would recklessly pour fiat into the system. Looking back at China’s actions, one can only conclude that their central bank was made aware of coming events by others, or, they are all Jedi, and deserve some kind of award for their incredible powers of foresight.

So far, the Chinese have de-pegged from the dollar, Yuan bonds are now being issued by the World Bank, and China has dropped the dollar in bilateral trades with Russia. We are only a step or two away from a global shunning of the dollar and a treasury dump by our biggest creditor.

Truth: China Is Suffering From Inflation

Concise data on Chinese inflation is even more impossible to obtain than it is here in the U.S. The “official” inflation rate in China increased by 5.1% last year, however, some estimates double that figure:

http://www.businessinsider.com/marc-faber-real-chinese-inflation-10-percent-2010-11

Chinese property prices rose for the 19th month in a row last December, while Chinese demand for housing remained low. Government subsidization of residential construction has created modern day “ghost towns”; entire complexes of apartments and retail spaces devoid of inhabitants:

http://blogs.forbes.com/robertlenzner/2010/11/27/property-developers-chinas-worst-performers/

China has introduced its own stimulus measures in the face of the global credit crunch. While our fiat dollars have all been stuffed into the pockets of corporate banks and foreign entities, their fiat Yuan is going directly into their real economy. This is why China’s inflation is so immediate, while ours is still partly subdued.

Does this mean China is in the midst of its own bubble, ready to pop and rain down financial havoc? Not necessarily…

Lie: China Can Counter Inflation Without Boosting The Yuan

China has one option; extreme Yuan appreciation boosting the buying power of their populace in order to counter rising prices. China denies this possibility in public forums, but their central bank’s actions tell a different story.

Reserve requirements (the amount of money Chinese banks must hold as a safety net) have been upped several times, mushrooming to 19%. This is meant to remove excess liquidity from the economy, but so far the move has failed miserably. China has also raised interest rates to curb lending several times to no avail. As noted above, inflation continues.

I believe Chinese as well as Western central bankers are well aware that the Yuan will have to spike considerably if inflation is going to be halted, but currency valuation is not something that can be enacted without consequence. Generally, for one currency to rise quickly, another currency tends to fall. In this case, that currency will be the dollar.

Forget about all the empty rhetoric you hear in the MSM or are liable to hear during Chinese President Hu Jintao’s visit this week in Washington. Already, Hu has called for greater cooperation between the U.S. and China while at the same time stating that the dollar based system is a “product of the past”:

http://www.breitbart.com/article.php?id=CNG.9964072691a62252d0a98b0308fb8063.281&show_article=1

The U.S. government has called for greater cooperation with China while the Senate has issued a statement demanding Congress institute a bill that would label China as a “currency manipulator” on the eve of Hu’s visit:

http://news.yahoo.com/s/nm/20110118/pl_nm/us_usa_china

The meeting between Hu and Obama will generate nothing, because neither Hu nor Obama actually have any say in the financial decisions they will discuss. Those decisions are made by the central bankers of our respective nations, and the central banks want an end to the dollar. When it comes down to it, the banking elites of China and the U.S. are both working towards this goal, while the masses are led to believe that they stand opposed.

Most revealing has been China’s support of the EU. Why are the Chinese suddenly so interested in propping up European economies that are destined to default? It’s definitely not out of the kindness of their hearts. First, China gains greater proliferation of the Yuan by tying itself closer to Europe, Africa, and the rest of Asia. Greater Chinese investment in the EU makes a switch to the Yuan (or a basket of currencies) and a move away from the dollar more acceptable to the citizenry of Europe. (Notice that all the American taxpayer dollars that were sent to tide over the EU were made secret, while all that Chinese money sent to the EU is loudly paraded for all to see. China: good guy. America: bad guy). Second, the greater the proliferation of Yuan bonds, the faster the Chinese can begin to dump their U.S. Treasuries. This is the key!

China must shrink its forex and T-bill reserves in order to drive an appreciation of the Yuan able to cut off inflation concerns. Timothy Geithner claims this will be good for the U.S. Hu claims it would be bad for China. They are both liars. Ultimately, inflation will be used by China as the excuse to drop the dollar completely, which is what they have been planning to do since at least 2005. The private Federal Reserve and our government will announce victory and a “managed” devaluation of the dollar, only to have the treasury bubble snap and bury us in hyperinflation, which is what they wanted all along, for many reasons, but most importantly to allow for the birth of the IMF’s SDR as the new global currency (amply supported by the new improved Yuan).

The Saga Of Disinformation Continues

I thought the economic situation was confusing two years ago. I never dreamed the pretzel could become so twisted so fast. The reason it is vital to stay on top of the fog and misdirection should be evident; deception in the economy can be used to steer the public and our country towards terrible ends. While many of us might become exhausted with the constant reminders of the dark road ahead, we cannot take for granted that the battle for the truth is far from over. We have made great headway over the years, far more than I dared imagine possible, but this is a beginning, one that must be cradled carefully, like the embers of the first fire.

The nature of propaganda is to strut, to pound its chest and wail the closer we get to reality. The more Americans stumble upon the facts behind the false statistics and false smiles of establishment pundits, the more we will be subjected to globalist think-tank fancies and elaborate insanities. In this, we find our most reliable gauge of impending jeopardy, and salvation. Bigger grifts signal precarious times, but also desperation amongst the perpetrators and con men. There does come a time when people become weary of being fooled, and they turn their blunderings from a hindrance into an education. Ironically, lies very often destroy themselves, by frustrating their intended victims into action.

You can contact Giordano Bruno at: giordano@neithercorp.us