Downgrade Thursday- Moody's Downgrades Greece Again, In Hall Of Shame; Thousands Protest; PIIGS CDS Spreads Explode; TEPCO One Step Closer To Default As S&P Cuts, Shares Tank; iPad Madness: Boy Sells Kidney To Buy An iPad2; Fukushima Updates

Updates
Update 1: Factory orders drop 1.2%, while inventories climb 1.3%. Another "green shoot" in Ben's hat.

Update 2: Large clouds of steam/smoke seen rising from reactor 4, EneNews.

Main Article 
If the past three days of horrific economic data was not enough to convince you that the US and by extension, the entire global economy is in the throes of a very real depression, then perhaps the mood barometer of the US consumer (aka Consumer Confidence) should - as so aptly highlighted on ZeroHedge, consumer confidence is now lower than at any other point in time including tragedies such as the 1987 market crash, the dot.com bubble, 9/11, hurricane Katrina and the collapse of Lehman Brothers. That alone speaks bound volumes of information as to where the economy stands after 4 years of "stimulus" worth $5 Trillion and it's obvious to the savvy readers here where all the money is going (hint: if you're one of the bottom 99% of the population, it's not in your pocket). FWIW, insider stock sales this week doubled from the previous week, totaling $330 million in stock sales. We wonder why they have been heading for the exits since the manipulated rigged casino the "stock markets" returned to "pre-recession" levels, if they still expect tons of growth in the future. Something stinks, and it reminds of us the housing market in 2006.

In Europe, the problems are perhaps even worse. While you were sleeping, the gangrene called government debt, continued to undermine the social stability of Greece, Portugal, Ireland and Spain. One quick glance at the near record CDS spreads tells part of the story - investors who were fooled once won't be fooled again - and they expect an imminent default restructuring of Greek debt any day now. How's that 16% ten year yield working out for you? Which begs the question - why has it taken the ratings agencies so long to figure this out? Moody's downgrades Greece again just above "default" and the outlook is negative. (Better yet, why has it taken them so long to figure out the banks are ripe for big downgrades?) Guess what comes next? This piece from the WSJ explains the 3 options Greece has remaining, for all but 3 weeks; all of them leave Greece in the same position as Argentina was in a few years back. In the meantime, lot's of pots and pans are getting banged in the streets by the estimated 50,000 protesters taking to the streets on an almost daily basis. Social unrest is one symptom of a major societal problem and coming to a Main Street near you.

Considering how Iceland stuck it to the bankers and is now recovering better than ever, we think a default (or whatever euphemism you so choose) will be in their best interest long term. A fresh start for the people and a  fresh currency which can actually compete, will be the result. Who will get stuck holding the short end of the stick? The banksters bankers. I'm sure your heart will bleed for them.

Certainly, this issue is highly complex and can't be solved in a single leap, but at this point in time, what could be worse? How about selling off your 2000 year old heritage to some bankers? Greek politicians are seriously considering that option and the Chinese are happy to buy.

Of course, not everything is about money. Or is it? As the situation in Japan spirals out of control and reaches full nuclear "Chernobyl on Steroids" and 40% of all Fukushima hospital patients are showing internal radiation poisoning and radioactive green tea is showing up 40 miles Southwest of Tokyo(!) TEPCO shares plummet on an S&P analysis of the situation. Too late. Any wonder why now some honest people are coming forth saying "Tokyo will be lost to radiation?" The cat is out of the bag. If the worlds 3rd largest economy becomes uninhabitable, is this bullish for the stock markets?

Finally, in other radioactive news, we learn that a boy in China sold his kidney so he could buy an iPad2. Of course, we wonder how he will feel when the iPad3 comes out next month. Say, what's a pair of testicles worth nowadays? How about an iPad3.

Morning Update/ Market Thread 6/2 - Panic or Blackmail (?) Edition…

Good Morning,

Equity futures are just above even this morning following yesterday’s 280 point nose dive. The dollar has lost all of yesterday’s gain and then some, yet the moves in equities and commodities are not reflecting that move lower in the dollar as they have been. Bonds are lower this morning, oil is slightly higher after a large drop yesterday, gold is hanging tough after rising yesterday (hint), silver is up slightly after getting nailed again yesterday, and most food commodities are higher today after a large move down yesterday.

Okay, so we know that the market is about 95% fluff, so why now? The data has been bad for weeks, so more bad data doesn’t seem like a likely candidate to me, although the manufacturing and housing data is obviously sliding off the proverbial cliff. No, the suspicious me is feeling manipulated again – we’re up against the debt ceiling, European countries are not complying by sucking IMF debt fast enough, and the end of QE2 is rapidly approaching. Is a threat being made somewhere along the lines of “See, this is what happens if you don’t comply?” Hmmm, I am suspicious because I know how the central bankers (who own and control the markets) work, and I’ve seen them do this time and again.

The more I view the market, the more I realize that it is a political tool and not the “free market” fantasized about by countless technicians – at least it’s no longer a free market, it’s more like a manipulative hologram.

Still, if one is doing TA on it, there is what appears to be a large bear flag following yesterday’s downstroke so it’s possible that there’s more to come:



The bad data flow continues with the Weekly Jobless Claims this morning coming in at 422,000 – still well above that 400k mark. This is down slightly from 424k last week and is worse than expected. Again, it takes this number getting below 350k, and staying there, to indicate job growth, and that has not happened yet. Here’s Econospin calling this number “good,” although I don’t know how anyone can – note yet another revision higher to last week’s data, that means this week’s number is somehow “good?”

Highlights
In badly needed good news on the jobs market, initial jobless claims are easing a bit from elevated levels. Claims fell 6,000 in the May 28 week to 422,000 (prior week revised to 428,000). The four-week average of 425,500 is down a sizable 14,000 and compares well with the month-ago level of 432,250. There are no special factors skewing the data with tornado-hit Missouri reporting some trouble but not enough to affect the total. Continuing claims are little changed, down 1,000 in data for the May 21 week to 3.711 million with the unemployment rate for insured workers unchanged at 3.0 percent. This report probably won't improve expectations for tomorrow's monthly jobs report but at least it won't be deepening pessimism.

Factory Orders will be released at 10 Eastern, we’ll report on that inside of the Daily Thread.

Note the sudden shift in the need to “keep the ‘Fed’s’ balance sheet high,” as if their “balance sheet” isn’t just an off the books addition to our national debt…

Fed May Signal Balance Sheet Will Stay at Record Amid Slowdown

June 2 (Bloomberg) -- A wave of surprisingly weak data on the U.S. economy may spur Federal Reserve policy makers to support growth by making it clear they’re in no hurry to shrink the central bank’s record balance sheet.

There’s a “strong possibility” that the Federal Open Market Committee will say following the June 21-22 meeting that it will keep reinvesting proceeds from maturing debt for a while, said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. Previously, the FOMC has said it will keep the benchmark interest rate near zero for an “extended period” without a similar pledge about its balance sheet.

Yesterday’s reports showing manufacturing grew at the slowest pace in more than a year in May and employers added fewer jobs than forecast prompted Feroli to cut his estimate for second-quarter economic growth. The slowdown may push policy makers to consider what options are left after their second $600 billion round of asset purchases sparked a Republican backlash. Saying the balance sheet won’t shrink immediately could dispel any notion that the Fed is about to push up borrowing costs.

“The idea of extending the period in which they maintain this level of accommodation is an easy call, a natural call and the right call,” said Neal Soss, chief economist for Credit Suisse Holdings USA Inc. in New York. A third round of asset purchases “is so contentious within the committee and the broader political environment, that they aren’t going to go there. That makes it very unlikely.”

What hogwash! The impossible math ensures that another round of QE is coming, count on it. If printing is halted at any point now, the impossible math dictates that a wave of deflation strikes. So, deflation, inflation, name your poison. You are being manipulated by/in the markets and your wealth is going to be transferred to them one way or the other as long as they are the ones in control of producing money. Central bankers are like a disease. You must treat the disease and stop talking about the symptoms.

Oh, yeah, as I type those bearish flags are breaking down… hope you didn’t buy into the LNKD IPO hype!

Manufacturing, Jobs Pull Back as Costs Climb

This is probably what GAW would refer to as "unexpected." Hot off the UNN wire services. Queenbee

Manufacturing in the U.S. grew at the slowest pace in a more than a year and employers added fewer jobs than forecast, sending share prices lower on concern a slowdown in the world’s largest economy will extend into the second quarter.

The Institute for Supply Management’s factory index fell more than projected to 53.5 last month, the lowest level since September 2009, from 60.4 in April, the Tempe, Arizona-based group said today. Companies added 38,000 workers to payrolls, the fewest since September, according to ADP Employer Services.

Yields on benchmark 10-year Treasuries fell below 3 percent for the first time this year as the reports, combined with recent data showing weakness in consumer and business spending, indicated the economy is struggling. Today’s data support Federal Reserve policy makers who’ve argued that the economy remains too fragile to withdraw stimulus.

“It’s a confluence of headwinds hitting the economy,” said Carl Riccadonna, a senior economist at Deutsche Bank Securities Inc. in New York, citing a jump in gasoline prices and risks posed by the European debt crisis. “In this recovery, the pace of economic activity is slower, and that makes the economy more vulnerable to these types of headwinds.”

Oil near $100 a barrel and disruptions to parts supplies caused by the earthquake and tsunami in Japan are weighing on the expansion globally, other reports today indicated. A purchasing managers’ index for China showed the slowest pace of expansion in nine months, while the equivalent measure for the euro area fell to a seven-month low.

Shares Drop

The Standard & Poor’s 500 Index dropped 2.3 percent to 1,314.55 at the 4 p.m. close in New York. Benchmark 10-year note yields dropped 11 basis points, or 0.11 percentage point, to 2.95 percent, the lowest since Dec. 7.

The reports prompted some economists to cut their forecasts for payrolls to be reported in two days by the Labor Department. Goldman Sachs Group Inc. reduced its estimate to a gain of 100,000 from 150,000; Deutsche Bank Securities Inc. to 160,000 from 225,000; and Bank of America Merrill Lynch to 125,000 from 165,000.

Economists at JPMorgan Chase & Co. in New York also cut second-quarter growth forecasts for the second time in as many weeks. The world’s largest economy will expand at a 2 percent annual rate from April through June, down from a prior estimate of 2.5 percent, according to an e-mailed statement from Michael Feroli, the bank’s chief U.S. economist.

Auto Sales

One reason for the reduction was a slump in auto sales last month that in part reflected decreased inventories following the March 11 earthquake in Japan. Cars and light trucks sold at an 11.8 million annual rate last month, down 11 percent from April and the fewest since September, industry data today showed.

Economists projected the ISM gauge would drop to 57.1, according to the median forecast in a Bloomberg News survey. Estimates of the 83 economists ranged from 53 to 60. The measure’s 6.9-point drop was the biggest one-month decline since January 1984.

The group’s production, orders, backlogs and inventory indexes all fell.

Manufacturing, which has been benefiting from a pickup in exports to countries like China andBrazil, began to cool in the aftermath of Japan’s earthquake in March. Industrial production stalled in April as disruptions related to Japan’s crisis led to a plunge in U.S. auto output, a Federal Reserve report showed May 17.

August Rebound

Honda Motor Co., Japan’s third-largest carmaker, said its North America and China vehicle production will return to normal in August as parts suppliers recover from Japan’s record earthquake.

In the U.S., production of Honda’s Civic small cars will continue to be slowed by limited supplies of some parts, the Tokyo-based company said in a statement May 26. Production of the 2012 Civic, which went on sale in April, will be at about 50 percent, it said.

“The light at the end of the tunnel is glowing brighter for us, represented by this significant improvement in our production situation,” John Mendel, executive vice president of U.S. sales, said in the statement.

Global Demand

Moline, Illinois-based Deere & Co. (DE), the world’s largest maker of farm equipment, said on May 18 that earnings will be $2.65 billion in the fiscal year through October, more than the $2.5 billion forecast in February.

The manufacturer’s forecast includes a negative impact of about $300 million in sales and $70 million in operating profit because of disruptions from Japan. Global demand for agriculture and construction equipment will drive profits, the company said.

The U.S. economy began 2011 on a weaker note, growing at a 1.8 percent annual rate in the first three months of this year after expanding at a 3.1 percent pace in the fourth quarter, according to Commerce Department figures.

The slowdown will “probably prove temporary,” with manufacturing data and financial markets improving, Federal Reserve Bank of New York President William C. Dudley said during a May 6 press conference.

Dudley said he expects the impact of rising commodity prices on inflation to be “transitory.”

TGIW- To Ease, Or Not To Ease. That Is the Question; Housing Is Hosed; Greece On And Off; Portugal Ends Bond Auction Early; ISM 'Drops Like Big Rock'; There Is Nothing Advanced About Today's ADP; Fukushima; More

Editors Note: We have been experiencing some difficulties with the Google blogging software since early March, which has removed/blocked some user comments and has resulted in long delays of publishing. If you have attempted to post a comment and it was not posted, please email us and we will try to post it as soon as possible. We apologize in advance and appreciate your patience. Thank you.

Updates
Update 1: European bank stress tests delayed until further notice. Wrong time, maybe.

Update 2: "We are on the verge of a great, great depression." Courtesy of CNBS, which is even more bizzare. 

Update 3: Say goodbye to Tokyo - "We will be losing Tokyo to Fukushima radiation." - Ichiro Ozawa (Radio Interview)

Update 4: Massachusetts State Defense Forces (aka Militia) reactivated. In preparation of the DOW tumbling 5000 points today back to earth?

Update 5: 500,000 Bq/kg of radioactive Cesium found 75 Miles (120km) from Fukushima. Is that a lot?

Main Article
We have received several reader emails over the past 24 hours, many of which in essence were asking 'with so much bad economic news, why are the markets rallying?' Another savvy reader asked 'why didn't the Nasdaq drop on the WHO report about cellular phones being carcinogenic and the death of bumble bees?' Our first response to both is, "does it really matter?" The old investment adage that "the markets can stay irrational longer than you can stay solvent (or sane)" holds true yet again and is something every investor must understand fully. However, in this particular case, at this particular period in time, we have entered an entirely different paradigm, an uncharted economic phase in history. As we have beaten to death numerous times here, these "markets" are now based entirely on whether or not more Quantitative Easing is in the works. That's all. One only needs to look at companies like "home builder" Toll Brothers (NYSE: TOL) with P/E ratios closing in on 60x earnings to know something is in need of a serious correction. Looking at the SEC fillings of the CEO gives us a glimpse of what this sham company is all about - since 2005 the CEO's total compensation amounted to nearly $1 Billion. Can you say ATM for insiders?

Needless to say, housing is the pits and getting worse. One look at housing data from 1972 shows there were 2,356,000 housing starts that year, and yet in 2010 we had 586,000 starts. Yesterday's Case Shiller/S&P housing index shed even more light into this alarming trend now that home prices are at 2002 levels. How long before home prices recover? Don't ask. Real estate was an investment - 30 years ago. Still, that didn't stop "the markets" from gaining 128 points on the day - the MSM says markets recover on Greece bailout rumors. Really? Try rumors of QE3 and QE4 on all the bad news is what propped the markets up, again.

What's bad for Main Street is very good (and very profitable) for Wall Street as QE is the ATM of the bankers. And since there is no end in sight for this bad news mountain - you figure it out. More bad news for Main Street (jobs cuts, plummeting housing prices, etc., etc., etc.,) equals good news for Wall Street (bigger bonuses) so long as QE continues. But the savvy investors know gold and silver is where the protection from QE is.

The infamous PIIGS in Europe are already in the deadly grasp of the death spiral. Austerity is necessary in order to meet "hand out requirements" "bailout requirements," yet with sky high unemployment, the last thing these nations need in order to recover is more unemployment. Painting yourself in corner seems to be contagious. Remember Dr. Deficit's plan? Soon the results of the "Stress Tests." Should be good for a few laughs. The next domino to fall after Greece, Portugal, already can't go to the markets for money and today they were forced to cut it short in order to keep yields below the threshing floor. Still, we ain't buyin' it. Europe is a clay/iron mix - it wasn't meant to be. Bond "haircuts" will be given the standard army crew cut this year. Perhaps, we may even see a Cojack style cut after all.

Need more "shock and awe?" ISM manufacturing data out this morning shows QE failed TSHTF US economy imploding over paid Wall Street analysts don't have a clue. Like yesterday's morbid Chicago PMI, their expectations were off by miles - 53.6 versus expectations of 57.1. As CNBS says, analysts were "shocked" by the data. Just like they were shocked that the ADP payroll data was again, not even close to their expectations. This time, the data came in at 38k versus expectations of a comical 175k. Oh, and last months data was revised, downward. Again. Did we mention that the analysts all agreed, Fukushima is über bullish for the economy?

Speaking of Fukushima, the latest official news from Japan is everything is fine and dandy. Things are so good now that tourists are being invited over for fruit salad. An official named Yasuo Seki said of Fukushima, "visiting Fukushima and enjoying what the prefecture has to offer is one way to support the locals. Soon it will be a great season to taste Fukushima's famous fruits. It would be great if foreigners could come visit the area and show their support by helping revive the economy." Thanks, but no thanks. Somehow, that "economy" word keeps popping up.

Morning Update/ Market Thread 6/1

Good Morning,

Futures are falling this morning despite a still lower dollar, bonds are rising sharply, oil is down a little, gold is up, silver is down, and most food commodities are down as well. Watch the food commodities, many of them are showing a Head & Shoulder’s pattern on their daily charts and they are close time wise to having a symmetrical right shoulder.

It was the ADP report this morning that sent futures lower and bonds higher. Remember, this report is notorious for being wrong, but this was a very large move from April’s supposed 179,000 private sector jobs created, to only 38,000 in May. That will lower expectations for this Friday’s Employment Situation Report. Of course we know that there have not been ANY new jobs created overall, the economy is still losing jobs, especially in relation to population growth.

And almost all the data is turning bad again. Yesterday the Chicago PMI fell out of bed, and Consumer Confidence fell, but wouldn’t you know that State Street Confidence rose? Definitely something to watch as those on State and Wall Streets are always the last to get it. Yesterday’s Case-Shiller data had to be embarrassing to all the housing bottom callers… except of course that they have no shame because they are mostly all shills trying to sell you something so that they can buy their next trinket from China or from Japan where they have been powering their industry with shoddily built nuclear power plants built on shorelines on top of fault zones. Don’t worry school children, just wear long sleeved shirts to your contaminated school, it’ll be okay (that is until about 10 to 20 years from now when they will deny that your cancer has anything to do with their corporate captured government response).

Even the worthless Mortgage Banker’s Association couldn’t pull a positive number out of their hats this morning (hey, it’s spring time) with their Purchase Index flat but their Refi Index fell 5.7%, bringing their overall index down 4.0% (like I believe anything this thug Association says).

And the Challenger Job-Cut Report also is headed in the negative direction with mass layoffs rising slightly month over month.

Gee, all that money printing and I can’t remember the last truly good piece of evidence that the economy is actually improving. Could it be that adding debt and/or money printing are actually BAD for the economy? Naw, couldn’t be, that would mean that all the bankers and economists are either wrong or lying, and that can’t be now can it?

The Manufacturing ISM and Construction Spending are released at 10 Eastern this morning and will be reported inside today’s Daily Thread.

Bad data yesterday and yet we get a tremendous ramp job into the close. Bailing out Greece? Please… that is nothing but a joke and it’s not even funny anymore like it was the first time when you could at least use being naïve as an excuse. What really happened was still more manipulation, this time it came when the CME LOWERED margin requirement for placing bets on most of the major indices. Sweet, got to keep the game alive for what, oh another 24 hours?

The following article reminds us how the world really works – it is about WHO creates the money. Those who create the money use it to buy the politicians who make the laws. They use the money to buy/ build exchanges where phony paper products are traded that serve no purpose to society – this is otherwise known as gambling, but it’s legal because they print the money and own the politicians. So, the markets are totally corrupt, and government is totally captured, and this is just one example of how it happens:

Judd Gregg joins Goldman Sachs

Judd Gregg, the former Republican senator from New Hampshire, is joining the investment bank Goldman Sachs as an international adviser, the company announced Friday.

“Judd Gregg’s experience and insight will contribute significantly to our firm and our continuing focus on supporting economic growth,” Goldman Sachs chairman and CEO Lloyd C. Blankfein said in a statement announcing the move.

Gregg will "provide strategic advice" and "assist in business development initiatives," according to Goldman Sachs.

“A strong financial sector is critical to our nation and one of the key engines of job creation in our country,” Gregg said in the statement. “I hope that I can bring to Goldman Sachs some ideas and perspectives that will help the firm continue to be a leader in supporting its clients in their pursuit of the capital, credit and advice they need to be successful.”

Gregg served three terms in the Senate and is a former two-term governor of New Hampshire. He served as chairman and ranking member of the Senate Budget Committee and also as ranking member of the Senate Appropriations Foreign Operations Subcommittee.

Uh-huh. Yep, of course we all know what he’ll really bring to Goldman Sachs…

In other words, nothing new, the robbery of your (and future generation’s) productive efforts continues unabated.