Monday, November 16, 2009

Smoke and Mirrors

Greetings good citizen,

Um, there is only one word that describes today’s market action and that word is ‘disturbing’. The stupidity index climbed another 130 points…only it’s not a ‘good thing’ by any stretch of the imagination.

What I find particularly vexing is how assets denominated in US dollars can rise while the dollar falls? Gold will rise in price when dollars lose value but why are stocks behaving like gold? Understandably, the ‘assets’ are convertible into other currencies but it’s disgusting to see the dollar fall while shareowners are ‘rewarded’ for holding stocks.

Um, what is most disturbing about this situation is the same people responsible for destroying the value of our currency aren’t being affected by their own reckless actions.

Despite our pal ‘Timmy’ talking up the dollar (while doing nothing to actually strengthen our currency) the dollar is falling like a rock. The ‘side effect’ of this plunge in the value of our currency is stock prices are rising (making the already wealthy, wealthier!) While people who work for a paycheck see their purchasing power dwindle.

Um, ironically, tonight’s offering does indeed point to this ‘cause and effect’ relationship (the tanking dollar and rising gold) but instead attributes the market’s rise to a totally bogus rise in retail sales.

Retail Sales Numbers Give Markets a Lift

By THE ASSOCIATED PRESS [Our boy ‘Javier’ has since ‘claimed’ this orphan.]
Published: November 16, 2009

Shares on Wall Street rose sharply on Monday after a new report showed retail sales rebounded more than expected in October because of an increase in auto sales. [Right! Um that’s a flat out lie and we all know it! Auto sales have returned to the basement, where they were prior to ‘cash for clunkers’.]

The United States market also followed overseas gains that were propelled by a weakening dollar and stronger gold prices, which again lifted commodities prices and shares of companies that produce raw material(s). [Notice how as purchasing power shrinks, prices rise! Why do you suppose purchasing power is shrinking good citizen? Could it be because we no longer produce anything for ourselves, never mind for anyone else?]

The Commerce Department said retail sales rose 1.4 percent in October, easily surpassing the 0.8 percent increase that economists polled by Thomson Reuters had forecast. It was a sharp rebound from a 2.3 percent decline seen in September.

However, excluding the autos, sales rose just 0.2 percent, half the increase economists predicted, tempering some of the excitement over the data. Futures pulled back slightly after the report. [It looks like the numbers were so pathetic they had to be ‘seasonally adjusted’ which has become short-hand for ‘fabricated to make them appear better than they are’.]

Consumer spending accounts for about 70 percent of all economic activity. Analysts widely agree a recovery at the consumer level is needed for a strong recovery, especially as government stimulus programs expire and unemployment remains high. [What the nimrods don’t address is how payrolls have been slashed and the average consumer is buried in debt…this hasn’t changed for the vast majority of US consumers who earn less than six figures annually.]

At midmorning, the Dow Jones industrial average rose 123 points, or 1.29 percent. The Standard & Poor’s 500-stock index rose 16 points, or 1.5 percent, while Nasdaq rose 28 points, or 1.3 percent. [Left unsaid is the ‘true cause’ of that rise, which is most likely the rapidly falling dollar. Worse, for the markets to spike 130 points the dollar lost a lot of value…yet, miraculously, inflation (as measured by the BEA) will remain ‘non-existent’!]

Before the markets opened, General Motors said it lost $1.2 billion in its first quarter since emerging from bankruptcy. Despite the loss, it said it will begin to repay $6.7 billion in government loans and was seeing a stabilization in its business.

The home improvement retailer Lowe’s said its profit dipped 30 percent in the third quarter, but it matched earnings expectations. Despite the declining earnings, Lowe’s said it is seeing stabilization in some of the hardest hit housing markets. [More ‘cherry-picked’ data good citizen. If it weren’t for FHA subsidized ‘liar’s loans’ the housing markets would be seized solid, there is no ‘mortgage money’ out there. Worse, a majority of these sales are to our old pal ‘flipper’, who thinks somebody is going to pay him sky high rent for the string of foreclosed properties he’s snapping up for ‘no money down’…]

Corporate outlooks from the companies will be just as critical as actual quarterly results because they are entering the key holiday shopping season. Disappointing sales through the end of the year could put a halt to the market’s ongoing climb. [Oh really? Well, they don’t want you to know that equity prices are rising solely because the value of the dollar is falling. You’re not supposed to know that can happen!]

Other economic readings on inflation, housing starts and industrial production are due out later in the week and could provide further evidence of the speed of a recovery. The Labor Department also reports its weekly unemployment claims data on Thursday. [This is something they do EVERY Thursday but we need to cut Javier some slack as he’s new around here.]

Bond prices were mixed Monday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.39 percent from 3.42 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.07 percent from 0.05 percent. [So, how big would a T-Bill have to be to earn a dollar at the hundredths of a percent interest rate?]

The dollar mostly fell against other major currencies, while gold prices continued to climb higher hitting another record. Gold rose $10.40 to $1,127.10 an ounce after hitting a new record of $1,133.50 earlier in the day. I clipped this an hour before noontime but the markets traded basically ‘flat’ for the day…which tells you something else about ‘why’ they really rose…]

In Europe and Asia, stock markets advanced after figures confirmed that Japan, the world’s second-biggest economy, was growing strongly.

European stocks tracked their Asian counterparts higher, with the FTSE 100 in London was shares up 59 points, or 1.1 percent. The DAX in Frankfurt rose 60 points, or 1. percent, while the CAC-40 in Paris was 30 points, or 1 percent, higher. [You may notice a strange ‘cut’ here good citizen, I suspect this article was in the process of being edited when I copied it…]


ding teenage clothing retailer Abercrombie & Fitch and department-store chain J. C. Penney

Stocks have rallied strongly since March’s lows, with many of the world’s major indexes trading at or near their highest levels this year as investors reined in their economic doomsday expectations to factor in a swifter than anticipated global economic rebound. [How’s that for ‘wishful thinking’? ‘Mainstream economist’s’ have been co-opted by both the MSM and Wall Street, so naturally they have ‘reined in’ their ‘doomsday expectations’ while nothing, absolutely nothing has changed for the better… The words missing from all of the recent economic reports are ‘Once upon a Time’…]

Earlier, Japan’s Nikkei 225 stock average closed up 20.87 points, or 0.2 percent, to 9,791.18 after figures showed the Japanese economy expanded at an annual rate of 4.8 percent in the third quarter. That was the second straight quarter of expansion and the biggest rise since 2007. [Okay bub, once again we’re talking a currency where their dollar equal one of our pennies! The numbers are gi-normous but after you shift the decimal point around you have to ask yourself what the hell they’re so excited about…]

Encouragingly, much of the growth in Japan was due to a rise in consumer spending as opposed to exports. [Um, this is ‘exciting’ only if it doesn’t mean inflation has ‘slipped the leash.’ Increased spending due to higher prices, brought on by devalued currency is definitely not a ‘good thing’…something we will see here; sooner than anyone expects.]

“Growth will inevitably slow in Q4 and beyond, but we expect Japan to continue to surprise the markets on the upside for a few quarters yet,” said Julian Jessop, international economist at Capital Economics.

Again, who is that and why should I give a fuck?

Perhaps more disturbing is how this hellacious story about the tanking dollar is being used to support claims that the economy is ‘recovering’…’quickly’…perhaps it will recover so quickly we won’t notice it ‘recovered and then slipped (just as speedily) into a deep funk again!

Um, Money Trickles North as Mexicans Help Relatives tonight’s second offering is a ‘headline only’ that pretty much sums up the ‘true status’ of the so called ‘economic recovery’ here in the US.

Just how pathetic is that good citizen?

You know you’re in trouble when Mexicans are sending their relations that are stranded up here money to tide them over…

Thanks for letting me inside your head,


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