hedonist

Bank failures in 2009 roll over to 100 - for the first time since 1992 - with the closure of Partners Bank of Naples, Fla. The estimated cost to the Deposit Insurance Fund is $28.6M. Time to revisit the WSJ interactive timeline of two years of failures.

Non-Farm payrolls were the worst in 3 months.
Factory Orders were the worst in 5 months.
Auto Sales were the worst in 5 months.
Retail Sales were the WORST this year.

And the PUNCHLINE, cause its crucial....

Average workweek at 33.0 was the worst in ATLEAST FIVE years, and even in Sept-Oct 2001 after 9/11 it was 34....

"To understand the importance of these changes in the workweek, note that a one tenth decline in the average workweek of 120 mln workers (roughly the current level of employment) results in 12 mln fewer hours worked. To create a similar decline in manhours through a change in employment, payrolls would have to fall 340K. For the purposes of production and income calculations, a one tenth of an hour change in the workweek is equivalent to a 340K change in employment. Needless to say, the workweek data are therefore critical in judging the overall strength or weakness of the employment report."~
Briefing.com

Not a Sucker's Rally - It's a New Bull Market

One keeps getting feelers like the 1 above that things have improved....

Here's what I note this month and mates I'd invite comment:

Whereas there have been no great improvements,

Non-Farm payrolls were the worst in 3 months.
Factory Orders were the worst in 5 months.
Auto Sales were the worst in 5 months.
Retail Sales were the WORST this year.

And the PUNCHLINE, cause its crucial....

Average workweek at 33.0 was the worst in ATLEAST FIVE years, and even in Sept-Oct 2001 after 9/11 it was 34....

"To understand the importance of these changes in the workweek, note that a one tenth decline in the average workweek of 120 mln workers (roughly the current level of employment) results in 12 mln fewer hours worked. To create a similar decline in manhours through a change in employment, payrolls would have to fall 340K. For the purposes of production and income calculations, a one tenth of an hour change in the workweek is equivalent to a 340K change in employment. Needless to say, the workweek data are therefore critical in judging the overall strength or weakness of the employment report."~
Briefing.com

Scary but true: it was nothing more than good ol' fashioned trial and error that saved the global economy from meltdown.

The analysis is simple...
The truckloads of unearned unaccounted for, easymoney thrown at the system are dictating markets...We're now in that illusionary part of the cycle, where we think it can actually work, notwithstanding that....

There are NO free lunches in life.
Where we are living now is in Dreamland.
Can it be that its THAT simple, that anytime u have a problem, just print money and bail folk out?
At that rate, one could start bailing out the whole world, and poverty would be eradicated!... It don't work that way dude.

The negative effects of having taken this easy way out will systematically manifest over time... at the moment we are in that upward tick, which is more like a lull before the storm.
What will eventually happen, is the excess liquidity will cause inflation, panic selling of Treasuries and stocks, a run to gold, and a collapse of the system.

Every time a bubble inflates and pops, people argue that this time will be different. But at the end of the day, investors "will continue to be hypnotized by get-rich-quick deals, seeking investments that magically double, double without toil or trouble."

The analysis is simple...
The truckloads of unearned unaccounted for, easymoney thrown at the system are dictating markets...We're now in that illusionary part of the cycle, where we think it can actually work, notwithstanding that....

There are NO free lunches in life.
Where we are living now is in Dreamland.
Can it be that its THAT simple, that anytime u have a problem, just print money and bail folk out?
At that rate, one could start bailing out the whole world, and poverty would be eradicated!... It don't work that way dude.

The negative effects of having taken this easy way out will systematically manifest over time... at the moment we are in that upward tick, which is more like a lull before the storm.
What will eventually happen, is the excess liquidity will cause inflation, panic selling of Treasuries and stocks, a run to gold, and a collapse of the system.

Caution: Plenty of Event Risk on the Horizon

The analysis is simple...
The truckloads of unearned unaccounted for, easymoney thrown at the system are dictating markets...We're now in that illusionary part of the cycle, where we think it can actually work, notwithstanding that....

There are NO free lunches in life.
Where we are living now is in Dreamland.
Can it be that its THAT simple, that anytime u have a problem, just print money and bail folk out?
At that rate, one could start bailing out the whole world, and poverty would be eradicated!... It don't work that way dude.

The negative effects of having taken this easy way out will systematically manifest over time... at the moment we are in that upward tick, which is more like a lull before the storm.
What will eventually happen, is the excess liquidity will cause inflation, panic selling of Treasuries and stocks, a run to gold, and a collapse of the system.

DJIA -0.7% at the open to 9535. S&P -0.7% to 1035. Nasdaq -0.6% to 2069. Treasurys are also lower this morning. 30-year -0.36% to 120-02. 10-year -0.2%. 5-year -0.1%. Euro +0.1% vs. dollar. Yen -0.7%. Pound -0.6%. $Cdn -0.9%. More fedspeak later today, with President Obama set to comment on the financial crisis (today's calendar).

The analysis is simple...
The truckloads of unearned unaccounted for, easymoney thrown at the system are dictating markets...We're now in that illusionary part of the cycle, where we think it can actually work, notwithstanding that....

There are NO free lunches in life.
Where we are living now is in Dreamland.
Can it be that its THAT simple, that anytime u have a problem, just print money and bail folk out?
At that rate, one could start bailing out the whole world, and poverty would be eradicated!... It don't work that way dude.

The negative effects of having taken this easy way out will systematically manifest over time... at the moment we are in that upward tick, which is more like a lull before the storm.
What will eventually happen, is the excess liquidity will cause inflation, panic selling of Treasuries and stocks, a run to gold, and a collapse of the system.

DJIA -0.7% at the open to 9535. S&P -0.7% to 1035. Nasdaq -0.6% to 2069. Treasurys are also lower this morning. 30-year -0.36% to 120-02. 10-year -0.2%. 5-year -0.1%. Euro +0.1% vs. dollar. Yen -0.7%. Pound -0.6%. $Cdn -0.9%. More fedspeak later today, with President Obama set to comment on the financial crisis (today's calendar).

The analysis is simple...
The truckloads of unearned unaccounted for, easymoney thrown at the system are dictating markets...We're now in that illusionary part of the cycle, where we think it can actually work, notwithstanding that....

There are NO free lunches in life.
Where we are living now is in Dreamland.
Can it be that its THAT simple, that anytime u have a problem, just print money and bail folk out?
At that rate, one could start bailing out the whole world, and poverty would be eradicated!... It don't work that way dude.

The negative effects of having taken this easy way out will systematically manifest over time... at the moment we are in that upward tick, which is more like a lull before the storm.
What will eventually happen, is the excess liquidity will cause inflation, panic selling of Treasuries and stocks, a run to gold, and a collapse of the system.

Fannie Mae Burns Even More Taxpayer Money

I agree. Abby's track record aint consistent.

In such matters read only what the top 1/2 have to say:

“Japan from 1992 to 2000 was in what aviators call a phugoid -- which is just this long oscillation in price; it looks to us like there’s a reasonable probability that we’re going to enter into a similar period, with more government intervention and all these things that tend to come about after a bubble, particularly one that’s been driven by credit.

The 34 percent rebound in the Standard & Poor’s 500 Index since March shows few hallmarks of a bull market, and stocks will probably stagnate for years.

The market in my best estimation is probably range-bound between roughly 1,000 on the upside and 700 on the downside, but I would put the risk to the downside.”~

Jeffrey deGraaf, Number 1 ranked technical analyst in the USA, by Institutional Investor 2005,2006,2007,2008.

Notable earnings after Tuesday's close: ACAS, AUY, BID, BMC, BRE, CAR, CBL, CEDC, CEPH, CTRP, ERTS, FRT, HLS, JLL, KFT, PL, PXD, SOLR, TSRA, UDR, UNM, VCLK, WFMI, XCO

Even if earnings look positive on some days, they shld be viewed as blip/aberration.
Oil is approaching the same region from where the markets reversed last time at abt $73; lets be lenient and extend this figure to $75.

Some of the data coming out on housing LOOKS good, but one should also digest, that this is due to 35% of all sales being distress sales!!
As a result if U notice, home prices are actually falling!! So there is NO "wealth effect" or propesnsity to spend!!
So this is the housing industry-linked consumer who will not spend.

Now lets come to the Jobs related spending:

The last non-farm Payroll report was a disaster!
Is there some way we can determine how the next report on Aug 7th will be?
Yes, very much so!

There are 2 leading job data indicators, with intense studies, that are linked to growth. As its a proprietary analysis, I cannot reproduce them here, but both those have turned sharply down last month, auguring quite a spook ahead.

Even tho the ISM has come out a tad better, of what use are more goods, if consumers aint gonna buy them?

Bottom Line: At best, the non-farm Payroll report will show no improvement.
On a neutral position, the non-farm Payroll report AND the jobless claims will be BAD to spooky. Do remember me on that day!!

Tuesday's economic calendar: 7:45 ICSC Retail Store Sales 8:30 Personal Income and Outlays 8:55 Redbook 9:00 FDIC's Bair testifies on bank supervision 10:00 Pending Home Sales 5:00 PM ABC Consumer Confidence Index

Oil is approaching the same region from where the markets reversed last time at abt $73; lets be lenient and extend this figure to $75.

Some of the data coming out on housing LOOKS good, but one should also digest, that this is due to 35% of all sales being distress sales!!
As a result if U notice, home prices are actually falling!! So there is NO "wealth effect" or propesnsity to spend!!
So this is the housing industry-linked consumer who will not spend.

Now lets come to the Jobs related spending:

The last non-farm Payroll report was a disaster!
Is there some way we can determine how the next report on Aug 7th will be?
Yes, very much so!

There are 2 leading job data indicators, with intense studies, that are linked to growth. As its a proprietary analysis, I cannot reproduce them here, but both those have turned sharply down last month, auguring quite a spook ahead.

Even tho the ISM has come out a tad better, of what use are more goods, if consumers aint gonna buy them?

Bottom Line: At best, the non-farm Payroll report will show no improvement.
On a neutral position, the non-farm Payroll report AND the jobless claims will be BAD to spooky. Do remember me on that day!!

Premarket gainers: CIT +9%. NVAX +9%. COT +7%. JASO +5%. ESLR +5%. LDK +4%. RSH +4%. AGEN +4%.Losers: PXP -12%. AET -10%. ACI -4%. INSM -4%.

Pre market or post it, times they are a bad....

"The fact is that American consumers have suffered a collapse in wealth of at least $15 trillion since early 2007. Global estimates are less reliable, but certainly in multiples of that figure. And when potential spenders feel less rich by that much, the only model one can use to forecast the future is a commonsensical one that predicts higher savings, lower consumption, and an economic growth rate that staggers forward at a new normal"~

Bill Gross, Pimco.

Treasurys gained slightly ahead of next week's auctions, with the 30-year yield -0.04 to 4.56%. 10-year -0.04 to 3.67%. 5-year -0.03 to 2.55%. Euro +0.5% against dollar; pound -0.3%.

There will be a stage when T-Bill selling will escalate as the $ begins to decline in value, putting pressure on stocks; this rally is unfortunate for smaller investors who could get trapped.

When one hear divergent views from all and sundry, its time to sift the wheat from the chaff, in order to get some kind of direction in this never ending maze, and read the thoughts of the best in the business:

“Japan from 1992 to 2000 was in what aviators call a phugoid -- which is just this long oscillation in price; it looks to us like there’s a reasonable probability that we’re going to enter into a similar period, with more government intervention and all these things that tend to come about after a bubble, particularly one that’s been driven by credit.

The 34 percent rebound in the Standard & Poor’s 500 Index since March shows few hallmarks of a bull market, and stocks will probably stagnate for years.

The market in my best estimation is probably range-bound between roughly 1,000 on the upside and 700 on the downside, but I would put the risk to the downside.”~

Jeffrey deGraaf, Number 1 ranked technical analyst in the USA, by Institutional Investor 2005,2006,2007,2008.

CRISIL: India's Domestic Rating System, and a Closer Look at Ratings Agencies

Indians are not even aware of a threat, which ruined the fortunes of most in 2008, with effects that linger till today; as there is NO safe investment avenue available, whereby one can get a REAL return on his capital AFTER tax, India has become a nation of forced gambling in the stock markets, due to the lop-sided policy of the government which pampers this sector in isolation, with breaks like long term capital gain exemption and tax-free dividends; once Indians invest their funds in the stock market, they are at the mercy mollycoddled foreign investors whose bonafides may be questionable. I request you'll to keep others appraised of this: Participatory Notes were thankfully, in a limited ban and phased out by October 2007. But by October 2008, P-Notes were back in action. We are back to the future, and looking at an ugly past. The Indian investor is then at the mercy of this gambling money; as soon as it suits their convenience, as it did in 2007, and now, they exit overnight leaving local investors with a badly mauled balance sheet. (adapted from an article by Ajit Dayal)

Indian Market Valuations: When's the Right Time to Buy?

Indians are not even aware of a threat, which ruined the fortunes of most in 2008, with effects that linger till today; as there is NO safe investment avenue available, whereby one can get a REAL return on his capital AFTER tax, India has become a nation of forced gambling in the stock markets, due to the lop-sided policy of the government which pampers this sector in isolation, with breaks like long term capital gain exemption and tax-free dividends; once Indians invest their funds in the stock market, they are at the mercy mollycoddled foreign investors whose bonafides may be questionable. I request you'll to keep others appraised of this:
Participatory Notes were thankfully, in a limited ban and phased out by October 2007.
But by October 2008, P-Notes were back in action.
We are back to the future, and looking at an ugly past.

The "genuine FII's" painstakingly fill in application forms as Indian authorities thoroughly check them out, to ensure they are sound people.

On the other hand, the P-Note pool of money - hot, short-term money - does not even have to fill in that health examination form. Their broker fills it out and confirms they are good people!

Having seen the Indian election results, the P-Note owners are now ready to head back to India to ride the gravy train - &add their own flavor to it by sloshing around playfully with their gambling money.
If P-Notes are a part of the current rise - god help us. Because some event in the US will frighten the owners of ST capital and then we will watch the fun!
(partly from an article by Ajit Dayal)

Mark Mobius: Positive Outlook for Emerging Markets

A leading defence expert has projected that China will attack India by 2012 to divert the attention of its own people from "unprecedented" internal dissent, growing unemployment and financial problems that are threatening the hold of Communists in that country. "China will launch an attack on India before 2012. There are multiple reasons for a desperate Beijing to teach India the final lesson, thereby ensuring Chinese supremacy in Asia in this century," Bharat Verma, Editor of the Indian Defence Review, has said.

He said the recession has "shut the Chinese exports shop", creating an "unprecedented internal social unrest" which in turn, was severely threatening the grip of the Communists over the society. Among other reasons for this assessment were rising unemployment, flight of capital worth billions of dollars, depletion of its foreign exchange reserves and growing internal dissent, Verma said in an editorial in the forthcoming issue of the premier defence journal.