DOW

GROWL: The Seinfeld Rally

Much as Seinfeld was a show about nothing, yesterday’s 3% rip up in the NYSE is probably much the same – the market was ready to rally, all indicators to the contrary, and used yesterday’s total nothingburger initial unemployment claims report from the Bureau of Making S*** Up (also known as the Bureau of Labor Statistics) as all the catalyst they needed to gap up at the open and stay there.  Nothing was going to get in Mister Market’s way yesterday, not even a depressing report on the May monthly deficit – which was dutifully spun as “great news” by the propaganda wing of Fraud Street.

I guess Benron doing his Kevin “Remain Calm… All Is Well” Bacon schtick was totally killer yesterday.

Whatever. There are going to be plenty of days like this on the way down into the abyss.

Meanwhile, despite zero interest rates and almost no stated standards (again) as to who can get a federally-backed loan, credit is continuing to contract.  Yeah, that “reflation” strategy is working like a charm, eh Benron?

We have the weekly report on retail sales in before the open – a slight contraction from last month is already baked into the cake, so expect another rocket shot if there’s another “unprecedented” sign of “strength” there.

Update: Oh, and about those retail sales numbers? Uh, oops.

Could be a, ahem, bumpy day for the bulls.

GROWL: Gotta hand it to the PPT

They truly are amazing when they’re on their game. I mean, a 12-handle ramp-up on the SPX with no volume, no news, and no reason what so ever in that closing 45-minutes of trading yesterday. Simply amazing, really. Bravo. Take a bow, lads.  Gotta get that DOW back near that ever-vital, completely totally important 10,000 mark again.  Got my DOW 10K v3.0 hat all ready for the occasion.

Well, for today we have people openly talking about a jobless “recovery” imploding into a jobless depression (OK, depression was my choice of word).  Credit seems to be drying up a bit (again) in one of the PIIGS, Merkel and Sarco are escalating their feud (which can only be great for the Euro and the credit/debt markets, right?) and central banks obviously feel they don’t even have try to hide their blatant, if it were done by a truly private enterprise it would be illegal, manipulation of the FX markets.  Meanwhile Wolfram and Hart Goldman Sachs did a nice data-dump on the FDIC earlier in the week – meaning they must want to be bury something.

Just another glorious day in “free market” Paradise, comrades.  Good luck!

UPDATE: More awesomeness on housing…

Without “tax credits” and other distortions, there simply are no buyers at the current prices – even with grossly-depressed rates on 30 year money under 5%.

The bottom line is that the solution to high prices is lower prices, but that requires that everyone up and down the line, most important the banksters who loaned money imprudently, accept the losses they made when they wrote that paper.

Yeah, I look forward to that happening in 5… 4… 3… 2… NEVER.

GROWL: What will the Ministry say?

Update and Bump: OUCH! is right.  And that number (+431K) is even worse when you do even the slightest little bit of digging.  No doubt about it, and no way to spin this away (though the MSM is certainly trying their darndest), this is a f-u-g-l-y number.

Original post:

Well, everyone is waiting to see what the Commerce Department – also known as The Ministry of Making S*** Up – has to say about Non-Farm Payrolls (NFP) this morning. Expectations are for a “blow-out” number of +700K, though Government Sachs seems to be hedging on that a bit and even FinViz is currently showing an expectation of +500K.  I suspect that’s the number that is already baked into the cake of our ludicrously inflated equities markets and that anything “surprising” will either lead to a massive plunge (if it’s a downside miss), triggering the FedCo Plunge Protector 10K, or a massive surge (which will, of course, not trigger anything other than massive back-patting among members of the Administration).

My guess is that we’re going to see a print of +700K and it will be almost entirely BS.  If it comes in at anything less than +500K though, look out below.

GROWL: Lunacy

First of all, and most importantly, I hope all had a wonderful Memorial Day weekend, that you thanked a Vet and that you prayed for those who are still in harms’ way.

OK folks, I wish luck to all attempting to trade in this basket-case of a market. We are coming off the worst US Stock Market month of May in about 70-years, after a substantial sell-off at the close Friday. The European Central Bank (an oxymoron, but anyway…) warned yesterday of a second wave of loan losses resulting from “the continuing financial crisis” (I suppose it’s verboten to actually use the word “Depression” in polite circles these days), China’s growth has slowed, we had yet another “fat finger” sell off, this time in Japan (as panic-selling is also, evidently, verboten), Gold is putzing upward while the “industrial” metals (Silver, Platinum, etc.) slump a bit.

US markets appear set to continue their downward trajectory, can Dow 10,000 v3.0 be far behind?

Meanwhile the goldbugs and non-goldbugs are continuing their ongoing feud – so all may indeed be right and well with the world after all.

Just remember, it’s only money.

Even Ugly Truth Is Beauty.

“If you speak the truth, have one foot in the stirrup!” – Sid Meyer, Civilization IV.

Yesterday offered us a spectacle of why Clusterstock.com is so aptly and humorously named. Yes, the bullish traders and frenetic market-makers got an up-close view of what it was like to be an Angle or a Saxon in 1067. The Dow took a 367 point high colonic and the outhouses from Shanghai to Shreveport did royally stink. But it really wasn’t quite like William the Bastard had just trundled ashore.

A better and more constructive way to look at this is that we just got a data point. That’s what the closing number of the DJIA is. It’s feedback, which the wiser heads among us understand is a gift. “Welcome to the dessert of the real.” Said Morpheus to Neo.

Thus, I’ll go ahead and be the Grinch. I’ll be even worse and blog like an E-VIL KONSERVATIVE KRACKER. Heck, I’ll even kick back and enjoy it.

Why enjoy this carnage? Do I also kick puppies at the neighbor’s soccer goal as well? Not while clean, dry and sober. And the ugliest, most thread-bare truth is always more beautiful than a lie.

The reason I enjoy this is because this is the sound of reality. This is the world as the world actually is. I don’t enjoy the fact that that world is no more beautiful and happy than a blighted, abandoned, urban neighborhood in the perpetually unemployed section of Detroit. I am, however, more hopeful because that reality is no longer cloaked in some conjuror’s illusion.

We can watch CNBC and actually see the honest portrayal of the vast and ineluctable kfuctitude that is the current American economy. We can now see how bad things are. As any former heroin junkie who ever sucked it up and got clean can tell you, that’s step one out of twelve. When the Dow started taking water like the bombed-out USS Arizona, America took a small step towards recovery and a brighter future.

I haven’t logged in and checked my TSP this morning. I don’t want to. I really don’t want to. I’ll be the first to admit that today doesn’t feel like step one to a brighter and more glorious American future. For many, far closer to retirement than I, it feels like the day after a long, and comprehensive cancer-removal surgery. Anyone not hurting hasn’t had the morphine wear off yet.

Therein lies a problem that will continue to prevent us from doing what is necessary to get well again and once more be a great economic superpower. People will always sell us more drugs to kill the pain, not kill the disease. There will always be some shyster hawking a new “jobs bill” or a new “stimulus package.” It will always be an “emergency” or a “crisis” and they will always be the rescue squad. At least until people wake the kfuc up and realize that nobody is even close to getting saved by all this crap.

And when German bond vigilantes and short sellers ply their trade, we shoot them. They are speculators and we hate them! Why? Because they reveal the cold, hard ugly truth. They punish the stupid and we’ve all had days where we abundantly qualified for just that sort of a beat-down.

What else do these iniquitous speculators do? They make it plainly obvious where capital has been misallocated. They rip through the games that corporate honchos and self-serving political aristocrats play with the national fisc. Enron could take private jet rides with Vice-President Gore until the Ozone Layer ceased to exist. Jim Chanos could care less when it was time to short them and reveal to the world they were nothing but a colossal fraud.

German banks could surreptitiously prop up their corrupt Greek brethren and then attempt to socialize the losses thereby taken on the backs of Germany’s Lumpenproletariat. However, they couldn’t take that (decency edit) into the paint against the speculators, shorting their bonds the way Dwight Howard envelopes a lame attempt at a lay up.

This trade action revealed the grotesque inadequacy of their capital structures. German markets were telling the German people that they were already on the hook for all the stupid and dishonest games financiers in Greece, Spain, Portugal, Ireland and every other smaller European nation had played with German financial credibility. Even worse, they were being told that on the bottom line just days before a big provincial election.

So recently, Chancellor Angie got her own opportunity to experience reality and the bountiful gift that is feedback. There’s now a whole section of Germany that her party and its coalition partners represent a whole lot less of now. It had to be somebody’s fault. With the proximate common sense shown by Morrisey when he demanded that people “Hang the DJ”, Chancellor Angie blames the Speculators.

She has banned short-selling and ordered that there be a moratorium on truth. If the news is bad, legislate it out of existence. The iniquitous Yanks never had to build Euro Disney. The EU has just done it for us. The German rulers have just stuck their fingers in their ears and said “LALALALALA! Mr. Market, we can’t hear you!”

Well, Angie Dawlin’, the world is interconnected. Also, the German parliament has inconveniently forgotten to ban long sales of securities. Several of those took place all over the world yesterday.

A market without short sales is a market analogous to a taxi-driver who consumed a fifth of Jack Daniels and still showed up at the airport to take on fares. These jack-asses now haven’t a clue as to whether large sums of capital have been allocated intelligently or not. If I had serious bankroll to manage, I wouldn’t be managing it in Europe right now.

This market also should reveal reality to Americans. It should tell us we cannot recreate the bubble economy. We tossed in $800B in stimulus and all that accomplished was a two-year stock of working capital for state and local government. Don’t get me wrong. As an American all in favor of getting my paycheck every two weeks, working capital has its good points.

Regrettably, it also has its limits. It keeps the lights and water on, pays people and buys spare parts. That’s all Economic Obamacare has accomplished. It does not pave roads, does not build buildings and neither saves nor creates jobs. The only thing shovel-ready here is Vice President Biden’s inane and risible propaganda otherwise.

Unfortunately, it buys spare parts for antiquated and useless machinery. It pays people to perform takes not Pareto Optimal to America’s wounded commonweal. It puts toothpaste in the holes of our national infrastructure, but does nothing to prevent the ceiling from springing a leak. It will fail. It will cost us money we do not have and it will fail. That is all.

So what do we do instead? We hunker down. We accept the heartbreak that accompanies a temporary national failure. We rebuild, we purge we eliminate the wasteful and reallocate the potentially effective.

It hurts. Jokes about E-VIL KONSERVATIVE KRACKERS aside, I’ve been unemployed, hungry and demoralized. I totally empathize with the people getting their turn on the wheel of pain this morning. Being unnecessary to the land that I love sucked my soul.

But there really isn’t any viable alternative left to us now beyond the “Darwinian Flush” prescribed by J. Kyle Bash when this entire economic catastrophe began to unfold. We have to hit “Reset” and try our damndest not to be deleted. That’s all we have left – our final, grim recourse before buying the isolated land, canned food and bullets. We suck it up now and fix this, or that’s what it really could come down to.

So why would I feel somewhat happy about this? Because it takes a certain fortitude and strength of character to accept that message from reality. We could just ban accurate market prices like Germany. We haven’t yet. We’re taking the bad-tasting cough medicine the way we have to. Have hope, America. The markets, unlike the President or Goldman Sachs, are telling you the sordid truth.

GROWL: The “secret” word today is… VOLITILITY

The Fed.GOV PPT, Inc. made a valiant effort to take a 2% sell-off and paint the final tape green yesterday, to no avail. Meanwhile PMs, which don’t have the Fed’s favoured status and are not therefore subject to the whims of Benron Bernanke and his Plunge Protection Team (Goldman, etc.), sold-off early and stayed sold off. We’re now rather well below the psychologically important 1200 mark for Gold. We might stay there a while, we might not.

Who knows, really?

Funemployment numbers are due, “expectations” are for a modest drop in both continuing and initial claims. Expect the “unprecedented”.

Equities in the Euro zone are rallying a bit, I guess the sight of Greeks going on a “general strike” is telling them all is right and well with the world again. That, or the swap lines to the Fed, and therefore our wallets, are wide open once again to central banks in Europe – as the Fed obviously not satisfied with fleecing us for its own purposes, they have to fleece us so central banks in France and Germany don’t have to take a haircut on their bad bets.

There’s no reason to believe we won’t see a whole lot more days like yesterday – as fundamentals try in vain to assert themselves as relevant (causing massive high-volume sell-offs) only to be thwarted in their noble cause by the daily PPT zero-volume melt-up.

UPDATE: Both Funemployment numbers were a miss, downside.  Initial claims were up nontrivially (471K vs. 446K, 439K exp.) and continuing claims benefited a bit from more people rolling off the back end, but were still higher.  Could be a messy day, folks.  Hang on.

GROWL: Caveats

OK, first the explanation of the title – the fact of the matter is that The Complete Idiot’s Guide to Being “A Bear” is too damn long to put in everyday posts, so I’m simply using the header “GROWL”. If you don’t get it, you need to leave. But I’m pretty sure we’ve got 99.9% of us on board so let’s head on down the road.

This post is all about caveats – as in, here’s some things when reading my GROWLs that you need to keep in the back of your mind.  The first is that I’m a Complete Idiot when it comes to all things economics – as I joyfully admit up front.  So what does that mean?  Well, if you’re looking for advice on where to invest/spend/save/hide your hard-earned sheckles don’t even think about looking here.  For one thing I’m not a certified financial adviser, so it would be – ahem – illegal for me to offer such advice.  For another – hello, Complete Idiot, here.  If you want to piss-away your money on the advice of a Complete Idiot you’re welcome to so do – fools, their own money, disassembly required, and all that.  But I take absolutely, positively no credit for any of your wins or responsibility for any of your losses.  Those are on you, bucko.

Here’s caveat Numero Dos: I’m a bear, in fact I’m pretty much, in this climate, more-or-less a permabear.  Meaning that “good news”, at least the type puked out hourly by the whores at CNBS (that would be CNBC) and Scumberg (that would be Bloomberg) – no, I won’t often link to either of them – or, honestly, most anyone in the major media in this Age of the Unicorn King pisses me the hell off.  Why?  Because it’s almost entirely bullshit.  You want happy talk?  You want Hopium?  You want skittle-pooping Unicorns?  Go to CNBS.  If you want to know what’s really going on, feel free to come here.  I read the alternative media so you, well, still should, but I’ll provide some handy linkie things along the way.  And that should help.

OK, third and final for today – I’m not a big fan of tin, in other words, I don’t tend to see the world in terms of grand conspiracies.  But neither am I totally blind to the fact that there is an elite in this (and every) country that has almost complete control over large sectors of our government, industries (or what’s left of them) and, indeed, society.  Thus has it always been, thus shall it ever be.  And they’re interested – very, interested – in keeping it that way.  Again, always been the case, deal with it.

What I’m saying there is that I tend to not suspect secret-society, Dan-Brown-on-Acid conspiracies when simple human nature can adequately describe what’s going on.  Of course the Bileburger types are wont to meet in secret to talk about what to do with all their money and power.  And of course they’re going to make sure key pols will be there when they do it.  How do you think just about anything has “gotten done” over the centuries?  Heck, Napoleon’s generals dined and danced with Wellington’s generals the night before Waterloo.  Think about that.

With that, and with my time and space here getting short, let’s just summarized what happened yesterday (and here, I’ll introduce some indispensable links).  The markets sold-off late, though the Plunge Protection Team (PPT – that would be the big names on Fraud Street, Goldman, JPM – the main recipients of Benny’s Backdoor Bucks, Inc.) made sure we didn’t have a repeat of last week’s “fat finger” panic sell-off.  PMs – you know, shiny stuff – continue to melt-up in price even as the relative strength of the much-abused US Dollar benefits from the idiocy of our friends and neighbors across the pond.

While the MSM Pumper Pimps – aka Tout.TV – are proclaiming the new boom with nothing but blue skies and open road ahead, still others are saying this looks like Deja Vu (as in, mid-2008) all over again in the equity markets and that default of sovereigns may be closer than anyone wants to think about.

There are plenty of numbers due out today that will probably tell us nothing useful.

That’s all for now – good morning!