The Federal Reserve

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: 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: Happy Monday!

What to say on this beautiful Monday morning here in New England? Well, first there are indications that there is a bit of Deja-Vu all over again happening out there in the land of the liquid – and we all know how that ended for us, eh?

Shiny metals are continuing their haircut from the end of last week and it looks like Au may soon again test 1200. For some, it’s an opportunity to get more at a “discount”, for others it’s business as usual. The market for PMs is notoriously volatile, not for any other than the stout of heart when it comes to investing. But as a wealth store? Well, that may be a horse of an entirely different color.

Chris Dodd (D-CountryWide) and Blanche Lincoln (D-AlmostCertainlyGoneInNovember) are trying to polish their badly tarnished populist cred by smacking around The Basksters.  That what they want to do has at least a tiny bit of merit doesn’t for an instant blot the knee-slapping hilarity of watching Senator “Friend of Angelo” try to “stick it to the Bankers”.  Oh well: Kabuki, popcorn, ready for the show!

The Complete Idiot’s Guide to Being “A Bear”

Welcome, one and all, to what I hope will be a new feature here at TMR – I am your resident “Complete Idiot” on all things economic and I’ve undergone quite a journey over the last 24-months or so from a more-or-less “WE ROCK” optimist to being a total “We are so totally freaking doomed!” Bear – so I’d like to share my continuing journey down that path with an eye, given the mission of this site, toward the political end of the spectrum (and here’s a hint – if you don’t think politics and economics mix you really need to be looking at places like Kos because we’re rather well past you here).

For the record, I’m neither a “Gold Bug” (though I certainly do own some of the shiny stuff), nor a member of the “Bank of Sealy” (though I certainly do have some FRNs – that’s Federal Reserved Notes, or Benny Bucks, for the uninitiated – scattered in easy to get to places).  So where do I stand?  Well, as of this morning – 13 May 2010 – I believe the following…

1) “The Market” is totally overbought, and it’s beginning to look a whole lot like late-Summer 2008 all over again

2) Gold will continue to outperform most other commodities, for quite some time

3) The Euro is dead, long live the Euro

4) The US will NOT be permitted to continue to deficit spend upward of 13% of GDP – and that practice, should it continue very much longer, will end very poorly.

And a whole bunch of other things.  I’m thinking of a quick early morning post, perhaps something to wake up to, with a round-up of how it all worked out in the evening.  Assuming I can manage it with this, you know, job thing.