Wednesday, September 22, 2010

It Is Not Getting Any Better

Well, for the bears it got a little better today, but that should be expected. Let the no QE Douche hangover for the bulls begin. One thing is for sure, that ramp from 1040 did nothing to help keep Joe six pack in the market. The 20th Consecutive Week Of Outflows is proof enough that the sheeple are catching on and that not many want to stick around for this coming fall that will at least resemble the fall in '08.

Now, finally, we all know nothing is improving and are sick and tired of the government lying to us. Evidence of the most recent non-truth comes in the form of the housing numbers from this morning. As Denninger points out in US Home Prices Declined (What?!) "The previously reported 0.3 percent decline in June was revised to a 1.2 percent decline. The unusually large revision mainly reflects the addition of new data from late June that show considerably weaker prices than earlier in the month." is from the release and it gets this response from Karl, "The data from June was literally made up for the end of the month. And the "revised" numbers are four times the decline originally reported." I'll add that you should remember the jobs data from the post Memorial Day report where they had to "estimate" the data for eight states. I would expect a revision there as well. In the category of cheating at the game try this on for size - Did Bill Gross Just Confirm On Live TV He Has An "Advance Look" At Non-Public Fed Data?

As for the markets telling the truth (following the "promise ramp" that QE Douche might actually get announced in the FOMC minutes) both Mish and Karl (and me) point to the treasuries relationship to the SPX. Mish has a great post in Curve Watcher's Anonymous Investigates the Question "Is the Bond Bull Dead?" "The pattern may not continue, but for quite some time rising treasury yields have generally been directionally aligned with rising equities. In three instances (the first three red boxes), a drop in treasury yields preceded (led) a subsequent drop in equities. The fourth box (where we are now) is unresolved." I'm sure most of you that have seen me post THIS CHART and know the weekly TNX values the SPX somewhere near 800. Denninger in The Folly Of Investing Today  "Here's reality folks.  Over the previous 10 years the TNX has never declined meaningfully without the S&P 500 following it, and declining to near or below it on a comparative basis." 

And the money post of the week from naked capitalism Steve Keen: Deleveraging With a Twist is an exceptional post covering debt and the recovery that you all must read. This post does a great job of explaining why we pasued and had the recovery and why we'll fall in the future. "The rise in aggregate demand supported a recovery in employment, but the prospects of this continuing to the point at which economic activity booms once more are remote: with debt levels as high as they are, the potential for further deleveraging still exceeds the worst that the US experienced during the Great Depression." I keep preaching deflation and default and I hope you are listening. "With the debt to GDP levels for all non-government sectors of the American economy at unprecedented levels, the prospect that any sector can be enticed to take on yet more debt is remote. Deleveraging is America’s future."

Oh, and if you actually think things are getting "better" you need to read this 20 Signs That The Economic Collapse Has Already Begun For One Out Of Every Seven Americans

GL out there and have a great evening.