23

02/10

Looking at Some Deadly Charts

20:30 by Administrator. Filed under: Whatever

by John Galt

FEBRUARY 23, 2010

4 charts.

That is all I need to post. There is a hunch that the market is way, way over extended. Today’s consumer confidence numbers from the Conference Board report speak volumes as to how little faith the consumers have in this over extended government fiat funny money “recover” and the underlying story that the average American schmuck has been witness to since February of 2007. There is no recovery underway. There is not resurgence. There is no massive bank lending to small business, large business or consumers. And there is not sign that the attempted monetization has staved off further asset value deterioration because while Ben might be one hell of an academic, his knowledge of business and the real workings of the banking system with regards to reality is about as expansive as that of oh, President Obama. When you have three key figures, Obama, Bernanke and Geithner assisting in or managing economic policy and none of them have signed the front of a check, managed a real bank much less worked as a teller, or created and developed a business from scratch, then the formula is place for theory to become the disaster we are witnessing. This is half-assed Keynesian economic policy at its best, a blatant ignorance as to the crossroads our nation finds it itself at historically at worse.

First the charts:

What do these four stocks tell you? That the really has met the album cover, appropriately entitled “Satan’s Cross” and whoa nellie, we are about to see some serious violence. The markets are not going ANYWHERE if these four are not participating and with the government attempting to turn the economy into one giant GSE, then the financial companies really have no reason to exist, now do they? The bigger unknown is just how big an impact the impending dissolution of the European Union will have on these clowns because the Brits are standing on the sidelines yelling “See I told you so” and the Irish are throwing bombs again as new splinter groups from the IRA have begun to resurface; conveniently as Europe’s economic recovery turns into a living hell for the PIIGS. Hmmm, connection? I wonder how long until the same thing begins inside our borders as the retirees learn they were lied to and their retirement accounts WILL NOT recover and that there really are a finite number of greeting and grocery bagging jobs in our world. Have no fear, Obamacare will cure all that too, I’m sure…

Thus the 4 charts are a reflective of the problems our financial system is facing. The regional banking stocks are out there in la-la land, moving well above their 50 day moving average and people are “assuming” that the Commercial Real Estate (CRE) crisis is just another bogeyman made up by some devious gold salesman who gets 5 minutes on CNBC World at 3 a.m. EST.  I wonder how Bill Gross will like doing those live shots at 4:02 a.m. with Jim Rogers since he’s no longer promoting the party line of pump, dump and screw the average soul any longer. The issues facing our economy are just now being realize and the other blogs that I follow have been doing an excellent job tracing the decline and fall as tax revenues crater, Municide comes to fruition, and week to week unemployment claims reveal that the path is still accelerating towards an average between 480K and 500K per week, hardly indicative of any real recovery under way.

Buckle up gang because geopolitical events and instability in Europe should begin to encroach on the shire and cause the Hobbits who infest Bubblevision, Wall Street, and Washington Dee-Ceipt will be eaten by a Chinese Dragon after that damned unicorn is incinerated in a fireball ending these purple skies our fearless leader keeps trying to pain. Watch the four stocks above and if they deteriorate further with larger and larger volume than you can anticipate a severe market break. I figure we will see such an event should Goldman Sachs violate the 120-125 price range.

Meanwhile, Back in 1-3-6 Land, Trouble Where the Purple Unicorn Gets its Fuel Supply Threatened

The three pages above are condensed but directly from the United States Treasury Direct page where the key points are highlighted.  What was so special that it threated the ability for the unicorn to spread Skittles and paint rainbows across our nation’s skies, far and wide?

1. 6 month Bid-to-Cover: 4.29

3 month Bid-to-Cover: 4.04

1 month Bid-to-Cover:  3.82

Translation? There was more demand for the 3 and 6 month bill but looks can be deceiving when you see the nature of the bids.

2. The low rate of 0.00% again surfaced in the 28 day (1 month) bill auction. Why is this important? The Treasury accepted all $5.96 billion of “Indirect” bid money and that means it was probably at the low rate. We also witnessed a huge Fed purchase (SOMA) and another visit from the mystery “Direct” bidder of $2.9 billion. There is a definite pattern emerging from the auctions where the Chinese appeared to exit auctions in December and the appearance of the “Direct” bidder since the first of the year. If anything, the ChiComs are avoiding anything over the 7 year but we can only speculate at this point until their central bank provides information as to their intentions. At which point the EFT UDN will go from moribund to moonshot in one day.

3. The 1 month BTC prior to this auction:

2/17 = 3.92

2/9 = 4.44

2/2 = 4.98

1/26= 5.55

1/20= 5.69

1/12 = 6.63

1/5 = 5.50

To see the deterioration to the numbers today are disturbing as short term funding is the mother’s milk of the Legislative and Executive branches and how they have been able to prevent a massive currency crisis by not being forced into the corner and printing their way completely out of this mess. Since there is ZERO chance of these idiots actually cutting spending and getting the expenditures of our government in line, one can take away from the numbers thus far this year that the foreigners are losing their desire to “help” the United States and in fact are staying in the most liquid debt instruments that they can or using the 1 month bill to preserve what capital they have left denominated in dollars.

The 1-3-6 rule is still far below historical norms and with the banking system still pretty much seized up and the perceived lack of inflation the general rule of the Keynesian freak show, it does not take much of a reach to conclude that we will see more 10 and 30 year auctions getting a grade of “F” from Rick Santelli and rates creeping higher and higher which will end what little housing party there is. Do not pay attention to reports like Case-Shiller and instead remember what the permit data looked like 3-6 months ago:

Unless one hell of a miracle erupts over the next 180 days, economic activity in the new housing and construction markets will remain at levels unseen since the Eisenhower administration and thus the economic recovery is still a mirage. We have not fixed anything, in fact by pushing the day of reckoning forward to the future, the powers that be have probably insured a much more drastic conclusion to this strategy of using duct tape to repair a major dam about to burst and the snow is about to melt, adding more stress on the system.

Stay tuned for more commentary tomorrow night as I will be addressing the silver and gold situation which believe it or not is still intact with the thoughts that I had during the correction I foresaw in December.

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