One of the persistent things my friend Robin Landry reminds me of is that if we have really started P3 down in the market (e.g. primary wave three down from either the nominal top of the Dow at 14,066 on a weekly print basis in the fall of 2007, or the weekly print close on an inflation corrected basis in early 2000, with major bounced in either case as P2) then one should be constantly on the alert for ‘downside surprises’ during P3 down…and that’s where my expectations are presently leaning.
The way I have it figured, we have two ‘extinction level events’ for economic life as we knew it and maybe a third in the wings.
One is obviously the fate of the Euro, which is the darling currency of One World Government Lite. With a major move downward in its purchasing power, not only will my youngest daughter be celebrating her 30-th birthday in Paris in early October with much less financial pain if the trend continues, but she might be able to afford a significant upgrade in accommodation plans since, as the German news service Spiegel points out, the “Specter of Inflation Haunts Europe” at the moment.
In what could be a tip-off of the “You know you’re in trouble when…” variety, Euro Intelligence reports this morning that the European Cnetral Bank has just purchased €16.5 billion of its own bonds.
All of which gets us around to the curious situation where the US dollar seems to be rising while Gopld has been expressing a real lack of downside conviction which although counter-intuitive on the surface makes perfect sense when you consider that the Yuan/Renembi is not yet the world’s reserve currency. Charting Stocks offers some additional insights explaining “Why Gold and the Dollar are BOTH Rising.”
Of course, around the ranch, we operate on much simpler terms: “More buyers than sellers?” is our first guess, but it goes deeper…down into the hearts of hot money player players, wherever those are.
But with futures up ahead of the open, yours truly will likely buy another short position ahead of the Consumer Price report tomorrow.l
PPI
On the other hand, a reversal at mid session today may be in the cards once the Big Boys finish selling to the weak hands, as this morning’s PPI report is…well…read it yourself:
“The Producer Price Index for Finished Goods declined 0.1 percent in April, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This decrease followed a 0.7-percent advance in March and a 0.6-percent decrease in February. At the earlier stages of processing, prices received by producers of intermediate goods moved up 0.8 percent and the crude goods index fell 1.2 percent. On an unadjusted basis, prices for finished goods advanced 5.5 percent for the 12 months ended April 2010, their sixth consecutive 12-month increase. ”
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Finished goods
In April, the decline in the index for finished goods can be attributed to lower prices for energy goods, which fell 0.8 percent. Also contributing to lower finished goods prices, the index for finished consumer foods moved down 0.2 percent. By contrast, prices for finished goods less foods and energy rose 0.2 percent.
Finished energy: Prices for finished energy goods decreased 0.8 percent after rising 0.7 percent in the previous month. Leading this decline, the gasoline index fell 2.7 percent. Lower prices for liquefied petroleum gas and residential natural gas also were factors in the finished energy goods decrease. (See table 2.)
Finished foods: Prices for finished consumer foods fell 0.2 percent in April, their first decline since July 2009. Leading the April decrease, the index for fresh and dry vegetables dropped 10.2 percent. Lower prices for eggs for fresh use also contributed to the finished consumer foods decline.
Finished core: The index for finished goods less foods and energy advanced 0.2 percent in April, its sixth consecutive monthly increase. Accounting for about one-fifth of the April advance, passenger car prices rose 0.6 percent.
Intermediate goods
The Producer Price Index for Intermediate Materials, Supplies, and Components moved up 0.8 percent in April, its seventh straight monthly advance. Accounting for most of the broad-based April increase, prices for intermediate materials less foods and energy climbed 1.1 percent. The indexes for both intermediate foods and feeds and for intermediate energy goods also contributed to this advance, rising 0.5 and 0.1 percent, respectively. On a 12-month basis, prices for intermediate goods moved up 8.6 percent, their largest increase since a 9.8-percent rise in October 2008. (See table B.)
Intermediate core: The index for intermediate materials less foods and energy climbed 1.1 percent, its largest increase since a 2.0-percent rise in July 2008. Thirty percent of the April advance can be attributed to higher prices for plastic resins and materials, which surged 11.4 percent. The indexes for steel mill products and primary basic organic chemicals also contributed significantly to higher intermediate core prices. (See table 2.)
Intermediate foods: Prices for intermediate foods and feeds advanced 0.5 percent in April, after falling in each of the previous three months. A major factor in this increase was a 5.1- percent rise in the index for meats. Higher prices for natural cheese, except cottage cheese also played a significant role in the intermediate foods advance.
Intermediate energy: The index for intermediate energy goods inched up 0.1 percent in April, its second straight monthly rise. The index for electric power led the April increase, climbing 1.1 percent.
Crude goods
The Producer Price Index for Crude Materials for Further Processing decreased 1.2 percent in April. For the 3-month period ending in April, crude materials prices fell 1.6 percent compared with a 15.1-percent jump from October to January. The monthly decline in April can be attributed to a 5.9-percent decrease in the index for crude energy materials. By contrast, prices for crude nonfood materials less energy moved up 4.0 percent and the index for crude foodstuffs and feedstuffs increased 0.9 percent. (See table B.)
Crude energy: The index for crude energy materials declined 5.9 percent in April. From January to April, prices for crude energy materials dropped 10.8 percent subsequent to a 24.5-percent surge for the 3 months ended January 2010. April’s monthly decrease was entirely the result of natural gas prices, which fell 19.2 percent. (See table 2.)
Crude core: The index for crude nonfood materials less energy rose 4.0 percent in April. For the 3-month period ending in April, crude core prices moved up 9.6 percent after increasing 11.0 percent from October to January. About two-thirds of April’s monthly advance can be attributed to a 4.9-percent rise in prices for nonferrous metals. An increase in the index for iron and steel scrap also contributed to higher crude core prices.
Crude foods: The index for crude foodstuffs and feedstuffs increased 0.9 percent in April. From January to April, crude foodstuffs and feedstuffs prices climbed 2.9 percent following a 7.5-percent rise in the previous 3-month period. Leading the April advance, prices for slaughter cattle moved up 7.6 percent. An increase in the index for slaughter poultry also contributed to higher prices for crude foodstuffs and feedstuffs.
Penciling out today PPI Finished goods number is no fun – argues deflation is still here and it could smack the price of gold hard once people see it that way. Gold was down $15 early.
Libor Reveals
“LIBOR puts the line to Wall Street’s Infinite Upside” headlines Taipan Daily today.
Aw, just one more good pop to the upside at the open on contained inflation fears…pleeezze???
Oh, here we go: Home Construction up, building permits fall…gotta be something in there to send stocks higher for the greater fools…
Losing Sight of Justice
Can’t say this is terribly surprising: Courts worldwide seem to be losing their sense of justice and are instead now going wherever the corpgov winds blow.
Examples: “Gary McKinnon: ‘They can’t return me to a place I wasn’t in’. This is where the UK courts are going to rollover and send a Pentagon computer hacker to the US for trial and to be locked up. as an aware reader wrote:
I especially like his answer to the question,”What did you find?”
“A space fleet and an impressive UFO and a total lack of Nasa and military internet security, which I found truly shocking which is why I alerted them via cyber notes.”
They should thank him for not destroying their computers and alerting them to the security problems instead of trying to bury him in prison. If I were him, I’d start telling everything that I know and not shut up until they leave me alone.
And another example of Courts losing sight of justice? “U.S. can indefinitely hold sex offenders, Supreme Court rules…”
Don’t get me wrong – I’m not in favor of returning sex offenders to society wholesale. BUT I am greatly concerned that this is a slippery slope. If the sex offender laws aren’t tough enough, lengthen penalties up front. But to give government to power to decide, that’s dangerous. Not to promote capital punishment, but that does have a way of making slippery slopes less slippery…
SpyFi
Google is reportedly looking into reports of data harvesting as they drove Googlemobiles around for mapping. Unprotected network? Guess it means open hotspot, huh?
Liar or Senator Department
The NY Times piece about how a senate “Candidate’s words on Vietnam service differ from history” may be a good study of the lengths people will go to in order to get elected. Like we didn’t know at some level, already?
Stating the Obvious
“New battle plan needed for a crsis prone world” writes Stephen Roach in the Financial Times. Why anyone would look to the Chairman of Morgan Stanley Asia for solutions to the world’s problems, when it’s obvious that big corporate interests are as much the cause as solution defies my understanding,. Oh wait! I must be some kind of simpleton to question those with money….
Condo Nazis Department
OK, I admit it…I am wildly critical of most condo associations because they are usually anti ham radio. But let me put that aside for a second and reveal that a “Baltimore condo may use DNA tests (of doggie doo-doo) to identify guilty pooch” and using this (pardon this) crappy application of DNA then fine the offending owner.
Who’s ever think we’d stoop to this kind of living? This stinks…oh the list of bad lines would fill up hours of stand-up…er….stoop down comedy.
Where’s my coffee?
Spill What?
Went all morning without mentioning the extinction level spill…see? I must be an optimist after all. Well, no…
Sighted in Key West - are they from the spill? No proof…but there’s a lot of questions being asked now about the candor of the 210,000 gallon per say claim…and especially since I haven’t been able to find pictures of the actual sea floor at the leak…just those videos of a pipe. Inquiring minds and all that…
Up then down today is my Dow dart of the morning: Go ahead…be surprised.
