Pollyanna Loses Her Cool

Dow closed down nearly 100 points. Even Wall Street is beginning to sit up and take notice.

Pollyanna: You Go, Girl!

"What worries you, masters you!" - John Locke

Pollyanna: She's Ba-aaack!

Fitch Downgrades Greek Debt

Euro clobbered! Dollar recovers:

Obama's Policy Earthquake Impacts Markets

Dow down about 90. It's choppy, but cans still be traded! From the front page of the WSJ:

Pollyanna Gives Up the Ghost

We're All Distracted Now!

by Mike Krieger:

Printing and Propaganda
As I have been saying for the past several years, the misguided Keynesian witch doctor central planners unfortunately in charge of our economic fate are attempting a grand experiment on us based on completely insane and nonsensical theories that have no chance at success.  These clowns claim to have all sorts of “tools” but in reality they have nothing.  When faced with a complete credit collapse of proportions never seen before in recorded history there were and are only two “tools.”  It’s the two P’s:  Printing and Propaganda.

While I have written about both of these “tools” before I am going to focus on the propaganda part today since it is the most applicable to the current state of the financial markets.  We all know by now that the centrals planners believe the tail wags the dog.  So the economy doesn’t lead to higher stock prices but higher stock prices will lead to a better economy.  Insane?  Absolutely.  Is it their religion?  100%.  The other important thing for investors to be aware of now when they are comparing the current state of affairs to what many lived through in the 1970’s is that the central planners have learned some lessons.  What we must always remember about central planners is that they will never renege on their core philosophy which is that an elite academic and political class in their wisdom are better stewards than free humans interacting in a marketplace.  That said, most people do not share their worldview for obvious reasons (who wants their lives micromanaged) so the trick of the central planners is to micromanage your life while you think you are in charge.  As Goethe said “None are more hopelessly enslaved than those who falsely believe they are free.”  He didn’t just make up this clever quote, it is a tried a true method of the most successful control systems throughout history.      

So even the brainwashed masses out there understand that price controls were tried in the 1970’s and failed.  We also know why.  Therefore, the last thing the current group of central planners will want to do is announce price controls.  That doesn’t mean they don’t attempt them anyway.  They have been rigging stocks in the United States consistently for the past two years and most people get this and accept it as a part of the current state of disunion we are in.  However, as I wrote last week we have now entered Phase 2.  This was represented by the raid on commodities. 

A tried and true strategy that TPTB have used in precious metals for years has been to create such tremendous volatility in gold and silver and especially the shares that most investors stay away since they can’t stomach it.  This strategy is now seemingly being employed to a much wider spectrum of commodities, hence my warning on trading futures last week.  The entire game was perfectly summarized by a quote in the most recent 13D report where it was stated:  “Unfortunately, this battle between finding a safe haven and the authorities’ desire to render it ‘unsafe’ is only in its earliest stages.  Our manta since 2007 – governments can and will do anything to survive.”

The Bernank Bluff    
So part of the propaganda “tool” used by the central planners is the manipulation of financial markets, which seems to increased in emphasis in recent weeks.  The other consists of outright lies and disinformation.  Put yourself in The Bernank’s shoes for a moment.  This guy loves printing more than Hewlett Packard.  He is despondent beyond belief that the markets and an increasing amount of financial commentators have criticized his precious QE insanity.  Meanwhile, the economic data is starting to roll over and housing looks set to launch into another spiral lower.  So what is a Bernank to do?  Bluff the heck out of the markets.  He knows that the only way he can have cover for his printing party is to smash commodities because the rise in commodities is the biggest point of contention amongst the masses.  Unfortunately, most people don’t delve deep enough into how the system works to have the serious moral and philosophical issues with the central planning system as I and many others do.  The Bernank knows this.  Bread and circus is a tried and true method.  Problems emerge when the bread runs out.  So the period we are in right now is huge for the Bernank and his merry band of mental patients.  They don’t have to make any decision on more printing until June when the current fiasco ends.  It is during this window when they think they can have their cake and eat it too.  They can print like mad yet at the same time claim they are about to stop and maybe even tighten.  Yeah, and the Easter Bunny is sitting next to me trading LinkedIn shares.

In any event, this is The Bernank Bluff and he is milking it for all it is worth while at the same time orchestrating raids on commodity futures.  This is just a massive psychological game against the investors class to keep them from the assets that will actually provide protection.  Well Bernank you’ve got a month left.  Make the most of it because after that you need to act.  I can’t wait to see you try to tighten as the economy rolls over. 

The Slut Walk
While millions around the world from the Middle East to Europe rush into the street to protest the rape and pillaging of their respective economies by the banksters and their political puppets guess what the good citizens of Boston, the heart and soul of the first American Revolution, are protesting.  For the “right to be dirty.”  I kid you not.  The article is right here http://www.telegraph.co.uk/health/women_shealth/8510743/These-slut-walk-women-are-simply-fighting-for-their-right-to-be-dirty.html.  Now let me make one thing crystal clear.  I am not trying to be the moral police.  I could care less how people treat themselves or behave as long as it doesn’t harm me.  The point I am trying to make is that as the biggest theft in American history has just occurred and continues to occur, this is what they are protesting about in Boston.  You know what the elites on Wall Street and Washington think when they see this?  They smile from ear to ear.  What a bunch of sheep.  We just stole trillions and they are protesting for the right to be slutty.  Look, I think I am a pretty decent observer of cultural trends.  Rest assured ladies, sluttiness is in a secular bull market.  It is encouraged by the elites.  What they fear is not degeneracy but rather self-respect and logic.  They want you to behave like animals so they can justify treating you like animals.  Has anyone read Aldus Huxley’s books?  This is worth reading http://www.huxley.net/bnw-revisited/index.html.   You go girl!
   
Peace and wisdom,
Mike

Pollyanna is Still Here, But Struggling

No one knows which way the market will break, but considering the awful economic news this morning, Pollyanna is still alive and well.

It's Back On! The Pollyanna Party is Back!

Pile on!

A FIVE-fecta of bad news today hasn't prevented another Pollyanna Party:

1. ECRI manufacturing data predicts a GLOBAL economic slowdown
2. Housing data disappoints
3. Philly Fed disappoints
4. Leading Economic Indicators disappoints
5. Jobless Claims continue above 400k, moving average continues to rise

Explanation from Goldman Sachs on Today's Dour Economic Data

I find it interesting that they blame Japan's woes for the Philly drop, but admit that they have no data to back it up.  This brings to five the plethora of bad economic news today. I'm amazed that the Dow isn't down 200 points!

Goldman Sachs on today's bad economic data:

1. The Philadelphia Fed's monthly manufacturing survey weakened sharply for the second month in a row. The headline index of "general business activity" fell to 3.9, from 18.5 in April and 43.4 in March. This still suggests factory sector growth, but only barely. Most of the detailed activity indexes also weakened - the new orders index fell to 5.4 from 18.8, the shipments index to 6.5 from 29.1, and the unfilled orders index to -7.8 from 12.9 - with the exception of employment, which rose to 22.1 from 12.3 in April. (We have no information on how much of the drop in the Philly survey over the past two months could have been related to supply chain issues associated with the Japanese earthquake, but this is not a region with an especially high concentration of vehicle manufacturing.) Price pressures eased a little but remain high in historical terms.

2. Existing home sales declined by 0.8% mom in April to an annualized rate of 5.05 million units. Consensus forecasts had expected a moderate increase. Home sales dropped in three of the four Census regions during the month, with the largest declines in the Northeast. The number of homes currently offered for sales was about unchanged after seasonal adjustment, at about 3.7 million units (the months supply of homes increased, but this was likely due to seasonal variation). The median sales price of existing homes increased by about 0.5% mom on a seasonally-adjusted basis-an encouraging turn after several months of weakness. Existing home sales prices are down 5% year-over-year.

3. Rounding out the weaker-than-expected data, the index of leading economic indicators fell by 0.3% mom in April. The consensus had expected a 0.1% inc

Stocks Go Red

Was it the two manufacturing indexes that raised red flags this morning?

Philly Fed Survey Collapses

Wow, now this is really ugly! I wonder if this is what crushed stocks in the past half hour.

from Zero Hedge:

The Philly Fed, which was expected to rise from the April number of 18.5 to 20, instead collapsed to 3.9! This compares to the March level of over 43. So much for the "Economic Recovery"^TM. The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from 18.5 in April to 3.9, its lowest reading since last October (see Chart). The demand for manufactured goods, as measured by the current new orders index, showed a similar slowing: The index fell 13 points while the shipments index declined 23 points; both remained positive, however, suggesting slight growth last month. For the first time in eight months, firms reported that unfilled orders and delivery times were falling—both indexes were slightly negative this month." And even thought the prices paid dropped from 57.1 to 48.3, this was little solace for survey respondents: "A majority of firms continued to cite input price pressures and a sizable share of firms reported higher prices for their own manufactured goods again this month." Time for Tim Geithner's 2011 NYT OpEd edition, titled appropriately, "Welcome to the Economic Stagflation." And, oh yes, bring on the QE3.

Stocks Back to Flat

ECRI Predicts Global Economic Slowdown

The world is headed for an economic slowdown, according to the Economic Cycle Research Institute's (ECRI) Long Leading Index of global industrial growth.

"It is not country specific, but imagine if you could add up all the activity in factories around the world and see if it was accelerating or decelerating, that is what this indicator is focused on," says Lakshman Achuthan founder and managing director of the research center. "And it has been telling us very clearly, unambiguously, that we have a peak in global industrial growth this summer."

Stocks Rise, Then Fall on Modest Dip in Jobless Claims

from Zero Hedge:
Another week, another 400+ jobless print, another prior upward revision: the DOL does it like clockwork. In the week ended May 14, initial jobless claims were filed by 409,000 people (to be revised to at least 412,000 next week), which while is a drop from last week's upward revised 438,000 (originally 434,000), better than consensus, yet with the number being well above 400,000, it means that the economy continues to be a net loser of jobs. Lastly, while irrelevant, the 4 week moving average printed at 439,000, highest since November, due to that outsized print from two weeks ago. This number will rise over the next week as well. Continuing claims dropped slightly from an upward (of course) revised 3,792K (first 3,756K) to 3,711K, beating expectations of 3,278K. Looking at the 99 week cliff, it appears an equilibrium has been reached as 49K lost Extended Benefits in the week ended April 30, offset by 53K people added to EUCs.

Commodities Rebound

This appears to be another turning point higher. It points toward inflation! This is going to hurt our economy, and any chances of recovery, if it continues.

David Stockman on Debt: "We've Run Out of Runway"

Regarding deficits created during the Reagan presidency:

"The essential distinction is that we had a clean balance sheet then - $1 trillion of national debt. Today we have $14 trillion in national debt.  We have used up all the runway, so to speak."

"We have piled our national balance sheet with so much debt that the government is at the very edge of a huge solvency crisis that isn't going to be addressed unless both parties dramatically change their position, and I see no sign of it.  So we're going to have a gong show. Year after year after year of these debt ceiling crises, maybe they will be solved for a month or two, and then we will go right to the next."

Fed Begins To Ease Off the Gas

Back to $101 Crude Oil