Jobless Claims + Retail Sales = Fail

I am not going to do a pre market update until the dust settles from these worse than expected reports. I said we were going to get violent and that's what we're getting. Overnight spiked up to 1015.25 only to drop back to down to the 1007 level after the reports. If you remember the 1005-1006 level has been very relevant over the last week or 2 so It will be interesting to see the resolution from here.



Remember the consumer is 73% of the economy. These retail numbers are terrible considering they include the beginning of the cash for clunkers program

Antibacterial Soap: Health Hazard?

From WebMD

May 29, 2008 -- Millions of Americans use antibacterial soaps and household cleaners every day, believing that their germ-killing ability will keep them and their families healthier.

But could these same chemicals that fight germs also be hazardous to your health?
That's a question being studied by a group of researchers at the University of California, Davis. In three separate studies, the researchers showed that the chemicals -- triclosan and triclocarban -- have potential to affect sex hormones and interfere with the nervous system.

They also may become suspects in the search for causes of autism.
.....
While Chang and the other researchers involved in the studies admit that it's too early to know whether the chemicals pose a serious health risk, it's already been shown that the cleaners might not work any better than regular soap and water -- and may contribute to the rise of resistant bacteria. So, they ask, why take the risk?

The chemicals causing these problems are petrolium byproducts called triclosan and triclocarban:

Chang, who coordinates the university's studies on triclosan and triclocarban as part of the Superfund Basic Research Program, supported by the National Institute of Environmental Health, says the U.C. Davis research doesn't contradict findings that triclosan and triclocarban are safe for most people.

But it does show that "there may be sensitive periods in development when these compounds could have a very subtle detrimental effect." Translation: If the compounds cause harm, they are most likely to do so during pregnancy, early childhood, and adolescence.

Chang argues that antibacterial soaps don't do enough good to risk this potential harm.

In 2005, an FDA advisory panel concluded that antibacterial soaps, as used by the general public, don't prevent illness any better than ordinary soap, and they may contribute to the rise of resistant bacteria.

In one study, recently accepted for publication in the journal Environmental Health Perspectives and made available online, Isaac Pessah, PhD, director of the U.C. Davis Children's Center for Environmental Health, looked at how triclosan may affect the brain.

There is a lot more in the article. I Highly recommend reading it. Also Make sure to watch the CBC documentary the Disappearing Male. It covers much of what is in this article. Link to my old post on it

Elizabeth Warren "We Have a Real Problem Coming"

Elizabeth Warren talks about the banks and how all those toxic assets are still somewhere

Visit msnbc.com for Breaking News, World News, and News about the Economy

Market Update: #&*#$ or get off the pot

Today was an interesting day. Like i said in the pre-market update this morning. The lack of conviction on sellers to push prices lower resulted in a spring like effect and we were up more than 20+ points at one point during the day.

Once again we have a move that transpires during the last 1/2 hour of trading and it is something that I hesitant to give an real importance to. This dip back down to the 1002 area is another one of those moments just like yesterday only now that we've tested the upper end of the range to a degree, the market is now in a #$@#$ or get off the pot point in time.

Tomorrow morning will be violent in one direction or the other. If we are able to gap under 1000 or 998 tomorrow it will probably be on the way through 995 down to 983 which should not provide much support. If that fails in any way we should be on our way to printing new highs above 1016.

Nothing in my TA indicates range bound price action.

Social Security: The Biggest Bailout Yet

Simply great article from Fortune:

In Washington these days, the only topics of discussion seem to be how many trillions to throw at health care and the recession, and whom on Wall Street to pillory next. But watch out. Lurking just below the surface is a bailout candidate that may soon emerge like the great white shark in Jaws: Social Security.

Perhaps as early as this year, Social Security, at $680 billion the nation's biggest social program, will be transformed from an operation that's helped finance the rest of the government for 25 years into a cash drain that will need money from the Treasury. In other words, a bailout.
....
Unlike the pigs feeding at Uncle Sam's trough, the people who qualify for Social Security old-age benefits -- the ones who'll benefit from the bailout -- have played by the rules and paid Social Security taxes for decades. It would be immoral to tell them, "Sorry, we have to trim your cost-of-living adjustment because we can't afford it," while expecting them to continue footing the bill for bailing out imprudent people and institutions.

Why am I talking about Social Security when health care is sucking up virtually all the oxygen in Our Nation's Capital? Because Social Security is a really big deal, providing a majority of the income for more than half the people 65 and up, and also supporting millions of disabled people and survivors of deceased workers; because the collapse of stock prices and home values makes Social Security retirement benefits far more important even to upscale baby boomers than they were during the stock market and home-price highs of a few years ago; and because the problems aren't that hard to solve if we look at Social Security realistically instead of treating it as a sacred, untouchable program (liberals) or a demonic plot to make people dependent on government (conservatives).

I would like to take a moment to rant a a little bit about the fact that the Ponzi scheme nature that is our current Social Security plan was engineered in 1983 by none other than Alan Greenspan, who is the biggest failure in the history of economic policy makers.

The Forbes Article continues:

The cash that Social Security has collected from my wife and me and our employers isn't sitting at Social Security. It's gone. Some went to pay benefits, some to fund the rest of the government. Since 1983, when it suffered a cash crisis, Social Security has been collecting more in taxes each year than it has paid out in benefits. It has used the excess to buy the Treasury securities that go into the trust fund, reducing the Treasury's need to raise money from investors.

So bascially the government spent it. In the 1980's when we were running a deficit, it wasn't as bad as it should have been because the government was siphoning off social security payments to pay other bills. Its the same as paying for everyone's dinner with a credit card, collecting the money and then spending the money thinking you'll just have another dinner next month and collect the money to pay for your previous dinner. It has to end eventually.

The Author makes the point that Social Security is merely monetary child's play compared to Medicare:

when it comes to problems, Medicare makes Social Security look like a walk in the park, even though at about $510 billion this year, it's far smaller. Not only are Medicare's financial woes much larger than Social Security's, but they're also much more complicated. . . . Medicare is more convoluted, because the healthcare system is much more complex than Social Security. Which, when you think about it, involves only money.

Please click the link and read the article. It is very sobering.

Social Security may not make it onto the agenda until next year. But it's going to show up sooner or later, and probably sooner, because the numbers are so bad that something's got to be done.

Opinion: Obama's Heathcare Horror

A very compelling opinion piece about the Democrats bungling of national health care.

From Salon.com's Opinion page:

Aug. 12, 2009 | Buyer's remorse? Not me. At the North American summit in Guadalajara this week, President Obama resumed the role he is best at -- representing the U.S. with dignity and authority abroad. This is why I, for one, voted for Obama and continue to support him. The damage done to U.S. prestige by the feckless, buffoonish George W. Bush will take years to repair. Obama has barely begun the crucial mission that he was elected to do.

Having said that, I must confess my dismay bordering on horror at the amateurism of the White House apparatus for domestic policy. When will heads start to roll? I was glad to see the White House counsel booted, as well as Michelle Obama's chief of staff, and hope it's a harbinger of things to come. Except for that wily fox, David Axelrod, who could charm gold threads out of moonbeams, Obama seems to be surrounded by juvenile tinhorns, bumbling mediocrities and crass bully boys.
....
There is plenty of blame to go around. Obama's aggressive endorsement of a healthcare plan that does not even exist yet, except in five competing, fluctuating drafts, makes Washington seem like Cloud Cuckoo Land. The president is promoting the most colossal, brazen bait-and-switch operation since the Bush administration snookered the country into invading Iraq with apocalyptic visions of mushroom clouds over American cities.
....
I just don't get it. Why the insane rush to pass a bill, any bill, in three weeks? And why such an abject failure by the Obama administration to present the issues to the public in a rational, detailed, informational way? The U.S. is gigantic; many of our states are bigger than whole European nations. The bureaucracy required to institute and manage a nationalized health system here would be Byzantine beyond belief and would vampirically absorb whatever savings Obama thinks could be made. And the transition period would be a nightmare of red tape and mammoth screw-ups, which we can ill afford with a faltering economy.

As with the massive boondoggle of the stimulus package, which Obama foolishly let Congress turn into a pork rut, too much has been attempted all at once; focused, targeted initiatives would, instead, have won wide public support. How is it possible that Democrats, through their own clumsiness and arrogance, have sabotaged healthcare reform yet again? Blaming obstructionist Republicans is nonsensical because Democrats control all three branches of government. It isn't conservative rumors or lies that are stopping healthcare legislation; it's the justifiable alarm of an electorate that has been cut out of the loop and is watching its representatives construct a tangled labyrinth for others but not for themselves. No, the airheads of Congress will keep their own plush healthcare plan -- it's the rest of us guinea pigs who will be thrown to the wolves.
....
And what do Democrats stand for, if they are so ready to defame concerned citizens as the "mob" -- a word betraying a Marie Antoinette delusion of superiority to ordinary mortals. I thought my party was populist, attentive to the needs and wishes of those outside the power structure. And as a product of the 1960s, I thought the Democratic party was passionately committed to freedom of thought and speech.

But somehow liberals have drifted into a strange servility toward big government, which they revere as a godlike foster father-mother who can dispense all bounty and magically heal all ills. The ethical collapse of the left was nowhere more evident than in the near total silence of liberal media and Web sites at the Obama administration's outrageous solicitation to private citizens to report unacceptable "casual conversations" to the White House. If Republicans had done this, there would have been an angry explosion by Democrats from coast to coast. I was stunned at the failure of liberals to see the blatant totalitarianism in this incident, which the president should have immediately denounced. His failure to do so implicates him in it.

The whole piece is quite good. I'd recommend reading it.

Pre-Market Update

Ultimately I don't trust moves that occur during the last 1/2 hour of the day. That window is used for position squaring and tends to be very unreliable for price action dictating anything predictable. So yesterday I said 995/994 was a major price point for signaling the end of this rally that originated at 865ish. Yesterdays close did close under the 995/994 level, however the price action that occurred from 3-3:30 was more telling than the price action from 3:30-4:15. We ranged in the 995/994 area for almost 2 hours in the afternoon before the position squaring window took prices lower. This signals to me a lack of conviction on sellers to push prices lower.

What they need to do today is prove they have conviction and the only way of doing that is to sell with conviction. Any hesitation will be exploited by buyers because 995/994 is the maximum stretching point for buyers before breaking. If sellers are willing to stretch them to their breaking point and not break, there will be a snap back and we'll see the upper end of this trading range tested (1016) and most likely broken.

Overnight sellers tried to gap down lower and show some selling conviction, but were stopped at the 986 area which shows that buyers are still willing to fight back and do so optimistically. By doing so this confirms a previous pattern and I can say that I need to see 983 tested and broken soon (including a close under that level) for me to finally call this rally finished. The first thing I am looking for is a close under 990 to signal a test of 983.

Comstock Partners: V shaped move in stocks doesn't mean V shaped recovery

A very nice piece in Comstock Partners Market commentary where they suggest the market is out on a limb:

The stock market rally has now reached a point where it is forecasting a V-shaped recovery that is not likely to happen.
The recent catalyst for all of this optimism is a bullish interpretation of current economic activity, some apparent stabilization in the housing market and various companies beating earnings estimates. Also not to be overlooked is the perceived strength of the Chinese economy that is affecting global growth and the upward move in some basic commodities. We think that all of these points are being exaggerated while the fear of missing the train leaving the station is resulting in a speculative surge that is likely to leave the majority disappointed.
...
As for the housing market, although we've seen some signs of stabilization at extremely low levels, the picture is nowhere near as bright as the screaming headlines in some major newspapers. New home sales for June were actually down when seasonally adjusted. Moreover the number of new homes sold in June was the worst since June 1982. You'd never know that from reading the newspapers or watching financial TV. Furthermore, income and employment, the main drivers of housing demand, are still too weak to support a meaningfull housing recovery. When we add in falling prices, excess inventories, more foreclosures and another surge of resets ahead, the housing picture is not too pretty.

Another factor that is being hyped is the bullishness over 2nd quarter earnings reports. Sure, earnings are beating expectations, but that's because they were deliberately set so low in the first place. While earnings are beating the most recent estimates they are actually still below the forecasts made in February.

They are a great resource for weekly readings. I would recommend checking them out.

Just A Little Market Update

So we have now filled the gap from last Friday's open @995 (Aug 8) which has essentially stretched this rally about as far as it possibly can go before breaking down (994 has some significance). So a close under this 995-994 area would be the "put a fork in 'er" type event and would signal at least a test of 980-978.50 area but most likely call to an end of this rally signaling a test of its origin at 865 with a stop on the way at 952.50.

Keep in mind I am neutral until this level is broken, but I my conviction for a break lower extending down 100+ points has increased.

A Surprise to No One: Paulson was still in bed with Goldman

courtesy of NYT

Before he became President George W. Bush’s Treasury secretary in 2006, Henry M. Paulson Jr. agreed to hold himself to a higher ethical standard than his predecessors. He not only sold all his holdings in Goldman Sachs, the investment bank he had run, but also specifically said that he would avoid any substantive interaction with Goldman executives for his entire term unless he first obtained an ethics waiver from the government.

But today, seven months after Mr. Paulson left office, questions are still being asked about his part in decisions last fall to prop up the teetering financial system with tens of billions of taxpayer dollars, including aid that directly benefited his former firm. Testifying on Capitol Hill last month, he was grilled about his relationship with Goldman.
...
Mr. Paulson did not say when he received a waiver, but copies of two waivers he received — from the White House counsel’s office and the Treasury Department — show they were issued on the afternoon of Sept. 17, 2008
...
During the week of the A.I.G. bailout alone, Mr. Paulson and Mr. Blankfein spoke two dozen times, the calendars show, far more frequently than Mr. Paulson did with other Wall Street executives.

On Sept. 17, the day Mr. Paulson secured his waivers, he and Mr. Blankfein spoke five times. Two of the calls occurred before Mr. Paulson’s waivers were granted.

It is just amazing that this amount of backdoor dealing occurs and goes unpunished. I'm frightened to see how much will occur if we do pass this healthcare bill

Another Fantastic Post by Denninger

http://market-ticker.denninger.net/archives/1313-Economic-Bottom-Calls-Willful-Ignorance.html

Investing: So 1980's

So The average holding period for a stock on the NYSE is now at under 6 months. I still don't understand why people actually believe or pay attention to fundamental analysis, PV of future cash flows, or any balance sheet, income statement, or CF statement. These things matter for longer holding periods (measured in years). So your Mutual fund or financial advisor who claims to be an investor, is lying to you. He is merely a speculator or a trader. Short term holdings are for those people trying to guess what everyone else is doing, speculating on the madness of crowds. So stop kidding yourself financial advisors, you haven't been investing since the 80's.