THE DOT - if this turns orange or red be alert

Friday, September 4, 2009

Friday brainstorming

First off all sorry for the part one thing with no follow through but we have serious connectivity problems now for a few days nw still lasting. (Mercury retrogade is always a stressful period)

1. Lets start with the never ending miracle of 550k new jobless claims per week and only 219k of lost jobs for the whole month. They do a lot of manipulation with their birth/death spin and other gimmicks to lie to the public. The real number is rather above 20% and while the IMF which was the only one to call for a depression on the way down is again q─▒ick to upgrade economic groth today -have a hard time to see how they dare to through around numbers after so many bad calls.


Real Unemployment Rate Hits 16.8%

As markets digest the worse, yet somehow better, than expected 9.7% unemployment, the real state of the labor market is much worse, as indicated by the U-6 number, which has hit a recent record of 16.8% on a seasonally adjusted basis. As a reminder, the "U-6 represents total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers." In other words, in reality the U.S. labor market is likely about as bad as Spain in terms of undoctored jobless data.

And while pundits were touting the inflection point in June when U-6 hit 16.5% and started to retrace, the most recent monthly data has crashed yet another green shoot in the great propaganda game.

2. Some good insights into one of Buffett's top holdings Wells Fargo - which seems to be quite disastrous when it comes to their balance cheat risks. In any case the foreclosure siuation is getting worse as the underlying job situation keeps deterorating

excerpt from zerohedge

The fine folks over at WLMLab Bank Loan Performance have done a great job at updating FDIC loan data by various banks. Some of their conclusions:

Yet the most significant observations is the ticking time bomb that is Wells Fargo's 1-4 Family 90+ past due loans.

WFC's Construction & Development portfolio is also on the verge of implosion.

Conveniently, these loans are low on Non-Accrual rates, meaning that net interest income is not currently affected (and leading to a falsely high EPS number), yet once everything hits the fan, the bank will be forced to charge off a staggering amount of debt at much higher principal amounts. Perhaps any and all rumors about WFC's viability should be evaluated very carefully going forward.

3. The tricky part for markets has started now with the Mercury retrogade almost through all Sep. and it will not be easy to trade as the bias will be down but too many expactations for a decline will make it a tough ride for bears and bulls. We have confirmed the top of last week by this weeks price action and as I wrote earlier the manipulators will screw the quadruple expiration in 2 weeks either way. The Obama admin is leaning towards a follow through as they want to earmark a positive yearend so they can credit themselves with turning around the recession. So far nothing really has been accomplished except some obscure data -trying to pull the rabbit out of the hat.

Its amazing to listen to all this Goldilock pundits who always come up with the same old fairy tail which is not earnings is important but the stock valuation models - well if that story had any backbone the Nikkei would trade at 40000. There are no magic smarter numbers than earnings but you have to think for yourself as todays earnings are realy cooked by many parameters and need to be discounted basically. Stocks are expensive right now and all forward expectations for the economy cannot be true as we have a global zero interest rate situation - never had that before and we have a good reason for that. Can not recall the name of the movie but the basic story line is 2 students find a dead houseowner in his fancy beach-house and pretend he is alive to get their good thing going ( girls and party) - that is exactely the situation with the banks and economies. So much debt has been accumulated on all levels the system needs a deep cleansing which has not happened yet. One part is reducing debt the other is to eliminate the insane risks still on bank books. Obama and the other Bilderberger puppets have done nothing so far to solve any of these problems and the big crash is still due or a slow but permanent death ( the Japanese version).

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