Rally Time |
The first economic data that hit the tape was the New Home Sales report and it, ahh, wasn’t good. It stunk. Bloomberg said the following “Bad news is building out of the housing sector. Last week's report on existing home sales showed surprising contraction as does today's report on new home sales where the annual sales rate fell to 298,000 units, down 0.7 percent in the month. The report includes significant downward revisions of 12,000 to June, now at 300,000, and of 6,000 to May, now at 315,000. Prices of existing homes contracted in July as they did for the median price on new homes, down a steep 6.3 percent in the month to $222,000.
“The outlook for the new home market and for home builders remains very difficult. Low interest rates may be a big plus but are being more than offset by heavy supply of low priced existing homes, by appraisal uncertainties, and by continuing tightness in the credit market.”
Well THAT report didn’t go well. Let’s have a look at The Richmond Fed data.
In the Richmond Fed’s report we read “In August, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — declined nine points to -10 from July's reading of -1. Among the index's components, shipments lost sixteen points to -17, and new orders dropped six points to finish at -11, while the jobs index inched down three points to 1.
“Other indicators also suggested additional softening. The index for capacity utilization declined eight points to -14 and the backlogs of orders fell seven points to end at -25. Additionally, the delivery times index moved down twelve points to end at -4, while our gauges for inventories were virtually unchanged in August. The finished goods inventory index held steady at 17 in August, while the raw materials inventories index added one point to finish at 19.”
Since the incompetent Fraud Street economists missed both reports by a wide margin, with the latter report being 100% worse than expected and the worst data since 2009, one would expect a negative reaction in equities. Ohhh, but this is Fraud Street, not the Wall Street hype of supply and demand that you have been told about over the decades.
Apparently the news was so bad that the hyenas of Fraud Street went into a feeding frenzy – eating as many short sellers as the pack could tear apart. And why would the nasty hyenas do such a thing? The answer lies with Ben S. Bernanke and the J-Hole symposium of the central banking mafia.
“What’s not to like in these reports?” says the banking mafia. “This now cinches the response we want from our puppet Bernanke: more free money for us via QE3.”
Boo-YA, baby! More horrific economic data and the markets take off like a rocket shot.
Trade well and follow the trend, not the so-called “experts.”
Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.
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