Below you will find Healthy Tree.
The chart below looks looks in agreement until the beginning of 2011. The disconnect between year over year retail sales change and consumer sentiment is the widest it has been in more than 15 years. For the chart to get back in line either YoY retail sales will fall, sentiment will have to rise or a mix of both in a strangely large move for both. It is hard to imagine sentiment is going to shoot up.
I will let the chart speak for itself.
Late last week I was toying around with the charting on the Federal Reserves website. While I think most government statistics are not very useful the more basic ones tend to be more accurate. So, I charted GDP then laid over Total Credit Market Debt (includes government and private debt). The reason I chose these two stats sets was the fact that we have a debt fueled economy and if debt supports the economy then it can also squash the economy. We know it can support the economy as long as the debt stays under the production (GDP). If debt surpasses production we have serious problems with growing. Check out the below chart. Then look at the second chart that was posted on the blog site ZeroHedge.com today. Hmmm.
Commodities Futures Trading Commission
3 Lafayette Center
1155 21st St NW
Washington, DC 20581
Chairman Gensler and Commissioner Chilton,
I am writing to you today concerning the protection of every American’s wealth. I am an American citizen with great concern for the destructive path of debt our country is on as well as the continued debasement of our (global) currencies. As you know gold and silver have been stores of wealth throughout history and have been a sound place to protect wealth from money destruction.
I understand the CFTC and the Department of Justice have parallel investigations of JP Morgan and its trading activity in the silver market. I also understand that this investigation has been open for years.
My question is simple: Why is it that the CFTC cannot determine if the detailed allegations against JP Morgan (or any other bullion bank) are true? Since the opening of the investigation, years ago now, there has been no further substantive comments from the CFTC.
I understand that CFTC Commissioner Chilton has made some public comments about his belief that there have been ‘repeated attempts to influence prices.’ While this investigation goes on we have seen silver and gold prices, in my opinion, unjustifiably knocked down in the past few months. This strikes me as curious as the US Mint, Canadian Mint, and Perth Mint are all seeing record sales of silver yet the prices are dropping in systematic attack fashion in the face of fundamental price support. I am also aware of a former trader, Andrew Maguire, and silver expert Ted Butler who have both painted the picture of and demonstrated, to the CFTC, the means and process to which the banks are attempting to manipulate silver through the futures market.
As an investor, it is very troublesome to think that the creators of the global financial crisis are now trying to manipulate investors ability to protect wealth through outsized, concentrated short futures positions in precious metals. In the end, the markets will find the true value for the metals. But, it would make the American public more confident in the regulatory bodies if the regulators squared the allegations before the markets do it on their own. In this American’s mind, justice should be served before the alleged manipulators are allowed to profit (or avoid losses on their bad bets).
You will be doing a great service to your country and economy by using your position to protect investors. Your reply and comments on this matter would be appreciated.
Kind regards
What will turn these charts up? What will turn these charts down? Which is more likely? In the past each of these were affected by the Fed’s QE which is not in the cards at the moment. What is in the cards is a disaster in Europe.
The recent ISM report from today was certainly not a positive. There is one piece of data that is very telling for the economy as well as a strong relationship to the market. That data set is the New orders minus Inventories (NO-I). The chart below shows the ISM versus subset information of the ISM report. The subset info is New Orders data minus Inventories (NO-I). A negative number on the NO-I ratio (red line) means inventories are building while a positive or increasing red line means inventories are decreasing. Rising inventories are bad. As you can see from the chart below whenever the two lines get far apart one of three things have to happen. First, ISM falls to meet NO-I (likely), NO-I rises to meet ISM or a mix of both. Keep in mind the last two times the ISM and NO-I differed by such a large amount the Fed stepped in with stimulus. So, of the three options above the most likely is ISM falls to meet NO-I. In my previous post I pointed to the relationship between ISM and the S&P 500.
Commentary below
A few items to take away from the above charts:
First, is that we are seeing some PMI turning up but the economy and the market not. Second, we are seeing ISM turning up and the market not. The divergence in the bottom picture we saw a little of back in March of ’09 which was right when China set out with its stimulus and the market surged. So, the question is where is the market’s white knight? Also, could it be that the numbers are not as good as they appear. See my next post on some of the details of the ISM that are very telling New Orders and Inventories…
