US economy "soft patch" CONFIRMED

Now this isn't a response to or jibe at M ( I've promised to stop that after all), but I do still feed the desire to put a layman's view up periodically on points being raised by M.
I don't think any Govt has claimed that any sort of strong recovery is currently clearly underway. As an individual I would dispute that if they did, just based on general conversations I have every day with average people.
The Govt(s) of the developed world have only ever explained their current and past monetary stimulus actions as being designed to prevent a total world economic collapse with a consequent massive and wide spread socio-economic destruction of personal wealth and health. As such they have simply been trying to put some type of floor under the actual and potential destruction which has been caused by irresponsible actions by a relatively small few ( but influerntial) people on wallst and in other major financial centres. That is to try to have the future growth in the world economy, when not if it comes, to start from a resonable uneroded base, not rock bottom.
Now traders like JW probably see more upside than downside potential in all this. So they are constantly looking for early growth indicators to get in before the masses ( and out before them in due course). They will dip their toes in various trades and quickly cut their losses if they're wrong. They do not essentially take a strong fundamentalist trend position or political view on anything, in gthe manner that persons like M do ( and presumably are paid to do).
But for every economist with fundamental views and opinions like M, there will be an equally intelligent and educated one to have diamatric views and opinions. Probably Paul Krugman might be a neat populist example. So who do you believe in the end ?

Btw I apologize to M if it is now going to drive him even more bonkers not knowing what I'm posting up.

Also it is my general understanding that traders like JW are more concerned in trying to predict how a market is going to react to breaking news, rather than if the reaction is correct in any fundamental economic analytical sense.
I will await JW's correction or not on this, that is assuming he has not also blocked my posts because of their layman content.

That's strange, usually JW would be right on top of my post by now correcting all my "inaccuracies" but he's nowhere to be found. I hope he's okay.


The US economy is NOT experiencing a REAL organic recovery and I don't have to wait for GDP, ISM, PMI, UMichigan, ADP and other buls@*t data releases to know . It's all a FED created illusion. Here's how I know:

1. The banks are insolvent and ZIRP has been in place for over two years with no end in sight.

(no reference provided here - you're on your own, but a subscription to Chris Whalen's Institutional Risk Analysis might be a good start: http://us1.institutionalriskanalytics.com/www/index.asp)


2. There's no such thing as a jobless recovery.

http://research.stlouisfed.org/fred2/series/UEMPMEAN

http://research.stlouisfed.org/fred2/series/EMRATIO

http://research.stlouisfed.org/fred2/series/CIVPART

http://research.stlouisfed.org/fred2/series/LNS15000000


3. The US housing market is still collapsing. 

Up to 11 million mortgages are likely to default (about 3 million defaulted so far), the shadow foreclosure inventory is rising and will continue to rise and as a result house prices will fall further......much further. Past experience also suggests they'll "overshoot" to the downside.

http://www.aei.org/event/100431

http://www.aei.org/docLib/AEI%2007-21-2011%20Goodman.pdf


The Case Shiller index is confirming a double dip in the US housing market (and the CS is inherently too optimistic by excluding from the survey short sales and foreclosed property sales)

http://www.standardandpoors.com/indices/sp-case-shiller-home-price-indices/en/us/?indexId=spusa-cashpidff--p-us----


4. The real U6 unemployment rate as calculated by 1980 methods (pre-hedonics) is actually running close to 25pc.

http://www.shadowstats.com/alternate_data/unemployment-charts


5. State Government revenues dropped by 31pc, and the numbers have gotten worse since the data was collected.

http://www.census.gov/newsroom/releases/archives/governments/cb11-03.html


and the irrefutable evidence straight from the horse's mouth


6. The BEA's recently released GDP numbers show a higher GDP number in Q2 2008 (13.3 trillion) than Q2 2011 (13.2 trillion). Just to keep things simple for those who haven't finished reading Carol Vorderman's book: There is NO recovery.

http://www.bea.gov/national/index.htm#gdp





Having said all this, I'm sure miraculously the economic indicators will print better later in the year despite a continuously deteriorating economy. This is how I know:

"In light of these developments, the most recent projections by members of the Federal Reserve Board and presidents of the Federal Reserve Banks, prepared in conjunction with the Federal Open Market Committee (FOMC) meeting in late June, reflected their assessment that the pace of the economic recovery will pick up in coming quarters. Specifically, participants' projections for the increase in real GDP have a central tendency of 2.7 to 2.9 percent for 2011, inclusive of the weak first half, and 3.3 to 3.7 percent in 2012--projections that, if realized, would constitute a notably better performance than we have seen so far this year." - Chairman B.S. Bernanke Testimony Before the Committee on Financial Services, U.S. House of Representatives, Washington, D.C.  on July 14, 2011




"THE FED IS TRYING TO CREATE THE ILLUSION OF RECOVERY WITHOUT THE INFLATION"

Make a poster out of this and put this up on the wall somewhere where you work for all to see. It will save you a lot of money some day.

Next I will answer the question that may be going through some posters minds. If the government/FED is controlling and manipulating all the economic indicators, even those that are coming from seemingly "independent" sources, why would they allow the release of this horrid July ISM print?

The question deserves a long answer but in a nutshell think about three very important things: debt ceiling debate, finding buyers for USG debt and Oil.

In the world of politics and high finance nothing happens by accident and everything happens for a reason.

I must say that as a layman I am getting more and more confused all the time.
M says " The Fed is trying to create the illusion of recovery without the inflation".
But I thought that it is an accepted fact that Governments actually want a reasonable amount of inflation at all times, as then they can use their proven method of controlling the economy,  that is by adjusting interest rates up or down.
Currently they have effectively lost the total use of this interest rate controlling mechanism, due to rates being at or close to zero.
Can some economics expert please explain this all more clearly to me ? ( M won't or can't as he is now apparently not seeing or reading my posted pleas for clarification).

I hope JW hasn't sunk up to his eyeballs in the soft patch with that "im not in the bearish camp, i think we had a bit of a soft patch" and he is unable to post. Either that or he is busy running all over his office trying to find that analyst who predicted this drop but was demoted to the mail room when he warned "trading with the herd will get you slaughtered"

From BEA release earlier today:

"Personal income increased $18.7 billion, or 0.1 percent, and disposable personal income (DPI) increased $16.3 billion, or 0.1 percent, in June, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) decreased $21.9 billion, or 0.2 percent.  In May, personal income increased $23.2 billion, or 0.2 percent, DPI increased $17.6 billion, or 0.2 percent, and PCE increased $5.9 billion, or 0.1 percent, based on revised estimates."

http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm


Another huge miss on personal income and spending. "Soft patch" my arse.

thanks for your concern menelaus. i m actually doing rather fine. you read all the threads but must have skipped the bit when i told you i had some early s/l on friday after gdp and sold some cadchf to protect myself. i mentioned i was v light although still risk on during the weekend as expecting some resolution on the us debt issue. i cut when europe and america cudnt hold to asia gains in the monday session.
did i lose? of course, small. ( do i win every day? you must be kidding, i m happy with a 55/45 ratio and a good risk management ). do i regret anything? no. what do i have for coming days? i m avoiding the chf whos gone into cowboys and redskins territory and i went short nzdusd, nzdcad and eursek. why these im not going to explain, as it s pointless for me. 
somewhere above you ll read, if you didnt block him ( actually can someone explain me how to block a forumite ) what fafh has written. defining what a trader does for a job. do i need to know wheter america is in recession or on a soft patch? yeah would help, of course. but what would def help is to understand what move to make at each turn of the market. thats what would give me the edge over the herd. you are clever enough to know exactly how the stats are going to print tomorrow maybe, but you re probably a bit lost to know how to make money out of it. you were making fun of the guy who went short eurchf and long european banks cds, as all was already priced in. "need to be ahead of the curve, thats the only way".. actually, no. are you going to tell us you re the only analyst in the world who predicted a slowdown or a bad print on the ism maybe??? if not, so..was it already priced in by the analyst community?? and if yes, why are you still here and not retired after making few hundred millions in a month?
look, i have no interest whatsoever to argue, im busy with my own life, work and the rest ( im actually amazed at how much time you succeed to spend day and night overhere, business must be really going well, especially with all those firms queueing up for advice on how to take over ge at 4 dollars, goldman at 70 or apple at 100 ).

still i picked up this comment in another thread:


Also, very briefly. When do I switch? Why switch? You are either too stupid, too proud, or too wanting to sell sophistication on here, when the ONLY strategy you needed to have implemented ever since the Chairman embarked in his monetary madness is....BUY THE F@#@ING DIP.

this was you at the end of june and at the level of 1355 on the spx ( 20 trading days ago, and 100 market points ago ).
im not having a go, but did you buy the fkng dip? when? did it hurt, for once?

ps: and if you didnt and you re making money everyday, and you re the only person in the whole world who can ride the curve and be ahead of the herds, why the continuosly bitter tone? are you telling us everything or do we need to guess??
ok, i try for some advice: buy some cuban heels and the world of sudden will look much more friendly!!


jw.

pps im away to st tropez and tuscany from friday till 22nd, plse dont get offended if i dont reply regularly these days. have fun all.

FU Johnnie.
Away to St Trop and Tuscany.
Bloody liberty.
And so unfair.
I'm absolutely green.
Leave something behind for the rest of us, if and when we come later in the season.

i knew you wd like it..wouldnt have been the same if i said eastbourne and hastings, no?

where are you based? i make it somewhere like barbados. or central america anyway.

JW, it would serve you better if you took the time to construct a post in proper english, without running sentences, without seemingly never ending paragraphs and most of all with capitalizing the first letter after a period. Is that too much to ask for?

I'm prepared to accept that you are simply trading the headlines ("sentiment"), ignoring the rot underneath when you dig deeper. Although it seems in your case judging by the way you vehemently argued the case that the numbers/indicators are getting better, I think you actually bought into the lie. Following the herd can indeed be a profitable trade for while even as you are willingly accepting ignoring reality and trading on bulls@*t. For a while being the key words. Because sooner or later the stench reveals itself and all profits can be lost in a matter of a few days, sometimes in a matter of a few hours. There's no escaping gravity (economic fundamentals) no matter how hard the government and the central banks will try to convince the ignorant public that you can.

When the market reverses, other players (cough*banks*cough) have access to information you don't. Straight from the central banks because they are members of the money cartel and you are not. They react faster than anyone and by the time you clue in on what's really going on, the exits are blocked. You end up holding the bag, someone always has to be the sucker in the trade.

So feel free to continue doing what you are doing, just don't come one here parroting the day's main stream financial media propaganda and defend it as irrefutable truth when I try to reveal the rot underneath........and hurl some insults my way at the same time for good measure. Some of us like to apply some critical thinking to unfolding events around us, draw our own conclusions and trade accordingly. I sleep easy at night.