Deaf, Dumb, And Blind

While nothing will stop Wall Street’s sales force and CNBC shills from hyping the lie that the worst is past, we think you’d have to be a fool to bet on it.
-Rick Ackerman


Consumer borrowing unexpectedly surges in March
WASHINGTON (AP) -- Consumer borrowing rose in March at the fastest pace in four months, more than double the increase of the previous month, in what was seen as a sign of rising economic stress.


The Federal Reserve reported Wednesday that consumers increased their borrowing at an annual rate of 7.2 percent, compared with a 3.1 percent rate of increase in February.

The gain was much larger than economists had been expecting and reflected strong borrowing on credit cards and also in the category that includes auto loans. The increase in consumer debt totaled $15.3 billion at an annual rate in March, much bigger than the $6 billion increase that economists had been expecting.


Economists said consumers were being forced to make greater use of their credit cards during hard economic times when they are being battered by job losses, soaring gasoline prices and higher food costs.

"This represents distressed borrowing. Consumers need cash and they have turned back to their credit cards to fill the void left by lost jobs and weaker incomes," said Mark Zandi, chief economist at Moody's Economy.com.
http://biz.yahoo.com/ap/080507/consumer_credit.html

Retailers report mixed results in April
NEW YORK (AP) — Consumers gave some of the nation's retailers a little relief in April after months of dismal sales, but business was helped by heavy discounting that could hurt first-quarter earnings.


Sales reports issued early Thursday showed that shoppers — who are contending with rising gas prices, sagging home and worries about their jobs — bought the basics at discounters and wholesale clubs. That made Wal-Mart Stores Inc. and Costco Wholesale Corp. among the top performers. Most mall-based apparel stores, whose merchandise falls into the category of discretionary items, struggled.

Analysts expect only a modest uptick in sales in May and June as consumers spend tax rebate checks that are starting to arrive.
http://ap.google.com/article/ALeqM5iUDvPEJ3EGEZ-t-4PjFke9ELUiuQD90HEO6O0


I don't know how truly "unexpected" the rise in Consumer Debt was in March, but unexpected or not, Americans were paying with plastic in March at an alarming rate. Any "strength" in retail sales in April were most likely bought and unpaid for with even more plastic. It is interesting to note that consumers are literally being forced to reign in "discretionary spending" at the rising expense of necessities. Heck, for all we know, consumers were spending their "tax rebate checks" before they even got them, with the plan to pay for the goods next month...by making the minimum payment on their credit card balance, of course. "Economic growth" bought and unpaid for is doomed to horrific failure.

It is a fact that 1st Qtr GDP numbers were goosed by high inventories. Retailers have been forced to deep discount their merchandise just to create some cash flow. Expect retail earnings in the 2nd Qtr to be absolutely abysmal. The general equity indexes were up again today in the face of mounting bad economic data. Scratching my head has yielded few answers about the obvious levitating act.

Stocks rise modestly even as oil extends record high run
NEW YORK (AP) -- Wall Street closed a quiet session with a moderate advance Thursday, with energy and other commodities companies leading the market as oil prices extended their record-breaking run.

The price of crude oil swept past $124 a barrel in late New York Mercantile Exchange trading, while gasoline rose to a new record of its own at the pump, climbing to a national average of nearly $3.65 a gallon.

Although the rising price of oil ignited concerns about inflation on Wednesday, knocking the Dow Jones industrial average down more than 200 points, stocks managed to hold on to their gains even as oil rose Thursday. Some of the big gainers were the companies that would benefit the most from higher commodities prices -- the oil companies and metals producers like Alcoa Inc. -- and they helped lift the major indexes.

Financial stocks were the worst performers of the day. Philip S. Dow, managing director of equity strategy at RBC Dain Rauscher in Minneapolis, said investors likely are still jittery over the sector, with continued concern about whether the companies have problems on their books beyond subprime mortgages. "Our guess is that the worst is not over for the financials on a fundamentals basis," he said.
http://biz.yahoo.com/ap/080508/wall_street.html

The "worst is not over for the financials"? What a shocking revelation. Even more shocking is the "news" that the Market Indexes were led higher by resource companies. If you ever need proof that Market Indexes like the Dow are misleading as to the "strength" in the markets, today is that proof.

On another note regarding market indexes. Would somebody please explain to me how the Dow Jones Transportation Average can rise when Oil prices are rising by leaps and bounds. Honestly, it escapes all reason. There's "irrational" market behavior, and then there's insane market behavior. How can the stocks of transportation companies be rising when their costs are rising at rates that could potentially bankrupt a number of them.

On March 20, 2008, the price of Oil settled at an interim low of $98.65. Today Oil rose to an intraday high, and new record, of $124.39. Oil prices have risen 26% since March 20. TWENTY-SIX PERCENT! It would be reasonable, if not rational to expect that Transportation Stocks would be in a death spiral about now. But not in America, where stocks are guaranteed to go up, up, up by the mysterious man, and his mischievous money machinations behind the curtain.

On March 10,2008 the Dow Jones Transportation Average hit an interim low of 4399. Today the Dow Jones Transportation Average closed at 5225, 222 points below it's 52 week high. The Dow Transports have risen 18.7% while Oil has risen 26%. How? If I knew I'd be a very wealthy man.

Here's some research that is even more shocking and confounding. On May 10, 2007 Oil was at $63.96. That same day in 2007, the Dow Transports were at 5122. The math is simple. Oil was $60.73 cheaper than it is today, or 95% cheaper. [Holy Crap!] The Dow Transports were ONLY 103 points lower than it is today. The price of Oil has come within 5% of doubling in the past 365 days, and transportation stocks are down ONLY 2%!? Hey, I'm not making this up.

Folks, Goldilocks is living in LaLa Land and a Category 5 Financial Hurricane is sitting just off shore. The government is so broke they have been forced to shut down the coastal radar and layoff all their meteorologists. Wall Street is Deaf, Dumb, and Blind to the destruction that lies just days away imo. Goldilocks economy my ass. This economy reminds me more of the Three Little Pigs and the Big Bad Wolf. And we all know what happens to Pigs on Wall Street. They get slaughtered...