Economic Reports Fall Hair-Raisingly Below Expectations...QE3 Expectations Go Up A Notch

Not that those of us who know The Truth should be surprised by this, but the consensus forecast on several economic indicators released today were substantially below the highly compensated Wall Street "Einstein" consensus forecasts.  Just what kind of fairy-tale is Wall Street/Obama pedalling these days?  I guess the reason they can promote their fiction is because most of the country passively enables - or wants to believe in - this world of make-believe.

Let me jump in here with links to the news reports - I don't think it requires too much commentary other than the theme that our economy is tanking hard continues to get further support.  What I don't understand is why the highly-paid geniuses on Wall Street with access to better than I continually fail in their forecasts, as do Bernanke and Obama.

"Existing home sales fall unexpectedly in April" - This one should have been a no-brainer to forecast.  What makes the data even worse is that plunging home sales are occurring while interest inch lower, credit standards are loosening up, the Government continues to subsidize credit risk via FNM/FRE/the Fed AND we are in what should be a seasonally strong period.  Here's the LINK

"Philly Fed sinks to 3.9 in May" - Wall Street was expecting a robust reading of 23.  Clearly, for whatever excuse the experts want to attribute, the manufacturing sector is tanking.  Here's the LINK

"April leading economic indicators fall .3%" - Wall St. was expecting no change from the previous month.  To make the case for housing even worse, one of the positive readings for this metric was interest rate spread, which means lower rates should be stimulating housing, but they're not.  Typically there is a high correlation between this index and the direction of the economy and the S&P 500.  Here's the LINK

Japan Q1 GDP reading MUCH worse than expected - down 5.2% annualized when you remove the deflator (i.e. actual output net of price increases) - This was substantially worse than any of the stock and economy promoters were expecting.  This is actually horrifying.  To be sure, there is a large effect from the nuclear disaster, but many on Wall Street actually thought the "rebuild" from that would promote growth LOL.  Here's a LINK to the details, with just straight reporting and no spin.

Government being called on to monetize Postal Service Retirement Benefits.  Does anyone REALLY think that the $2 trillion debt ceiling raise will be the last?  Does any REALLY believe that our Government will turn trillion-dollar deficits into a manageable budget?  REALLY?  Here's an instance in which the taxpayer will called-upon to pay for even MORE entitlements - the numbers in here are horriflyingly large:  LINK

Regardless of what caused the plummet in Japan's economic acitivity, there will be a large "ripple" effect globally, especially one that reverberates here and in China. There may ultimately, eventually be a small "snap-back" effect, but I doubt that will be anytime soon because the large part of economic demand in the major economies has been derived from massive monetary stimulus - the stimulus that policy-makers say they will no longer continue.  Of course, politicians like to keep their jobs - even Bernanke.  So I believe that not only will we see a continued increase in QE and deficit spending in this country, but the problems in Europe in and Japan make it a rock-solid bet that we will see more QE in those economies as well. 

The interesting question for me is, if the Japanese Central Bank has to divert funds away from supporting our Treasury auctions in order to support its own economic survival, who will start funding the inevitable $2 trillion increase in debt-spending in this country?  LOL - that's strictly a rhetorical question, of course.

As for the action in the metals markets.  The net long position in silver of the "large spec" (hedge fund momentum player) category is now at its lowest since February 2010.  I actually thought it would take a hit into the high $20's to see that occurrence.  What it tells me is that we are likely near a bottom in the silver market correction.  Here's excellent commentary on the condition of the physical silver market as reflected in the market for 1 oz. sovereign-minted coins LINK  There is no question that the supply of silver is getting tighter by the day, not only here but globally.  The commentor also gives a great explanation for why we are not even close to a "bubble" in this sector.

In terms of the market-action in silver futures, the bleed-off in open interest in Comex silver has been stunning.  The last time the silver o/i was at this low of level, the price of silver was $28.61 on Jan 31 this year.   The Comex inventory is now down to just 100mm ozs after a big withdrawal out of the "eligible" category last night (to review, the "eligible" category represents investors who are "safekeeping" their silver at a Comex depository).  From a trading perspective, although silver is still quite volatile hour-to-hour, it seems like the "trampoline mat" on the downside is giving a lot more resistance.  In other words, every sell-attack seems to be met with more buying and the price "snaps-back" a lot more quickly than in the past two weeks.  And finally, just to test things anecdotally, I stuck a roll of silver eagles for sale on craigslist.  I was shocked by the number of emails I received looking to buy my roll.  That tells me that more and more people are looking to buy on any price weakness, as opposed the past - when prices would plunge like they have and all the buyers would scatter.

My point is that I think the metals market may recover and move higher a lot more quickly than after previous price-smashing Comex open-interest liquidations AND the availability of physical silver at these prices is wearing thin.