Tuesday, March 20, 2012

Throwing Cold Water On The Hot Air Coming From DC (Oval Office/Fed)

We've heard Obama and his handlers, plus the majority of Fed officials, issue statements recently which state the economy is recovering, employment is recovering, housing is recovering, etc.  And they offer the highly manipulated Government and industry-council generated data as evidence.  Note that it is now becoming widely acknowledged and accepted - even by some mainstream media promoters - that the Government data is not credible.

Let's look at today's housing starts data for February, released by the Department of Commerce:  LINK.  The headlines that stream across mention that February's numbers were down slightly from 3-yr highs last month.  What they don't mention are that the numbers reported are "seasonally adjusted annualized" numbers.  In other words, the numbers are statistically manipulated using a formula that is a highly guarded secret and then the numbers are projected forward for the year, or "annualized."  The numbers are as fictitious as the Easter Bunny. 

Now let's look at the "not seasonally adjusted" one month data for the month of February.  And note that these numbers are "preliminary."  Last month's one-month not seasonally adjusted  "preliminaries" were revised lower.  On a preliminary basis for February, only 48k homes were started, and only 31k of these were single-family homes.  Even more interestingly, only 28.6k single-family homes were completed.  This data diverges significantly from the headline-reported 698,000 annualized starts that is being reported everywhere, doesn't it?

Considering that the Government via FHA is promoting 3% down payment mortgages to buy a home, these housing start numbers suck.  I just heard the ad on the radio yesterday by a mortgage broker promoting the program on the local sports radio show.

Let's step away from the murky cesspool of Government-reported data and I'll relate a reality report from a friend of mine who works just below the CFO at a Fortune 200 company that provides component parts and services to original equipment manufacturers globally.  About 70% of its sales are derived domestically.  My friend told me about five months ago that their business in China had slowed down considerably.  Shortly after that, China's economic slowdown was being widely reported.  Two days ago when I saw him, he told me that their U.S. book of business was "dead."  For the record, I do not trade in the stock of this company and have no interest in doing so.  My point is to illustrate that the true state of the economy in this country, despite Obama/Bernanke assurances to the contrary, is dismal.  The reason he and I talk about this stuff rather than discussing John Isner beating Djokovich last weekend is that he understands that there is a big disconnect between what gets reported in the general media and what is really going on organically in the system.

Goldman Sachs agrees with me on this and bear in mind that they are going off of the publicly reported headline data, not the actual data that you have to sift through in order to dig up:  LINK  The truth of the matter is that the economy never really did show true, real-inflation-adjusted growth after the financial collapse in 2008.  And the Fed is going to have to roll out another big QE program at some point in the next few months or risk Obama's Presidency, which is something I'm sure Bernanke cares about a lot more than whether or not all the unemployed who are not considered part of the labor force can feed their families...


  1. the Hulbert Gold Newsletter Sentiment Index is at -15.7% -- almost
    back to the 2008 lows

    Robert Mish has been a precious metals dealer for nearly 50 years and
    knows what gold bubble mania looks like. We are nowhere near that
    stage, in his opinion.

    Instead, he sees a US populace largely unappreciative of holding
    precious metal as a store of wealth, and engaged in a slow process of
    dis-hording their gold and silver to eager foreign buyers, who are
    more than happy to take the bullion back to their shores.

    In terms of where we are on the gold mania spectrum, he sees us at a
    "2" out of 10.


    the coins are going overseas...

  2. To Anon #1, my coins are staying right here in the US... all my pretty Eagles, and Buffalos, and the five-9's Maples, and the odd Panda, and the Silver 1K Lunar Dragon too... all staying at the bottom of the lake right where I accidently dropped them.

    Oh, and Dave... Fuck you for ruining the whole Easter bunny thing for me.

  3. Dave! No! Don't you get it! Ben is HERO! Look, it says right here on this magazine! You've got it all wrong! Get behind your government, your politicians, your central planners, your DJIA! Sell that useless metal! All is well!!!!!!!


    I saw this today while in the checkout line at the grocery store. Almost went apeshit and beating the clerk over the head with a sweet potato due to the uncontrollable rage! Bernanake. Hero. OMG, kill me fucking NOW!