Zero Hedge ran a post today about the fact that subscribers can pay for a 3 minute advance look at the Chicago PMI before it is released to the “general public”. The Chicago PMI “indicates how vibrant regional manufacturing activity is. An index value of 50 or higher indicates increasing busi-ness activity; below that indicates decreasing activity”. Today the PMI for September came in at 46.1 which was below the estimate of 52. The market tanked exactly 3 minutes before the PMI number was released to the general public.  Bespoke Investments says it all:

While there appears to be nothing illegal taking place, it does provide another example of how the market is stacked against the individual investor.

Chicago PMI

While it is true that there is nothing currently illegal taking place —–it should be made illegal. Imagine if a company CEO said he was going to sell subscribers to his newsletter a 3 minute advance look at his company’s sales, orders or earnings? Yet the firm that compiles the Chicago PMI (Kingsbury International) gets to sell market moving information in advance to a select few well heeled folks…  The SEC will probably start it’s own advance-look-at-information vending arm soon…like the NYSE has already done.  It’s a hell of a set-up the crooks have built for themselves.

CNBC’s Dennis Kneale declared the recession to be over…

then lambasted “cowardly anonymous bloggers” for jeering his declaration:

Karl Denninger, a not-so-anonymous blogger, calls Dennis an idiot, then:

OK, now on to the facts – your idiotic and utterly unsupportable “the recession is over” call.

There are two types of recessions, if you happen to know more about economics than you knew about options a year ago, when you were caught asking on the air “what’s the VIX?”

The types of recessions are inventory driven recessions, the most common, and credit driven recessions.

The last material credit driven recession was in the 1930s.  We called it the “The Great Depression.”

Recessions cannot end until the conditions that caused the recession are removed from the economy.  This is elementary logic and obvious to anyone with an IQ larger than their shoe size.

This is not about what I believe Dennis, this is about mathematical facts.  Real GDP has taken a 4.83% contraction already from consumers alone – now add into this the pass-through effects on manufacturing and service output from unemployment and the numbers are even worse.  It matters not what the government cooks up – what matters is what people actually do.

Finally, on your so-called “Golden Cross”; for it to be valid the 200MA and 50MA must be rising.  The 200MA is falling; ergo, it is a false signal.  Go look at some charts; this indicator is no better than a coin toss if the second condition, which you conveniently omitted, is absent.  Better yet, talk to a market technician that knows his butt from a hole in the ground.  I do a nightly technical video available on my forum and pointed this out several days ago.

We reckon the “debate” between government-subsidized CNBC and the “cowardly bloggers” will continue for some time, but we wonder how long the recession has to continue before CNBC must admit that it was wrong and throw poor Dennis under the bus…If we still have over 10% unemployment this time next year, can the recession still be spun as “over”… as of… now?  The clock is ticking.

Zero Hedge is skeptical of the BLS unemployment release, highlighting the seasonal adjustments made and the temporary hiring of census workers:

“I will bet one double Quarter Pounder with cheese and bacon that next month, the revisions of the April numbers will be on the order of an additional 85,000 unemployed. My guess is that, discounting the Census Bureau hirings, April saw 680,000 newly unemployed workers.’

Econompicdata generally concurs with Zero Hedge’s assessment.

WSJ reports that “people familiar with the matter” are suggesting Citigroup may need to raise as much as $10 billion in new capital:

“The bank, like many others, is negotiating with the Federal Reserve and may need less if regulators accept the bank’s arguments about its financial health, these people said.  In a best-case scenario, Citigroup could wind up having a roughly $500 million cushion above what the government is requiring.”

What -that’s all?  This report has been picked up by every major news supplier in the world. Just Google the terms “Citigroup may need $10B more capital” to see all the links…  Swamp Report believes this is another intentional leak by the government to prepare the market for the stress test results.  “In a best case scenario”… Ha!   Citgroup’s wants us to believe they are fighting tooth and nail to keep from having to raise a lousy $10B.  “Only please, please, please, Brer Fox, please don’t throw me into that briar patch.” The government’s approach seems to be  reverse psychology: seed the idea that if $10B is all Citigroup needs then the CNBC cheerleaders are right – the banking problems are behind us.  The government is really into manipulating by signaling.  The AP dutifully reports and translates the government’s “signals”:

“Last week, Fed officials said all 19 banks that underwent the stress tests will need to keep extra capital on hand beyond what’s now required in case losses on loans and other assets continue to climb. That was a signal some banks would have to raise more cash. Initial results indicated that both Citigroup and Bank of America Corp. would be among that group, sources told The Associated Press earlier this week.”

Zero Hedge is a little impatient with the whole thing:

“Why should Chrysler creditors be forced to suffer and be scapegoated in front of the entire world, while we don’t know who one single large creditor of a Citi or of BofA is? …. but we can speculate…Hey Obama/Tim – how about some bank creditors suffer a loss here and there too in your witch hunt against “all those self-serving Wall Streeters.” Does it maybe have to do with the fact that these are not really Wall Streets at all but the very same gullible fools who are supposed to lap up the $1 trillion + in USTs you will be shovel feeding over the next year… yes, the same investors who still have their investment in Freddie and Fannie marked at par compliments of Uncle Sam and Joe Taxpayer.  All is good though: CNBC just announced that all is priced in, and that no bad news can ever move the market lower as everything negative has been factored in every single stock price in perpetuity and then some.”

$10B is a pittance, agreed. But is it enough to cover Citigroups losses over the next 2 years? – not even a remote chance.

Last week DOL reported the advance figure for seasonally adjusted initial claims was 610,000, a decrease of 53,000 from the previous week’s revised figure of 663,000. Yesterday, Zero Hedge posted a report by Structural Logic which anticipates another decline:


Last week, Swamp Report posted our own analysis of Easter week unemployment claims and found that the next week normally had a 50% move in the other direction. In other words, the results would indicate that unemployment claims to be announced tomorrow would reflect an increase of around 70,000.  We’ll see tomorrow…

Zero Hedge has a great post out on the recent low volume movements in the S&P.  It occured to us that maybe all the bears are celebrating Passover, while what few bulls remain are hiding Easter eggs, (or is that goose eggs? ) that will be found later, after they ferment a while.

Hat tip to Zero Hedge.

New York, March 19, 2009 — Commercial real estate prices as measured by Moody’s/REAL Commercial Property Price Indices (CPPI) decreased in January by 5.5% from the previous month. The January decline was the largest in the history of the index, which has followed commercial real estate prices since December 2000.

Prices are now down 19.1% from a year ago and 15.4% lower than they were two years ago. They have declined 21.0% from their peak in October 2007. Prices have nominally returned to the levels they were in the spring of 2005, says Moody’s.