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The Data Right in Front of Your Eyes Exposes the Real Economy

On Friday morning my first glance at the CNBC app showed a headline reading to the effect: Market Mostly Unchanged Awaiting the Data. Once your eyes are opened you understand that this is a ridiculous idea.

Just the morning before, I had gotten two worrisome alerts:

  • Initial Jobless Claims Miss; Back Above 8-Month Average

  • Retail Sales Slide Across The Board, Post Biggest Miss Since June 2012

Initially, the Dow opened DOWN about 109 points and within what seemed like mere minutes the high-frequency trading algorithms had reversed the trend and in the end finished the trading day in the green again.

And so on Friday the latest most-important-awaited data point, the Industrial Production number was released, another disappointment, which in turn sent the market reeling ever higher yet again?

  • Industrial Production Plunges, Fed Blames Weather

Despite Utilities soaring 4.1%, the Federal Reserve “blames” the worst miss (and biggest drop) in Industrial Production since August 2012 on “severe weather” in some regions of the country. Capacity Utilization also tumbled – to its lowest since October. Numbers for November and December’s exuberance were revised lower in both series (that must be the weather effect being anticipated that weather would be bad in January!?!). There were 6 mentions of the word ‘weather’ in the report as any weakness in macro data is due to unforeseeable events (weather in Winter) but any surprising beat is due to solid fundamentals underlying the real economy.

Of course the plunge in Industrial Production would have nothing to do with the near-record levels of inventories in channel-stuffed over-laden mal-invested auto makers?…

• source: zerohedge.com

So, after reaching its top of 16,588 then eventually dropping over a thousand points due to the Fed’s announcement that it would ever-so-slightly (taper) tighten the free-easy-money spigot, the Plunge Protection Team has nearly retraced the losses, on most days with very low volume. The gains mostly coming after Yellen’s emphatic reassurance that the Fed would continue its QE (money-printing) and assure that interest rates continue to be suppressed to historic lows.

So you see, hopefully by now, that the Stock Market has nothing to do with economic fundamentals and has been on its meteoric rise due to the free-easy money created by the Fed (out of thin air), lent to the banks and hedge funds who in turn shuffle it into the markets, inflating asset prices, creating an illusion of recovery. (if you are gullible enough to fall for it)

You can take any charts, cyclical trends or other fundamental forecasting tools you may have been taught to believe in and flush them down the toilet. That is all they are worth in this centrally controlled and manipulated economy.

The extreme winter weather conditions have become the perfect scapegoat for the barrage of poor numbers that we have been seeing most recently. But is the weather really the cause or just a convenient excuse?

Real Data Tells The Real Story: Retail

This past holiday season was to provide the reassurance that the recovery (now 5 years old) was really picking up steam. Such was not the case and in reality it served more as confirmation of the exact opposite. With the initial reports of low foot traffic in the retailers, analysts dismissed that as a resulting side effect of online sales. While the weather may have kept consumers out of the malls how does one explain it negatively impacting online sales?

Retail Sales Slide Across The Board, Post Biggest Miss Since June 2012

Retail sales, which incidentally, just happen to be seasonally adjusted precisely to account for such shocking phenomena as snow in the winter:

  • Headline retail sales plunged -0.4% on expectations of a 0.0% print.
  • December headline retail sales were revised from 0.2% to -0.1%, which also means that the December data was in fact a miss of expectations of 0.1%, not a beat as was reported at the time, and also means retail sales have now missed three months in a row. We know, we know: the weather.
  • Retail sales ex autos were unchanged atg 0.0%, on expectations of 0.1%, with December also revised from a “beating” 0.7% to a miss of 0.3%
  • Retail sales ex autos and gas dropped -0.2%, on expectations of a 0.1% increase, with December revised far lower from 0.6% to 0.1%

In other words: yet another confirmation that the US consumer is tapped out thanks to draining his savings during the holiday season, and also hinting that the inevitable untaper is coming far sooner than expected.

• source: zerohedge.com

Retail Sales Point To Continuing “Struggle Through” Economy

This morning, the ICSC-Goldman Sachs weekly retail sales survey was released which showed a 50% decline in retail sales post the Christmas holiday.  This is not surprising, of course, as the rush to buy Christmas gifts is complete and consumers have a short respite before the credit card statement arrives.  However, while one week’s worth of data doesn’t tell us much, a look at the longer term trend is more revealing.

• source: STAWealthManagement

Americans Burned Through $46 Billion In Savings To Fund December Purchases: Savings Rate Lowest Since January 2013

If there was any confusion where the funding for what little shopping spree Americans engaged in during December, it should all go away now. While the street was expecting a 0.2% increase in both personal income and personal spending in the month of December, what it got instead was a flat print in income (i.e. unchanged from November) while spending (mostly for non-durable goods) spiked by 0.4% meaning there was a 0.4% funding hold that had to be filled somehow. That somehow we now know is personal savings, which tumbled from a revised 4.3% to 3.9% – the lowest since January 2013.

Finally, this data means that according to the BEA in December US consumers funded some $46 billion in spending through burning down their savings.

• source: zerohedge.com

Consumers Max Out Their Credit Cards In Month When Personal Savings Tumble

One week ago we remarked that in the month of December, in order to fund their purchases of Holiday gifts and year-end trinkets, Americans burned through a whopping $46 billion in personal savings.

Today, we got the credit side of the ledger with the December consumer credit report, in which we learned that in addition to the now traditional draw of Car and Student loans, which came out to $13.8 billion, or exactly in line with the 12 month average draw, sending the total notional to a record $2.24 trillion, it was revolving credit, i.e., credit cards, which saw a substantial $5 billion increase in outstandings.

So just as the US consumer was tapped out, and saw their personal income remain unchanged from November and real disposable income cratered, as a result having to draw down on their savings, the remainder of all purchases was funded through the use of credit cards, which may or may not be repaid in 2014.

• source: zerohedge.com

A ‘tsunami’ of store closings expected to hit retail

Published: Wednesday, 22 Jan 2014 | 12:58 PM ET CNBC.com

Get ready for the next era in retail—one that will be characterized by far fewer shops and smaller stores.

On Tuesday, Sears said that it will shutter its flagship store in downtown Chicago in April. It’s the latest of about 300 store closures in the U.S. that Sears has made since 2010. The news follows announcements earlier this month of multiple store closings from major department stores J.C. Penney and Macy’s.

Further signs of cuts in the industry came Wednesday, when Target said that it will eliminate 475 jobs worldwide, including some at its Minnesota headquarters, and not fill 700 empty positions.

Experts said these headlines are only the tip of the iceberg for the industry, which is set to undergo a multiyear period of shuttering stores and trimming square footage.

Shoppers will likely see an average decrease in overall retail square footage of between one-third and one-half within the next five to 10 years, as a shift to e-commerce brings with it fewer mall visits and a lesser need to keep inventory stocked in-store, said Michael Burden, a principal with Excess Space Retail Services.

In addition to J.C. Penney—which announced last week that it will close 33 stores—there are about a dozen retailers that still have too many stores, Sozzi said. Among them: American Eagle, which needs to move some of its aerie lingerie locations into its main stores; Aéropostale, which is on track to close 175 stores over the next few years; and Wal-Mart, which has about 100 stores in the U.S. producing same-store sales declines deeper than 3 percent, Sozzi said.

• source: CNBC.com

The US Consumer Is So Strong, Macy’s Just Fired 2500 And Announced The Closure Of Five Stores

Just out from Macy’s, which first said the following: “The 2013 holiday season was successful for Macy’s and Bloomingdale’s as we offered fresh and distinctive merchandise, delivered great value to the customer and provided a robust omnichannel shopping experience…

“outlining cost reduction initiatives to support continued profitable sales growth”: “Approximately 2,500 employees are expected to be laid off and are eligible for severance as a result of these organizational changes. Other associates are being reassigned with new duties or transferred; some open positions will not be filled.”

• source: zerohedge.com

The Blistering Recovery Continues: Week After Macy’s, JCPenney Fires 2000, Closes 33 Stores

JCPenney reported today that the Company is pleased with its performance for the holiday period“, turns out was merely joking and just echoed the Macy’s sentiment, announcing the termination of some 2,000 jobs and the closure of 33 stores.

• source: zerohedge.com

Radioshack Celebrates One Year Anniversary Of Closing 500 Stores By Closing 500 More

If it seems like it was exactly a year ago that turmoiling retailer Radioshack shut down 500 stores due to lack of consumer interest in its wares (and or consumer disposable cash), it is because it was. (see:Retailers that will close the most stores-USA Today-02.03.2013)

So how does Radioshack demonstrate its morbid sense of humor on the one year anniversary of said announcement? Well, by closing another 500, or about 12% of the retailer’s total 4500 outlets currently in existence.

While the ultimate fate of Radioshack is quite clear to most, a far more important topic is what happens to all the commercial real estate secuiritizations and/or malls that currently have a RSH location which is about to shutter. Then again, this is the new normal, and things such a fundamentals and cash flows are merely an irrelevant footnote.

• source: zerohedge.com

Dead Mall Syndrome: The Self-Reinforcing Death Spiral of Retail

The decay of the “build it and they will come” model of commercial real estate is gathering speed for a simple systemic reason: the decline is self-reinforcing in several critical ways.

The primary point here is that CRE is highly leveraged and loaded with staggering amounts of debt that rests on leases that are only as good as the retailers’ profit-loss statements and solvency.

Once the wheels fall off this model of “growth,” chains will enter a cycle of closing marginal stores to boost profits. That will place additional pressure on retail properties as once-reliable chain tenants exit marginal properties en masse.

• source: OfTwoMinds.com

The Retail Death Rattle

Summed up in a brilliant piece by Jim Quinn of The Burning Platform blog

November and December retail sales account for 20% to 40% of annual retail sales for most retailers. The number of visits to retail stores has plummeted by 50% since 2010. Please note this was during a supposed economic recovery.

 Even the heavyweights like Wal-Mart and Target continue to report negative comp store sales. How can the government and mainstream media be reporting an economic recovery when the industry that accounts for 70% of GDP is in free fall? The answer is that 99% of America has not had an economic recovery. Only Bernanke’s 1% owner class have benefited from his QE/ZIRP induced stock market levitation.

The entire economic recovery storyline is a sham built upon easy money funneled by the Fed to the Too Big To Trust Wall Street banks so they can use their HFT supercomputers to drive the stock market higher, buy up the millions of homes they foreclosed upon to artificially drive up home prices, and generate profits through rigging commodity, currency, and bond markets, while reducing loan loss reserves because they are free to value their toxic assets at anything they please – compliments of the spineless nerds at the FASB.

GDP has been artificially propped up by the Federal government through the magic of EBT cards, SSDI for the depressed and downtrodden, never ending extensions of unemployment benefits, billions in student loans to University of Phoenix prodigies, and subprime auto loans to deadbeats from the Government Motors financing arm – Ally Financial (85% owned by you the taxpayer). The country is being kept afloat on an ocean of debt and delusional belief in the power of central bankers to steer this ship through a sea of icebergs just below the surface.

The absolute collapse in retail visitor counts is the warning siren that this country is about to collide with the reality Americans have run out of time, money, jobs, and illusions.

The laughable jobs recovery touted by Obama, his sycophantic minions, paid off economist shills, and the discredited corporate legacy media can be viewed appropriately in the following two charts, that reveal the false storyline being peddled to the techno-narcissistic iGadget distracted masses. (see source)

There are 247 million working age Americans between the ages of 18 and 64. Only 145 million of these people are employed.

The labor participation rate is the lowest it has been since women entered the workforce in large numbers during the 1980′s. We are back to levels seen during the booming Carter years. Those peddling the drivel about retiring Baby Boomers causing the decline in the labor participation rate are either math challenged or willfully ignorant because they are being paid to be so.

• source: theBurningPlatform

Wal-Mart sees lower Q4 earnings, blames weather, food stamp cuts

Discount retail giant Wal-Mart added to Wall Street’s gloom on Friday, slicing fourth quarter guidance from its original estimate as it blamed a litany of negative factors for the lowered expectations.

The retailer faulted the federal government’s reduction in food stamps—significant because most of its clients are lower income buyers—and the extreme cold weather as damaging its results. Additionally, it blamed store closings in Brazil, China and India.

• source: CNBC.com

Record 20% of Households on Food Stamps in 2013

The numbers also show there was a record number of individuals on food stamps in 2013 and that the cost of the program, the Supplemental Nutrition Assistance Program (SNAP), was at an all-time high.

In fiscal year 2009 – Oct. 1, 2008 through Sept. 30, 2009 — the number of households on food stamps was 15,232,115. Five years later, in 2013, that amount had increased by 51.3%  to reach 23,052,388 households.

That number has dramatically increased from five years ago. In fiscal year 2009, the number of individuals participating in the food stamp program was 33,489,975. In 2013, the number was 47,636,084, an increase of 42.2%.

• source: cnsnews.com

Food stamp use among troops skyrockets during Obama admin

Food stamp redemption at military grocery stores, or commissaries, has nearly doubled since the beginning of the “Great Recession,” topping out at $103.6 million in fiscal 2013, from $31.1 million in 2008.

Some of the growth in soldiers’ redemption of food stamps reflects the weak economic recovery, especially for spouses looking for jobs. In 2012, there was a 30% unemployment rate among spouses off active-duty military who were 18 to 24 years old.

Base pay for a new soldier with a spouse and kid is around $20,000, just above the poverty line. Although that doesn’t include housing or food allowances.

• source: money.cnn.com

Real Data Tells The Real Story: Auto Sales

After retail sales, recovery hopes would be pinned on auto sales. Through the end of the year the pundits were boasting big increases. Automakers were pulling out all the stops: loan terms up to 8 years, sign and drive leases for those without a penny to put down, even going so far as to offer sub-prime loans. Yes you heard that correctly, the same 100% no-documentation financing that brought down the mortgage industry only five years ago.

As it turns out the sales that they were counting were in large part sales from the manufacturer to the dealers who would hold the inventory until the consumer came out to buy. This practice is known as Channel-Stuffing”.

Ford, GM Car Sales Tumble: Weather Blamed As Usual

Ford and GM January car sales which tumbled by 7.5% and 12% respectively, on expectations for a decline of only 2.3% and 2.5% for the two US carmakers. And confirming that automaker executives continue the trend we have seen with all other sellers of goods and services, namely that when it is snowing in the winter, nobody buys anything, it was all the weather’s fault.

•source: zerohedge.com

GM Channel Stuffing Second Highest Ever In January

one thing is clear: there was a big drop in auto demand which was to be expected from an overextended consumer whose plight we have been following for years. However, where GM did surprise, is that despite its apparent realization of climatic conditions, the company decided to plough through with abnormal production levels and flooded its dealer network with inventory. So much inventory, in fact, that in January, GM’s channel stuffing pipeline rose by another 42K cars (a quarter of total sales in January), increasing the stock of cars parked at dealer lots and collecting dust to 780K from 748K in December, the second highest ever!

• source: zerohedge.com

Channel-Stuffed US Car Dealers Cut Prices; Hope To “Sell Their Way Out Of This”

Much of the recovery in auto sales has been a massive channel-stuffing make-work program (mal-investment once again triggered by ‘false’ signals created by Fed intervention). Now, as the WSJ reports, Detroit’s big 3 are trying to sweeten discounts to clear a massive inventory of unsold vehicles from dealer lots (desparate not to start a profit-killing price war). “We believe we can sell our way out,” said GM, but as Morgan Stanley warns, “the best of the U.S. auto replacement cycle is over.” Good luck…

• source: zerohedge.com

Real Data Tells The Real Story: Housing

Existing Home Sales Miss 4th Month In A Row; Lowest Since October 2012

NAR chose to blame the weather in keeping with the rest of the nation as it cited “cold” in the Northeast and Midwest for the 4th miss on existing home sales in a row and the lowest level of sales since October 2012.

What is ironic is that while the always independent NAR proclaims weather to blame for the miss, it crows that December sales were the strongest for a December in 7 years. The median home price rose 9.9% Year-over-year (so half that of China’s). NAR sums it up: “we lost some momentum toward the end of 2013 from disappointing job growth and limited inventory…”

• source: zerohedge.com

Pending Home Sales See Biggest Collapse Since May 2010: Weather, Affordability Blamed

Pending Home Sales collapsed 8.7% month-over-month – the worst since May 2010 – missing by the most in over 3 years. This is a 6.1% drop YoY.

NAR’s Larry Yun notes “unusually disruptive weather” prevented buyers from looking. However, he goes on to add that “Home prices rising faster than income is also giving pause to some potential buyers.” This unusually honest line from the realtor mouthpiece is notable.

• source: zerohedge.com

Mortgage Applications Drop – Hover Near 19 Year Lows

Despite being told by Bullard, Yellen (and numerous other Federal Reserve thinkers) that quantitative easing was aimed at improving the housing market, the data suggests that – somewhat predictably – it did very little for mom-and-pop organic real home-buyer but stoked speculation and fervor among fast-money cheap-funding investors.

Mortgage applications for home purchases have basically flatlined since the Fed began QE and hover now just above their lowest levels since 1995…

MortgageApps.02.19.2014

chart: Bloomberg

• source: zerohedge.com

Pending homes plunge, surprising economists

Signed contracts to buy existing homes dropped 8.7 percent in December as abnormally cold weather hit much of the U.S., according to a new report from the National Association of Realtors.

The plunge caught economists by surprise. Economists polled by Reuters had forecast pending home sales would tick up 0.3 percent.

This pending home sales index fell to 92.4 from a downwardly revised 101.2 in November. These signed contracts are an indicator of sales in January and February, and are at the lowest level since October 2011.

All four major regions in the U.S. saw declines.

• source: CNBC.com

Homebuilder Confidence Crashes By Most On Record

For the 3rd time in the last 20 years, homebuilder sentiment got way ahead of reality… and as the February NAHB data shows, reality is starting to catch up to them. The NAHB sentiment index crashed by its most on record in Feb, missed expectations by its most on record, and fell back below the crucial 50-level, as it starts to play cyclical catch-down to home sales and mortgage apps.

• source: zerohedge.com

Real Data Tells The Real Story: Macro Indicators

Baltic Dry Index Crashes 18% In 2 Days

Baltic Dry Continues Collapse – Worst Slide Since Financial Crisis

Baltic Dry Index Collapses 50% From December Highs To 5-Month Lows

Factory Orders Drop Most In 5 Months, Inventories Rise Fastest Since June

Empire Manufacturing Misses; Plunges Most In 18 Months

So in summation we can see that there is a real disconnect between the reality of our economic situation and that which is presented to us through the mainstream media and believed by the masses. We are being programmed on a daily basis that we are in a economic recovery among other illusions, but let’s just stick to that one for now. All bad data is explained away by the talking heads as they divert our attention to the ever-rising stock market as a sign of good times!

This monetary mis-allocation, distortion and outright deception and fraud is going to have very grave consequences. It is important to be diligent in seeking the truth and preparing one’s self and one’s family to weather the coming storm.

One chart that will make you take pause before flushing is the following overlay of our current distorted monetary policies over that of the roaring 20’s. Take a look and let me know your thoughts.

Dow.1929-pres

“The ‘Recovery’ Is A Mirage” Mark Spitznagel Warns, “With As Much Monetary Distortion As In 1929”

Spitznagel: The somewhat improved economic activity that we’re seeing is based on a mirage—that is, the illusion created by artificial zero-interest rates.

•source: zerohedge.com

Step-1: Notice the Rabbit Hole, look inside and notice that things are not what they appear to be……

Please share this, pass it along, comment and start a conversation.

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