Is the Obama administration continually lying with their economic statistics or are they just incompetent or stupid?

Is the Obama administration continually lying with their economic statistics or are they just incompetent or stupid?

Suppose a company you invested in reported earnings were up every quarter by 10%. But then at the end of the year you noticed that since last year it was only up 10%? Wouldn't you be suspicious as to why it wasn't up at least 40% for the year? How come it did not go up 10% compounded four times or 46.41%? Would you look more carefully at their data?
Oh! Now you notice that in the last month of each quarter they restated (corrected) the earnings. They quietly announce they had no increase last quarter but they loudly predicted earnings would be higher by at least 10% at the end of the present quarter. Your stock doesn't go down it goes up again because the 10% expected increase is good news again.
But you look and see that they do the same thing over and over again. They give four optimistic forecasts and four excellent earnings increases each year but nothing is really getting any better. Wouldn't you realize then that the management was either deceiving investors or was incompetent? It has to be one or the other because errors occur randomly not almost always in one convenient direction. That is the game Obama's people are playing with the US economic statistics over and over again. The Soviet Union always lied that way until it collapsed. And GE/MSNBC/Pravda and Jim Cramer are also either stupid or just going along with the economic and corporate lies. That is why we always like to look at what the revisions do to the announced data and report that as well.



The oil leak could be an economic disaster for the gulf coast and up the Mississippi River as well because boats entering the Mississippi will need to be cleaned first.

The European debt crisis is not an inflationary crisis because Greece and Portugal are anchored to the Euro. It is a deflationary or depression type crisis that is why gold and commodities have been generally falling. But yesterday the short 8% plunge in the US stock markets unleashed gold buying and the buying extended a bit into silver as well and other precious metals. That was the result of fear that all currencies could be in danger


World Markets:

It is very likely that Chinese capitalism will fail this year as miserably as Russian capitalism failed in the last decade. However, they may become less communist and similar to the way Russia is today with a much reduced growth rate but still much better than under communism. Then it will again be time for Americans to invest in China.

As we have been saying:
Beware now of emerging countries and their stocks and bonds. Chinese corporations are beginning to default en-masse on foreigners. The communists can be expected to sting American investors in a professional manner that will cause investment losses two to three times more than their indices indicate. In other words GE/MSNBC/Pravda will once again lie to investors and the pain investors feel will be at least twice what the media reports. Out of the huge investment losses a Chinese tier stock structure will likely evolve with the main indices likely to survive as the Dow's of China while up to 30% of the Chinese firms (mostly over capitalized) can be expected to fail.

Also there are many emerging nations in far worse financial trouble than Greece that are still selling low yield bonds to Americans. When the Russian bubble broke in the 90's and they defaulted, it brought down many hedge funds. So beware because China could eventually default. In fact, considering that they are communist we can expect them to default the moment they have extracted what they want from us.

Economic Calendar
Earlier this week
Consumer Income & Spending: Personal income in March rose 0.3 percent, but consumer spending rose by 0.6 percent. With the unemployment rate, stubbornly at 9.7 percent, forecasters expect unemployment to remain near 10 percent through at least the remainder of this year. That means that if the recovery is to continue, it will have to be largely based on consumption, not new employment. But if consumer spending continues to increase faster than personal income that would suggest that people are once again going into debt. Indeed, the personal saving rate dropped from 3 percent to 2.7 percent, hitting its lowest rate since September 2008. Economists therefore worry that the gains in consumer spending and therefore a recovery are not sustainable while unemployment remains high.

ISM Manufacturing Index: The ISM Manufacturing Index increased to 60.4 in April, from 59.6 in March. With this index 50 is economic stagnation, less than 50 is economic contraction and greater than 50 is expansion in manufacturing. While the index indicated growth for the 12th consecutive month in the overall economy, as well as expansion in the manufacturing sector for the ninth consecutive month we are still well below where we were in 2007.

Construction Spending: Construction Spending increased by 0.2% to $847.3 billion during March after falling by 2.1% in February, revised downward from a previously estimated decrease of 1.3%. Without that after-the-fact 0.9% downward revision the current figure would be down 0.7% not up 0.2%. Note that the revision is four times bigger than the reported change and makes the reported number completely statistically meaningless. Revising figures downward after they are reported is one way politicians manipulate data to make the next month look better without the American public knowing it was political manipulation. Year over year, construction spending has declined by 12.3% from the March 2009 estimate. The housing peak was in 2006.

Auto Sales were up 20% from a year ago when they were in bankruptcy but down 9% from March 2010. That is not good.

Factory Orders: Total factory orders, that is with non-durables and durables combined, rose 1.3 percent, the same as for February. This is truly good and not just hype.

Housing stocks have been hyped to record highs. Pending sales of previously owned homes hit a hyped five-month high in March as buyers rushed to sign contracts before a tax credit expired. That five-month hyped high is actually a double dip. See:
http://www.martincapital.com/chart-pgs/Pg_existinghms.htm


ADP employment report showed a 32,000 increase in private sector jobs during April. This is very good but statistically meaningless news even if it is true and not revised down later. Of course about 500,000 new people look for jobs each month and there is 10% unemployment. ISM’s Non-Manufacturing Employment Index for April registered 49.5 percent. This reflects a decrease of 0.3 percentage point when compared to the 49.8 percent registered in March.

ISM non-manufacturing Index: Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee; and senior vice president — supply management for Hilton Worldwide. “The NMI (Non-Manufacturing Index) registered 55.4 percent in April, the same percentage as registered in March, and indicating growth in the non-manufacturing sector. The Non-Manufacturing Business Activity Index increased 0.3 percentage point to 60.3 percent, reflecting growth for the fifth consecutive month. The New Orders Index decreased 4.1 percentage points to 58.2 percent, and the Employment Index decreased 0.3 percentage point to 49.5 percent.” That seems to contract the favorable ADP employment report.

Yesterday:
Unemployment claims: On the surface it looks like claims declined from 551K to 444K but then we notice they actually revised the last numbers up 3K from 448K. That revision of course must lower the new numbers because otherwise the total number unemployed would be in error. So instead of the reported 7K decline in first claims it is a 4K decline or no statistically significant change but just data scatter. Also Congress will not extend unemployment payments beyond the current record 99 weeks so the unemployed will have a lot less money starting in June. The stimulation package is now running out. Credits for fist home buyers just ended too. Soon we will see the withdrawal effects of the removal of stimulants.

Productivity: Again they downwardly revised last months annualized productivity increase from 6.9% to 6.3% so they could report a productivity increase of 3.6% instead of 3%. That makes a growth slowdown appear less severe. But the media did not even mention 55% slowdown in growth they just hyped that it was still growth.

Friday, May 6:
Employment Report
Unemployment rate,
Consumer Credit


Market Outlook May 7, 2010
Small caps, the latest touted sector was down over 30% yesterday after the smoke cleared. Volume surged another 56% higher as the markets plummeted yesterday. The market manipulators were in complete confusion. Last week Jim Cramer was scoffing at prudent investors who were going into cash and shorting the market at the top. He said stay fully invested. Then earlier this week Jim Cramer looked like a deer staring into the headlights of an oncoming truck. Yet he said stay put and be spectators as the truck approached but don't buy anything. Then yesterday the truck hit his investors and one of his fans called and said his portfolio took a 10% hit. Jim Cramer then said wait until the market falls further and then buy accidentally high dividend stocks. One caller challenged him and said won't Obama be taxing dividends at 39% net year. Won't that clobber dividend stocks?

The frightened market manipulators are now beginning to spin the news negative. The volume-adjusted NYSE clearly broke the two head-and-shoulder necklines. The real institutional market manipulators did however hold the raw Feb 2, 2010 index necklines to make investors complacent as we predicted. You can check and see that most stocks were not allowed to drop below their lows for this year. There were some however they did not catch and they briefly lost almost 100% before recovering with staggering losses. The volume adjusted Head-and-shoulder sell signal necklines did not hold. We were correct in the assumption that the market manipulators would hold the raw price necklines to make investors complacent.

Since our volume-adjusted H-A-S necklines broke down it is likely we have seen the stock market highs for this year. The smart investors who were 50% short and 50% in cash and holding probably had their short price targets hit and are now 100% cash. It is too risky to start shorting now because the market is very volatile and the manipulators were successful in preserving the raw H-A-S necklines so most investors think the bull market held and probably are about to do bargain hunting. After a few days or weeks of foolish investor bargain hunting as Jim Cramer suggested it is possible the markets could approach the recent highs. Then the shrewd investors will go short again and that time when the market plunges the market manipulators will join in and all the lows will break down and even Jim Cramer may say we are in a bear market though his GE/MSNBC/Pravda listeners will have once again lost their shirts. But then most of them must like Obama because they listen to GE/MSNBC/Pravda nonsense.

The coming correction will likely be the most severe correction of the past 12 months.

World Markets
Asian markets were down again last night; Shanghai down -1.9%, Hong Kong down -1.1%, India down -1.3%, S. Korea down -2.2%, and Japan down -3.1%. Communist China is about to see a surge in defaults and bankruptcies that will cost foreign investors dearly just as Russia's first bull market failed more than 10 years ago. We are avoiding all the emerging markets of the world especially China. We expect the Chinese experiment to fail this year as the Russian experiment failed in the 1990's. Demand for oil, coal, metals, cement and other materials will then plummet.

After losses yesterday, European markets are down today in the range from -0.1% to -1.1% this morning about half way through their day.

US pre-market futures are too manipulated to be useful today. Investors are in cash waiting for new opportunities to short the market. The second (volume adjusted) neckline did not hold so we are not done with this correction. The unadjusted neckline did hold so we expect there will be a dead cat bounce of a week or more.

John P. Hussman, Ph.D. this week says:
"Over the past few months, the stock market has been characterized by an overvalued, overbought, overbullish, rising yields syndrome that has historically proved unrewarding and often particularly dangerous for investors. It's important to underscore that even in post-war data, and even if we assume that the economy is in a typical post-war recovery, this particular syndrome has been unrewarding, on average,"

This week by Streetsmart's Sy Harding:
Reported:
That the broader NYSE failed to break above its 21 day moving average last week.
That the rising U.S. market (previous weeks) was diverging with the collapsing global markets.
Global government debt issues are coming home to roost!
Retail Sales in April – Not So Hot!