World credit tightening has begun

World credit tightening has begun

China tightened its monetary policy again over the weekend for the third time this year, raising the amount of cash reserves banks in China must hold. Australia’s market dropped sharply on the news that taxes on mines would go up 40% to reduce their deficit. Obama in his term is running a $10 trillion deficit or at a rate of three times what Bush ran in two terms. The Obama tax increases will be very large each year beginning in 2011 and it will be entirely on productive Americas with illegal immigrants paying nothing, getting free services and sending their cash back home out of America. Yesterday Hispanics were reported by GE/MSNBC/Pravda as saying they would register democrat-socialist because intelligent Americans in the other parties do not support illegal immigration. The leftist democrat socialists can buy the votes of illegal aliens just by allowing them to get American driver’s licenses so they can use them as American IDs and get fraudulent birth certificates and fraudulent social security numbers. Obama still has not released a photocopy of his alleged American Birth certificate.

Economic Calendar
Monday, May 3:
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.

Tuesday, May 4:
Auto Sales
Factory Orders
Pending Home sales

Wednesday, May 5:
ADP Jobs Report
ISM non-manufacturing Index

Thursday, May 6:
Unemployment claims
Productivity

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


Market Outlook May 4, 2010
Once again the market manipulators will spin the economic news to draw suckers in at over inflated prices. Car sales are still a disaster but will be spun relative to last year when the car industry was in bankruptcy.
The market was up yesterday but volume collapsed 19% and once again the volume-adjusted NYSE top continues it’s declining since last fall. If the high has now been set for last month's advance then the volume adjusted NYSE has now completed a head and second shoulder sell signal. That would be a sign of exhaustion of buyers as happened in late 2007 and accelerated into the sharp decline at the end of 2008. However, a few weeks of exhaustion of buyers could re-establish market health later this year. Only time will tell. Still the coming correction will likely be the most severe correction of the past 12 months.

World Markets
Asian markets were down last night; Shanghai down -1.2%, Hong Kong down -0.3%, India down -1.4%, S. Korea down -0.3%, and Japan up 1.2% after being closed for the low volume advance yesterday .

European markets are down sharply today in the range from -1% to -1.8% this morning about half way through their day.

US pre-market futures are down about -0.6% today after a sharp rise on low trading volume yesterday.

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.