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In Session - New Feature for Enrolled Members

Saturday, May 9, 2009, 8:23 AM

Enrolled Members:  There is a new feature available at the site.  I am now placing my daily observations and important articles in a running thread called "In Session".

As a normal part of every day, I regularly collect and read lots and lots of information and compose short snippets explaining what I think. Instead of saving them all up and finding that only a portion of them ever make it into a Martenson Report, it occurs to me that posting them as I go might be valuable to you.

I expect to update this thread nearly every day with whatever I've found. Please feel free to join in and comment on whatever strikes your fancy. If you want me to comment on a particular news item, this is the place to do that. If the item deserves it's own thread, it may get moved out to its own location.

Here are two postings from yesterday:


I now want to riff on something that has REALLY caught my eye this week.  As longtime readers know, one of the data pairs upon which I place much emphasis is the US Treasury interest rate and US dollar index pair.

In particular, a rising interest rate and a falling dollar index will indicate to me that the game has changed.  Should this pair suddenly begin a sharp countermove, I would consider several outcomes likely, including (but not limited to) a sudden spike in the price of oil, a sudden rise in the price of gold, chaotic stock markets, massive bond market losses, extreme moves in all derivatives that use the US dollar as the unit of account (that's most of them), a steep rise in commodity prices in general (only in US dollar terms), and a US government funding crisis (within 1-6 months of a really pronounced break).

For these reasons, I keep a very close eye on this pair.

These past few weeks, but especially today, I saw some moves that have made my eyebrows elevate.

First, here's the bond data. I am going to use the 30-year bond as my illustrating case, but I could just as easily use the 10- or 20-year bonds.  In the chart below, there are three things I want to draw your attention to, which I will explain below:

The green lines show that the 30-year bond has broken back into a trading range that extends back to 2007.  This is not necessarily big news, because there have been periods of history where the long bond has spent decades in a trading range.  However, these are not normal times.

Let me explain.

The blue text and arrow indicates the moment when the Federal Reserve, on top of its numerous other "thin-air money" programs, announced that it would begin also purchasing US Treasury bonds, specifically long bonds, to the tune of $300 billion in 2009.

This is gigantic, game-changing news.  This should have ripped the top off the Treasury market and driven bonds to new heights.  Instead, what happened was the now-anemic-looking white candle, marked by the blue arrow.  In fact, it looks tawdry; cheap, even.

Since that initial bump, the 30-year bond spent the next 7 weeks sliding inexorably down a slope, as marked by the purple text and arrow.

This is simply not a very good sign and indicates that the bond market may be overwhelming the pace at which the Fed feels comfortable buying bonds with thin-air money.  If the Fed goes too quickly on this program, it risks losing the entire market, which, truth be told, is MUCH larger than the Fed itself.  Remember, the Fed's only "product" is a slip of paper that has its name printed on it.

These slips of paper have value because the US citizens and corporations work hard to produce things denominated in these bits of paper AND because the US government collects taxes in the same units.  And that's about it.  If the financial and world markets lose their faith in this chain of value extraction, then the bits of paper have value in proportion to how many of them happen to be in existence at the moment that such faith is lost.  It is a delicate balance, and I do not envy the job before Bernanke, et al.

Observation:  Bond yields are rising

Now let's look at the dollar.  It did not do particularly poorly today, but it did not do well either.  What concerns me is looking at the behavior of the dollar over the same time frame as the Fed Treasury purchase announcement:

I see that the dollar has been pretty much in lock-step, declining with the long-bond.  

Observation:  The dollar is falling

This, coupled with the earlier (above) observation that the Fed stepped in and took a big portion of today's 30-year bond auction, is enough to not only have my antennae up, but quivering.

I'll be keeping an eye on this.

For now, bonds yields are rising and the dollar is falling.


Thank you, Erik (and others!), for the support and the idea to publicize.  I think I will send out a short message and link to it by newsletter AND do a blog post.

Meanwhile, I am finding myself quite amused by the payroll numbers released this morning at 8:30:

Payrolls drop by 539,000; jobless rate jumps to 8.9%

By Rex Nutting, MarketWatch
Last update: 8:36 a.m. EDT May 8, 2009

WASHINGTON (MarketWatch) - The U.S. economy continued to shred jobs at a horrendous pace in April, with nonfarm payrolls falling by 539,000 and the unemployment rate jumping to a 26-year high of 8.9%, the Department of Labor reported Friday.

The report was largely as expected, reflecting an easing in the pace of massive job destruction from the previous five months. Since the recession began in December 2007, payrolls have fallen by 5.7 million, or 4.1% of payrolls, the largest percentage decline since the 1958 recession.

April's loss of 539,000 jobs was the smallest decline since October's 380,000. Job losses in February and March were revised higher by 66,000.

The article goes on in great depth to parse out the numbers, but mysteriously makes no mention of the the birth-death model, the most important number of them all.

Here it is:

Wow!  The government's model managed to crank out 226,000 additional "thin-air" jobs to add back into the mix.  For the record, this is 50,000 MORE jobs than were added by the model last April.  

What sort of a model do they have that assesses the current hiring conditions to be 30% better than last year?  What model could possibly be adding construction and finance jobs at this time?  What do they use for inputs?  How come these modelers still have jobs?

At any rate, if the B-D model had not added the 226,000 jobs, the report would have come in at -765,000, which is FAR worse than expected.

Really, this is just getting silly at this point.  The US government is losing all credibility at a quite rapid pace, and more and more people are catching on.  But in all seriousness, I fear the backlash that could result from the populace when the collective weight of all these insults to our intelligence finally boil over into some sort of a response.

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22 Comments

DavidLachman's picture
DavidLachman
Status: Silver Member (Offline)
Joined: Jul 4 2008
Posts: 153
Re: In Session - Great Addtion

Chris, Thanks for this new feature.  It is great to feel like we are in touch with what is catching your attention on a more daily basis.  One more thing to look forward to each day I turn my eyes to CM.com!

cat233's picture
cat233
Status: Platinum Member (Offline)
Joined: Aug 20 2008
Posts: 575
Re: In Session - New Feature for Enrolled Members

For those of you who are not enrolled members and cannot see the In Session material, I wanted to let you know there are at least 20 responses thanking Chris for this new feature.

Chris works hard to educate all of us.  The Crash Course and the abundant free material provided on this site are due in part to Chris and his generosity.  He has used his own financial resources, he has not taken one cent from the site.  There are very few who have not been affected by the economy, this site is not immune.

If you have the financial resources to help support this site and are not yet an enrolled member, please consider an enrollment membership now.  For those of you who may need to "sacrifice" a few trips to Starbucks, or a meal dining out once a month, please help support Chris and this site with an enrolled membership.

Chris and his staff need support.  I am asking all of you who can help elevate some of the financial strains to please help with your enrollment membership.  I personally consider this site an investment in my future, the returns are seen now through Chris' work... His knowledge that he shares.

The In Session material alone is worth your support and investment in Chris.

Thank you Chris, thank you staff, thank you all who contribute to this site in any form.

Cat

You may enroll here... www.PeakProsperity.com/product/chrismartensoncom-enrollment

 

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maveri's picture
maveri
Status: Silver Member (Offline)
Joined: Nov 20 2008
Posts: 159
Re: In Session - New Feature for Enrolled Members

I contribute because...

I believe in what Chris and his team are doing and seeing someone live what they speak stamps an additional legitimacy on the message in my opinion.

This message needs to continue getting out because the majority of people are still in ignorance and don't even know the freight train in coming and they are in the path. I too was numbered in that collective but thankfully someone showed me how to pull the track change lever for myself and helped me change onto a different path that doesn't end in the washed out bridge up ahead.

It's out of the sense of appreciation and gratitude that I wish to contribute and the benefits listed are a secondary item for me (at least in terms of convincing me to contribute that is).

Nice to be part of a group that's helping people prepare.

The information gleaned from the knowledgeable people on this site is paramount to me. The links, the discussions, feedback as to how they are changing their lives speaks volumes.

The ability to glean from those further down the process of change means an quicker switching time for others following as the hard work of smoothing the ground has already been largely accomplished - in a period where the world is strapped for time this is absolutely vital - ANY process that expediates the change for others is more valuable than Gold itself.

Just as a magnifying glass focuses parallel streams of light and bends them to a focal point, so I find the people on this site - the vast flow of information out there zooms past us all each and every day but people here bend it together and bring it to a focal point so that the many can see what's really going on despite vested interests out there that want to filter that light or disperse it to keep people in the dark. So many times over the years I've thought about many of the things people bring clarity to on this site but never seemed to take that thought process one step further to see what the focus really revealed.

Thanks ALL - I appreciate the work ALL of you do

:-)

hightor's picture
hightor
Status: Bronze Member (Offline)
Joined: Aug 12 2008
Posts: 26
Re: In Session - New Feature for Enrolled Members

 Excellent new feature. Someone HAS to do a full article about government number-bending. I have found it so frustrating to see all the news about the Stress Tests with no mention of the facts so well pointed out by this Website that there was indeed no Stress in the Tests. Maybe a "Frontline" or Moyers interview with Chris. Let's start writing Moyers to have Chris on.

Vanityfox451's picture
Vanityfox451
Status: Diamond Member (Offline)
Joined: Dec 28 2008
Posts: 1636
Re: The Chris Martenson Advertising Drive

Cat,

I noticed your post and it pushed me to create a thread along lines that work in symmetry.

An outline to some personal thoughts I've been having lately :-

The Chris Martenson Advertising Drive

http://www.peakprosperity.com/forum/chris-martenson-advertising-drive/18590

I think it was the last line where you wrote :-

"...thank you all who contribute to this site in any form."

I personally can't afford to access the Martenson Reports but do all I can to advertise this site. You'll find a rash of me everywhere on You Tube if you fish...

Paul

Lemonyellowschwin's picture
Lemonyellowschwin
Status: Platinum Member (Offline)
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Posts: 548
Re: In Session - New Feature for Enrolled Members
maveri wrote:

It's out of the sense of appreciation and gratitude that I wish to contribute and the benefits listed are a secondary item for me (at least in terms of convincing me to contribute that is).

Not me.  I contribute for purely selfish reasons.  If your goal is to stay ahead of the curve and be able to get a sense of what's over the horizon, access to the Martenson Reports and the In Session material is well worth the cost of enrolling. 

joe2baba's picture
joe2baba
Status: Martenson Brigade Member (Offline)
Joined: Jun 17 2008
Posts: 807
Re: In Session - New Feature for Enrolled Members

kinda reminds me of the old days when there was more chris and less joe2baba.............boy i needed some time off

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: In Session - New Feature for Enrolled Members

 Wow, super feature Chris! Like getting the Crash Course behind the daily news. THANK YOU!!!

Take care

jpitre's picture
jpitre
Status: Gold Member (Offline)
Joined: Mar 3 2009
Posts: 366
Re: In Session - Question for Chris on credit cards

Chris M.

I find that your untiring efforts and clarity of thought helps bring order to my own thinking. I find myself reflecting "Oh, I knew that" - but in the scramble of data, I had lost track of some of the pieces. A big THANKS.

I look forward to meeting you one day.

My question of the moment has to do with a comment on another thread about "when the electronic currency system shuts down" I take this to mean debit/credit cards and the like cease to function. How do you see that all playing out. Is the overhanging debt problem of the credit card industry likely to cause the whole industry to cease operating or? I suspect that it will happen over time bit by  bit (lowering credit limits, requiring deposits etc) rather than a catastrophic shut down one day, but then ............

Personally I/we have some cash and gold (probably not enough) set aside to bridge a few months or more of system failure - and I'm counting on some specific warning of that happening as we get closer

Jim

admin's picture
admin
Status: Administrator (Offline)
Joined: May 6 2007
Posts: 346
Re: In Session - Question for Chris on credit cards

Jim,

You may want to post your question directly on the "In Session" thread.  This would allow Chris to quickly see it as he offers feedback.  http://www.peakprosperity.com/forum/session-week-may-6th/18485

Ron

jpitre's picture
jpitre
Status: Gold Member (Offline)
Joined: Mar 3 2009
Posts: 366
Re: In Session - Question for Chris on credit cards

Ron

 

Thanks - re-posted as you suggest

 

Jim

 

 

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: In Session - New Feature for Enrolled Members

Hello Jim:

I know your question was directed at CM. That said I will try to locate a video I posted a while back, which highlighted the fact that the big banks hold 45% of everyones money, and the reporter asked what would happen if these banks were left to fail. Clearly there were going to be disruptions in CC's and Debit cards.

Mike Pilat posted an article on Argintina, they knew this was coming, and it seemed to take forever - then one day it surprised everyone. They had to wait hours in line at the banks, amounts withdrawn were limited. Police and army were called in.

We are changing how we buy, in bulk is in. Everything is going to go up anyway.

Take care,

PS Here is the video, I'm truly sorry for not making notes of this, the video is 1 hour and eightteen, if I recall the part about the cards ceasing to work was in the first third.

The Planet Money video was in the Daily Digest of April 28th

Nime's picture
Nime
Status: Bronze Member (Offline)
Joined: Jan 29 2009
Posts: 88
Re: In Session - New Feature for Enrolled Members
cat233 wrote:

If you have the financial resources to help support this site and are not yet an enrolled member, please consider an enrollment membership now.  For those of you who may need to "sacrifice" a few trips to Starbucks, or a meal dining out once a month, please help support Chris and this site with an enrolled membership.

 

 

While this is true for the readers in the US it is not true for those of us who happen to live in poorer countries. For example $300 is (at current exchange rate) close 1000 zloty which is roughly between 1/2 and 1/3 of average monthly wages. Conversely, for $80 I could go to local Starbucks equivalent for coffee almost daily for a month. Or buy food for my family for a week. This makes buying membership at CM.com a much harder decision. 

ejanea's picture
ejanea
Status: Bronze Member (Offline)
Joined: Oct 2 2008
Posts: 53
Re: In Session - New Feature for Enrolled Members

 I am glad that someone else has pointed this out.  I certainly can't affort to spend even the minumum amount on any website... even maintaining my presence online is hard.  

I appreciate what I am able to read without any financial contribution,  and I have recommended the site to many other people...  however, I certainly can't afford to pay so many american dollars for the private parts of the site.

tuckershaver's picture
tuckershaver
Status: Member (Offline)
Joined: Apr 20 2009
Posts: 2
Re: In Session - New Feature for Enrolled Members

 Chris,

Thanks for this.  I think the world is opening up every day when I read your insight.  

jimmbaird's picture
jimmbaird
Status: Member (Offline)
Joined: Feb 16 2009
Posts: 6
Re: In Session - New Feature for Enrolled Members

Dear Chris, and Others...

I have enjoyed the Martenson's  Report information,  features and basic philosphy for several months now.  I do feel that now  this website suffers, though, from what is so rampant in our modern society  -  too much information !    This new feature, in my eyes,  just over inundates more information about our descending society that most of us that subscribe to the Martenson Report allready believe in.   Personally, I would enjoy dissecting and condensing of information along with more positive steps to work towards the possibility of a better healthier future for all..   More information about the negativity and poor system that we find ourselves managing in, isn't achieving that end for Me.  

with best regards

Jim Baird

Vanityfox451's picture
Vanityfox451
Status: Diamond Member (Offline)
Joined: Dec 28 2008
Posts: 1636
Re: In Session - New Feature for Enrolled Members

Jim,

I agree with you that there is a great deal of information on this site. So much at times it can be a full-time job just to read through everything you can find, particularly if, like me, you're fascinated with many subjects! The computer goes on and, before you know it, 3 hours can disappear from your life never to be found again...

I have to say though that, throughout the net, I haven't yet found a site more complete and rounded in its fullness; it's a rich tapestry.

In regard to your ideas on building a section to CM.com that gives idea building ideas of the future, there are numerous threads on every conceivable subject under the sun if you fish.

Alternatively, outline some ideas of your own and send them via pm or email to Chris about what you would like to happen here in the future. You could also build one of your own threads on this very subject, giving your point of view and seeing what surfaces from that. After all, this site is built on factual opinion and, your own is just as valid as others...

Best,

Paul

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: In Session - New Feature for Enrolled Members

I feel CM does a great job of reporting reality....unfortunately reality seems more negative than positive too me. As long as we stay open minded & honest with ourselves reporting fact we should be OK.

I feel Chris has done an excellent job of trying to show people how to be a happy person with our own little worlds we all live in no matter what happens with the broader picture. In the end that is all we really have is to be happy & enjoy the precious short time we are all given.

nickbert's picture
nickbert
Status: Diamond Member (Offline)
Joined: Jan 14 2009
Posts: 1207
Re: In Session - New Feature for Enrolled Members

For those that have a hard time affording a subscription, I think all of us understand where you're coming from and don't expect anyone to stress their finances for the sake of a subscription.  But if you want to contribute in some other way, maybe you can do as VanityFox mentioned and simply promote the site and the Crash Course to people you know.  Maybe a neighbor of yours would be more than willing and able to get a subscription, only he/she isn't aware of that this site exists.  I only came across this site after several months of digging and poking around for relevant non-spin information about the true state of the economy, and I wish there had been someone who could have referred me to this place earlier.  I'd found a lot of useful info in the months before then, but the CC and this site was a true gold mine of information, with all the formerly scattered pieces of information I was looking for all in one place.  For FREE.  So after mining the CC and this site of all it's information I figured the least I could do was pay for a 3-month subscription considering how much time (and money) this all saved me already, and just to see what kind of additional content existed.  And IMO I've found this to be an incredible value for the money, and I readily admit self-interest has something to do with my decision to stay enrolled. So if you can afford it, just sign up for a short enrollment and dig around to see if you find it worthwhile for yourself.  I plan to stay enrolled as long as I can afford it... and this is coming from someone who's been somewhat of a tightwad lately

- Nickbert

DaveK's picture
DaveK
Status: Member (Offline)
Joined: Mar 22 2009
Posts: 9
Re: In Session - New Feature for Enrolled Members

There is no way I can justify paying for internet content, so I'll add my comments on the employment statistics below, and someone can rub them out if they are not appropriate.

I see there are 350 members and guests on-line as I write, so surely some adverts would pay for the site, rather than doing it this way.

The latest US employment numbers have been presented in the MSM as showing the slowdown is slowing down less rapidly, indicating the bottom is close. Not only are the numbers probably fixed, but the net monthly change is not the best way to look at it. The straight (seasonally adjusted non-farm) employment numbers make more sense - a longer timeframe to show the last 2 recessions to scale, and the last 4 years to show the bubble growing and bursting.

The tool for generating these charts is at US Bureau of Labor Statistics

 

 

 

So the suggestion that the latest month's numbers indicate that the economy is nearly bottoming is a load of rubbish

It's in the biggest dive of all time.

DaveK

skrieger's picture
skrieger
Status: Member (Offline)
Joined: May 7 2009
Posts: 1
Re: In Session - New Feature for Enrolled Members

Nicely done.  The table for the birth/death data is informative.  Shadow Stats makes the point with every data release.

 

 

SteveS's picture
SteveS
Status: Gold Member (Offline)
Joined: Sep 6 2008
Posts: 358
Delving into construction statistics

Chris, I like the way you dig into published statistics to find out what's behind them. Kind of a financial Snopes. One recent statistic I saw got my interest:

Construction spending, pending home sales rise

By MARTIN CRUTSINGER
The Associated Press
Monday, May 4, 2009; 1:48 PM

WASHINGTON -- Hopes that the recession is easing got a boost Monday from reports that construction spending and pending home sales both fared better than expected in March. The news pushed stock prices higher.

The Commerce Department said construction spending increased 0.3 percent in March, the best showing since a similar rise last September. Economists surveyed by Thomson Reuters had expected spending to drop 1.5 percent for a sixth straight monthly decline


It seemed odd that construction spending would be going up, so I decided to try to peek behind the curtain myself:

First stop was the US Census contruction data:

http://www.census.gov/const/C30/totsa.pdf

Ok, well total construction spending was up 0.3% from February (though down from last March -11%). But when you start looking through the numbers you see residential is down -4% (-33% from last March) - that makes sense. It looks like what drove the increase (not %-but actual dollars) was power and manufacturing. If you look at the change from last March, they are definately the big players. But just looking at the Feb to Mar change, total construction increased $2.6B and power construction, by itself, increased about $5B. So the large increase power construction is hiding poor performance in other sectors. I don't see this as a broad-based recovery.

I was curious to see where all this power construction was, so I found a better breakdown.

http://www.census.gov/const/C30/privsa.pdf

Which breaks out electric construction from total power. It looks like electric is the big player here. I wanted more detail, so I found a place to ask questions on the US Census site, and posed the question. They only break things down further on a yearly basis, but electric doesn't get any more detail:

http://www.census.gov/const/C30/private.pdf

Electric construction was up 50% from 2007 to 2008! They have no more detail available. I wonder where all that electrical construction is happening? In any case, the lesson I got out out of this was to look behind the numbers, as the story in the paper makes it look like we are experiencing a construction turn-around, whereas it's being supported almost entirely by one sector which also is covering losses in other sectors.

BTW, I got quick and useful responses from US Census and their web site was pretty easy to navigate. We need to remember that the folks in the trenches are doing a good job.

 

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