Archive - Mar 21, 2010 - Story

The DXY is ripping, and is about to break out of recent resistance levels. News out of Europe that no bailout of Greece is to be expected, further compounded by some serious doom and gloom out of Evans-Pritchard about the EMU and the euro in general, means that the euro will soon make a date with the one point two-handle. This is certainly not good for Goldman clients who just one week ago bought into Goldman's pitch of going long the EURUSD, with a 1.35 stop. Looks like that stop is about to be breached.

Jim Cramer may be in hot water with the SEC over his theStreet.com, and he may be a mouthpiece for the biggest ponzi enabling organization the developed world has ever seen, however, he did have some interesting and spot-on observations on the just passed health care bill. In a nutshell, and for once we agree with Cramer, if futures are not limit down right now, it is because of the same bidding hand that has kept the market going straight up at a 30 degree angle for the past year.

We previously discussed the curious phenomenon of increasing individual tax refunds handed out by the US Treasury, despite record weak tax withholdings, and speculated that the Treasury's generosity, which is very much unfounded, is one of the main reasons for the consumer "outperformance" year to date, due to the excess money obtained by US consumers courtesy of what appears an oddly lax Internal Revenue Service. We won't speculate on the secondary implications of governmental cash flows to and from taxpayers, and instead will focus on actually following the cash. The conclusion is simple: even as the IRS has paid out far more in refunds in 2010 versus 2009, the difference in gross tax withholdings between 2009 and 2010 is at year highs. The government can not afford to pay refunds, yet does so at an alarming pace. The net difference (withholdings net of refunds) for just the first 10 weeks of 2010 is already at a ($42.7) billion cumulative number: a new 2010 high.

Last week was nothing special as stock market continued to drift higher on light volume and the Volatility Index (VIX) reaching a new multi-year low. This mix of higher prices on light volume, multi year lows in the VIX and an overbought market paints a clear picture to a market technician – Be Ready for a Pullback! Last Wednesday I sent out a report covering sector rotation comparing the price performance of these sectors from the January peak with last weeks price action. It was very interesting and it pointed to a sharp sell off Thursday or Friday.

Crude oil futures kept falling back from highs even though speculative funds increased their bets that prices are headed higher. The benchmark West Texas Intermediate contract ended the week at $80.68 a barrel, after nearing $83 earlier in the week, compared to $81.24 a week ago. Saudi Arabia’s oil minister, Ali Naimi, made it clear once again on Tuesday that the world’s largest oil producer prefers a range of $70 to $80 for oil prices. Speaking to journalists in Vienna prior to and OPEC meeting, Naimi said the oil-exporting group, which accounts for 40% of daily oil consumption, won’t let tight supplies push prices too high.

Over the past two years, one of the most salient topics of discussion has been America's collapse into a Chinese state of economic disclosure - limited, opaque, and, at worst, fraudulent. Due to Zero Hedge's extremely "eclectic" selection of readers who are professionals in a variety of industries, we would like to take the opportunity to hear from all of you on what the true state of the US economy is where you are - be it (un)employment, inventories, overall business conditions, moods, general supply and demand, etc. Consider it an objective, crowd-sourced, non-manipulated business perspective.