Jim Cramer

"We are not clueless," Kevin Warsh notes in this September 16th 2008 Federal Reserve transcript (as the entire financial system was imploding around them); but it is the final 'debate' in this brief section that sums up what Marc Faber has feared all along. Adjective or Abverb?

While The Russell 2000 briefly regained positive territory for 2014 (up 1.5% on the week), the Dow, S&P, and Trannies ended the shortened and low volume week practically unchanged (and the Dow -2.6% YTD). Treasury yields oscillated as bad-news-good-news played out but ended the week practcically unchanged (10Y -1bps, 5Y +1bps). The USD drifted lower today to end the week very modestly positive (+0.1%) as EUR strangeth dominated JPY and CAD weakness). VIX went higher all week (admittedly OPEX-impacted) as underlying stocks remained bid. Credit markets ended the week wider than they opened on Tuesday (despite equity strength). Depsite the USD, commodities rose on the week with Silver and WTI crude up almost 2% and gold up 0.5%. For an options-expiration day, today's volume was very weak. And 2014's best performing S&P 500 sectors... Healthcare and Utilities.

The curse of the over-bearish (or over-bullish) magazine cover is well known. Of course, the media will only cherry-pick the "lows" as an indication that it's time to buy; as opposed to the exuberance-exhibiting article writers and their glaring headlines. To wit, this week's Barron's cover proclaims "GOOD NEWS - The US economy could grow this year at 4%... Forget the snow, consumers and businesses are ready to spend." Hhmm, it seems that Barron's forgot to look at the data...

Presented with no comment...

One glimpse at the following chart and it's clear that the US economy has not reached the much-vaunted "escape velocity." As CNBC's Rick Santelli explains in this succinct summary of the quandary of GDP hopes, inventory-build fears, and extrapolation-dreams, "many of these programs, procedures, and plans offered by the Fed - or the government - actually work to jump-start the economy... but they can't reach sustainability." His simple analogy of the economy as a heart-rate in a chronically sick (if not dead) person and Fed juice as a defibrillator seems very fitting. As the chart below shows, the US economy is very much still on life-support.

Apart from a 45-minute period from 1030ET to 1115ET (POMO) of totally failed momentum ignition, US equities and USDJPY were once again perfectly coupled leaving the Dow and S&P in the red today and the rest practically unchanged on dismally low volumes. Treasuries continue to slide with yields now 5bps (30Y) to 10bps (5Y) higher in the last 2 days (the worst 2 days for 5Y in almost 2 months). The USD ended practically unchanged on the week (once again) as EUR weakness (Coeure comments on negative rates) offset GBP strength (Carney comments). VIX traded down to 14.02% intraday (and the term structure is very steep and complacent once again). Gold (new 3-month highs) and silver surged intraday but the afternoon saw selling even as bonds, stocks, and the USD weakened. Dow remains below 16k.

Despite the yeah-meh-bleh nature of consumer confidence measures, Gallup's more broadly surveyed, and seemingly consistent with the reality of the American workforce, index of economic confidence remains lackluster at best and dismal at worst. However, there is one bright shining beacon of light across the "United" States of America... one state stands proud as the lone state that is economically confident... that state is... drum roll please... D.C.

In light of its 19th quarter of losses in a row, calls for a Federal bailout, and recent consideration of adding a Bitcoin exchange to its non-bank financial services (via a "postcoin"), we thought a glimpse how "postal" the USPS is set to become was useful. Some will call it progress of course but as the following chart shows, the number of US Postal Service employees has fallen to 50-year lows (and would and could be more) - "The Postal Service is doing its part within the bounds of law to right-size the organization,"  blaming federal mandates that restrict how it can conduct business and excessive funding requirements for its employee pension plan.

While infamous ruler-user Laszlo Birinyi does note that "this market is not going to be like last year," he remains full bulltard as to where stocks are headed. As Bloomberg notes, Birinyi says stocks have too much momentum to make betting against them a winning strategy and the S&P will hit 1,900 by the end of the second quarter. "Short sellers have probably learned their lesson," he squeaks adding thatthe current pullback signals "healthy skepticism that sets the stage for more gains." One question - how was momentum in 1929? 1987? 1999? or 2007?

While The White House's Jason Furman glistened in the after-glow of a falling unemployment rate this morning (and a very modestly improving labor-force-participation rate) despite dismal real job creation (which must be due to the weather - but is not!), we thought it perhaps of note that a very large segment of American - White men aged over 20 saw their labor force participation rate drop to a new record low.

Presented with little comment aside to note that 9 of the last 10 Januaries have seen negative surprises...

What better way to assure your company has an earnings bomb? Have Jim Cramer tout it before earnings of course. Sure enough from January 28: "GM sales are going to be superb", and "Europe's coming back." Fast forward to today when GM reports Q4 revenues of $40.5 billion which missed expectations of $40.9 billion, and EPS of $0.67 vs the $0.87 expected. Additionally, GM's global market share just dropped to 11.4% - matching the lowest in the past year. So much for the superb sales. As for Europe? Well, as the chart below shows, Europe just posted its weakest quarter in the past year. And don't count on much growth either: CapEx was down to $7.5 billion in 2013, from $8.1 billion in 2012, even as the company's total free cash flow declined from $4.3 billion last year to just $3.7 billion.

If you repeat a lie often enough, and if you only speak with confidence and in a calm, cool collected voice, the people will believed you - propaganda 101. Also, if you repeat enough times that the US economy - that $17 trillion juggernaut 0 which as recently as December was fabled to have entered the escape velocity phase and thus was safe from the adverse side effects of the Fed's taper, has hit a brick wall because of snow in the winter, then maybe the people will believe that too. Of course, there are the facts, and as always happens, the facts are diametrically opposed to the propaganda.

Thanks to a bounce off 101.00, USDJPY supported yet another marginal bounce off fresh 2014 lows in US equities (led by a heavyily turmoiled Russell this morning following the better than expected ISM Services). Nasdaq and Trannies bounced off its 100DMA and the Dow rallied back to modestly green and tested the 200DMA from below. The ubiquitous late-day ramp attempt failed and the Dow lost its marginal green color into the close; Trannies and Russell underperforming. Notably though, despite stocks ending flat to down, Treasury yields surged 6-8bps off post-ADP lows (and 3-4bps up on the day). Gold and silver spiked on the weak ADP data and faded back on the day with Silver outperforming on the week (+3.5% vs 1.1% gold). Credit and VIX once again were not playing ball this afternoon and diverged from stock's bounce but we do note that equities are showing notably more volatilty relative to FX carry in the last 2 days. YTD: Dow -7%, Russell -6%, S&P -5%, Nasdaq -4%

Precious metals had begun to jump higher before the ADP data hit but once it did - and disappointed - gold and silver spiked (over $1,270 and $20 respectively). Equity markets kneejerk reaction was a spike higher which immediately faded into a crash to recent lows. Dow futures are testing 2014 lows - as are S&P 500 futures. 10Y Treasury yields touched 2.60%; Nikkei futures are once again testing 14,000 as USDJPY breaks below 101.