Several reports are coming out of Asia, that point to the problems the Wizards there are dealing with. The first one from China is sounding like a broken record, and describes another crackdown on local and provincial officials that won’t play ball. To me, this illustrates that the central government in China is in many respects broken. China has become a nation of economic mafiosos, governed by local elitist Godfathers and their political hacks. Oh sure, once in awhile Beijing lays a hand on someone, as for instance they aren’t willing to give up Shanghai without a fight, but by and large they are on the defensive. In fact, my suspicion is that these so called crackdowns are largely a facade. On another front, China is moving to take advantage of the break in oil prices to start filling their strategic reserve.
The second report out of Japan reports that several governors expressed concern in their August minutes about the impact of the Yen carry trade. The news report again illustrates, the complete lack of directness in communications out of these Asian countries. They rarely commit themselves, or instead operate as if subtle suggestion will have an effect on the Riskloves that are raiding their currency. Then when the subtle warning is made, they do an offset when a key official makes a Humpty Dumpty remark like this one. Of course the carry trade Boyz then immediately pile into more Ponzi trades with this kind of perceived green light
It is not true that we’ve recently started a survey specifically on the carry trade,” said Tokiko Shimizu, the head of the bank’s foreign exchange operation division. “The BOJ is monitoring movements of financial markets daily and we are interested in the carry trade too.”
Readers know that of all the housing data noise, I am currently most focused on housing permits. Simply put if permits aren’t taken or aren’t being followed up on, then construction employment will fall fast. Given that construction and financial employment is a major factor in Bubble locales, the fall on effect will be an even greater acceleration of delinquencies and foreclosures than the trend already underway. Today we see more evidence that the game is up. In my view even this 1.6 million unit pace is still far above what the market can absorb. Obviously, the continued availability of Ponzi finance is distorting market decision making, and encouraging continued “because the money is available” aggressive and unnecessary activity in many sectors.
Permits for future groundbreaking, an indicator of builder confidence, fell 6.3 percent to an annual pace of 1.619 million units, the lowest rate since October 2001, from a 1.727 million rate in August. Economists had expected the Commerce Department to report September permits at a 1.702 million pace. They were down 27.7 percent from the same time a year ago.
I even find this permit report suspect. It just doesn’t hold water, especially given that many builders continue to report 40% cancellation rates. Even outfits like NVR who have been spared this indignity because of higher deposits, or special diligence, or operating in more exclusive high end Bully markets, are falling under the retribution sword as customers bail on them..
New orders in the third quarter decreased 18 percent to 2,378 units from 2,897 units last year. Meanwhile, the cancellation rate jumped to 27 percent from 15 percent last year and 13 percent in the second quarter of 2006.
And a little Bubble mentality humor from Minyanville.
What I’m about to say, may seem wild eyed, but this “stock” market has an almost unprecedented pinned looked, as if there is an historic manipulation going on in the futures pits, or with some type of Robotrader derivative trading. Free, non manipulated markets just don’t act this way. I really don’t think it’s the Fed although they are negligent. It could be a Pig Man operation, they’ve captured the market, at least for now. Maybe some modern day Jay Gould and his henchman Fisk in the garb of electronic trading? Market and banking oversight today has morphed back to 1869 defacto standards for sure.
Another theory, is there might even be a rogue trader or group of rogues, who have been allowed in this unregulated environment to accumulate some massive leveraged equity futures or option position, and in the short term literally hijack or at minimum strongly influence the market? Don’t think so, well it’s happened before. A slightly different twist, is that a thousand Riskloves and crazies are all trading the same black box program at the same time. If that one is valid, someone will trip them, just as sure as the sun goes down at night. When you look at measures such as TRIN, it just doesn’t look like real money is driving this, but more like synthetic trading of some type.