It's Time for the Bottom Line

Some local drama today and it turned quite chilly as well. No need to remind the regulars, tonight MY world champion New Orleans Saints open the season against the Minnesota Vikings. I will have a full NFL preview post up Saturday, but this game is tonight. This will be a short post so I can catch the game.

I know the Vikings feel they are the better team after last year, and they even might be. If this was week 8 I think the game goes for the Vikings. It is week 1, and the preseason cannot get you ready for the offensive firepower that is New Orleans, especially at home. I am calling for Saints 31, Vikings 21.

Friday night is tomorrow and I do not know if you folks think I write the entertainment post way in advance or what, but requests are considered all the way until Friday night at about 7pm.

Massachusetts Emergency
This morning Tom Brady, the quarterback of my co-favorite NFL team New England Patriots, was in a moderate car accident. All reports state he is fine and he was at practice and did the full day's work. The local channel 7 News had SEVEN on the scene reporters at the corner where the crash happened (at 6am remember) tonight at 6pm! They all covered various angles of the story! This was big news indeed.

It seems a nut job in a minivan ran a red light at high speed and Brady's car collided with it. It was a red minivan, driven by a NY Jets fan (kidding!) with a driving violation record that is 4 pages long, as reported by channel 7. This driver was driving so fast and so reckless he almost ran over a 70 year old lady in the crosswalk who was with her dogs. This guy is in big trouble.

I hope Brady is ok, but these things tend to take a few days to affect you. What a mess.

It's Time for the Bottom Line
I like to poke fun at headlines, use sarcasm as my medium for creation, and highlight the hilarity that is our economic mess. Tonight I am low on time and lower on patience (long week!) so I just want to hammer one thought home and then I want some answers.

How long until this recovery happens?

Now most readers here are probably more of the mind that any recovery has been weak or not arrived at all. I am asking the other 95% of the world this question.

Case in point, this mornings "awesome" initial jobless claims. Coming in at only 451,000 this was cause for celebration. Keep in mind 451,000 initial would still indicate job losses, and certainly not real job growth. What is the consensus view?:
Hopes rise as jobless claims fall, trade gap eases
New filings for jobless benefits tumble to two-month low
WTF? Still looking for hope? At this stage in the recovery this number needs to be lower, much lower. From Calculated Risk the following chart of initial claims (click for larger view):

Hello! Anybody home?

At the peak of the last UE spike, initial claims ran just about at 500k. During the jobless recovery the number drifted around 450k. When construction and other jobs were created by the housing boom the initial number ran closer to 320k. I would also point out the Hurricane Katrina spike in initial claims was much smaller than what we are running all the time now! So here I am wondering again, where is this recovery? Where is it? It is late in the game to still be looking at second derivatives and hoping for more. It's getting old, it really is.

I would like to point out that last weeks numbers were revised up, and this weeks number was based on plenty of guesswork as 9 states did not report numbers due to the Monday holiday. I kid you not. Estimates were used instead! This did not make it into the release, but made the rounds shortly after via Bloomberg. This is unacceptable. You can read more about the number here:
Nine States Did Not File Initial Claims Data Due To Labor Day, Hundreds Of Thousands Of Estimates In Data "Beat"
BLS BS
Now perhaps next week this all gets sorted out and today's number was very close to correct. It would not change my point at all.

I do not want to go on about many items that are "screaming" recovery but only when viewed by comparison with the worst numbers. At this point the recovery should be gathering steam and running full on, not slowing down, which it is. That is the bottom line to borrow a phrase from The Housing Time Bomb.

The stock market is a mess and makes as little sense right now as it did back in 2007. Corporate profits are better than they have been, but that was accomplished by cost cuts and extremely favorable cost pressures. Many scream stocks are cheap based on XYZ criteria, but I have zero interest in the overall market unless it gets 20% lower which I think is fair value for where the economy is now and looking ahead.

This week I learned that:
-Deflation is over
-The Double Dip is officially dead
-The stock market, ALWAYS a LEADING indicator, says old highs on the way
-Jobs will come roaring back any day now
-Money is leaving the stock market, but this is bullish as the chumps always pull their money before huge rallies
-There is a Santa Claus

Overall a positive week. I guess I need to cheer up!

Have a good night.

Still Waiting

The season is definitely changing here. Today was hot and humid, around 85 degrees until a cool wind just moved in and it will be dry and 50 degrees tonight. September is always a fine month up here, but you cannot stop the fall from rolling in. Luckily I have ordered an acorn picker upper tool that was suggested a couple years back but I never got around to getting it. The acorns were terrible this year.

Blog Title Selection
When I make my rounds through my reading list I always wonder how the writers selected the names for their blogs. Some make sense, others not so much. I spent a solid 15 minutes coming up with the blog title Economic Disconnect a few years ago because I felt it was the perfect description of the financial world back in 2007. I guess Oblivious and Stupid would have worked, but I was trying to be more subtle.

I will look around and see if the terms "economic disconnect" get used in main stream press articles, but it is few and far in between. My friend Mark who writes The Illusion of Prosperity has had his title used often and today even by the president himself (a commenter left the link):

"The idea was that if we had blind faith in the market; if we let corporations play by their own rules; if we left everyone else to fend for themselves, America would grow and prosper.
For a time, this idea gave us the illusion of prosperity. We saw financial firms and CEOs take in record profits and record bonuses. We saw a housing boom that led to new homeowners and new jobs in construction. Consumers bought more condos and bigger cars and better televisions.
But while all this was happening, the broader economy was becoming weaker."

Epic WIN! For another see here.

Electric Cars need to Make Noise
I do not want to get into some environmental (air pollution or sound pollution or any other) debate here. What I did want to talk about is how deadly silent electric cars and hybrids are when they are on full battery. I mean, you can barely make anything out! It is a little creepy. I find this an issue in the crazy cramped streets of Cambridge when I need to take a turn and because there are so many cars (all SUV's, just what one would expect from city dwelling liberal hippie hypocrites by the way) parked all over the place you cannot see around corners.

What I do is try and see the best I can, and I roll down the window to listen for a car. These dang things make no noise! No real close calls as yet, but I do think about it. The following article offers a solution:
ECTunes solves silent electric vehicle "problem" with directional noise system
They bring up some other points about car noise. I am all for this!

Still Waiting
I guess with a market that seems to do the most it can to frustrate the most amount of players I should not have been surprised by this week so far. I thought we would see some direction or larger volume but nothing but the same old market. Up one day big, down the next all at the open. One day the Irish banks will crash the system, the next they make loans to themselves in a show of liquidity and all is well. I am still waiting for something to happen.

We did get more baby stimulus ideas from the president today, but any infrastructure spending will not create jobs but will be used by the states to pay their own existing employees to do more wasteful work. At 50 Billion, that is not even a rounding error anymore.

For some reading material for a slow middle of the week, I offer:

Nanowire Coated Cotton Cleans Water by Zapping Bacteria to Death
Illness-inducing bacteria, meet nano-engineered cotton–and a quick death. Researchers have created a new “filter” that zaps bacteria with electric fields to clean drinking water. They say their system may find use in developing countries since it requires only a small amount of voltage (a couple of car batteries, a stationary bike, or a solar panel could do the job) and cleans water an estimated 80,000 times faster than traditional devices.

Instead of trapping bacteria in small pores like many slow-going traditional filters, the cotton and silver nanowire combo uses small electric currents running through the nanowires to kill the bacteria outright. In a paper to appear in the journal Nano Letters researchers say that 20 volts and 2.5 inches worth of the material killed 98 percent of Escherichia coli in the water they tested in their lab setup.

The authors argue that the filter’s silver nanowires and carbon nanotubes are cheap; the small amount of silver required makes its expense “negligible,” coauthor Yi Cui says in a press release, and the group chose to use cotton because of its abundance.

And it is not robotic! Seriously, some argue the next war will be fought over water and not much water purification work has been done using the newer technologies....yet.

Making Plastics out of Switchgrass Plants
Metabolix Inc. Creates a 100% Biodegradable Plastic
This is a local company that has made strides using natural products for polymer science. For more color you can try out this review paper:
Advances in the synthesis and extraction of biodegradable polyhydroxyalkanoates in plant systems – A review
NOTE: No position or affiliation with the companies or technology listed. I hold physical silver and a paper position in SLV.

Rich exoplanet system discovered
These new finds are tantalizing!

At long last, we find out what exactly the cargo was that Han Solo had to dump that got him in all the trouble with Jabba the Hutt. Skip towards end for the hilarious finish. Ah yes, Darth Sidious never fails to settle a score.

Have a good night.

Linkage

I had another great commute home and I am out of time for a post!

Never fear, here comes the Tuesday Linkage in case you missed these items:

-Silver bounces off $20 today notes Tim Iacono. I was really hoping to hold $20 but any close over $19 fits my model right now.

-John Hussman find the argument that many are bearish as puzzling as I do.

-EconomPic has some great graphs and reasoning why he thinks bond yields are not out of whack with reality.

-The Reformed Broker lists 6 possible Autumn Outliers that could make some waves.

-It seems the robotic/cybernetic revolution started way back in Victorian times as shown by this creepy prosthetic arm:


Have a good night.

Sunday Assorted Items

I really cannot believe NFL opening weekend is next week. It really snuck up on me this year. Maybe it is because the Patriots are not looking too good so I am afraid of week 1? I will have a full run down on opening weekend next Saturday. Keep in mind, The New Orleans Saints play the Minnesota Vikings on Thursday night in grudge match repeat of the NFC Title game last year. Thanks again Brett for throwing that interception!

Food Stuff
A friend of mine had a party yesterday and I wanted to bring some food. I have brought ribs over there two times already so I wanted to try a new one. I went with chicken wings and drumsticks. I also could not pass up some Little Smokies in beans, which made the cut as well. Here is the grub waiting on the counter:


I rubbed the chicken down with a basic rub:


I cooked the stuff with indirect heating at 250 degrees. I assembled the chicken on the top grate, put the pan with the beans and smokies on the bottom grate, and put a drip pan across the beans to keep the drippings contained:

It takes about 2 hours until done.

Here they are about done. Right at this point I remove the indirect equipment and lightly sauce the meat with Sweet Baby Ray's BBQ sauce. I forgot to take any more pictures but you get the idea:

They really came out great and lasted about 10 minutes at the party. Another Big Steel Keg success!

Old Classics
Yes, I have trolling YouTube again!

If you have seen the film "Raging Bull" about Jake Lamotta you will remember his terrible loss to Sugar Ray Robinson in their third fight. While the movie version was very scary, the 13th round of the real fight was scary too! The announcer opens the 13th round (go to 6:30 mark) by saying "Round 13, the hard luck number". Love the old Pabst Blue Ribbon beer ads between rounds:

That must have hurt!

The rematch between Champion Joe Louis and Jersey Joe Walcott had a brutal ending. In their first fight Louis was awarded a 15 round decision over Walcott but if you watch the fight there is no way Louis won that fight. I gave Walcott 9 or 10 rounds! In the rematch Walcott was again a little ahead before "The Brown Bomber" explodes for the win in round 11 (go to 4:30 mark):

Wow!

Have a great night.

Friday Nor'easter of Fun

I had a relaxing and slow day off. The heat has still been harsh, but the incoming Nor'easter/Hurricane Earl should bring in some cooler weather. I am pretty far inland and north of Boston so the local forecast is for rain and sustained winds but nothing too crazy.

Let's Keep it Light
The end of the week brought a balls out awesome jobs report where only 50k or so jobs were lost. With employment growth like this we should arrive safely at full employment in 65 years or so as long as nobody has a baby. Not too shabby!

Two best items for this Friday:
-The Automatic Earth pens today's missive and notes:

Here's thinking we won't understand this one, as a society, until we're sitting among its smouldering ruins. Sure, it's the fault of the leaders, the politicians, the economists. But who put them where they are? It's you, it's us, we are as addicted as they are to the perpetual growth paradigm. They talk nonsense, and we hear what we like to hear and swallow it hook line and tinkerbell. It's in our amoeba brains, and we can't fight it, since we are the amoeba brain. "I don't care if you make sense, as long as you make me feel good." Don't blame yourself, blame the amoeba inside of you. You know better.

My sentiments exactly.

-Mish delivers the knockout blow to the notion that the world is on fire with success with the following:

One year ago the official unemployment rate was 9.7%. Today it is 9.6%.

One year ago U-6 unemployment was 16.8%. Today U-6 is 16.7%

For all the trillions of dollars in stimulus and additional trillions of dollars in bank bailouts and trillions of dollars of expansion of the Fed's balance sheet, this is all we have to show for it.

Lowers the BOOM! How's that Keynesian spending working for ya?

Friday Nor'easter of Fun
It is Friday night and in the immortal words of Danny Zuko:
You know how it is, rockin' and rollin' and what not.

First a "Legally Blonde" clip and now "Grease"? Has Economic Disconnect lost his mind!?

Microbial Diversity
I had written a little last night about microbial diversity. Seems a few people are actually interested in this stuff! For some color I can recommend:
High Bacterial Diversity in Permanently Cold Marine Sediments
Discusses some techniques for estimating bacterial diversity in a sample. The good thing about microbiology is that the papers are not hard to follow. Skip to discussion section for the summary.

I had mentioned how hard it is to actually grow these kinds of bugs in the lab. At my last job we worked around that by first isolating the DNA from soil by a process of harvesting. This is a basic methodology but I had worked out a better one with better yields and much larger DNA recovery size (greater than 300 kilobases):
Methods for microbial DNA extraction from soil for PCR amplification

Now how you get around not being able to grow the bugs is you clone their DNA into special vectors that are able to highly express DNA based on powerful promoters like T7, or some neat viral promoters. If you are lucky what happens is the basic bacteria you use in the lab will be able to express the genes and make products that have a testable activity. Say you are looking for anti-bacterial activity, you can plate out a bunch of these bacteria that with unknown DNA in them and test if they have any ability to kill other bacteria. Another way is to grow cultures of the bacteria, isolate the things they made by chemical means, and test them using a disc diffusion assay. If you are lucky you get a "hit" that looks like this:

The sample shows antibacterial activity by killing of a zone of the plated bacteria. Cool huh?

But Economic Disconnect, how does the bacteria make anti-bacterial products and not kill itself first? Great question! Usually a product that has this kind of function will be found on a large pathway of genes (Maybe up to 25 genes) that are needed to form the molecule. On that pathway will be a resistance gene that confers to the bacteria the ability to stay alive in it's own product. Otherwise they would just kill themselves too. Nature is amazing yes? Sorry, this ran a little long but I thought it may be interesting. Or not.

Random Items
As if I have not already lost you, here are some things I saw today out on the web:
-The Bubble Nebula is wild looking!:


-The Witches of Dathomir and especially The Nightsisters

-At the US Open? Really?

-It was not bad enough this guy probably broke 3 ribs with this stunt, but he also ruined any chance he may have had of scoring one of the chicks drinking on the dock. Epic FAIL!

Clippage
A few things worth a look.

Reader Watchtower pointed the way to maybe the creepiest clip for a game I have ever seen. If you want to be disturbed by dark imagery, I can recommend "Fallout: Las Vegas":

That was chilling.

My friend Tom of the North pointed me to Sunsha Jung playing the U2 classic "With or Without You" and now I am really a loser that my Dad quit teaching me guitar because I just could not get it:

DANG! BFD Sunsha! Just show off why don't you, already then, nice.

One of my favorite boxing memories was when George Foreman knocked out Michael Moorer in the 10th round (skip to 1:00 minute mark) to become the oldest heavyweight champion ever!:

I remember announcer Jim Lampley screaming "It Happened! It Happened!" and it was a great time.

Rock Blogging
Tunes to give a listen to. To all of you, from all of me.

Reader C-T, who has a crush on the lead singer of Everclear I imagine, requested "Santa Monica":

I know that one!

It the best when I hear a song I have never heard before and it rocks! All the way by request from Michigan, try out a bad ass Lucinda Williams and "Joy":

Live music is the way to go.

I just saw the movie this song was featured in today for the 100th time! Try out "Win" by Mark Safan:

I love YouTube! Great tune.

Cowboys fan Gawains must be a little nervous with the regular season at hand and the Dallas crew looking shaky. Fear not, I think they are going to do very well after a slow start. It is how you end after all! As a lift up I offer Fleetwood Mac and "The Chain":

Nice pick!

BTW, I will have a full NFL Week 1 preview post next weekend! Almost time!

Ok, you may have guessed that I love 1980's metal and hair band rock. My second favorite era? 1950's classic rock! I know, I make no sense. Do not try and figure me out, it cannot be done!

I want you to turn this one WAY UP and try and tell me after you were not moving and getting happy:

Not much better than Dion and The Belmonts and "Run Away Sue"!

Two left on deck. Which way will it go?

For a blend of 80's and 50's try out a newer version of Buddy Holly's "Crying, Waiting, Hoping" by Marshall Crenshaw:

And I beat the 1 year rule! Looking at the comments on that post I see Watchtower has been with me a LONG time! Also this was before friend LT G even joined the armed forces! It is fun to look at old posts! Thanks Watchtower for staying with me!

Last Call! You have to call it. I can't call it for you. It wouldn't be right. It wouldn't be fair!

Ok, I cannot find by search the last time I played this so I have to hope is was more than a year ago. I wanted to close the show with this one anyway!

Go nuts and get loose with Faith No More and "Epic":

The 2:00 minute mark to the 2:40 mark is very special and piano at the end is fine indeed!

Have a good night.

Constructive Thinking

I cannot believe it was yet another traffic debacle today! Another 2 hour commute home. It just saps the life out of you. I took tomorrow off and will be off until next Tuesday so a nice 4 day break on the way. Just have to dodge Hurricane Earl but it looks to be staying mostly very south in Massachusetts. Friday night is on tap so get your requests in!

All of a Sudden People are Making Sense
I had to do a few double takes today as I read things that actually made sense for once! I have no idea if this is a new paradigm, or some veiled attempt to goad action from policy makers (sort of a triple dog dare you thing) but I was impressed.

From CNN Money we have these gems:

Not even record low mortgages rates have boosted home sales or enticed a debt-weary public. Of course, this doesn't seem much of a shocker. Experts say home prices - which have fallen by more than 30% since 2006 -- are still inflated by 15% to 20% in many areas...

But evidence is mounting that government interference in the housing market might be doing the broader economy more harm than good, at least for the long-term. A government tax credit that expired in April to encourage homebuyers did help boost sales, but that proved only to be a temporary crutch...

"We're just putting more people in the trap," Baker says of government policies that basically encourage people to buy or stay in homes beyond their budget. "I don't feel good that we're finding more suckers."

This is all true and shows a new thinking about government intervention that has been lacking. It does not end there!

Calculated Risk details the lack of desire among Realtors and home builders for a renewed tax credit. I am not making this up!:

"We are not advocating another one. We think it's important for the market to have time to recover on its own," says Walter Molony, spokesman for the National Association of Realtors.

"From a political standpoint, with Congress not wanting to increase the debt, it would be too expensive," [Bernard Markstein, senior economist with the National Association of Home Builders] says. "In terms of advisable, we are bordering on where tax credits become ineffective."

Now I think the jab about costs (increase national debt) was a ruse, but the other statements were huge. These things just pull forward demand, nothing else. If the economy had caught fire and the credit binge part II had started, fine it would have worked. It is a strike out. Move on.

Welcome folks, to reality. The best part is waking up with Folgers in your cup!:

I can only hope this marks a trend.

Constructive Thinking
Over at The Big Picture author Barry Ritholtz gets constructive and asks:

Yesterday, we discussed Infrastructure spending, following the WSJ article on more tax cuts as a stimulus.
We know from history that rather than temporary tax cuts or spending, its been the big infrastructure projects that leave behind usable assets for the private sector are the biggest bang for the tax backed buck.
Think Interstate Highways, Apollo Space Program, Darpanet (internet), Manhattan Project.
Question: What sort of projects should the US be doing in terms of Infrastructure development?

Now I want to leave aside that most of those programs were from like 100 years ago and now most "infrastructure" projects are tax rip offs (Google Boston's "Big Dig" for best example) that are wasted.

Instead let's get constructive! Enough gloom and doom! Put your thinking caps on, add a big smile and try and come up with some items in the comments. I know you are all very able. From a scan of TBP comments some stand outs:
-High-speed freight/trains
-100% Internet access in the US and its territories, either through broadband or Wi-Fi, as applicable. Universal free Wi-Fi access in all major urban areas
-Electrical grid and water supply improvements
There are plenty more but the best was:
-Licensed and regulated internet poker
Ok, I love online poker!

Stay away from amorphous crap like "better education", or "green energy". Come up with real things that are either doable today, or doable with a few advancements keyed by better funding.

Economic Disconnect's List of Government Funded Infrastructure
-I like the monster internet access idea. What is great is because government works so dumb, I have full faith this could be built and they would have no control over it because they got out smarted by the guys building it. What I mean is don't fear government control of what happens with it.

-I know I have talked about this before, but natural product research is a monster gap in the pharmaceutical world. Why? It is hard! So many drugs come from organisms (they may be made by chemical means later) that have a broad range of activities. Did you know that in labs we can only grow perhaps 3% of all the bacteria/bugs that exist? Did you know that around 70-80% of ALL drugs are natural products! And this is based on the 3% of things that can be grown in a lab! The world's oceans have untapped microbial diversity that is not usable in lab settings right now, what could those bugs give up? Sadly many large pharma companies have abandoned natural product research and this is a monster gap in not only drug therapy research, but many other areas. I do not want to go on all night, but funding for this work is crucial going forward. For an example, here is a pathway I have cloned from Streptomyces that is used all over the world, and no I did not find it (it is very old), it was a control experiment!

-A non-state employee, non-union worker overhaul of bridges and roads in the 6 biggest metro areas.

-Steam generators fueled by the Earth's own heat via tapping in to the Moho.

That should get you started. Sound off in the comments! Best answers get an automatic (non-Beatles) Friday night request.

Have a good night.

The Panic of Correlation

Monster traffic issues getting home today. On top of the "students move in to the city" seasonal distortion of traffic data for September's first week, a huge truck also caught on fire on a highway I use to get home! How is that for a double header? After an annoying ride home I thought it best to relax and write a blog along with a cool brew or two. Spellcheck is a good thing.

Apple Shows New Products
A friend of mine thinks I am an Apple (AAPL) hater because I find it comical that a company that makes little cheapo electronic gadgets will be bigger in market cap then US GDP in a few years time. Call me crazy. As far as AAPL stuff goes, I have no idea. I have a PC that was a cheap buy and with it I write this blog, read Wikipedia endlessly, and watch old fights on YouTube. How much do I need for that?

Anyways, today Apple had a big unveil show and supplied magnifying glasses to the audience so they could see the next generation of AAPL products.

Think AAPL products but smaller. The newest item was a tiny TV that you can watch movies and TV on. Wow, what a breakthrough. I think I heard of this before:

Ok, I am kidding! The new AAPL TV is HD and streams stuff you can rent if you are near an internet connection. This will come in super handy when you are at home and want to watch HD movies but do not want to be bothered going to the living room to watch them on the monster HD TV you have with the surround sound and 20 foot picture because it reminds you of the HELOC you blew to buy it all. The new mini TV only costs $99! No problem!:

There was other stuff but the pictures were too small to see much. When will the Apple Femto line of products come out? I could think of better uses for the billions in revenue these time wasting, eye sight killing things will generate but at least they all have touch screens.

Disclosure: No position in AAPL and only picking on them as they were in the news; my grind is about the general love affair with silly toys in general.

Fall Mortgage Mega Refinance Plan Rumor?
All rumors for now, or early leaks, depending how you see it. Number 5 on the Yahoo search this morning was "Mortgage Modification" for what it's worth:

Which was beating "Apple Rumors" at number 9!

My Kind of Article
I have to admit I was having a great time reading this article this morning:
A Termite-Riddled House: Treasury Bonds
Now the title suggests the whole thing is about the treasuries market, but really there is much more. What made is super special to me was the all out assault on Modern Monetary Theory (MMT) which is something I really cannot stand as it requires a certain distance from any real world to make it believable. Another classroom book theorem which if true would have ushered in an unending era of full blown prosperity the world over by now had it any merit. It does not. On Zero Hedge, guest writer Gonzalo Lira minces no words and pulls no punches when he writes:

I think this MMT theory is full of shit, propagated by fucking idiots.

MMT is just a clever way to justify insurmountable levels of fiscal debt—it’s a rationalization of this insurmountable debt, using a veneer of economic terminology to cloak the purveyors’ political ideology of spend!-spend!-spend!-your way out of a recession or depression: In other words, Keynesianism-redux. Keynesianism on steroids—Keynesianism gone fucking in-sane.

Hard to beat that!
The whole thing is well worth a read, even on a mini screen. Heck, I even printed it out.

The Panic of Correlation
A monster move up in the markets today, and it was all over in about an hour. Get the job done and go home early, words to live by in my book!

I am not even going to talk about an ISM that at any point is the history of the world was terrible, it managed to beat "expectations" and many ascribed the whole rally to that alone. Why not just "expect" next time the ISM to be 10, have it print 55 and declare recovery victory? At that beat markets should be at old all time highs and all would be well. Via Pragmatic Capitalism, who checked out a Credit Suisse presentation we have this graph that shows how this recovery fits many others from history ISM wise:

The headline of "Markets Cheer 16 More Months of Flat ISM Rating and Rise 3%" just does not have a real ring to it. Is the market correctly priced for 16 months of the ISM print being 55-59? It must be, it is forward looking after all. (SNARK on high)

The ADP jobs number was bad, but who needs jobs when manufacturing is making more stuff for people to buy?

I was looking for the "what" this morning, as in what would have caused this panic buying? Clusterstock had the best answer:
Obama's September Surprise: A Shock Reversal On Tax Cuts?
Now we have something! As the article reads (which refers back to Reuters):

If it’s a one-year extension of all expiring tax provisions (including extenders), it would be a very smart political move for him.

He would triangulate his base and appeal to swing indies. It also undercuts one of the main GOP arguments. The stock market would surge. It’s a total no-brainer, unless you are just that ideologically-addled not to do it.

No we have something!

A minuscule ISM beat was not the reason for a ramp up in the markets so just stop trying on that line. A extension of the "Bush" tax cuts, now that has some teeth.

There were plenty of market player friendly tax breaks that were set to expire, as well as many fat cat friendly ones. This was the reason that almost the entire move up happened at the ring of the bell. This also fits nicely with what I wrote last night about serious efforts for give aways to commence right at the get go in September.

As an aside, the President would be risking whatever credibility he has left with a move like this. After railing against Bush tax cuts as "benefiting the top 1% of the people and helping no one" it's a long road back to "extending these tax cuts will help the economy". I am not trying to make political points here, it is just hard to square. That said Economic Disconnect is for any and all tax cuts where ever they may be! How about all of them? Ok, I will settle for the 15% flat tax and I am even open to a VAT tax if you can believe that! See, I fit no pattern.

In the end I feel more confident than ever in my words last night. It has already begun. With asset classes now correlated almost 100% every day is a move up or down and not much in between. Panic buying was seen today. Who knows what tomorrow brings. What should be clear is if the mere mention in a small WSJ piece gets rebounded on Reuters which makes Clusterstock and this moves markets 3%, then the situation is a powder keg. That swings both ways in case you did not figure that out.

I could be wrong; maybe the better ISM (better than all the regional ones, that's for sure!) was the real reason. Maybe the old "oversold" meme came out to play. Maybe there was no reason, it was just Wednesday. I will stick to my call on this one. I should think we will not have to wait long to find out.

Have a good night.