Empire State Manufacturing Index Takes a Dive

The November Empire State Manufacturing Index measures the level of a diffusion index based on surveyed manufacturers in New York state and is considered to be a leading indicator of economic health as it measures business activity, new orders, shipments, unfilled orders, inventories and hiring.  Prices paid improved, but was offset with prices received as well.  The current outlook saw conditions across the board getting worse.

Figure 1. Courtesy of the Federal Reserve Report

Figure 2. Courtesy of the Federal Reserve Report

Figure 3. Courtesy of the Federal Reserve Report

Figure 4. Courtesy of the Federal Reserve Report

The Forward looking report all categories improving (assuming due to the Christmas season), but the forward looking indicator from last report saw this month being better as well.

Monthly Retail Sales

The October Core and Non-Core Retail Sales numbers were released this morning looking favorable.  Retail Sales is the change in the total value of sales at the retail level and Core Retail Sales is the same, excluding automobiles. These are considered to be vital data as it is a gauge of consumer spending, I would say that it is screwed due to the Christmas holidays.  The numbers are actually down across the board (-2.67%) from Augusts numbers, but up across the board since October 2009 ( this could also have to do with the inflation we have been witnessing across the board, so we have to pay more to get the same things).

Weekly M1 and M2 Money Supply

Last weeks Money supply showed a 0.44% increase in M1 (month-to-month) and a 0.26% increase in M2. For monthly M3 please refer to the bottom of the pages link to the shadowstats.com graph showing M3.  Figure 1 shows the change in M1 and M2 week to week, as you can see it is on a steady rise in dollars.

Figure 1

Figure 2 shows the percent change in M1 and M2 from the previous year and shows M1 rising (short term) moving sideways from a longer term view.   You can see that in the latter half of 2009 we had a decline in money supply, as our money supply is debt backed.  As debt dried up due to defaults, write-downs, loan modifications and consumers paid down debt (plus many other reasons) the money supply contracted.  The FED has increased money printing in 2010, which is helping offset the decreases in debt (due to the reasons stated prior) making it appear to move sideways year-over-year.  

Figure 2

Taking a look at M3 for the year in figure 3, we can see that M3 started expanding approximately Mid 2010 and has really ramped up (coinciding with money printing activities such as POMO).

Figure 3

The following are the breakdowns of the different Money supply categories according to Wikipedia

• M1: Bank reserves are not included in M1.

• M2: represents money and "close substitutes" for money.^[13] M2 is a broader classification of money than M1. Economists use M2 when looking to quantify the amount of money in circulation and trying to explain different economic monetary conditions. M2 is a key economic indicator used to forecast inflation.^[14]

• M3: Since 2006, M3 is no longer published or revealed to the public by the US central bank.^[15] However, there are still estimates produced by various private institutions. (M2 +large deposits and other large, long-term deposits)

Money Creation Explained

Michael Pento on Ireland, Japan and U.S.

Quantitative Easing Explained

G20 Currency Disputes

King World News Interviews

This week King World News interviews Jim Rickards (part 2), Michael Pento, Ben Davies & Art Cashin.  The interviews with Jim Rickards I would say are a must listen, very insightful and important information coming from Jim this week. 

Jim Rickards Part II - Discusses new events of the U.S. Military performing exercises to respond to riots based on the collapse of the dollar.  Jim also talks about Robert Zoelick's (president of the world bank) comments on gold somehow being tied to the dollars value, legitimizing gold as a currency.  Jim brings up that the U.S. Government is printing money to devalue it to get consumers scared into buying while things are cheap.  China and others doesn't believe us, and believes (based on Pres. Obama's comments) that we entered the currency war to create a trade war.  Jim notes that during Weimar the stock market went up even though the currency was diving, this is because the stocks value in dollars is worth more dollars as the dollar is devaluating.

Michael Pento -  Discusses the Fed's decision to blow up the economy through inflation and asset bubbles. Michael also talks about the changes in story between the Fed and Treasury Secretary in monetary policy position and the underlying action continues to be dollar destruction.  He also talks about runaway inflation and its impacts on the global market if things don't change.

Ben Davies - Discusses debt in the U.K. compared to their GDP.  Ben also discusses the moves in Gold/Silver and how it correlates to demand in the market.  Ben also talks about the increased margin requirements for Silver futures contracts and its downward pressure on Gold and Silver in the latter part of the 

Art Cashin - Discusses China's market plunge due to the concern of rising interest rates in China.  China trying to contain their economy with rising rates and a slowing economy, would impact the rest of the world markets.  Art also discusses the commodity inflation that is occurring due to the consequences of quantitative easing.

Friday's FED POMO Purchase

On Friday November 12th, 2010 the FED performed another POMO (Permanent Open Market Operation) purchase of $7.229 billion.  This brings the total since August 17th 2010 to $82.714 billion dollars.

OPERATION 1 - RESULTS

Operation Date:	11/12/2010
Operation Type:	Outright Coupon Purchase
Release Time:	10:42 AM
Close Time:	11:30 AM
Settlement Date:	11/15/2010
Maturity/Call Date Range:	11/15/2014 - 04/30/2016
Total Par Amt Accepted (mlns) :	$7,229
Total Par Amt Submitted (mlns) :	$29,039

Unofficial Problem Bank List

CalculatedRisk has updated the Unofficial Problem Bank List this week with an increase in the number of problem banks to 898.  Six additions to the list and 2 removals from the list occurred this week bringing the total asset value to $418.5 billion dollars from $416.5 billion.

Weekly Bank Failures

This week we lost 3 more banks bringing the 2010 record breaking number to a total of 147 banks.  The 3 failed banks are Copper Star Bank in Scottsdale AZ, Darby Bank & Trust Co in Vidalia GA and Tifton Banking Co in Tifton GA.

Jim Rickards on QE2

Jim Rickards discusses why QE2 is not required for economic growth and it is actually just being used to devalue the dollar.

Currency Wars Heating Up

With the G20 meeting this week and rumors of heated debate over the dollar, the U.S. dollar's perception of being a stable reserve currency is under attack.  The U.S. dollar is now starting to look like its Era as the reserve currency could be coming to an end.

Economic Points Supporting Gold

I post this somewhat humorous video as they make some really good points on the state of the economy that sums it up very well.  Obviously the video has a point it is trying to make as well, but I thought it was a good way to summarize our current economic state.

Jim Rogers on the Fed