Monthly ETF Money Flows

For the month of September we saw a large inflow into ETF's, with a surge of $25.795 billion flowing into ETF's.

To get a better handle on where the money is going to we need to break this down a little more.  Based on the following graphs you can see that ETF's got a big boost from Large/Medium Cap, Sector (specifically Commodities, financial and Real Estate) and Emerging Market ETF's.

Here is how the different ETF categories are trending.  They have been broken down by subcategory so it is easier to see.

Weekly Money Flows

I am a little late in publishing the weekly money flows this week, but here they are.  We are seeing a trend toward a lesser exodus from U.S. stocks, but an increased move toward Foreign funds.  This deceleration of stocks out of the domestic market may be slowing as people interpret the rising stock market as a sign the market is healthy, instead of the fact that the Fed is holding the market up through dollar devaluation and priming by its Primary Dealers.

We also see continued strength in the Bond market vs. the stock market, which shows that investors are still very wary of the stock market.

Weekly KWN Interviews

This week King World News interviews Peter Schiff, John Embry, Bill Laggner, Eric Sprott & Art Cashin.

Peter Schiff - Discusses the falling dollar, the Fed and how to protect yourself.  Peter discusses getting into hard assets and Warren Buffet.  Peter thinks that QE2 is going to happen as well as QE3, QE4 and so on.
John Embry - Discusses the economy and where we are going, as well as Gold targets.  John goes into the case for higher silver prices due to demand and short supply.  John, also talks about diversification into hard assets (agriculture included).
Bill Laggner - A hedge fund manager discusses currency wars, U.S. pricing money at zero and becoming currency trades (China and Germany not happy about this).  China now restricting imports from the U.S. on poultry, as well as exports of rare earth materials to the rest of the world to include the U.S.  Mortgage Putback estimates (on the big banks) could be so high that the banks will have to raise capital again.
Eric Sprott - An asset manager discusses investing in Gold an Silver stocks and possible big moves on the HUI (Gold Bugs Index).  Eric also brings up how all countries are debasing their currencies is improving the likely hood of Gold going up as its perception as a reserve currency is gaining more momentum.  Silver's rise is really putting the squeeze on the banks who are shorting it to suppress the price and they may not be able to continue to short (along with investigations into price suppression).
Art Cashin - Discusses the Feds measured move on inflation and how it could become toxic to the system.  Art also mentions until we get a firm grip on QE2 it will be hard to interpret any economic data.

Economic Comedy Relief

Every once in a while I like to interject a little comedy into the blog as sometimes you just need a good laugh in the midst of all this mess.  Jay Leno goes out to test peoples knowledge on the economy.

And that's why we are in trouble...

POMO Update

The Fed initiated another POMO (Permanent Open Market Operation) purchase today of $1.66 billion dollars, bringing the total to $61.971 billion.  This is the 2nd of 3 purchases from the Primary Dealers prior to the elections.

Operation 1 - RESULTS

Operation Date:	10/28/2010
Operation Type:	Outright Coupon Purchase
Release Time:	10:15 AM
Close Time:	11:00 AM
Settlement Date:	10/29/2010
Maturity/Call Date Range:	04/15/2012 - 03/31/2013
Total Par Amt Accepted (mlns) :	$1,660
Total Par Amt Submitted (mlns) :	$39,152

Weekly Initial Unemployment Claims

The Initial Unemployment Claims for the prior week was released this morning.  Initial Claims are a measure of persons who filed for unemployment for the first time in the prior week and is considered a lagging indicator, but shows the overall health of the economy.  The forecasted number for last week was 453k and the actual headline number came in at 434k, which is an improvement over the week prior to this weeks.  The week priors report of 452 was revised to 455 which brings in the delta on revisions.

Initial Unemployment Claims

Initial Claims Revision Delta

Monthly New Home Sales

The New Home Sales numbers covering the month of September 2010 were released yesterday.  New Home Sales is the annualized number of new single-family homes that were sold during the previous month and is considered a leading indicator of economic health as it has rippling effects throughout the economy. Personally I think that is going to be redefined in this depression we are in as we cannot continue to make home sales what drives our economy, we need to invest in real manufactured goods and infrastructure. The forecasted number called for 301k and the actual headline number beat coming in at 307k, which beat the prior months revised 288k. This is 78% below the high in 2006, so even if if New home sales were going to drive our economy, then it has a long way to go.

Monthly Durable Goods Update

The Durable Goods and Core Durable Goods reports for September 2010 were released today with transportation helping the number.   Durable Goods is the change in the total value of new purchase orders placed with manufacturers for durable goods and Core Durable Goods is the same excluding transportation. The forecasted Core Durable Goods was for 0.4%, but the actual headline number was -0.8%.

The forecasted Durable Goods (includes Transportation) was 1.7% and the actual headline number was 3.3%.

Shipments were down again for the 2nd consecutive month and Inventories were up for the 9th consecutive month.  We need to see those numbers reverse.  The biggest losers in durable goods orders were communications equipment with a -18.6% change M-o-M.  The biggest gainers was Transportation with a 15% gain M-o-M, more specifically Defense and Non-Defense aircraft parts.

William Black & Dylan Ratigan Discuss Mortgage Fraud

Todays POMO Purchase

The Fed executed another POMO (Permanent Open Market Operations) purchase today of $2.5 billion dollars brining the total since August 17th 2010 to $60.311 billion.  This markets the first of 3 POMO's before the November elections.

OPERATION 1 - RESULTS
Operation Date:	10/26/2010
Operation Type:	Outright Coupon Purchase
Release Time:	10:15 AM
Close Time:	11:00 AM
Settlement Date:	10/27/2010
Maturity/Call Date Range:	02/15/2021 - 08/15/2040
Total Par Amt Accepted (mlns) :	$2,500
Total Par Amt Submitted (mlns) :	$11,305

Monthly CB Consumer Confidence

CB Consumer Confidence is level of a composite index based on surveyed households (5,000 households)  and is considered a leading indicator of consumer spending. The forecast number was for 49.3 and the actual headline number was better coming in at 50.2.

I find it worth mentioning that of those surveyed those claiming business conditions were bad declined 4.1% and those claiming business conditions were good increased 0.3%, yet when asked about the labor market the responses were less optimistic.  It would seem to be a mixed picture for the month of October when it comes to consumer confidence.

Insider Selling

The week ending October 22nd 2010 saw more outflows in stocks from corporate insiders.  The largest insider purchase was $1,014,475 for Monsanto (MON), which makes sense as economist and investment advisors are advising agriculture.  The two largest inside sellers were GOOG and ORCL.


Total Insider Purchases: $1,919,291
Total Insider Sales: $439,854,761

The Dollar Outlook

Peter Schiff said on CNBC that the Government is trying to devalue the currency further and Americans should diversify into Gold/Silver and foreign currencies.  A question as to how the average American can diversify into foreign currencies was raised and answered through ETF's.

I looked up ETF's that trade currencies and found that Ipath sells the following:

ERO for EUR/USD

GBB for GBP/USD

JYN for USD/JPY

ICI for a basket of G20 currencies

The following link gives a longer list of currencies and ETFs that invest in currencies (click here).

This is in no way advise to invest, seek an investment advisor before making a financial decision.

Monthly Existing Home Sales

The September Existing Home Sales number was released today.  Existing Home Sales is an Annualized number of residential buildings that were sold during the previous month, excluding new construction.  The forecasted number was 4.29 million and the actual headline number was 4.53 million, beating the prior months 4.12 million homes sold.

Again, we need to see if this is a trend, as so far it is just a higher-low not a higher-high.

Number of People on Food Stamps Per State

The graph below shows the number of people that are on food stamps to date.  The total number of people on food stamps stands at 41,836,330.  This chart has been added below for constant reference.

Economic Impact on Sacramento CA

This video really shows the impact of the economic downturn (o but we are in a recovery aren't we?).  Many people out of work and becoming homeless.  Tent cities are rising as it is all that people have left to survive on.  Most Americans are just 2 paychecks away from being homeless, a very staggering figure.

Peter Schiff on Taxes