The beginning of detoriation in slow US economy: Recession ahead

Baltic Dry Index During Recession

So far main stream media has been presenting even bad news as a good news showing how great is US economy compare to world economy and US stock market is rallying because of the good news. There are more bad news which never shows up in the media. So far media were happily promoting that it was great holiday sale which leaded which to huge pile of inventory and that save US GDP to be above 2%. This was the weakest GDP  report in last 3 year for January.  If we compare year over year

Jan 29 2010, GDP was 5.7% expected 4.5%, Dec 2009 : 2.2%

Jan 28, 2011, GDP was 3.2% expected 3.6%, Dec 2010 2.6%

Jan 27th, 2012 GDP was 2.8% expected 3.0%, Dec 2011, 1.8%

Yet media is promoting strong growth in US economy after 15 month. The consumer sentiment came at 75, but its the survey conducted in 500 household. Will you consider this sentiment as true picture for rest of the population.

Government has spending money with QE1, QE2, Operation Twist, Stimulus and so on. They have been putting tax payer money but it doesn't show up in economy. The only thing that is growing is Wall street bonuses and US stock market.

Since Nov 25th, Dow has added 1600 point, S&P500 about 170 point and infact Dow and S&P500 is sitting at 2011 highs. 

Baltic Dry Index value is at 726 which suggest that global economy is shrinking. http://www.bloomberg.com/quote/BDIY:IND/chart

Yesterday Spain unemployment rate  hit 22.8% leaving 5.3 million out of work. Spain has a population of about 46 million. Spanish unemployment rate between age 16-24 is 51.4%, Greece 46.6%, and Portugal 30.7%. A country cannot do well without its youth talent. With billions of Euro in debt, Greece, Portugal and Spain.

This stock market is rallying on rumor and hope and it doesn't like reality. It won't be too long before US market will take a big U turn and we should see biggest decline in very short time because of this automatic trading. 

Kim Kardashian marriage got more media coverage then US debt Ceiling: TZA, FAZ, ERY, SDOW

 Last summer US debt ceiling debate brought the downfall of US stock market. The news on US debt ceiling was carried out every minute. American people saw the true sides of Republican and Democrat and how inefficient was the President of USA. Mr. President kept threatening of using his veto power to raise debt ceiling. Finally it was raised to 15.194 trillion dollar on last day. This debt ceiling of 15.194 trillion dollar was once again breached in December but the media didn't even bother to discuss about it. The situation got so worst that US treasury started dipping into federal pension fund to avoid default. http://www.reuters.com/article/2012/01/17/us-usa-debt-treasury-idUSTRE80G20R20120117 

US treasury issued warning that if US debt ceiling is not raised by 1.2 trillion dollar then US will default on Jan 27th. Today senate failed to block the debt limit by 52-44 vote in favor of raising the debt ceiling. Now Mr. President will use veto to raise Debt ceiling by 1.2 trillion on Friday. In that case, House and senate need to come up with 2/3 majority to get ride of veto. http://www.c-span.org/Events/Senate-Fails-to-Advance-Resolution-Blocking-Debt-Limit-Increase/10737427570/

All being said, the media coverage of this US debt ceiling was nothing. Kim Kardashian marriage got 4 hour of premier coverage, while this US debt ceiling was hardly covered as if it was non important event.

This government is all about bailout, spending, and no job growth. Unemployment dipping to 8.5% is not because of job growth but because of less participation in the labor market.

Tomorrow US GDP will be out tomorrow at 8.30 EST.

Jan 29 2010, GDP was 5.7% expected 4.5%, Dec 2009 : 2.2%
Jan 28, 2011, GDP was 3.2% expected 3.6%, Dec 2010 2.6%
Jan 27th, 2012 GDP ????, expected 3.0% Dec 2011, 1.8%

So any guesses for tomorrow GDP. The expectation is lowest in 3 year. So don't be surprised if US GDP is beaten.

The important level for tomorrow is S&P500 should hit 1310 level to trigger sell off.

Don't keep anything invested overnight. The market is expected to decline till Monday.