August 8, 2012 (Zerohedge)
As channel-stuffing shifted from the US (here) to China (here) and Europe (here), so the new vehicle sales data has disconnected from a number of realities. Whether it is economic growth or Ford's share price, things look a little over-cooked in the land of if-we-build-it-the-government-will-buy-'em.
However, there is one index that tends to see through all the unreality much more clearly than our analysis above, that is the Used Vehicle Price index. Each time this index has dropped and broken below its two-year average, the auto industry has tended to fade rapidly. After yesterday's comments on the lowering of collateral standards for subprime auto lending, it would appear we are setting up nicely for some whocouldanode moment in the manufacturing sector's most critical industry.
Each time Used Vehicle prices (black) have dropped plunged below their two-year average (red dots) signaling a slowing of momentum (which Bob Shiller noted yesterday was critical to major credit-driven purchases), so the auto industry (e.g. Annualized vehicle sales and Ford share price in the chart) has weakened notably...
"In God We Trust" - honesty was the motto of the founding fathers!
"Our constitution was made only for moral and religious people. It is wholly inadequate to the government of any other" - John Adams, 2nd President of the USA
Market crashes are now deliberately generated on selected companies and their share prices. It works this way:
- A supercomputer scans the markets continuously looking the trades as they are executed and weak spots in relationship with share pricing and up and down transaction volumes
- When weak spot is found the crime starts. From now on the speed of the computer and the physical conduit from the stock exchange determines who has the edge. Surprised? The exchanges are now even renting space to corporations to operate as close to them as possible to have this market edge (recent 60 minutes revelation). As far as we see already this is a crime by deliberately putting all other investors to a weaker position, but that is just the beginning of it.
- The supercomputer is so fast and location so advantageous that it can steal any trade from slower computers even if that computer has already pushed the execute command. The supercomputers simply execute their trade before the last bit of the slower computer command has arrived to the exchange. This is like driving on the highway with a super fast car along a dedicated lane with instant access to all lanes on that highway. The super fast car can now pass anybody its driver wants in an instant and reach the destinations before slow ones even come close.
- These supercomputers have been manipulating the markets by algorithms already for years by buying and selling ahead of the crowd as long as big enough crowd keeps on trying to execute the same trades. Most of the slower computer users react by trying the less advantageuos price to get what they wanted but again the supercompuer steals the deal, and so on untill the crowd trying to do this gets thinner. When the tide slows down enough it switches the supercomputer to opoosite mode and everything gets repeated. The major loss for the supercompuetrs is only their super low excahange charge while whatever they take from the outsiders end producing profits.
- Ever wondered why the daily market variations have been growing bigger and bigger every year?