The King Report
M. Ramsey King Securities, Inc.
Friday June 6, 2008 – Issue 3887 "Independent View of the News"

It was Déjà vu Thursday. Despite a preponderance of bad news, once again the Fed engaged in Thursday repo madness ($29.25B), which supercharged stocks. So once again we had a Thursday ‘big’ rally.

Before we get into stocks, the real story on Thursday was the carnage in the forex market. Too many traders, apparently there is an inordinate amount of neophytes handling forex money theses days, bought into Bernanke and his ilk’s hawkish BS and went long dollars. So when ECB chief Trichet said the ECB might have to hike rates and Bernanke went repo mad again on Thursday the dollar tanked.

Once again Wal-Mart and Costco reported better than expected May sales due to energy & food inflation while most other retailers showed large declines in sales. And once again Street shills and pundits attributed Wal-Mart and Costco’s May sales gains to inflation driving people to those stores instead of acknowledging that their sales are boosted by inflation.

And once again a brokerage firm, this time Deutsche Bank, recommended Lehman.

And once again Wal-Mart and Costco would NOT disclose food sales. Wal-Mart sales, for stores open at least one year, increased 3.9%; Costco US showed a 7% US gain and a 15% foreign gain. BJ’s Wholesale Club sales surged 13.4% on gasoline and food sales. BJ reports gasoline sales jumped 6.6% and perishable food sales surged 11% but general merchandise was flat!!! Why don’t analysts press WMT and COST to reveal their ‘core’ or food sales figures?

BJ revealed its food sales; its shares declined yesterday while COST and WMT soared.

Here are the retail losers: JCP 4.4%, GAP 14%, Target 0.7%, Limited Brands (Victoria Secret) 6%, American Eagle 9%, Pacific Sunwear 3%, Saks 8.7%, Kohl’s 7.2%..Retail gainers include child discounters: Aeropostale 6%, Children’s Place Retail Stores 10%, TJX 2.2%

Nordstrom reported +10.9% due to an earlier start date for its half-yearly sale for women and children.

Therefore, June sales will decline as much as 22% according to Nordstrom….

Bloomberg: The number of Americans filing first- time jobless claims unexpectedly fell last week, possibly reflecting the closure of government offices for the Memorial Day holiday…While the figures are adjusted for seasonal variations, holidays make it more difficult for Labor to estimate the changes.

http://www.bloomberg.com/apps/news?p...
sid=a7bvAOvkxlTk&refer=home

It’s even harder to decipher US government economic statistics when seasonal adjustments are fooled with each month in order to craft acceptable data.

Our friend Jimmy, a savvy operator and ex-special ops type, tells us there is no conceivable way that any story about nuclear security would be divulged publicly. So the Pentagon story might be subterfuge. The ‘big rumor’ that circulated yesterday was the dismissed Air Force officials wouldn’t sign off on an attack on Iran, so they were removed. Ergo traders poured into oil…Gold could be next.

As we asserted in Thursday’s missive, recent far Fed behavior is diametric to its hawkish rhetoric. The new MZM and Adjusted Monetary Base readings show the Fed has hit the accelerator again. MZM surges to anew Adjusted Monetary Base is now surging.

http://research.stlouisfed.org/publi...

http://research.stlouisfed.org/publ
ications/usfd/page3.pdf

Some analysts note that MZM growth has slowed substantially. It has, depending on your parameters. Per the St. Louis Fed’s calculation of the 4-week moving average annualized MZM has slowed to 6.5% growth from 35% in mid-April. But the recent slowdown is only due to the absurd growth in MZM to save the US from financial implosion in mid March.