Jim Sinclair’s Commentary
Major MOPE reviewed by CIGA Eric.
Planned layoffs drop to lowest level since 2006
CIGA Eric
February’s total of 42,090 planned layoffs was 41% below January’s 71,482 and 77% lower than the 186,350 job cuts tracked in February 2009, at the depth of the recession. It was the lowest monthly total since July 2006.
At times, obvious good news must be view with skepticism. Today’s announced layoff by Challenger, Grey and Christmas showed a year-over-year contraction of -150%. Since the inception of the time series, large declines in excess of -125% (1994, 2000, 2002, and 2006) have marked intermediate bottoms from which announced layoffs have expanded. As I have said many times before, it is often unwise to assume that this time will be different.
The red spot shadow reflects a probability window based on the previous advances.
Challenger, Grey, and Christmas Announced Layoffs (ALO) And YOY Change: 
Source: marketwatch.com
Jim Sinclair’s Commentary
You know that this was known in December yet the horns blew for prosperity.
Manufacturing slows in February
CIGA Eric
Manufacturing activity expanded in February for the seventh straight month, but at a slower pace, a purchasing managers’ group said Monday.
The Tempe, Ariz.-based Institute for Supply Management’s U.S. manufacturing index slipped to 56.5 from 58.4 in January.
The below chart illustrates the cycles of liquidity-driven growth. The comparison of the 70′s with today does not suggest a similar economic setup. The ISM data limited data history only allows for near term cycle comparisons.
ISM Prices Paid Index (PP) to National Purchasing Manager’s Index (PMI) Ratio: 
Source: money.cnn.com
Personal income edges higher
CIGA Eric
Personal income edged up slightly in January, and spending by individuals rose for a fourth straight month, according to government data released Monday.
What the headline fails to reveal is the growing instability between personal consumption and income. Personal consumption to income has risen to a record high of 84.8% in 2010 despite rising unemployment and income stagnation. This is a far cry from 74% recorded in 1981. The most recent ratio has exceeded the old record high of 84.7% posted only five years ago. Either Americans are truly reckless consumers, or they, struggling to keep their heads above water in troubled economic times, find themselves spending an increasing amount of their personal income on basic, survival consumption. I tend to view the rising ratio more as the latter. How much of personal income can be devoted to consumption – 85%, 90%, how about 100%? The higher the ratio goes, the more unsustainable it becomes. Soon, no amount of entitlements will delay the inevitable – a serious drop in consumption relative to income. This reality reveals the seriousness of the problems (both economic and social) facing the domestic and global economy.
Personal Consumption As A % of Personal Income or "Real Funding Pool": 
Source: money.cnn.com
Money – The Subject Theory of Value
CIGA Eric
If you want to understand why gold is rising despite few signs of price inflation, it boils down to the understanding of how money is valued. The quantity theory of money, believed by monetarists, suggests that too much money chasing too few goods, will produce inflation in time.
The Fed is printing money like a drunken sailor, but the signs of hyperinflation are nowhere to be seen. Yet, despite this, the price of gold continues to climb. Why? People, on the margin, are becoming increasing skeptical of dollar ability to preserve value over time. Gold has not gone parabolic, often result of hyperinflation, because people have yet to believe en mass that the dollar "cooked" or worthless. There lies the basic description of the subjective theory of value of money as presented by the Austrian School of Economics.
Money is a game of perception and confidence. This is the main reason why thing can look so normal, right before the wall of confidence come tumbling down and all hell breaks loose. Martin Armstrong alludes to this rapid progression in his commentary How all systems can collapse overnight.
Suggested Reading: kitco.com
Suggested Reading: How all systems can collapse overnight
