Any reduction in QE if it even happens at the next FOMC meeting in September will be so small that it will be merely a simple token PR show for Bernanke's benefit so that he'll be able to claim after he retires that he wasn't just a mad money printer - "see I reduced QE!"
Today the market is gapping up just a little on news that the easy money Prime Minister of Japan has been re-elected. Gold is up above 1,300 an ounce. US investors are happy with the markets at near new highs even though individual stocks have been getting hit hard the past few days on bad earnings reports. On Friday Microsoft fell over 7% on disappointing earnings. Google blew up too and this morning McDonald's is posting dismal results.
The largest employer in the entire world is the U.S. department of defense with over 3 million employees. The biggest private sector employer in the United States is Wal-Mart. After that is temp agency Kelly Services and then McDonalds.
I'm not bearish on the market, but I take what I hear on the CNBC echo chamber with a grain of salt too.
In reality even though new jobs were indeed created they were not enough to have a meaningful impact on the economy, because the new number of jobs being created is no higher than population growth.
On Friday the United States government released its preliminary 1st quarter GDP report for the first three months of 2013. It showed that the economy grew at a rate of 2.5%, which was almost a full percentage point below what economists were predicting and a rate that is not fast enough to cause real employment to grow as it smaller than the rate of population growth.
This lecture by David Stockman was presented at the Mises Circle in Manhattan: "Central Banking, Deposit Insurance, and Economic Decline.
Roberts writes, "the reason that investor's perform so poorly over long periods of time is that investors continually extrapolate current trends (reality) indefinitely into the future (belief). It is in that moment, when "contrarian investment views" are regularly disregarded as irrational fears, that a new "reality" presents itself."
Last week Peter Schiff appeared on Fox Business Channel as a guest and talked about the Cyprus debt collapse. After he talked the producer took him off the air and then had Lou Dobbs rebut him - and then personally smear him. Of course they did not allow Schiff to answer the smears.
President Obama did an interview on ABC news the other night and stated that there is no debt crisis. He said that at the rate the debt is growing "in fact, for the next 10 years, it’s gonna be in a sustainable place.”
Here's something I never knew - if you are an American you can move to Puerto Rico and pay practically no capital gain taxes no matter how much you make.
So what does the DOW making a new all-time high yesterday really mean?
This is a video that has gone viral on Youtube. In my view this is partly a function of the growth of industries tied to the government that operate outside of the free market that other businesses and everyone else has to live in. These are industries that are dependent on government spending and cost+plus contracts such as the military-industrial complex and industries that are handed money in bailouts and Fed money printing such as the entire financial industry.
I just read this email question I got:
"mike, thanks for sharing so generously your opinions on the market! i am in metals. mlps and reits. my lowest high "dividend" stock pays about 8%. i feel that these high dividend stocks are doomed due to the coming seemingly set in stone dividend tax on high earners. what do you think? thanks!"
Last week we heard that the September employment rate fell to 7.8% thanks to the creation of about 114,000 jobs. Some are crying fowl and see this "good news" as a manipulation or lie to help Obama out before the November election. The reality is that it is meaningless news and this chart shows how the unemployment rate fell and why the number people out of work is really higher than the unemployment rate makes it sound in this economy - and has been for years. Simply put less people are being counted as being a part of the labor force:
I just did this podcast with David Frazier of www.integrativeinvesting.com.
David said he thinks the market is currently rallying because people are hopeful that the Fed will engage in a QE money print, but he thinks this is very unlikely. He explained what it will take to really turn around the US economy and what he thinks is going to happen in the stock market.
"Much of the debate about American unemployment has focused on why companies have moved factories overseas, but only 8 percent of the American work force is in manufacturing, according to the Bureau of Labor Statistics. Job growth has for decades been led by service-related work, and any recovery with real legs, labor experts say, will be powered and sustained by this segment of the economy."
Last Friday’s unemployment figures threw a spanner in the works of the ongoing narrative that the US economy was on the recovery, albeit a weak one. Friday’s figures marked the first rise in unemployment (to 8.2%) in nine months. In May, the economy only added a paltry 69,000 jobs. Coupled with fears about the worsening crisis in the euro zone, the Dow Jones went into a tailspin, wiping out all the gains made this year.
According to the Labor Department’s monthly report last Friday, the US unemployment figure for February remained at 8.3%, while 227,000 jobs were created. This is the third consecutive month of job gains over 200,000. Job figures for both December and January were also revised upwards from 203,000 to 223,000 and 243,000 to 284,000 respectively. Thanks to the better-than-expected report, the Dow Jones finished higher for a third straight day last Friday, ending at 12,922.
Contrary to initial expectations, the US unemployment rate for January fell to 8.3%, the lowest since February 2009. (This was the fifth consecutive monthly decline.) Moreover, there was also a net increase of 243,000 jobs, the biggest gain in nine months. In addition, the Labor Department also published revisions showing that another 60,000 more jobs were created in December and November than previously reported.
I am doing a little bit of traveling this week and my trip started with a business stop in Asheville, North Carolina. I stayed there one night and the next afternoon went downtown and got some lunch. They got some of those Occupy Wall Street people there next to city hall and I decided to walk over and see what they are about for myself.
You may have seen some news stories about them. If you live in New York you know about it, because they had big demonstrations and clashes with police in the Wall Street area this last Fall. After that they sprouted up in other cities in public areas.
Retail stocks are getting hit hard today as major discount retailers announce strong headline sales numbers, but analysts must now worry that those sales will not lead to strong profits.
According to Thomson Reuters, retail sales for stores operated by major chains for at least a year were 3.4% higher than they were in December from the December a year ago. This was good on its surface because it was 0.1% more than analysts had been expecting.